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

[Born Free]

actually there was very little legislation behind the Bush Mortgage Bubble. The most toxic parts of the Bush Mortgage Bubble were policies such as relaxing the Net Capital Rule for investment banks or reversing the Clinton rule that restricted Freddie and Fannie's subprime purchases. Here's Bush's most toxic policy. He preempted all state laws against predatory lending.

“By early 2004, these concerns prompted Georgia and more than 30 other states to pass laws designed to eliminate abusive or predatory lending practices by the financial services firms, including those with federal charters, operating within their boundaries.
Acting on a request from a national bank, the OCC in 2003 concluded that federal law preempts the provisions of the Georgia Fair Lending Act (GFLA) that would otherwise affect national banks’ real estate lending. "

http://www.occ.gov/publications/publications-by-type/economics-working-papers/2008-2000/wp2004-4.pdf

Now why would Bush preempt all state laws against predatory lending?

"In addition, clarification of the applicability of state laws to national banks should remove disincentives to subprime lending and increase the supply of credit to subprime borrowers.”

WOW! did bush really say he wanted to "remove disincentives to subprime lending and increase the supply of credit to subprime borrowers”? HOLY COW! bush really did say he wanted to "remove disincentives to subprime lending and increase the supply of credit to subprime borrowers.”

Read post #80, that should enlighten you.

 

[Visbek]

Here's your argument, based on your opinion alone..." The Big greedy banks did it". It's simplistic, generic and wrong.

His argument is too narrow, but so is yours.

As I've asked several times in this thread, if the GSE's caused the housing bubble, then:

• What caused the bubble in US commercial real estate?
• What caused the real estate bubble in Ireland?
• What caused the bubble in dozens of other countries, all at the same time as the US?
• What caused the banking crisis in Iceland?

 

[Fenton]

Thanks Fenton, I wasn't aware that Fannie was such a great customer to
Countrywide.

No problem, I've been tapping out post on my smart phone and don't have access to my drop box acct where I can post a couple of sources.

Thank you for your very informative post BTW. Its a nice change from what usually winds up in the threads that focus on the Sub-Prime Collapse.

Which is usually VERN, posting the same 3 or 4 links over and over while claiming everything happened after 2004.

 

[Fenton]

His argument is too narrow, but so is
yours.

As I've asked several times in this thread, if the GSE's caused the housing bubble, then:

• What caused the bubble in US commercial real estate?
• What caused the real estate bubble in Ireland?
• What caused the bubble in dozens of other countries, all at the same time as the US?
• What caused the banking crisis in Iceland?

My argumemt was and has always been isolated the American Sub-Prime Collapse.

I've traced it back thoroughly from the 1992 "affordable housing iniative " placed on the GSE's right up to Fannies Collapse in multiple post including the few I've made here today.

If the Government through mandates built on a false narrative sets rising quotas on loans purchased by our GSEs, and at the same time uses the same narraitive to threaten banks for using the same standards that have kept them solvent for decades, the result is apparently, a huge real estate bubble.

FHA/HUD provides insurance for multi-family buildings and SBA guarantees loans for Commercial properties.

As far as the Commercial real estate bubble is concerned I would guess it's rise and fall was directly attributed to the massive homeownership rates that shot up exponentially throughout Clinton and Bush's presidency.

A " strong" housing market equates to a " strong" private sector as industries related to the housing markets start to grow.

With that growth comes a higher employment, more people with expendable income which means a rise in goods and services purchased.

There's a reason the collapse had not only National economic implications, but international economic implications as our economies are inextricably linked.

A drop in American Consumerism affects Chinese manufacturing and also European markets.

The sub-prime bubble was financed through MBSs backed by poor quality loans, AAA rated and distributed throughout International markets.

But it was all built on long held lending principles and standards that had been corrupted in the interest of " equity".

 

[Fenton]

And also, in the terms of the amount of wealth lost, the damage done economically and the left over destruction, there is no equal to the Sub-Prime bubble.

People think its over....yea right.

As Fannie and Freddid post " massive profits" the knowingly ignore the TRILLIONS in MBSs backed by crap mortgages and actual mortgages that are worthless.

Every once in a while some clown comes in here and brags about their " profits"....Lol

 

[vesper]

no vesper, we have a serious problem. There are no fines for CRA non compliance. I’m starting to be concerned for you well being. Doesn’t the fact that all you could find was testimony of someone proposing fines prove there are no fines. and if you had bothered to read anything other than the sentence fragments you cling to you would see that the testimony said “there is no penalty involved other than a denial of an application “ Your post only proves you will not let reality stop you from believing your false narratives. I find that more scary than sad.

I find you rather humorous. While you focus on the word fine as only meaning a monetary penalty it can also mean a forfeit for not fulfilling a contract. "The Senate Record was a discussion over the bank regulators' proposal to adopt such authority as handing out stiff fines to those banks who did not comply with CRA. Eventually the bank regulators dropped the idea of statutory fines but found another way to put the screws to banks/bankers through regulatory denial or conditioning of a required approval of a covered application such as...
• A new charter
• Federal deposit insurance
• Establishment of a new branch
• Relocation of an institution’s main office or a branch
• A merger, or purchase and assumption transaction, with another depository institution
• Acquisition of another depository institution

Regulators are political animals. If they determine a lending institution is not meeting the requirements under CRA then they lower the bank's rating which in turn can result in the bank being denied an acquisition, charter etc. While they considered fines for years, they opted for extortion.

CRA regulations like all regulations are hidden taxes for they force an industry to re-tool. Today lending institutions now have to hire a staff of people just to keep track that their institution is meeting the requirements of CRA. It's quite an expensive ordeal.

