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“The ripple effects of letting those companies implode would have been huge.”

Nice try again, you did not answer to my post on this subject, I ask again "you have no idea what Gengrich advised them on or what his advise was...."
Gingrich was on their payroll for many years. It's very clear he was basically lobbying for them.


Maybe you can show me where Bush said Fannie and Freddie should lower their lending standards?
1) Bush 41 signed the Housing and Community Act of 1992, which expanded their mandate to buy loans made to low- and moderate-income housing.
2) Bush 43 pushed that further, along with his repeated attempts to expand home ownership.
President Calls for Expanding Opportunities to Home Ownership and
https://www.nytimes.com/2008/12/21/business/worldbusiness/21iht-admin.4.18853088.html?pagewanted=all
Home Ownership and President Bush - YouTube


You harp on increasing home ownership as the way to do that was to give free money.
The way Fannie and Freddie increased home ownership was by purchasing riskier loans. Which were being issued by other people anyway.


Yes but it was regulated by who.
"Regulated" does not mean that the federal government was auditing their books.


The lower interest rates are how low again and have been how low for how long now. Low interest rates have been in place for how long now, which negates your point.
No, actually, it proves that you don't really understand what's going on. E.g. just because interest rates are currently low, doesn't mean it is easy to get a mortgage or a refi. In fact, standards are significantly stricter today than in 2005 or even 2008.


All the above sounds good, but most of what your talking about had nothing to do with the housing market. Was there abuse by the brokers, yes the got on the band wagon but F&F started the fire
Thanks for yet again, demonstrating that you have no idea what you're talking about.

This might help you out a bit: For the Last Time, Fannie and Freddie Didn't Cause the Housing Crisis - David Min - The Atlantic


Spread the blame all you want, but it only takes one match to start a forest fire that many get caught up in.
No, actually, it takes a whole series of contingent events to create a forest fire. You need tons of kindling, a lack of smaller routine fires that clear out the various brush and deadwood, you need low humidity and proper winds, and then you need some idiot to start the fire and let it burn long enough to spread.


I repeat, it was in 2003 when Bush wanted to reform F&F so the loading of sub prime loans started many years before then.
...unless it didn't.

us-subprime-mortgage-market-growth.png


And let's face it, Bush had zero interest in stopping the bubble. I don't recall a single time that he expressed any awareness of the US being in a housing bubble, before it actually popped.


I understand all that as well. But again it does not negate who started this mess and who pushed it.
Yes, and again, that list includes....

• capitalists who needed a safe return
• the Fed and foreign lenders, who slashed interest rates
• Wall Street, which pushed for cheap credit, and repeatedly freaked out at the mere mention of the Fed raising rates
• foreign investors happy to loan money into the US housing market
• legislators who killed Glass-Steagall
• bankers who developed derivatives
• bankers who took advantage of the obscurity of derivatives
• bankers who relied too heavily on VAR, and thought they were covered when they weren't
• numerous government staffers who refused to regulate derivatives
and so forth.

By the way, I assume you're an American so you are oblivious to the rest of the world, but: If the GSE's caused the housing bubble, then how did bubbles also form in Ireland, Greece, Britain, Israel, Japan, Lebanon, Mexico, Poland, El Salvador -- and dozens of countries? Fannie and Freddie weren't buying any of that stuff.

The simple fact is that the global financial system, as a whole, issued too much credit, to instruments that were too obscure, and either didn't know about or didn't care about the possible contagion effects. As a result, we had -- perhaps for the first time in history -- a global real estate bubble.

So please, spare us this ridiculous conservative/Republican meme. I realize how convenient it is for you to blame one or two organizations, and to ignore how thoroughly they paid off Republicans as well as Democrats. But it's pure fantasy, and is not even remotely supported by the facts.
 
The states were not going to all declare bankruptcy if the stimulus didn't pass. "Helping the states" is a completely different thing than "stopping a majority of states from failing to pay their creditors."

I.e. stimulus ≠ bailout. These are fairly basic budgeting concepts.



Again, I concur that all those tax breaks were terrible. I really don't know how the Republicans could have possibly abided by them. :D



"Discretion."

I assume you're probably referring to some sort of Medicare block grants. A fair amount was, in fact, specified. E.g. a state could not use Medicaid funds to pay for unemployment insurance.

Long on Republican talking points, short on fact....

You certainly have a romanticized version of what really occurred with the stimulus aka Porkulus bill. It is well documented the monies received by the states were used to plug the holes in their budgets. Period. And that amounts to a bailout. Not every state is fiscally irresponsible, but a growing number of them are becoming that way and when there is an economic downturn, they have nothing put back for a rainy day. Because it's federal law that they must balance their budgets, often they use special accounting techniques in order to meet that requirement. It has also been revealed that the states that went for Obama received more funds per capita than those who had gone for McCain.

It is well documented the funds that went to federal agencies that had already been budgeted for operations were provided with huge amounts of funding for unnecessary projects like new furniture for the Homeland Security offices to windows in federal buildings that are vacant. A million here 50 million there of a list of such projects that have nothing to do with stimulating the economy through upgrading infrastructure like roads, bridges etc. But what the Hell, nothing like spending other people's money. In fact wasn't it the great Obama himself that finally had to admit his shovel ready jobs weren't so shovel ready? Jobs that amounted to unions hiring workers to dig a hole one day and fill it the next.

