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Another Recession? [W:94,113]

Re: Another Recession?

Kushinator said:
How is this a response to my statement?
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The CRA, along with every other tax, regulation, law, or prohibition, is an intervention and therefore coercive. Any government action demands compliance through the threat of force. Otherwise, it would have no teeth.
 
Re: Another Recession?

froggigger said:
The CRA, along with every other tax, regulation, law, or prohibition, is an intervention and therefore coercive. Any government action demands compliance through the threat of force. Otherwise, it would have no teeth.
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You still do not get it: how does this relate to my statement?

kushinator said:
There is nothing to suggest the CRA forced banks to make risky loans. On the contrary, CRA loans were less likely to default than non-CRA loans of similar credit quality.
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Re: Another Recession?

Kushinator said:
You still do not get it: how does this relate to my statement?
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Kush, please correct me if Im wrong here.

CRA increases and the CDS legislation coincided with each other did they not? What Im driving at is that the GSEs and companies that were going to buy the low income credit mortgages had to have a way to cushion the downside because they were risky to issue mortgage insurance to--increasing the costs to make homes unaffordable again. So what Im asking is were CDSs developed as a way for GSEs and other parties to comply and expand on CRA criteria?

I honestly do not know, I need to do some research on the history of the CDS and mortgage derivatives to get an idea of when exactly they became so popular---which was only a few short years after they went south.
 
Re: Another Recession?

OpportunityCost said:
Kush, please correct me if Im wrong here.

CRA increases and the CDS legislation coincided with each other did they not? What Im driving at is that the GSEs and companies that were going to buy the low income credit mortgages had to have a way to cushion the downside because they were risky to issue mortgage insurance to--increasing the costs to make homes unaffordable again. So what Im asking is were CDSs developed as a way for GSEs and other parties to comply and expand on CRA criteria?

I honestly do not know, I need to do some research on the history of the CDS and mortgage derivatives to get an idea of when exactly they became so popular---which was only a few short years after they went south.
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CDSs were developed after the Exxon Valdez spill by JP Morgan Chase in 94.
 
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Re: Another Recession?

OpportunityCost said:
Kush, please correct me if Im wrong here.

CRA increases and the CDS legislation coincided with each other did they not? What Im driving at is that the GSEs and companies that were going to buy the low income credit mortgages had to have a way to cushion the downside because they were risky to issue mortgage insurance to--increasing the costs to make homes unaffordable again. So what Im asking is were CDSs developed as a way for GSEs and other parties to comply and expand on CRA criteria?

I honestly do not know, I need to do some research on the history of the CDS and mortgage derivatives to get an idea of when exactly they became so popular---which was only a few short years after they went south.
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I really doubt they were developed to expand CRA criteria. If anything, they were steered in the direction to boost mortgage supply, which in turn created massive cash flow streams for emerging financial services. Please remember that CRA loans were/are actually very solid.
 
Re: Another Recession?

iliveonramen said:
CDSs were developed after the Exxon Valdez spill by JP Morgan Chase in 94.
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Im more concerned with the legislation and their expansion into the mortgage market, but thank you. They obviously had a huge detrimental impact into the credit and mortgage market so...trying to find out when they went off the chain. It looks like maybe 3rd quarterish 2002 from CPI and housing fluctuations.
 
Re: Another Recession?

Kushinator said:
I really doubt they were developed to expand CRA criteria. If anything, they were steered in the direction to boost mortgage supply, which in turn created massive cash flow streams for emerging financial services. Please remember that CRA loans were/are actually very solid.
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Only way is to look at CDS legislation. I dont even know when it was developed for the mortgage market.

It seems that the GSEs spent an enormous portion of money in that area. Whether CRA or not.
 
Re: Another Recession?

I am mixed on the subject. Sure there was a general deregulation in derivative markets, but that does not explain why firms took on excessive risk. For example, Lehman, Bear, and GS (along with a plethora of other Wall Street firms) were were on the hook for exotic derivative products. Instead of a security consisting entirely of mortgages, they created and traded bundled securities that were entirely composed of CDS's, while risk managers were actually offering insurance on these products.