Here's an example of a FDIC shakedown over not finding a bank complying to their satisfaction under CRA. Bad or delinquent loans? Zero. Foreclosures? None. Money set aside in 2008 for anticipated loan losses? Nothing. ... The bank even squeaked out a profit of $87,000. And its Tier 1 risk-based capital ratio was 31.6 percent, or more than three times higher than many community banks in Massachusetts yet the FDIC examiner gave the bank "needs to improve" rating.
Yes, the Community Reinvestment Act Really Did Help Cause the Housing Crisis - Capital Commerce (usnews.com)

Remembering of course you’ve yet to back up the “CRA fines” narrative, back up the filibuster threats. That “narrative” only lives in con editorials and posts. Read this slowly. BUSH WAS AGAINST REFORM. That’s why Frist refused to allow a vote. the “filibuster” delusion is just another “narrative” cons cling to just like “CRA fines”. And dont forget, the orignal delusion was it didnt make it out of committee. see how you have to change your narratives. And your delusion requires to ignore BUSH WAS AGAINST REFORM. and thanks for the ridiculous youtube video. Now that you know that Bush told barney there was nothing wrong with Freddie and Fannie, you should start to realize you are being manipulated by fox news.

And your narrative is based on one account no doubt celebrated by the left! The chairman of the Banking, Housing and Urban Development in 2005 was Sen. Shelby of Alabama. (R) The majority in the Senate at that time being Republicans meant there were more Republicans on the committee than Democrats. At the Gov website, I found comments of Sen. Shelby relating back to the days he served as Chairman (2003 to 2006) His recollection is Democrats stopped the legislation on Fannie/Freddie reform. The Republicans with the majority of members on the committee, had enough votes to pass it out of committee. The only way Democrats would have had a way of stopping it from an up or down vote was through a filibuster. Dodd was the ranking Democrat member of that committee, he also has very deep ties to Fannie and Freddie whom by the way were pouring millions into lobbying against the bill. Dodd left Congress with a very long list of crooked dealings he was associated with like Countrywide and Tarp funds paid out for AIG bonuses for their big wigs. Now mind you I have seen both accounts that the bill was passed out of committee and that it didn't make it out of committee but never have I found that cockamamie account you have given. And all the accounts I have read states it was stopped by Democrats. Well once again, that could only be by threat of a filibuster raising the bar to 60 votes for it to pass. There were only 55 Republicans at that time.

http://www.banking.senate.gov/public/index.cfm?FuseAction=Newsroom.PressReleases&ContentRecord_id=9202F559-A452-9D7D-5A88-F0B54EDAFC8B

 

[Vern]

Read post #80, that should enlighten you.

you realize of course you are deflecting? You wanted the legislation behind the Bush Mortgage Bubble and I explained it was policies. I then showed you bush's most toxic policy of PROTECTING PREDATORY LENDERS. For a group that clings to the silly "bush tried to warn us" narrative, bush PROTECTING PREDATORY LENDERS had to be enlightening. But its as if you didn't even see it and then tell me to go look at some other poster's post. I would be embarrassed if I had to hide behind somebody else's post. As far as your hero Fenton's posts go, he has to ignore the actual facts I post to cling to his silly and false narratives.

Born, here's a chance for you to stand up and think for yourself. What do think of Bush's policy of PROTECTING PREDATORY LENDERS. Try to be honest. Its a quality I just don't often get from con posters.

 

[head of joaquin]

I find you rather humorous. While you focus on the word fine as only meaning a monetary penalty it can also mean a forfeit for not fulfilling a contract. "The Senate Record was a discussion over the bank regulators' proposal to adopt such authority as handing out stiff fines to those banks who did not comply with CRA. Eventually the bank regulators dropped the idea of statutory fines but found another way to put the screws to banks/bankers through regulatory denial or conditioning of a required approval of a covered application such as...
• A new charter
• Federal deposit insurance
• Establishment of a new branch
• Relocation of an institution’s main office or a branch
• A merger, or purchase and assumption transaction, with another depository institution
• Acquisition of another depository institution

Regulators are political animals. If they determine a lending institution is not meeting the requirements under CRA then they lower the bank's rating which in turn can result in the bank being denied an acquisition, charter etc. While they considered fines for years, they opted for extortion.

CRA regulations like all regulations are hidden taxes for they force an industry to re-tool. Today lending institutions now have to hire a staff of people just to keep track that their institution is meeting the requirements of CRA. It's quite an expensive ordeal.

Here's an example of a FDIC shakedown over not finding a bank complying to their satisfaction under CRA. Bad or delinquent loans? Zero. Foreclosures? None. Money set aside in 2008 for anticipated loan losses? Nothing. ... The bank even squeaked out a profit of $87,000. And its Tier 1 risk-based capital ratio was 31.6 percent, or more than three times higher than many community banks in Massachusetts yet the FDIC examiner gave the bank "needs to improve" rating.
Yes, the Community Reinvestment Act Really Did Help Cause the Housing Crisis - Capital Commerce (usnews.com)


And your narrative is based on one account no doubt celebrated by the left! The chairman of the Banking, Housing and Urban Development in 2005 was Sen. Shelby of Alabama. (R) The majority in the Senate at that time being Republicans meant there were more Republicans on the committee than Democrats. At the Gov website, I found comments of Sen. Shelby relating back to the days he served as Chairman (2003 to 2006) His recollection is Democrats stopped the legislation on Fannie/Freddie reform. The Republicans with the majority of members on the committee, had enough to votes to pass it out of committee. The only way Democrats would have had a way of stopping it from an up or down vote was through a filibuster. Dodd was the ranking member of that committee, he also has very deep ties to Fannie and Freddie whom by the way were pouring millions into lobbying against the bill. Dodd left Congress with a very long list of crooked dealings he was associated with like Countrywide and Tarp funds paid out for AIG bonuses for their big wigs. Now mind you I have seen both accounts that the bill was passed out of committee and that it didn't make it out of committee but never have I found that cockamamie account you have given. And all the accounts I have read states it was stopped by Democrats. Well once again, that could only be by threat of a filibuster raising the bar to 60 votes for it to pass. There were only 55 Republicans at that time.