It is well documented the stimulus aka Porkulus was filled with providing funds for all the special interests of the Democrat party. Not one Republican voted for this boondoggle including 11 Democrats in the House. And as far as filibustering goes, the Republicans if you recall have been called the party of no. During the time of the creation of the Porkulus, The 110th Congress (2007-2008) is the record-holder so far: There were 112 votes on cloture during that two-year period. In the 2009-2010 there were over 41 cloture votes. Mostly related to feckless spending.
 
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There are a lot of things a person can find fault with Bush but Fannie and Freddie isn't one of them.
The White House released this list of attempts by President Bush to reform Freddie Mae and Freddie Mac since he took office in 2001.
Unfortunately, Congress did not act on the president’s warnings:


** 2001

April: The Administration’s FY02 budget declares that the size of Fannie Mae and Freddie Mac is “a potential problem,” because “financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity.”

** 2002

May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)

** 2003

January: Freddie Mac announces it has to restate financial results for the previous three years.

February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that “although investors perceive an implicit Federal guarantee of [GSE] obligations,” “the government has provided no explicit legal backing for them.” As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. (“Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO,” OFHEO Report, 2/4/03)

September: Fannie Mae discloses SEC investigation and acknowledges OFHEO’s review found earnings manipulations.

September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact “legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises” and set prudent and appropriate minimum capital adequacy requirements.

October: Fannie Mae discloses $1.2 billion accounting error.

November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any “legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk.” To reduce the potential for systemic instability, the regulator would have “broad authority to set both risk-based and minimum capital standards” and “receivership powers necessary to wind down the affairs of a troubled GSE.” (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)

** 2004

February: The President’s FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: “The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator.” (2005 Budget Analytic Perspectives, pg. 83)

February: CEA Chairman Mankiw cautions Congress to “not take [the financial market's] strength for granted.” Again, the call from the Administration was to reduce this risk by “ensuring that the housing GSEs are overseen by an effective regulator.” (N. Gregory Mankiw, Op-Ed, “Keeping Fannie And Freddie’s House In Order,” Financial Times, 2/24/04)

June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying “We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System.” (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)

** 2005

April: Treasury Secretary John Snow repeats his call for GSE reform, saying “Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America… Half-measures will only exacerbate the risks to our financial system.” (Secretary John W. Snow, “Testimony Before The U.S. House Financial Services Committee,” 4/13/05)

** 2007

July: Two Bear Stearns hedge funds invested in mortgage securities collapse.

August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying “first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options.” (President George W. Bush, Press Conference, The White House, 8/9/07)

September: RealtyTrac announces foreclosure filings up 243,000 in August – up 115 percent from the year before.

September: Single-family existing home sales decreases 7.5 percent from the previous month – the lowest level in nine years. Median sale price of existing homes fell six percent from the year before.

December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying “These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I’ve called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon.” (President George W. Bush, Discusses Housing, The White House, 12/6/07)

** 2008

January: Bank of America announces it will buy Countrywide.

January: Citigroup announces mortgage portfolio lost $18.1 billion in value.

February: Assistant Secretary David Nason reiterates the urgency of reforms, says “A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully.” (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)

March: Bear Stearns announces it will sell itself to JPMorgan Chase.

March: President Bush calls on Congress to take action and “move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages.” (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)

April: President Bush urges Congress to pass the much needed legislation
and “modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes.” (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)

May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.

“Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance sub-prime loans.” (President George W. Bush, Radio Address, 5/3/08)

“[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator.” (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)

“Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans.” (President George W. Bush, Radio Address, 5/31/08)

June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying “we need to pass legislation to reform Fannie Mae and Freddie Mac.” (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)

July: Congress heeds the President’s call for action and passes reform of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.

In 2005– Senator John McCain partnered with three other Senate Republicans to reform the government’s involvement in lending.
Democrats blocked this reform, too.

Not only did democrats not act on these warnings but Barack Obama put one of the major Sub-Prime Slime players on his campaign as finance chairperson.

And let us not forget that Bush was dealing with a Democrat majority in Congress the last two years of his presidency. Two crucial years that if Democrats would have been more willing to work with Republicans and the President, the looming crisis would not have been so severe.


Here is a video that shows multiple times of testimonies to Congress warning of the Fannie/Freddie crisis and Democrats in denial.

Timeline shows Bush, McCain warning Dems of financial and housing crisis; meltdown - YouTube
 
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There are a lot of things a person can find fault with Bush but Fannie and Freddie isn't one of them.
The White House released this list of attempts by President Bush to reform Freddie Mae and Freddie Mac since he took office in 2001.
Unfortunately, Congress did not act on the president’s warnings:

First off Vesper, say "republican congress did not act on the president's warnings". and thanks for the convenient time line from Bush. Somehow it left off the quote of Bush's treas sec telling barney frank that there was nothing wrong with Freddie and Fannie. I posted the quote and the link in this thread. Pretending not to see it doesn’t make it magically go away. And I see it didn’t include Bush’s Statement of Policy where he clearly stated he was against GSE reform because it “would lessen the housing GSEs' commitment to low-income home buyers.” Again I posted it in this thread so you cant pretend.

How funny is that? a chamber of the republican house finally passes a reform bill and Bush slams it. How do cons not know these things? mmmmm, what else do cons pretend not to know? mmmm, how about Bush stopping GSE reform.

Strong opposition by the Bush administration forced a top Republican congressman to delay a vote on a bill that would create a new regulator for mortgage giants Fannie Mae and Freddie Mac.