The government did not create this, while it sure did close it's eyes and hope for the best.
 
Re: Another Recession?

OpportunityCost said:
Commodity Futures Modernization Act of 2000 - Wikipedia, the free encyclopedia

In hindsight this looks like one of the worst pieces of legislation in the last 50 years.
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ahhh, the king of the Wikipedia links strikes again. OC, you have an ideological delusion that CFMA had something to do with the Bush Mortgage Bubble so of course you will do as instructed and believe its bad. But please enlighten us. Why do you thinks its the worst? And where are the efforts to repeal it? is that mean ole Barney Frank still magically blocking republicans?
 
Re: Another Recession?

Vern said:
ahhh, the king of the Wikipedia links strikes again. OC, you have an ideological delusion that CFMA had something to do with the Bush Mortgage Bubble so of course you will do as instructed and believe its bad. But please enlighten us. Why do you thinks its the worst? And where are the efforts to repeal it? is that mean ole Barney Frank still magically blocking republicans?
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Vern, if you have a problem with the source, by all means, refute it.

I have no ideological delusion that CFMA has something to do with the mortgage bubble---without this bill it could not have occurred. CDSs were the instrument by which the entire credit market was corrupted. Add the bill removing the wall between retail and commercial banks and you have a gigantic amount of risk being spread throughout the market.

There have been several bills offered to repeal it or least establish stronger margin limits to lower the risk element. Why dont you go look them up, since you brought them up. I dont believe any have made it out of committee or been put to the floor for a vote. I could be wrong. I really havent looked and I dont care to. You want to know, you go look.

Lastly, Barney Frank is retired, so why dont you get a talking point from this election cycle?

PS Kush, your PM box is full to the top.
 
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Re: Another Recession?

OpportunityCost said:
I have no ideological delusion that CFMA has something to do with the mortgage bubble---without this bill it could not have occurred.
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AMAZEBALLS! I said you had an ideological delusion that CFMA had something to do with the Bush Mortgage Bubble and you confirmed it. usually you deflect and spin for days. Anyhoo, please explain the connection between the CFMA and mortgage lending standards and how it prevented Bush's regulators from doing their job.
OpportunityCost said:
There have been several bills offered to repeal it or least establish stronger margin limits to lower the risk element. Why dont you go look them up, since you brought them up. I dont believe any have made it out of committee or been put to the floor for a vote. I could be wrong. I really havent looked and I dont care to. You want to know, you go look.
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now there's the OC I know. you posted a lot of words and said nothing. Let me repeat it for you. You said its the worst bill in 50 years. You've posted nothing to back that up (I don't think even Wikipedia can help you). And if its so bad, where are the republican bills to reverse it?
OpportunityCost said:
Lastly, Barney Frank is retired, so why dont you get a talking point from this election cycle?
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er uh OC, blaming barney never had any basis in reality so don't let the fact that he's not in congress anymore stop the silly posts blaming him.
 
Re: Another Recession?

OpportunityCost said:
I have no ideological delusion that CFMA has something to do with the mortgage bubble---without this bill it could not have occurred. CDSs were the instrument by which the entire credit market was corrupted. Add the bill removing the wall between retail and commercial banks and you have a gigantic amount of risk being spread throughout the market.
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We agree on something else. The deregulation (or rather the exemption) of CDSs was the vector by which toxic assets polluted the entire financial system. We've always had housing bubbles and collapses. The banks that had too many foreclosures in their inventory were bought up by FDIC and life continued. But CDSs basically infected all banks, and caused a credit bottleneck that threatened to ruin tens of thousands of businesses.

Of course, who was it that got CDSs exempted from regulation. Good old conservative Republican leader Phil "Forclosure" Gramm, who now of course is a lobbyist for the banking industry.


Foreclosure Phil | Mother Jones
 
Re: Another Recession?

head of joaquin said:
We agree on that. But since this was based on the conservative ideology of deregulation, it amazing that you admit this.
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Widely supported by establishment DC. Go check out the voting and who signed it. Hint: Clinton.
 