United States Senate Committee on Banking, Housing and Urban Affairs : Newsroom

Oh dear God, the CRA meme!. Like clockwork.

The CRA barred banks from denying loans to QUALIFIED borrowers based on zip code (i.e., race). It didn't produce one bad loan.

I can't believe you'd be so ignorant as to repost this stupid meme here, where people know better. You should post this at Hannity.com

 

[vesper]

Oh dear God, the CRA meme!. Like clockwork.

The CRA barred banks from denying loans to QUALIFIED borrowers based on zip code (i.e., race). It didn't produce one bad loan.

I can't believe you'd be so ignorant as to repost this stupid meme here, where people know better. You should post this at Hannity.com

And you show your ignorance.

 

[vesper]

No problem, I've been tapping out post on my smart phone and don't have access to my drop box acct where I can post a couple of sources.

Thank you for your very informative post BTW. Its a nice change from what usually winds up in the threads that focus on the Sub-Prime Collapse.

Which is usually VERN, posting the same 3 or 4 links over and over while claiming everything happened after 2004.

I appreciate your comments

 

[Vern]

I find you rather humorous. While you focus on the word fine as only meaning a monetary penalty it can also mean a forfeit for not fulfilling a contract.

vesper, you are hysterical. You posted "fine" as meaning only a monetary penalty because you covered denying application aspect when you said

"penalty for not doing so amounted bank regulators holding up applications for mergers to being fined"

I called you out and then you posted that silly google link because you thought you found proof of the monetary penalties. Now you are trying to pretend that "fine" means something other than "monetary penalty". I know its not right to laugh at people like you but it is funny. seriously vesper, show your posts to trusted friend or relative. You need help this forum cant provide.

And fyi, there was no filibusters or filibuster threats against GSE reform. Your narrative requires you to believe dems would do everything to stop it thus its easy for you to believe they threatened a filibuster. remember, you believed states didn't have balanced budget requirements. then you believed it was a federal law requiring states to balance their budgets. then you believed there were monetary penalties for non compliance with the CRA. And now you are to trying to convince yourself that "fine" means something other than monetary penalty Amazeballs!!!.

And now your version of reality is dependent on what Shelby "recollects". How come you don't "recollect" bush stopping reform in 2003? How come you don't "recollect" bush attacking reform in 2005? How come you don't "recollect" bush saying there is nothing wrong with Freddie and Fannie? How come you don't "recollect" bush reversing the Clinton rule that 'reined in' Freddie and Fannie? How come you don't "recollect" bush PROTECTING PREDATORY LENDERS? How come you don't "recollect" the Bush Mortgage Bubble started in late 2004? I've posted the solid factual links for every one of those things you cant seem to recollect?

 

[Vern]

Yes yes, we all know you think EVERYTHING happened after 2004 and it was ALL Bush's fault but we've already established that your version of events is based on a figment of your imagination.

and then you repeat your desperately ignorant aseertion that it ALL happened after 2004.

LOL !!!
The stupid working group nonsense. Hey that was just good enough for the Partisan section of the forum, where everything you expel belongs.

Which is usually VERN, posting the same 3 or 4 links over and over while claiming everything happened after 2004.

First, here is the link that so upsets fenton.

Bush’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

This link is one of dozens of links I’ve posted detailing the Bush Mortgage Bubble. This link establishes the cause and timeframe of the Bush Mortgage Bubble. Both the cause and timeframe shred every silly conservative narrative ever posted. The part I like best is its from Bush.

Besides wailing and flailing at that particular solid factual link, notice how Fenton accuses me of everything he is guilty of. Half his “facts” are a figment of his imagination. Who’s assertions are more desperately ignorant than Fenton’s? If bush’s Working group is nonsense, what does that make all the silly youtube videos and his “parade of quotes”? And I bet he’s posted that same youtube video more than I’ve posted Bush’s Working Group.

 

[vesper]

vesper, you are hysterical. You posted "fine" as meaning only a monetary penalty because you covered denying application aspect when you said

"penalty for not doing so amounted bank regulators holding up applications for mergers to being fined"

I called you out and then you posted that silly google link because you thought you found proof of the monetary penalties. Now you are trying to pretend that "fine" means something other than "monetary penalty". I know its not right to laugh at people like you but it is funny. seriously vesper, show your posts to trusted friend or relative. You need help this forum cant provide.

And fyi, there was no filibusters or filibuster threats against GSE reform. Your narrative requires you to believe dems would do everything to stop it thus its easy for you to believe they threatened a filibuster. remember, you believed states didn't have balanced budget requirements. then you believed it was a federal law requiring states to balance their budgets. then you believed there were monetary penalties for non compliance with the CRA. And now you are to trying to convince yourself that "fine" means something other than monetary penalty Amazeballs!!!.

And now your version of reality is dependent on what Shelby "recollects". How come you don't "recollect" bush stopping reform in 2003? How come you don't "recollect" bush attacking reform in 2005? How come you don't "recollect" bush saying there is nothing wrong with Freddie and Fannie? How come you don't "recollect" bush reversing the Clinton rule that 'reined in' Freddie and Fannie? How come you don't "recollect" bush PROTECTING PREDATORY LENDERS? How come you don't "recollect" the Bush Mortgage Bubble started in late 2004? I've posted the solid factual links for every one of those things you cant seem to recollect?

