Capitalism Guarantees Rising Inequality

[Wyatt earp]

Capitalism produces inequality because some people are better than others.
Some people are lazy whilst others work hard.
Some people are bright but some are stupid.
Some fuck about in school but others do every homework.

The bright and hard working tend to get paid more or run business.
The rest are toilet cleaners or whatever.

Live with it.

It's like Republicans think there's no reason people are smart or stupid. It's an inborn trait (that is inherited?). Believe it or not people can be trained to be smart or stupid. It largely depends on their surroundings and esteem, less so on raw "mental giftedness."

Socrates wanted to prove this point. He took an illiterate and "dumb" Athenian and spent the day with him. In the sand he tried to get the slave to derive basic mathematical conclusions (geometrical in nature) without direct help. End of the day the slave had made several deductions with minimal prodding. Socrates notes this shows mankind understands universal principles if brought into a setting that awakens that epistemology. This has application for today: treat people similarly with similar education and we'd see very different world than we see today in America.

For Rightwingers, it's a matter of overcoming hatred for a certain class of people that are exactly like you except they were born into different circumstances that discouraged human flourishing and skill development. By the luck of the draw you could have been born into the poor family who is despised by all Republicans.

Disclaimer: I disagree with Obama/Democrats as much as I do any Republican official.

I agree but democrats in this country try to make them stay dumb for votes. In my little job we wecolme the chance to find a diamond in the ruff. But what are you supposed to do when democrats pay them not to work for two year's? They don't want to work. And move up with a $12 dollar an hour jobs whem their friends live good in their opinion off of food stamps and ssuch.

 

[Toddsterpatriot]

Did I say "too much" anywhere? I don't think so.

Blaming the Federal Reserve is misguided and doesn't even come close to telling the whole picture but at least they had some impact on the whole thing. Those who blame CRA are just pushing ignorance.

The bottom line is that people made investments with bad information. When that happens in a market bad things tend to happen.

Did I say "too much" anywhere? I don't think so.

You said "look no further than the Federal Reserve lowering interest rates".
Did you mean to blame them for not lowering enough?

When that happens in a market bad things tend to happen.

Moreso when the government encourages (forces) banks to loan to poor credit risks.

I specifically said I wasn't blaming the Fed. I was pointing out that there actions did have an impact on the markets though. Which is just a pretty easy thing to observe. In order to argue blame the first thing you have to establish is that there was an impact.

The theory that it was the CRA doesn't hold up to scrutiny because there is no evidence that the CRA had an impact. It is kind of sad that so many people are so ready to blame poor people and government that they can believe poor people crashed the economy. It doesn't pass a basic common sense appraisal.

Bubbles happen. Always have, always will.
Can the Fed make bubbles worse? Obviously.
Did the CRA cause bank losses? Obviously.
Did Fannie and Freddie turn private losses into taxpayer losses? Obviously.

 

[Wyatt earp]

Did I say "too much" anywhere? I don't think so.

You said "look no further than the Federal Reserve lowering interest rates".
Did you mean to blame them for not lowering enough?

When that happens in a market bad things tend to happen.

Moreso when the government encourages (forces) banks to loan to poor credit risks.

I specifically said I wasn't blaming the Fed. I was pointing out that there actions did have an impact on the markets though. Which is just a pretty easy thing to observe. In order to argue blame the first thing you have to establish is that there was an impact.

The theory that it was the CRA doesn't hold up to scrutiny because there is no evidence that the CRA had an impact. It is kind of sad that so many people are so ready to blame poor people and government that they can believe poor people crashed the economy. It doesn't pass a basic common sense appraisal.

Bubbles happen. Always have, always will.
Can the Fed make bubbles worse? Obviously.
Did the CRA cause bank losses? Obviously.
Did Fannie and Freddie turn private losses into taxpayer losses? Obviously.

I just hope the most powerful person on the planet knows what she is doing. God help us if yellen dont

 

[Doubletap]

Ayn Rand is great for horribly stupid quotes. Hopefully he posts some more. How about that one about owning the sweat off your brow or whatever.

Wow. Another heavy rebuttal to the quote. Are u always so intellectual? lol

I apologize for being a Member of the Tribe.
You see, MY religion has a whole bunch of societal rules, some of which include taxation for infrastructure.

On one side we have Ayn Rand, self-hating Jew, one the other side, we have God.
Think I'll go with God.

You're free to go, sadly, with the unproven.

 

[Andylusion]

Freddie Mac is not the only one that was fooled by the rating of the MBS created by private institutions. The ratings agencies were fooled too as were the originating institutions and those who were buying them.

The idea that the min wage change caused the recession is ridiculous. The idea that the financial crisis didn't ripple through the economy is even more ridiculous.

The fact is that the recovery was weak and largely built on the housing boom which was destined to hit the wall. Once it did the weakness is the labor market was exposed. The effective supply of money shrunk drastically. The ability of consumption to be supported by debt was finally exposed.

Ok, I had thought we already posted all this, and established the facts. Someone seems to have missed the memo, so here it goes again.

Before 1997, there were no Sub-prime Mortgage Backed Securities. There were loans, but they were a niche market, but no MBS with sub-prime loans. If you think that there were, by all means provide the evidence of them.

According to Insider Mortgage Finance, it was only in 1997 that Sub-prime mortgages started shooting off.