Oxley pulls Fannie, Freddie bill under heat from Bush - MarketWatch

Despite what appeared to be a broad consensus on GSE regulatory reform, efforts quickly stalled. A legislative markup scheduled for October 8, 2003, in the House of Representatives was halted because the Bush administration withdrew its support for the bill,

http://www.frbatlanta.org/filelegacydocs/er04_framewhite.pdf


HOLY COW!?!?!? Bush stopped reform?!?!?! Well to be fair, that’s only a shock to cons. See I already knew that Bush said there was nothing wrong with Freddie and Fannie, reversed the Clinton rule that reined in Freddie and fannie and forced Freddie and Fannie’s low income housing goals
 
First off Vesper, say "republican congress did not act on the president's warnings". and thanks for the convenient time line from Bush. Somehow it left off the quote of Bush's treas sec telling barney frank that there was nothing wrong with Freddie and Fannie. I posted the quote and the link in this thread. Pretending not to see it doesn’t make it magically go away. And I see it didn’t include Bush’s Statement of Policy where he clearly stated he was against GSE reform because it “would lessen the housing GSEs' commitment to low-income home buyers.” Again I posted it in this thread so you cant pretend.

How funny is that? a chamber of the republican house finally passes a reform bill and Bush slams it. How do cons not know these things? mmmmm, what else do cons pretend not to know? mmmm, how about Bush stopping GSE reform.

Strong opposition by the Bush administration forced a top Republican congressman to delay a vote on a bill that would create a new regulator for mortgage giants Fannie Mae and Freddie Mac.

Oxley pulls Fannie, Freddie bill under heat from Bush - MarketWatch

Despite what appeared to be a broad consensus on GSE regulatory reform, efforts quickly stalled. A legislative markup scheduled for October 8, 2003, in the House of Representatives was halted because the Bush administration withdrew its support for the bill,

http://www.frbatlanta.org/filelegacydocs/er04_framewhite.pdf


HOLY COW!?!?!? Bush stopped reform?!?!?! Well to be fair, that’s only a shock to cons. See I already knew that Bush said there was nothing wrong with Freddie and Fannie, reversed the Clinton rule that reined in Freddie and fannie and forced Freddie and Fannie’s low income housing goals

Bush called himself a "compassionate conservative" which is code for big government. Of course he supported Freddie and Fannie like every other big government lover does.

But still he saw the dire need for major reform. The Oxley Bill didn't reach that level.

True conservatives believe the federal government should get out of the real estate business.

I agree to the extent that there was little done in 2003 and 2004 on the issue of finance reform. It was not a priority of the White House or Congressional Republicans.

However, the 109th Congress (2005-2006), the House overwhelmingly approved (331 to 90) HR 1461, The Federal Housing Finance Reform Act, designed "to create a stronger regulator for Fannie Mae and Freddie Mac." The Senate, still a slim majority of Republicans lagged the House in taking action because Democrats in the Senate filibustered.
 
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You certainly have a romanticized version of what really occurred with the stimulus aka Porkulus bill.
You certainly have twisted every aspect of the stimulus bill to meet your partisan agenda.


It is well documented the monies received by the states were used to plug the holes in their budgets.
As I've already said: Yes, some funds were used that way. And again, about 1/3 of the package was also tax cuts, which conservatives and Republicans claim heal all wounds.

And again, it's not a "bailout," because the states would not have all collapsed into a financial mess without the stimulus. The goal was to keep people working; giving the states a role in that is a decent way to do it.

I might add that if the states weren't involved in deciding where the funds went, you'd bitch just as loudly about the stimulus.


it's federal law that they must balance their budgets
Incorrect. States have made that decision on their own. Most include a balanced-budget requirement in their constitutions, others require it by statute.


It is well documented the funds that went to federal agencies that had already been budgeted for operations were provided with huge amounts of funding for unnecessary projects like new furniture for the Homeland Security offices....
Whatever, dude. Every penny was tracked on recovery.gov, an unprecedented degree of transparency. And if you expect anyone to believe that Republicans aren't just as good as Democrats at bringing home the federal spending, then url=http://en.wikipedia.org/wiki/Gravina_Island_Bridge]I've got a bridge to sell you.[/url]


Not one Republican voted for this boondoggle including 11 Democrats in the House. And as far as filibustering goes, the Republicans if you recall have been called the party of no....
That's nice. It doesn't change the fact that the Republicans didn't stop it, or (my favorite) how Romney pledged to keep military spending at the same level as during two wars. Yeah, I'm sure there wouldn't have been a single penny of pork spending there. :D
 
There are a lot of things a person can find fault with Bush but Fannie and Freddie isn't one of them.
Why, because you quoted a website that selectively plucks out every bad thing said by Bush and some of his minor functionaries about the GSE's?

Why didn't you mention how Bush, in 2002, thanked the CEO's of Fannie and Freddie for expanding minority lending by $440 billion? Why are you unable to recognize that a President calling for increased rates of home ownership is going to influence a real estate bubble in process?

Why not mention how Fannie Mae donated $9.4 million to the Bush campaign in 2000, and another $33 million in 2004?

What laws, exactly, did the Bush administration propose to increase oversight of the GSE's? (And no, a junior deputy secretary saying "there oughta be a law" does not qualify.)

Why did the Wall Street Journal feel the need to call out Republicans who supported the GSE's, and then turned right around as though no one had any memory of that support? (Review & Outlook: The Fannie Mae Republicans - WSJ.com)

And again: The reality is that all the GSE-bashing, while partly correct, is just an excuse to ignore all the other aspects, including deregulation, normal capitalist operations, and complicity by politicians of all stripes. As noted by your refusal to explain how the world ended up with a GLOBAL housing bubble, if the GSE's were "truly" the ones at fault.
 