Fine can mean penalized. Penalized can mean fined.

The link I gave to the Senate Record was very clear that they were discussing legislation in regard to penalizing banks for not complying with CRA. The discussion was centered around Republicans against such a proposal as leveling at banks a million a day for not complying. Meaning it was a Democrat idea. And another thing significant about this conversation was it was going on two years after the Clinton's revisions to the CRA. There are those still on the left that would like to see something like that happen. It remains a constant threat to banking institutions. If you read the second page you would have discovered the number of banks at that time being downgraded for not complying.

Bottom line it's a nice piece of evidence showing just how Democrats are willing to put out statutory fines or penalize a lending institution by downgrading their rating hindering them from doing business if they dare not make bad loans.

 

[Visbek]

My argumemt was and has always been isolated the American Sub-Prime Collapse.

And your argument fails, because the exact same process happened all over the world, at the same time, to similar degrees (in some cases worse). It is abundantly clear that the factors which caused these numerous real estate bubbles were not isolated to the US.

And the factor that you regard as primary, if not exclusive, is wholly absent in all those other cases.

If the Government through mandates built on a false narrative sets rising quotas on loans purchased by our GSEs, and at the same time uses the same narraitive to threaten banks for using the same standards that have kept them solvent for decades, the result is apparently, a huge real estate bubble.

That's nice. However, the facts are abundantly clear that private entities, who were not subject to any such legislation (notably the Wall Street banks that bought every mortgage they could get their hands on), were more than happy to buy subprime mortgages. The mortgage originators could not have possibly made all those loans, if they didn't have a market for them.

Nothing about the GSE's or anti-redlining legislation had any effect on the misuse of mortgage models. E.g. the modelers had taken data about subprime loans from the era when they were barely used, and used those results to model the risks of a rapidly expanding base of subprime loans. The GSE's didn't come up with those risk models, they didn't advocate their use.

Similarly, the banks had their own VAR models, which repeatedly told them that they were covered and the risks were manageable, whereas those models did not take into account a broad-based decline in real estate values -- what Nassem Taleb calls a "black swan" event.

Further, rating agencies like S&P were pressured to look the other way, and to rate derivatives composed of underperforming mortgages far more favorably than they deserved. This was a critical component in being able to sell off those mortgages -- and another component that had nothing to do with the GSEs.

None of this could have happened if ordinary home buyers weren't willing to buy homes at inflated prices. Some didn't understand the exotic loans. Many expected to flip their houses.

As far as the Commercial real estate bubble is concerned I would guess it's rise and fall was directly attributed to the massive homeownership rates that shot up exponentially throughout Clinton and Bush's presidency.

There was some of that -- e.g. some commercial properties were converted to residential. But spending on commercial construction was flat until 2005. Competition between residential and commercial wasn't enough to cause a bubble.

And again, this is a real estate market where the GSEs have zero impact. Buying mortgages on commercial properties is well beyond any legislative mandates imposed on them.

There's a reason the collapse had not only National economic implications, but international economic implications as our economies are inextricably linked. A drop in American Consumerism affects Chinese manufacturing and also European markets.....

That doesn't explain the run-up in real estate values in other nations prior to the recession, or the banking crisis in Iceland (which crashed before American consumerism).

The sub-prime bubble was financed through MBSs backed by poor quality loans, AAA rated and distributed throughout International markets.

Yes, that is a factor in the US bubble -- and one that had very little to do with the GSE's. It was the Wall Street banks that securitized the loans and sold them abroad.

And again, securitization of US mortgages isn't what caused housing bubbles in other nations. What it did was produce contagious effects on the financial industry from US bank crashes.

The bottom line is that blaming the GSE's is utterly insufficient to explain the global real estate boom, let alone the one in the US. Their behavior was more like pouring lighter fluid on an grill that's already lit; it made things worse, but was not the root cause.

Maybe if you bothered to read up on a little more than the articles that blame Fannie and Freddie, you'd realize it. David Faber's And Then The Roof Caved In is a good place to start.

 

[Vern]

Fine can mean penalized. Penalized can mean fined.

The link I gave to the Senate Record was very clear that they were discussing legislation in regard to penalizing banks for not complying with CRA. The discussion was centered around Republicans against such a proposal as leveling at banks a million a day for not complying. Meaning it was a Democrat idea. ....

oh vesper, why cant you just say you were wrong about the CRA imposing fines on banks. You meant "fine" as a monetary penalty. It only makes you look foolish to continue to deny what you posted. Oh that's right, it was the key part of your false and disgusting "cra extorting banks" narrative. You claimed fines could be levied against banks for non compliance. At first you thought you proved it (that was sad all by itself). Then you thought you could create a new definition of "fine". Now you attempting to babble around it with some tale of woe.

And vesper, notice how in addition to creating your own reality, you have to ignore the facts I've posted. The CRA had nothing to do with the Bush Mortgage Bubble that started in late 2004. Wait, hold on, it did affect the Bush Mortgage bubble. It helped mitigate the devastating effects of Bush's policies to encourage, fund and protect lower lending standards

The Community Reinvestment Act:
A Welcome Anomaly in the Foreclosure Crisis
Indications that the CRA Deterred Irresponsible Lending
in the 15 Most Populous U.S. Metropolitan Areas


Our study concludes that CRA Banks were substantially less likely than other lenders to make the kinds of risky home purchase loans that helped fuel the foreclosure crisis.
Specifically, our analysis shows that:
(1) CRA Banks were significantly less likely than other lenders to make a high cost loan;
(2) The average APR on high cost loans originated by CRA Banks was appreciably lower
than the average APR on high cost loans originated by other lenders;
(3) CRA Banks were more than twice as likely as other lenders to retain originated loans in
their portfolio; and
(4) Foreclosure rates were lower in MSAs with greater concentrations of bank branches.

http://www.traigerlaw.com/publications/traiger_hinckley_llp_cra_foreclosure_study_1-7-08.pdf

If you knew anything about the Bush Mortgage Bubble, you would know that item 3 is the key. They didn't write the loan with the intent to sell it. Anyhoo,
vesper, you do make a good case with your falsehoods, delusions and spin. But I'm sorry, I'll go with the facts.