Re: Another Recession?

head of joaquin said:
We agree on something else. The deregulation (or rather the exemption) of CDSs was the vector by which toxic assets polluted the entire financial system. We've always had housing bubbles and collapses. The banks that had too many foreclosures in their inventory were bought up by FDIC and life continued. But CDSs basically infected all banks, and caused a credit bottleneck that threatened to ruin tens of thousands of businesses.

Of course, who was it that got CDSs exempted from regulation. Good old conservative Republican leader Phil "Forclosure" Gramm, who now of course is a lobbyist for the banking industry.


Foreclosure Phil | Mother Jones
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As Ive pointed out before, Phil was a dem and switched. Hes an establishment DC weasel, all a lobbyist needed to know was his price.

It was the combination of the two---both allowing commercial and retail banks to combine and the CMFT act.
 
Re: Another Recession?

Vern said:
AMAZEBALLS! I said you had an ideological delusion that CFMA had something to do with the Bush Mortgage Bubble and you confirmed it. usually you deflect and spin for days. Anyhoo, please explain the connection between the CFMA and mortgage lending standards and how it prevented Bush's regulators from doing their job.
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Seems offtopic.


now there's the OC I know. you posted a lot of words and said nothing. Let me repeat it for you. You said its the worst bill in 50 years. You've posted nothing to back that up (I don't think even Wikipedia can help you). And if its so bad, where are the republican bills to reverse it?
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I voiced my opinion. Republicans dont have to reverse bills based upon my opinion.
As I said, you brought it up, you can go do some legwork.

er uh OC, blaming barney never had any basis in reality so don't let the fact that he's not in congress anymore stop the silly posts blaming him.
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I didnt make them so addressing them to me seems silly, and off topic. So.....shrug?
 
Re: Another Recession?

Moderator's Warning:
Please stick to addressing the topic and leave the personal comments out of it.
 
Re: Another Recession?

well if nobody is doing anything about the CFMA then surely another Bush mortgage bubble is on the way Oh No! well for the next Bush mortgage bubble they'll have to document people's income because every regulatory effort has been to make sure the borrower has the ability to pay the loan back.
 
Re: Another Recession?

Vern said:
well if nobody is doing anything about the CFMA then surely another Bush mortgage bubble is on the way Oh No! well for the next Bush mortgage bubble they'll have to document people's income because every regulatory effort has been to make sure the borrower has the ability to pay the loan back.
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If you still think Bush could be responsible for economic conditions now, you would be mistaken. In any event we are talking about a possible recession based on reasons other than mortgages--possibly the cessation of QE.

On the other hand, the job market is in the best shape its been since the crash---thats not saying a lot but it is positive.
 
Re: Another Recession?

OpportunityCost said:
Widely supported by establishment DC. Go check out the voting and who signed it. Hint: Clinton.
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Yep, Clinton should never have played ball with the GOP and their bad conservative policy. That hardly makes your position look very good.
 
Re: Another Recession?

OpportunityCost said:
As Ive pointed out before, Phil was a dem and switched. Hes an establishment DC weasel, all a lobbyist needed to know was his price.

It was the combination of the two---both allowing commercial and retail banks to combine and the CMFT act.
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Oh please. Pretending that Gramm wasn't a conservative republican is like saying Bush is a liberal. Pure hokum

Bottomline: the conservative ideology of deregulation is a vast failure. You can spin all you like, but that's the takeaway.
 
Re: Another Recession?

head of joaquin said:
Yep, Clinton should never have played ball with the GOP and their bad conservative policy. That hardly makes your position look very good.
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? Bi-partisan bill. Support from both sides. It was establishment DC's baby.

My position is not to fling blame around. My position is to examine the possible causes and discuss them. It would be nice for you to join me in the discussion rather than trying so hard to pin it on one side or the other.
 
Re: Another Recession?

head of joaquin said:
Oh please. Pretending that Gramm wasn't a conservative republican is like saying Bush is a liberal. Pure hokum

Bottomline: the conservative ideology of deregulation is a vast failure. You can spin all you like, but that's the takeaway.
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Bush's fiscal and spending policies were VERY liberal. I would counter that with not all regulation being a good thing.
 
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