You certainly have twisted every aspect of the stimulus bill to meet your partisan agenda.



As I've already said: Yes, some funds were used that way. And again, about 1/3 of the package was also tax cuts, which conservatives and Republicans claim heal all wounds.

And again, it's not a "bailout," because the states would not have all collapsed into a financial mess without the stimulus. The goal was to keep people working; giving the states a role in that is a decent way to do it.

I might add that if the states weren't involved in deciding where the funds went, you'd bitch just as loudly about the stimulus.



Incorrect. States have made that decision on their own. Most include a balanced-budget requirement in their constitutions, others require it by statute.



Whatever, dude. Every penny was tracked on recovery.gov, an unprecedented degree of transparency. And if you expect anyone to believe that Republicans aren't just as good as Democrats at bringing home the federal spending, then url=http://en.wikipedia.org/wiki/Gravina_Island_Bridge]I've got a bridge to sell you.[/url]



That's nice. It doesn't change the fact that the Republicans didn't stop it, or (my favorite) how Romney pledged to keep military spending at the same level as during two wars. Yeah, I'm sure there wouldn't have been a single penny of pork spending there. :D
You are correct about balanced budgets being states requirements. But you are so far gone on everything else. What a joke that you claim every penny was tracked by the federal government. Brahahahahah. They are still reporting the scams, fraud and waste over this massive mistake. Sidewalks that lead to ditches, grant money to produce dance videos, programs to teach African men how to wash their genitals, saving endangered rodents in San Francisco........oh the list goes on and on and on of billions of dollars so recklessly spent. Yet you claim all this created jobs.....Amazing
 
Why, because you quoted a website that selectively plucks out every bad thing said by Bush and some of his minor functionaries about the GSE's?

Why didn't you mention how Bush, in 2002, thanked the CEO's of Fannie and Freddie for expanding minority lending by $440 billion? Why are you unable to recognize that a President calling for increased rates of home ownership is going to influence a real estate bubble in process?

Why not mention how Fannie Mae donated $9.4 million to the Bush campaign in 2000, and another $33 million in 2004?

What laws, exactly, did the Bush administration propose to increase oversight of the GSE's? (And no, a junior deputy secretary saying "there oughta be a law" does not qualify.)

Why did the Wall Street Journal feel the need to call out Republicans who supported the GSE's, and then turned right around as though no one had any memory of that support? (Review & Outlook: The Fannie Mae Republicans - WSJ.com)

And again: The reality is that all the GSE-bashing, while partly correct, is just an excuse to ignore all the other aspects, including deregulation, normal capitalist operations, and complicity by politicians of all stripes. As noted by your refusal to explain how the world ended up with a GLOBAL housing bubble, if the GSE's were "truly" the ones at fault.

What part of selling globally mortgage backed securities do you not understand?

What is so hard to understand by 2008, before the crisis, half of the 54 million mortgages in the U.S. financial system were subprime and other low-quality mortgages?

More than 70% of these 27 million weak mortgages were on the books of government agencies, primarily the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. When these mortgages defaulted in unprecedented numbers, they drove down housing prices, weakened most large financial institutions and caused the financial crisis.

The whole crisis had something to do with deregulations alright. By forcing banks to make mortgages to people who really didn't qualify for one. In 1995 Clinton loosened housing rules by rewriting the Community Reinvestment Act, which put added pressure on banks to lend in low-income neighborhoods. By 2001 the devastating results were evident and the clarion calls by the Bush administration for reform of GSE's began. Congress didn't listen. In 2005 the Republicans did pass legislation in the House HR 1461 to reform GSE's but the Senate with a very slim Republican majority was filibustered by Democrats. In 2006 the entire Congress was a Democratic majority in denial that there was even anything wrong.

End of story.
 
By forcing banks to make mortgages to people who really didn't qualify for one.

If we could force banks to lend, unemployment would be sub 6% and we would not be consistently flirting with disinflation/deflation. You cannot force banks to lend to unworthy borrowers; this is simply a matter of fact. You can however force banks to analyze loan applications in low income areas, but this does not guarantee they will receive credit.
 
You are correct about balanced budgets being states requirements.

that hurts my feelings Vesper. I was the first to tell you that. So can you admit that states would have balanced their budgets stimulus or no stimulus? Of course with no stimulus, state layoffs to balance their budgets would have only made the Great Bush Recession worse.
 
If we could force banks to lend, unemployment would be sub 6% and we would not be consistently flirting with disinflation/deflation. You cannot force banks to lend to unworthy borrowers; this is simply a matter of fact. You can however force banks to analyze loan applications in low income areas, but this does not guarantee they will receive credit.

I'm sure you are aware of the group known as ACORN. Our president is his early days as a community organizer certainly had affiliations with them. ACORN in the 90's began attacking lending practices not investing in low income areas.

Group Attacks Lending Practices Of Merging Banks

It was continued attacks by organizations like ACORN through community organizers that led to Clinton to rewrite the Community Reinvestment Act which put a burden on banks to take on high risk loans.
O’S DANGEROUS PALS | New York Post

Community Reinvestment Act implies “discrimination exists when a lender’s underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants.” Note that these “arbitrary or outdated criteria” include most of the essentials of responsible lending: income level, income verification, credit history and savings history–the very factors lenders are now being criticized for ignoring.
 
that hurts my feelings Vesper. I was the first to tell you that. So can you admit that states would have balanced their budgets stimulus or no stimulus? Of course with no stimulus, state layoffs to balance their budgets would have only made the Great Bush Recession worse.