 

[Fenton]

First, here is the link that so upsets fenton.

Bush’s Working Group on Financial Markets October 2008



http://www.treasury.gov/resource-center/fin-mkts/Documents/q4progress update.pdf

This link is one of dozens of links I’ve posted detailing the Bush Mortgage Bubble. This link establishes the cause and timeframe of the Bush Mortgage Bubble. Both the cause and timeframe shred every silly conservative narrative ever posted. The part I like best is its from Bush.

Besides wailing and flailing at that particular solid factual link, notice how Fenton accuses me of everything he is guilty of. Half his “facts” are a figment of his imagination. Who’s assertions are more desperately ignorant than Fenton’s? If bush’s Working group is nonsense, what does that make all the silly youtube videos and his “parade of quotes”? And I bet he’s posted that same youtube video more than I’ve posted Bush’s Working Group.

Alan Greenspan 2005
If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,''

"These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

Now onto Edward Pinto, who served as a Chief Credit Officer at Fannie Mae. His Memorandum to the FCIC.

I know you won't read it VERN, since it doesn't blame Bush, but I'll post it for others who are curious how Fannie and Freddie could have continued to rack up massive amounts of toxic debt, while the Democrats lied to protect them.

" To better understand how this accumulation of weak mortgages came about, a description of the
loan classification system used by Fannie and Freddie (the GSEs) and followed by others is in
order. Fannie and Freddie did not classify subprime and Alt-A loans based on objective risk
characteristics but on the basis of how the lender or securities issuer classified a loan. Thus a
loan was only subprime or Alt-A if a lender or issuer denominated it as such. This subjective
classification methodology led to a serious underestimation of the number of high risk loans
originated. "

"The long term misrepresentation by the GSEs as to the risks they were acquiring was finally
admitted to by Fannie on November 10, 2008 when it disclosed in its 10-Q:

“We have classified mortgage loans as Alt-A if the lender that delivered the mortgage loans
to us had classified the loans as Alt-A based on documentation or other features. We have
classified mortgage loans as subprime if the mortgage loan was originated by a lender
specializing in the subprime business or by subprime divisions of large lenders. We apply
these classification criteria in order to determine our Alt-A and subprime loan exposures;
however, we have other loans with some features that are similar to Alt-A and subprime
loans that we have not classified as Alt-A or subprime because they do not meet our
classification criteria.” P. 182 of Fannie’s Q.3:2008 10-Q "
http://www.aei.org/files/2010/03/15/PintoFCICTriggers.pdf

"When the financial crisis hit in full force in 2008, approximately 26.7 million or 49% of the
nation’s 55 million outstanding single-family first mortgage loans had high risk characteristics,
making them far more likely to default. But the effect was more significant than merely
heightened risk of default."

From Fannie Maes 2006 10-K report...

"[W]e have made, and continue to make, significant adjustments to our mortgage loan sourcing and purchase strategies in an effort to meet HUD’s increased housing goals and new subgoals. These strategies include entering into some purchase and securitization transactions with lower expected economic returns than our typical transactions. We have also relaxed some of our underwriting criteria to obtain goals-qualifying mortgage loans and increased our investments in higher-risk mortgage loan products that are more likely to serve the borrowers targeted by HUD’s goals and subgoals, which could increase our credit losses."


Democrats lying about Fannie Mae again...


And of course we can't submit the reply to VERN without the Infamous 1999 NY Times Article..

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits."

Fannie Mae Eases Credit To Aid Mortgage Lending - NYTimes.com


What now vern ?? Another link to the Presidential Working Group ?

 

[Fenton]

oh vesper, why cant you just say you were wrong about the CRA imposing fines on banks. You meant "fine" as a monetary penalty. It only makes you look foolish to continue to deny what you posted. Oh that's right, it was the key part of your false and disgusting "cra extorting banks" narrative. You claimed fines could be levied against banks for non compliance. At first you thought you proved it (that was sad all by itself). Then you thought you could create a new definition of "fine". Now you attempting to babble around it with some tale of woe.

And vesper, notice how in addition to creating your own reality, you have to ignore the facts I've posted. The CRA had nothing to do with the Bush Mortgage Bubble that started in late 2004. Wait, hold on, it did affect the Bush Mortgage bubble. It helped mitigate the devastating effects of Bush's policies to encourage, fund and protect lower lending standards

The Community Reinvestment Act:
A Welcome Anomaly in the Foreclosure Crisis
Indications that the CRA Deterred Irresponsible Lending
in the 15 Most Populous U.S. Metropolitan Areas


Our study concludes that CRA Banks were substantially less likely than other lenders to make the kinds of risky home purchase loans that helped fuel the foreclosure crisis.
Specifically, our analysis shows that:
(1) CRA Banks were significantly less likely than other lenders to make a high cost loan;
(2) The average APR on high cost loans originated by CRA Banks was appreciably lower
than the average APR on high cost loans originated by other lenders;
(3) CRA Banks were more than twice as likely as other lenders to retain originated loans in
their portfolio; and
(4) Foreclosure rates were lower in MSAs with greater concentrations of bank branches.

http://www.traigerlaw.com/publications/traiger_hinckley_llp_cra_foreclosure_study_1-7-08.pdf

If you knew anything about the Bush Mortgage Bubble, you would know that item 3 is the key. They didn't write the loan with the intent to sell it. Anyhoo,
vesper, you do make a good case with your falsehoods, delusions and spin. But I'm sorry, I'll go with the facts.

More nonsense from you VERN...

Did the Community Reinvestment Act (CRA) Lead to Risky Lending?
Did the Community Reinvestment Act (CRA) Lead to Risky Lending?

Yes, it did. We use exogenous variation in banks’ incentives to conform to the standards of the Community Reinvestment Act (CRA) around regulatory exam dates to trace out the effect of the CRA on lending activity. Our empirical strategy compares lending behavior of banks undergoing CRA exams within a given census tract in a given month to the behavior of banks operating in the same census tract-month that do not face these exams. We find that adherence to the act led to riskier lending by banks: in the six quarters surrounding the CRA exams lending is elevated on average by about 5 percent every quarter and loans in these quarters default by about 15 percent more often. These patterns are accentuated in CRA-eligible census tracts and are concentrated among large banks. The effects are strongest during the time period when the market for private securitization was booming.

 

[Vern]

From Fannie Maes 2006 10-K report...

"[W]e have made, and continue to make, significant adjustments to our mortgage loan sourcing and purchase strategies in an effort to meet HUD’s increased housing goals and new subgoals. These strategies include entering into some purchase and securitization transactions with lower expected economic returns than our typical transactions. We have also relaxed some of our underwriting criteria to obtain goals-qualifying mortgage loans and increased our investments in higher-risk mortgage loan products that are more likely to serve the borrowers targeted by HUD’s goals and subgoals, which could increase our credit losses.

why fenton, I consider it a compliment that you reposted one of my links. See how Fannie mae admits they are buying "less than stellar" loans to meet Bush's Housing goals. Ouch!. And don't forget, Bush raised the goals after he reversed the Clinton restrictions for buying abusive subprime loans DOUBLE OUCH!!!

In April, HUD proposed new federal regulations that would raise the GSEs targeted lending requirements. HUD estimates that over the next four years an additional one million low- and moderate-income families would be served as a result of the new goals.
http://archives.hud.gov/news/2004/pr04-066.cfm


wow, a hud link. I wish I could post any silly editorial that tells me what I want to believe like Fenton does. And fenton, you are under some delusion that I deny the Clinton housing policies. Clinton increase homeownership safely and responsibly. Sadly bush didn't. His toxic housing policies enacted in 2004 are why the Bush Mortgage Bubble started in late 2004.

 

[jaeger19]

Here's your argument, based on your opinion alone..." The Big greedy banks did it". It's simplistic, generic and wrong.

Here's my argument ...and it also happens to be the truth so listen up.

In 1992 Congress enacted legislation that imposed a new " affordable housing " requirement on the GSEs.

Part of this requirement was that the GSEs had to purchase a minumum of 30% of their loans from low to Moderate income home buyers.

In 1994 Clinton and HUD Secretary Henry Cisneros came up with a plan and in 1995 The National HomeOwners Strategy ( a long list of Executive Orders ) was implemented.

It included allowing homebuyers to dip into their 401ks for a down payment without a penalty, AND it lowered Capital Requirements on loans purchased by Fannie and Freddie from 10% to 3%.

Clinton ALSO from 1993 to 1998 replaced ALL of the GSE executives and most of their board members with his Democrat Cronies including Franklin Raines.

Who from 1998 to 2004 misreported over 10 BILLION dollars in profit so he could meet his executive bonus targets.

Clinton and his AG Janet Reno also threatened banks with strict retalliation if they were caught " redlining". A false narrative that banks were discriminating based on color.

The GSEs were put under HUD regulatory control with mandates to meet a rising QUOTA of buying crap loans and by 2000 that quota had reached 55%.

In 2000 Andrew Cuomo, the then Secretary of HUD commited 2 TRILLION dollars to the buying of " affordable mortgages". The idiot left gave him a Governorship for his troubles.

Fannie Mae in 1997 turned their first low quality loan into a security and never looked back, poisoning the asset markets with billions in MBSs that were "AAA" but backed by low quality loans. They were also the primary consumer of privately produced Mortgage Backed Securities and by 2004 held over 40% of them.

When Fannies regulator warned the Congress in 2004 of their imminent demise, the democrats at Fannie and Freddie responded by diving into NINA loans.

The Economic Bureau of Research has a study out on how the CRA laws contributed to the bubble. You should read that before piping off.

In 2004 Fannies Regulator warned Congress that the Housing Giant was headed for insolvency. Democrats dug in, lied in front of republican held commitees and stopped efforts to enact new regulatory action that would have walked back the crisis.

72 of them signed a letter and sent it to Bush warning him not to regualte Fannie and Freddie.

Hell, they even produced a Commercial complaining Bush's new regulatory body was going to stop the availabillity of "affordable mortgages".

17 times, starting in 2001 Bush and the Republicans tried get the growing and corrupt mortgage giant under control.

By the time 2008 rolled around Fannie and Freddie alone held almost 70% of all low quality loans or MBSs backed by low quality loans in America.

Fannie was also Country Wides best customer, as Country Wide offered VIP loans to top Democrats like Chris Dodd.

Over 5 Trillion dollars worth......

And YOU blame the banks.

Yep.. because a lot was because of the banks. You sir are just too funny.

Lets interject a little common sense into your fantasy.

First... I do not at all reject what you have pointed out above... its not the whole picture by any means.. since it leaves out deregulation of the banking industry.. it leaves out the fact that their were millions of greedy americans that WANTED these loans even though anyone in their right mind should have understood that one cannot afford a 200,000 dollar on a 30,000 a year salary. It leave out that the problem spanned three administrations, (republican and democrat) and several congresses both dominated by republicans and at times democrats. It leaves out the problems with derivatives, and credit default swaps and a host of other issues.