After all the money the states received from Porkulus, last year STILL 10 states had to close budget shortfalls of at least 27%, requiring significant cuts in government programs and services to bring their budgets into balance which reveals just how fecklessly in the hole they were before the economic crisis.

States Continue to Feel Recession
 
What part of selling globally mortgage backed securities do you not understand?
I understand it very well. For example, it's my understanding that the GSE's held little or no foreign assets, and that buying Irish mortgages was well outside of any orders issued by Congress. They certainly did not buy enough foreign mortgages to cause a housing bubble in two dozen other countries.

So again: If the GSE's are at fault, then what cause the housing bubble in two dozen other nations? Is Fannie Mae to blame for the Irish housing bubble and its subsequent crash?


What is so hard to understand by 2008, before the crisis, half of the 54 million mortgages in the U.S. financial system were subprime and other low-quality mortgages?
Nothing. Nor am I denying that subprime lending -- as in, lending that did not conform to the GSE's standards -- went through the roof.

Why is it so hard for you to realize that the mortgage originators (i.e. private entities) were the ones issuing the loans, and improperly judging the risks? That it was the banks that were willfully ignoring the distortions of risks, buying the mortgages, slicing them up into obscure derivatives, and selling them to people who had no idea what they were buying? Or that the GSE's were late to subprime, and only started buying subprime to be competitive with other purchasers of mortgages? Why is it so hard for you to recognize that Fannie and Freddie went from holding 50% of all subprimes, to 25%? That from 2003 to 2007, the GSE's fell behind the total increase in mortgage lending?


More than 70% of these 27 million weak mortgages were on the books of government agencies, primarily the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. When these mortgages defaulted in unprecedented numbers, they drove down housing prices, weakened most large financial institutions and caused the financial crisis.
Yeah, too bad they actually held closer to 30% of subprime mortgages during the boom.

The GSE's held high percentages of subprime before subprime took off, when there were few subprime loans made. It was the mortgage originators who grabbed subprime and jumbo and variable-rate and all sorts of non-conforming loans, evaluated the risks using flawed models, and rapidly expanded the mortgage market. The banks bought as many mortgages as they could get their hands on, and sold it as fast as they could, in order to grab big profits with minimal exposure and risk -- a process that ensured they had no skin in the game, and didn't care who got burned if the derivatives underperformed.

So again, the GSE's are a factor in the crisis. However, pretty much everything would have happened, almost exactly the same way, if they hadn't expanded their purchases of subprime. If it was the banks left holding the bag full of derivatives rather than the GSE's, the government would have needed to prop them up anyway.


By 2001 the devastating results were evident and the clarion calls by the Bush administration for reform of GSE's began.
And again, by 2003 Bush 43 was thanking the heads of the GSE's for voluntarily committing $440 billion more to purchases of mortgages to low- and moderate-income minority homebuyers.

The simple fact is that the GSE's were not single-handedly responsible for the housing bubble and crash. That's a conservative meme that is incapable of papering over the real causes.
 
And again, by 2003 Bush 43 was thanking the heads of the GSE's for voluntarily committing $440 billion more to purchases of mortgages to low- and moderate-income minority homebuyers.

The simple fact is that the GSE's were not single-handedly responsible for the housing bubble and crash. That's a conservative meme that is incapable of papering over the real causes.

and whats really funny about that is this is the only connection between the Bush Mortgage Bubble and the GSE accounting scandal (not fraud, scandal). Like a child caught breaking a window, the GSEs were more than happy to do anything Bush told them. Oh by the way, Bush took credit for the 440 billion in securities

"Many organizations have already responded to the President’s challenge by committing to:


•Substantially increase by at least $440 billion, the financial commitment made by the government sponsored enterprises involved in the secondary mortgage market, specifically targeted toward the minority market;
"

Homeownership Policy Book - Executive Summary


mean old republicans. they thank the GSEs for meeting their challenge only to turn on them and cut and run.
 
After all the money the states received from Porkulus, last year STILL 10 states had to close budget shortfalls of at least 27%, requiring significant cuts in government programs and services to bring their budgets into balance which reveals just how fecklessly in the hole they were before the economic crisis.

States Continue to Feel Recession

er uh vesper, you've already admitted I was right but thanks for posting the link that proves it.

"Temporary aid to states enacted in early 2009 as part of the federal Recovery Act was enormously helpful in allowing states to avert some of the most harmful potential budget cuts in the 2009, 2010 and 2011 fiscal years. But the federal government allowed that aid to largely expire at the end of fiscal year 2011, leading to some of the deepest cuts to state services since the start of the recession. "

fyi, the stimulus ended in 2011. so states were on their own after 2011. You would know this if you bothered to read your own link.
 
I understand it very well. For example, it's my understanding that the GSE's held little or no foreign assets, and that buying Irish mortgages was well outside of any orders issued by Congress. They certainly did not buy enough foreign mortgages to cause a housing bubble in two dozen other countries.

So again: If the GSE's are at fault, then what cause the housing bubble in two dozen other nations? Is Fannie Mae to blame for the Irish housing bubble and its subsequent crash?



Nothing. Nor am I denying that subprime lending -- as in, lending that did not conform to the GSE's standards -- went through the roof.