However, lets deal with what you have put forth.

One.. the GSE's like fannie and Freddie do not make loans. Don't make them. THEY BUY THEM

So that means the do not have the power to make lenders make bad loans.

And who would be making those bad loans? Oh that's right the BANKING INDUSTRY. Duh!

And why... well.,,if it was the CRA and all those bad regulations.. then since they have not been repealed.. then they would still be doing it...

And so since they are not.. there must be another reason that banks were making tons of these loans. Wait a minute.. PROFIT.

Tons and tons of money was being made by these banks...and this started BEFORE the GSE's got involved.

But hey.. you mentioned it.. the GSE's did get involved and they did start buying up these bad loans (as did other investors)

WHY the HECK would the GSE's start relaxing the lending requirements under two different administrations? Oh yeah... IT WAS BECAUSE THE BANKS WERE LOBBYING THE HECK OUT OF THE POLITICIANS, THATS WHY!

Cause I gosh darn guarantee you that the poor and middle class wannabe home owners weren't talking to Clinton, or Bush or any other politician on a daily basis lobbying for changes to the GSE's rules. In fact, I doubt they new what Fannie Mae rules WERE.

So it was the BANKS that were lobbying for all the changes you are crying about. And WHY? So they could continue to make record profits. and when it all when tits up.. they lobbied for a bailout. and they got it.

So please spare me your fantasy land that it was "Clinton" and that the poor banks didn't want to make millions upon millions of dollars... and that they didn't lobby the heck out of congress to create the environment where they could make those millions

 

[Born Free]

you realize of course you are deflecting? You wanted the legislation behind the Bush Mortgage Bubble and I explained it was policies. I then showed you bush's most toxic policy of PROTECTING PREDATORY LENDERS. For a group that clings to the silly "bush tried to warn us" narrative, bush PROTECTING PREDATORY LENDERS had to be enlightening. But its as if you didn't even see it and then tell me to go look at some other poster's post. I would be embarrassed if I had to hide behind somebody else's post. As far as your hero Fenton's posts go, he has to ignore the actual facts I post to cling to his silly and false narratives.

Born, here's a chance for you to stand up and think for yourself. What do think of Bush's policy of PROTECTING PREDATORY LENDERS. Try to be honest. Its a quality I just don't often get from con posters.

The biggest PREDATORY LENDER was and is F&F, who Bush and McCain tried to reform in 2003 but got turned down by guess who. Democrats. That is the truth and being honest, something you wish never happened, thus it is you that is in denial.

 

[Born Free]

One.. the GSE's like fannie and Freddie do not make loans. Don't make them. THEY BUY THEM

Does naive mean anything to you. Yes F&F is the largest holder of mortgage loans in this country, everyone knows they are the big giant and the banks are their agents.

So that means the do not have the power to make lenders make bad loans.

Now this is where you are in fantasy land, if F&F goes to a bank and tells that bank, we will buy all your loans you make to people with no job and no credit. So what happens the banks go out and make loans that they know F&F will take off their hands.

And who would be making those bad loans? Oh that's right the BANKING INDUSTRY. Duh!

Duh, F&F reduces their purchase of loan standards, it is F&F that set the standard the banks can issue a loan that F&F will take over. Where have you been?

This is real easy, if F&F had high standards they would never have taken one loan that did not meet their standards. When you go to the store, will you buy a rotten apple or a good one. In F&F case they purchased every loan out there good and bad, how stupid is that.

Now to close how much tax payer money did it take to bail out F&F.

Last read post 116

 

[froggigger]

Yep.. because a lot was because of the banks. You sir are just too funny.

Lets interject a little common sense into your fantasy.

First... I do not at all reject what you have pointed out above... its not the whole picture by any means.. since it leaves out deregulation of the banking industry.. it leaves out the fact that their were millions of greedy americans that WANTED these loans even though anyone in their right mind should have understood that one cannot afford a 200,000 dollar on a 30,000 a year salary. It leave out that the problem spanned three administrations, (republican and democrat) and several congresses both dominated by republicans and at times democrats. It leaves out the problems with derivatives, and credit default swaps and a host of other issues.

However, lets deal with what you have put forth.

One.. the GSE's like fannie and Freddie do not make loans. Don't make them. THEY BUY THEM

So that means the do not have the power to make lenders make bad loans.

And who would be making those bad loans? Oh that's right the BANKING INDUSTRY. Duh!

And why... well.,,if it was the CRA and all those bad regulations.. then since they have not been repealed.. then they would still be doing it...

And so since they are not.. there must be another reason that banks were making tons of these loans. Wait a minute.. PROFIT.

Tons and tons of money was being made by these banks...and this started BEFORE the GSE's got involved.

But hey.. you mentioned it.. the GSE's did get involved and they did start buying up these bad loans (as did other investors)

WHY the HECK would the GSE's start relaxing the lending requirements under two different administrations? Oh yeah... IT WAS BECAUSE THE BANKS WERE LOBBYING THE HECK OUT OF THE POLITICIANS, THATS WHY!

Cause I gosh darn guarantee you that the poor and middle class wannabe home owners weren't talking to Clinton, or Bush or any other politician on a daily basis lobbying for changes to the GSE's rules. In fact, I doubt they new what Fannie Mae rules WERE.

So it was the BANKS that were lobbying for all the changes you are crying about. And WHY? So they could continue to make record profits. and when it all when tits up.. they lobbied for a bailout. and they got it.