Why is it so hard for you to realize that the mortgage originators (i.e. private entities) were the ones issuing the loans, and improperly judging the risks? That it was the banks that were willfully ignoring the distortions of risks, buying the mortgages, slicing them up into obscure derivatives, and selling them to people who had no idea what they were buying? Or that the GSE's were late to subprime, and only started buying subprime to be competitive with other purchasers of mortgages? Why is it so hard for you to recognize that Fannie and Freddie went from holding 50% of all subprimes, to 25%? That from 2003 to 2007, the GSE's fell behind the total increase in mortgage lending?



Yeah, too bad they actually held closer to 30% of subprime mortgages during the boom.

The GSE's held high percentages of subprime before subprime took off, when there were few subprime loans made. It was the mortgage originators who grabbed subprime and jumbo and variable-rate and all sorts of non-conforming loans, evaluated the risks using flawed models, and rapidly expanded the mortgage market. The banks bought as many mortgages as they could get their hands on, and sold it as fast as they could, in order to grab big profits with minimal exposure and risk -- a process that ensured they had no skin in the game, and didn't care who got burned if the derivatives underperformed.

So again, the GSE's are a factor in the crisis. However, pretty much everything would have happened, almost exactly the same way, if they hadn't expanded their purchases of subprime. If it was the banks left holding the bag full of derivatives rather than the GSE's, the government would have needed to prop them up anyway.



And again, by 2003 Bush 43 was thanking the heads of the GSE's for voluntarily committing $440 billion more to purchases of mortgages to low- and moderate-income minority homebuyers.

The simple fact is that the GSE's were not single-handedly responsible for the housing bubble and crash. That's a conservative meme that is incapable of papering over the real causes.

As far as the first part of your response; Looser lending standards enabled previously unqualified borrowers to become homeowners, and the homeownership rate soared between 1995 and 2004. Those looser regulations came with it a threat to banks having a formal complaint by organizations like ACORN leveled at a lending institution for unfair practices. This would be all it took to have a bank be placed under investigation for discrimination. Something like that could halt mergers from occurring. Now were there some engaged in reckless activities for gain? Sure, there are crooks and liars in every profession but please, don't paint every lending institution with one big broad brush. The pressure to prove they were not discriminating through the looser lending standards was real. Because many of these loans had been repackaged into mortgage-backed securities, the growing default problem soon spread to inves*tors in national and international financial markets where these instruments were sold. The Democrat Congress in 2006 knew the housing sector was under duress due to the number of foreclosures in sub-prime loans. And they chose to do nothing while telling the public there was no crisis.

I could go on but it is now 1:00 and I am still in my jammies and need to get dressed and become productive. Cheers!
 
er uh vesper, you've already admitted I was right but thanks for posting the link that proves it.

"Temporary aid to states enacted in early 2009 as part of the federal Recovery Act was enormously helpful in allowing states to avert some of the most harmful potential budget cuts in the 2009, 2010 and 2011 fiscal years. But the federal government allowed that aid to largely expire at the end of fiscal year 2011, leading to some of the deepest cuts to state services since the start of the recession. "

fyi, the stimulus ended in 2011. so states were on their own after 2011. You would know this if you bothered to read your own link.

No Vern, the link proves no such thing. It proves they weren't prepared for any bump in the road because they are over extended. It proves you can throw a lot of money at something and unless you change the policies it isn't going to get better. It proves the Porkulus didn't work. And now that money is all spent, the forecast for 2013 looks grim. Until we get some folks in Washington that are business friendly and can get government the heck out of the way economic recovery will be a slow drip at best. And with less than half the population paying taxes, it doesn't look good.
 
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that is treasury's prediction about what would have happened without the bank bailout

do you believe that is a legitimate expectation?

was it worth the cost?

is it true that the net cost at present only amounts to $3 billion remaining unpaid?

Massive $238 billion financial bailout 5 years ago ‘avoided catastrophe,’ only $3 billion has yet to be paid back: Treasury | The Raw Story
Many of these companies are as large as they are due to mergers and acquisitions. Government approved mergers and acquisitions. This from a government who, 100-ish years ago, passed all kinds of anti-trust laws and broke up virtual monopolies precisely because companies that are "too big" don't serve society well. Seems to me that the government has a hand in creating this whole thing.
 
No Vern, the link proves no such thing. It proves they weren't prepared for any bump in the road because they are over extended. It proves you can throw a lot of money at something and unless you change the policies it isn't going to get better. It proves the Porkulus didn't work. And now that money is all spent, the forecast for 2013 looks grim. Until we get some folks in Washington that are business friendly and can get government the heck out of the way economic recovery will be a slow drip at best. And with less than half the population paying taxes, it doesn't look good.

er uh Vesper, you are seriously confused. The stimulus aid to the states did exactly what it was supposed to do: Prevent massive layoffs at the peak of the Great Bush Recession. I said it and your link said it. Who knows what you read but you’ve haven’t really shown any real grasp of the facts. And when I posted the facts you claimed that states woudn’t have balanced their budgets without the stimulus. and then you claimed they had to because of Federal law. so you’ve consistently proven you aren’t going to let the facts get in the way of your narratives.

and just so you know, the Bush Mortgage Bubble started in late 2004 when bush’s regulators not only allowed banks to lower their lending standards, they encouraged them. here’s a link that pretty much explains the facts of the Bush Mortgage Bubble

I still see alot of misconceptions about the Bush Mortgage Bubble and the Bush policies that encouraged, funde and protected it so I thought I would start an FAQ section. Since the resulting destruction of the housing and financial sector are still a drag on the economy today, it seems relevent

Q When did the Bush Mortgage Bubble start?

A The general timeframe is it started late 2004.

From Bush’s President’s Working Group on Financial Markets October 2008

“The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”

http://www.treasury.gov/resource-center/fin-mkts/Documents/q4progress update.pdf
 
I'm sure you are aware of the group known as ACORN.

I am well aware of your talk radio rhetoric.

Our president is his early days as a community organizer certainly had affiliations with them. ACORN in the 90's began attacking lending practices not investing in low income areas.

There is a difference between redlining, and practicing proper risk management with respect to underwriting. It is impossible to force a bank to lend; the only way they would do so is if they believe they could make money from it. And playing financial hot-potato was profitable (you know offering loans to people who they knew could not afford them, only to push the loans into secondary markets at a profit), until those who got stuck holding mis-priced securities began to go under in droves.

Community Reinvestment Act implies “discrimination exists when a lender’s underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants.” Note that these “arbitrary or outdated criteria” include most of the essentials of responsible lending: income level, income verification, credit history and savings history–the very factors lenders are now being criticized for ignoring.

Drivel.

Viewing peoples applications in a normal manner is does not guarantee all applicants will receive credit.
 
Very interesting thread...

A few thoughts thrown in to a good discussion.

What caused the banking crisis?

Pretty simple... banks were willing to lend way too much money to folks that couldn't afford it.. and folks were willing to borrow WAY more money than they could afford.

So GREED.

So.. why did banks make all these bad loans.?

Well, some point to the CRA.. and say.." see, the community reinvestment act caused all the problems"...

Well, first off, the majority of sub prime loans came from lenders with no regulation under CRA.. (only about 30% were under full cra authority) and only about 40% if you include those lending institutions with partial cra oversight.

But here is the best rebuttal to the CRA forced banks to loan theory. The CRA was never repealed. its still in force today... so if it FORCED these poor banks to loan money they didn't want to THEN.. its should still be forcing them NOW.. but it isn't.

The real reason that banks made these loans was because they were making money! boatloads of it.

In the early 90's.. banks and other institutions were making some sub prime loans but there was only so much risk that investors were willing to take (banks had to sell the loans like a game of hot potatoe)...

THEN when banks were deregulated with the REpeal of Glass Steagle... suddenly, you had a bank, that was an investment company that was an insurance company. Suddenly, the bank could make a loan, roll those bad loans up into an investment vehicle to make it look good, then have their insurance company rate it as a good investment and put it out into the market. Basically, it allowed the banks, to make an investment look like a roll of one hundred dollar bills when its just a hundred, rolled up over a bunch of ones.

Well, even that only went so far.. because the more of these bad loans you make, the more you have to have buyers to unload them to. That's where the GSE's come in. Now, they had been going along just fine, because the requirements for the loans they bought were pretty good... but in the 2000's, the banks and the GSE investors pressured for less regulations so that GSE's could purchase more of these subprime loans. So the fact was that the GSE's were pretty late to the game and didn't get a lot of time before the bad loans.. began to come due... suddenly those defaults increased, increased.. until it snowballed into the bursting of the bubble...

NOW.. what to do with the banks that got stuck with the bad paper that they didn't have time to unload?

The argument was that these banks were "too big to fail" and so they were bailed out... and the plan was that by bailing out the banks, they would keep the banks able to loan money out to folks, businesses and avoid a credit crunch. So what did the big banks do?

The cut credit anyway, and then took the money to either buy up smaller banks that had not been the cause of the trouble but were now in trouble because of the recession. AND they bought treasury bonds... so they got money at no interest from the government, then turned around and bought bonds with that money and made interest.

So all the bank bailout did, was make the problem of big banks worse, and reward them for their stupidity.

What should have happened is that the big banks that caused the problems in the first place should have been allowed to fail, and to allow the smaller banks or other banks that did not cause the problem to have access to money to lend from the fed directly rather than getting it from a big bank that loaned it to the smaller banks.
 
Very interesting thread...


A few thoughts thrown in to a good discussion.

What caused the banking crisis?

Pretty simple... banks were willing to lend way too much money to folks that couldn't afford it.. and folks were willing to borrow WAY more money than they could afford.

So GREED.

So.. why did banks make all these bad loans.?

Well, some point to the CRA.. and say.." see, the community reinvestment act caused all the problems"...

Well, first off, the majority of sub prime loans came from lenders with no regulation under CRA.. (only about 30% were under full cra authority) and only about 40% if you include those lending institutions with partial cra oversight.

But here is the best rebuttal to the CRA forced banks to loan theory. The CRA was never repealed. its still in force today... so if it FORCED these poor banks to loan money they didn't want to THEN.. its should still be forcing them NOW.. but it isn't.

The real reason that banks made these loans was because they were making money! boatloads of it.

In the early 90's.. banks and other institutions were making some sub prime loans but there was only so much risk that investors were willing to take (banks had to sell the loans like a game of hot potatoe)...

THEN when banks were deregulated with the REpeal of Glass Steagle... suddenly, you had a bank, that was an investment company that was an insurance company. Suddenly, the bank could make a loan, roll those bad loans up into an investment vehicle to make it look good, then have their insurance company rate it as a good investment and put it out into the market. Basically, it allowed the banks, to make an investment look like a roll of one hundred dollar bills when its just a hundred, rolled up over a bunch of ones.