So please spare me your fantasy land that it was "Clinton" and that the poor banks didn't want to make millions upon millions of dollars... and that they didn't lobby the heck out of congress to create the environment where they could make those millions

The problem was that the banks stopped being mortgage debt underwriters. Their risk of default loss was very small because of the secondary market, a market funded on the backs of the taxpayer. Fannie bought risky loans for cash allowing the banks to re-loan the same money over and over. Yes, for profit. Easy profit. That's why the special interest groups lobbied DC - and why not? Fannie and Freddie had become mortgage financing machines. Why not use them with Washington's blessing?

Lets not forget, too, that Fannie has also lobbied Washington. The 2000 federal budget had language inserted at the urging of Treasury Secretary Summers that made it clear GSEs were not federally guaranteed. Fannies borrowing costs went way up as a result and they ran to DC for help. Not long after, their borrowing costs were lowered once again and they were back in business as usual.

The bottom line is that this is what happens when government meddles. Blame Carter, blame Clinton, blame Bush, they all played a part. The real blame should be directed at FDR for starting this fiasco.

 

[Visbek]

The biggest PREDATORY LENDER was and is F&F....

The GSEs did not make loans. Period.

The "predatory lenders" were the mortgage originators. Before the bubble, they were likely to sell to Fannie Mae. Once things picked up speed, they bypassed Fannie altogether, ignored the normal standards, and sold straight to the banks.

You might want to get that kind of thing straight.

 

[Visbek]

F&F is the largest holder of mortgage loans in this country, everyone knows they are the big giant and the banks are their agents.

They are a big giant. However, the banks were not their "agents" during the bubble. The banks would buy tons of mortgages, package them up as derivatives, and sold them off to the private markets. The stuff they couldn't sell, or looked really bad, they would repackage as a different set of derivatives.

Now this is where you are in fantasy land, if F&F goes to a bank and tells that bank, we will buy all your loans you make to people with no job and no credit. So what happens the banks go out and make loans that they know F&F will take off their hands.

If you're talking about the years 2000-2006, they would sell them to Wall Street.

Duh, F&F reduces their purchase of loan standards, it is F&F that set the standard the banks can issue a loan that F&F will take over. Where have you been?

The mortgage originators increasingly ignored those standards:

This is real easy, if F&F had high standards they would never have taken one loan that did not meet their standards.

Incorrect. Subprime, Alt-A and jumbo mortgages did not conform to Fannie Mae's standards. Yet the percentage of conforming loans dropped to low levels in 2004, 2005, 2006 and 2007.

I.e. at the height of the bubble, the mortgage originators increasingly ignored the standards.

In F&F case they purchased every loan out there good and bad, how stupid is that.

They only started doing that in 2005. Was it dumb? Yes. Did it cause the bubble? No.

Now to close how much tax payer money did it take to bail out F&F.

If the GSE's hadn't bought those loans, the taxpayers would wind up on the hook anyway. The difference is that it would've been the banks and mortgage originators on the hook, instead of Fannie Mae.

 

[Fenton]

They are a big giant. However, the banks were
not their "agents" during the bubble. The banks would buy tons of mortgages, package them up as derivatives, and sold them off to the private markets. The stuff they couldn't sell, or looked really bad, they would repackage as a different set of derivatives.



If you're talking about the years 2000-2006, they would sell them to Wall Street.



The mortgage originators increasingly ignored those standards:

Incorrect. Subprime, Alt-A and jumbo mortgages did not conform to Fannie Mae's standards. Yet the percentage of conforming loans dropped to low levels in 2004, 2005, 2006 and 2007.

I.e. at the height of the bubble, the mortgage originators increasingly ignored the standards.



They only started doing that in 2005. Was it dumb? Yes. Did it cause the bubble? No.



If the GSE's hadn't bought those loans, the taxpayers would wind up on the hook anyway. The difference is that it would've been the banks and mortgage originators on the hook, instead of Fannie Mae.

Loans purchased by Fannie and Freddie were NOT guaranteed by the US Government, only loans purchased by Ginnie Mae are guaranteed 100%.

AND if Fannie and Freddie had NOT bought those loans, there wouldn't have been a Sub-Prime Collapse.

Honestly,you need to think before you type. In 2000 Andrew Cuomo, as the HUD Secretary commited over 2 Trillion dollars to the buying up of "affordable loans".

Fannie and Freddie financed the Sub-Prime Bubble and it was Fannie Mae who started securitizing sub-prime loans, NOT the banks.

In 1997 they started securitizing low quality loans but not only did they produce MBSs backed by sub-prime loans they were the primary Consumer of privately created MBSs.

By 2004 they held over 40% of all privately created MBSs.

Without the HUD mandated Quotas, without Fannie and Freddie flooding the asset markets with corrupted securities, Fannie and Freddie wouldn't have possessed the capital to perpetuate the bubble and NO private entity in their right mind would have taken the risk of purchasing that amount of sub-prime paper that was backed with so little up front Capital.

And of-course Fannie Mae bought up Alt-A, Sub-Prime and NINA loans. I mean really ? Their Cheif Credit Officer Edward Pinto after 2008 exposed how Fannie Mae claimed their standards were so high while at the same time entering into riskier and riskier markets.

Hell Fannie ADMITTED IT in 2010. They simply LIED. They came up with their own definitions and standards so they could continue to qualify risky loans at next to zero capital requirements.. It was for people like you, people that would take their word for it.

Fannie Mae held over 70% of Country Wides loans by 2004.

By 2008, Fannie and Freddie held over 19 million sub-prime loans or Securities backed by sub-prime loans.

Out of 29 million total sub-prime loans that were produced from 1995 to 2008, Fannie and Freddie alone held the majority.

Over 5 TRILLION in massive debt, that was passed over to the US treasury.

If you don't think the GSEs were a major component in the Sub-Prime Collapse, ( they were a Primary Component in the Sub-Prime Collapse ) your simply uninformed.