Well, even that only went so far.. because the more of these bad loans you make, the more you have to have buyers to unload them to. That's where the GSE's come in. Now, they had been going along just fine, because the requirements for the loans they bought were pretty good... but in the 2000's, the banks and the GSE investors pressured for less regulations so that GSE's could purchase more of these subprime loans. So the fact was that the GSE's were pretty late to the game and didn't get a lot of time before the bad loans.. began to come due... suddenly those defaults increased, increased.. until it snowballed into the bursting of the bubble...

NOW.. what to do with the banks that got stuck with the bad paper that they didn't have time to unload?

The argument was that these banks were "too big to fail" and so they were bailed out... and the plan was that by bailing out the banks, they would keep the banks able to loan money out to folks, businesses and avoid a credit crunch. So what did the big banks do?

The cut credit anyway, and then took the money to either buy up smaller banks that had not been the cause of the trouble but were now in trouble because of the recession. AND they bought treasury bonds... so they got money at no interest from the government, then turned around and bought bonds with that money and made interest.

So all the bank bailout did, was make the problem of big banks worse, and reward them for their stupidity.

What should have happened is that the big banks that caused the problems in the first place should have been allowed to fail, and to allow the smaller banks or other banks that did not cause the problem to have access to money to lend from the fed directly rather than getting it from a big bank that loaned it to the smaller banks.

Your'e wrong, so wrong.

"Big Banks had neither the power or the inclination to start loaning out massive amounts of their principle to people that would more than likely NOT pay it back.

IF you want to know what REALLY started AND perpetuated the crisis look to Bill Clintons 1995 National HomeOwnership Strategy, his and Janet Reno's threats against banks who were "redlining" and his construction and perpetuation of the whole redlining false narrative.

His appointment of corrupt Democrats to run the GSEs including Franklin Raines.

I mean you DO realize Fannie Mae started turning crap loans into securities in 1997.

There is no excuse for the amount of ignorance you just displayed on the sub-prime collapse.
 
Looser lending standards enabled previously unqualified borrowers to become homeowners, and the homeownership rate soared between 1995 and 2004....
Home ownership did rise during that time, and lending standards were lower.

What you're missing is that the mortgage brokers and banks were lowering their standards anyway.

They were not waiting for Fannie Mae to start buying up subprime. The mortgage brokers were issuing subprime and exotic loans; the banks were chopping them up and selling them. They were more than happy to issue nonconforming loans, before the bubble burst. That's why I keep pointing out how the GSE's got into subprime late.


were there some engaged in reckless activities for gain? Sure, there are crooks and liars in every profession but please, don't paint every lending institution with one big broad brush.
I'm being downright favorable in my characterization of the behavior of the private sector.

Some, but not the majority, of the real damage was done by outright fraud; the bigger issue is that the economic incentives were all pushing people to look the other way. The mortgage originators could issue the loans, ship them to Wall Street, and felt none of the pain if the loans stopped performing. Similarly, the banks packaged every mortgage they could get their hands on, sold them off, and also did not suffer if the loans failed to perform. The banks were also happy to repackage derivatives as other derivatives, which increased the obscurity and magnified the risks.

All of this was going on, regardless of the actions of the GSE's.


The pressure to prove they were not discriminating through the looser lending standards was real.
The pressure to make insane amounts of money was much more real, and a much bigger motivator.

Or perhaps you have documentation of hundreds of lawsuits against Bear Stearns or Lehman for redlining? Oh wait, that's not possible, because Bear and Lehman were not retail banks. They don't issue mortgages, they just buy them from mortgage originators and other banks (like Countrywide or WaMu). No one forced them to buy those mortgages and MBS's. They were the buyers of those products, years before the GSE's got into subprime.


Because many of these loans had been repackaged into mortgage-backed securities, the growing default problem soon spread to investors in national and international financial markets where these instruments were sold.
Yep... but that isn't what caused housing bubbles in other countries.

Ireland, for example, had a massive real estate bubble at the exact same time as the US. People were building houses on spec, buying houses on credit, and when it all went boom, the government bailed out the banks -- and bankrupted itself, and the entire country. Irish lending standards have nothing to do with Fannie Mae or Freddie Mac. The American GSE's almost certainly did not buy Irish mortgages; if they did, they were not pushed by Congress to do so, and could not possibly have bought enough to make a dent in the Irish housing market.

No part of that process had anything to do with American GSE's. It was all about cheap credit, lax oversight, lower lending standards, incentives going haywire, and no one wanting to stop the music. And those are the same basic forces that built the US real estate bubble.
 
There is no excuse for the amount of ignorance you just displayed on the sub-prime collapse.

speaking of ignorance fenton, I posted a nice graph for you. Don't tell me you didn't see it. remember you said

but without Fannie and Freddie having the Capital requirements lowered down to 3% in 1995 and without Clinton appointing a bunch of Democrat Criminals to run them ( Franklin Raines ) there would have been no buyer for the crap mortgages.
.

now remembering the Bush Mortgage Bubble started late 2004 (right about the time Raines retired from Fannie Mae) we see that the private label MBS market shooting up right before the Bush Mortgage Bubble.
gse%.jpg

wow, looking at the % of market share you can clearly see the GSE market falling off a cliff. And the funny part is that 71 % of the Private label market was subprime. So it looks like there were a lot of buyers for "crap mortgages". And if it wasn't for Bush's policies and Bush's regulators there wouldn't have been any crap mortgages to sell in the Private MBS market.

and can you post a link about the capital requirements being lowered in 1995. I cant find anything.
 
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