As you can clearly see, sub-prime was a niche, flat line market before 1997 to 1998. So something must have happened in 1997 to 1998, to cause the Sub-prime loans to take off.

What was it? Two things. It was the carrot, and the stick.

First, the Carrot. This press release was made by First Union, which later became Wachovia.

First Union Capital Markets Corp. and Bear, Stearns & Co. Inc. have priced a $384.6 million offering of securities backed by Community Reinvestment Act (CRA) loans - marking the industry's first public securitization of CRA loans.
The affordable mortgages were originated or acquired by First Union Corporation and subsidiaries. Customers will experience no impact - they will continue to make payments to and be serviced by First Union Mortgage Corp. CRA loans are loans targeted to low and moderate income borrowers and neighborhoods under the Community Reinvestment Act of 1977.
"The securitization of these affordable mortgages allows us to redeploy capital back into our communities and to expand our ability to provide credit to low and moderate income individuals," said Jane Henderson, managing director of First Union's Community Reinvestment and Fair Lending Programs. "First Union is committed to promoting home ownership in traditionally underserved markets through a comprehensive line of competitive and flexible affordable mortgage products. This transaction enables us to continue to aggressively serve those markets."
The $384.6 million in senior certificates are guaranteed by Freddie Mac and have an implied "AAA" rating.​

Now again, who made this deal? Freddie Mac did. The government did. This was backed by the CRA. And who gave the senior certificates guaranteed by Freddie Mac an implied AAA rating? Freddie Mac did. The Government did.

Freddie Mac was not "fooled by the rating agencies". Sorry, YOU ARE WRONG. Freddie Mac MADE THE DEAL. Freddie Mac GAVE THEM THE RATING. You are wrong sir. Sorry.

Second, the stick.

[ame=http://youtu.be/Lr1M1T2Y314]How The Democrats Caused The Financial Crisis: Starring Bill Clinton's HUD Secretary Andrew Cuomo And Barack Obama; With Special Guest Appearances By Bill Clinton And Jimmy Carter - YouTube[/ame]

The Clinton Administration directly sued banks to make sub-prime loans. Cuomo in this footage, at 3 minutes, even admits openly that they are higher risk, and will have a higher default rate.

They all knew exactly what they were doing, and they did it anyway.

And you want to tell me that government was "fooled by the credit agencies"? Bull crap dude. They knew back in 1998 they were pushing loans that would have a higher default rate. Even Obama, if you watch the video to the end, said "the idea was a good one". He knew what he was doing when he was a lawyer for ACORN suing Citigroup to make bad loans.

They all knew.

So let's review huh? They sued banks to make bad loans. Community activist groups sued banks based on the CRA, to make bad loans. Freddie Mac, and later Fannie Mae, guaranteed and bought sub-prime loans, and gave those loans a AAA rating.

And you think the CRA had nothing to do with it? Remember First Union, which became Wachovia, after signing that deal with Freddie Mac?

Read this press release:

Wachovia has earned an "Outstanding" Community Reinvestment Act (CRA) rating, the highest possible, from the Office of the Comptroller of the Currency (OCC). Only 14 percent of banks regulated by the OCC achieve the "Outstanding" rating.
Regulators from the OCC analyzed Wachovia's lending, investing and service activities for the period of Oct. 1, 2000 to June 30, 2003. The merger of First Union National Bank and Wachovia Corp. occurred during this time. "I'm proud that we earned the highest possible rating for our active involvement in the community," said Ken Thompson, Chairman and CEO.

Its high levels of community development lending. During the assessment period, Wachovia supplied more than $3.3 billion in community development loans.
* Its extensive use of Low Income Housing Tax Credits (LIHTC). LIHTC are complex investments that provide equity financing for affordable housing projects. Uniquely, Wachovia makes LIHTC investments directly, rather than through third party intermediaries.
* Its leadership role in the creation of the Section 8 Rental Housing Choice Voucher Program, which allows low-income families to apply Section 8 rental vouchers toward mortgage payments for up to 15 years. Wachovia partnered with Fannie Mae to develop and pilot this innovative mortgage program, which seeks to increase homeownership among low-income families.

In 2004, Wachovia:
* Provided $25 billion in community loans and investments to revitalize neighborhoods.
* Helped an average of 475 lower-income families buy a home each week.
* Originated almost $25 billion in mortgage loans, with nearly $6 billion in loans directly benefiting lower-income families and neighborhoods.
* Received the Fannie Mae Community Lending Hero award for leadership and creativity in addressing low- and moderate-income homeownership issues.
* Worked with 176 community mortgage partners to provide homeownership counseling and mortgages to more than 1,000 first-time homebuyers.
* Invested $223 million in equity to create more than 5,000 affordable rental-housing units.
* Pledged more than $75 billion over five years in community loans and investments to serve communities affected by the SouthTrust merger.
​

And what happened after doing all these low-income Community investment loans, under the CRA, working with Fannie Mae?

They went bankrupt, just like Bear Stearns did.

I'm sorry... but if you believe that the CRA had no involvement in the crash, when there is tons of direct evidence to the contrary, then you are just denying reality, just like you have in other posts where you accuse me of "hate". Empty argument. Empty claims. Denying clear cut facts. Living in a hole of ignorance. Time to come out into the light. See how the world really is.

F&F are not ratings agencies.

Not all sub-prime loans are CRA loans.

The crisis is a result of a lot of contributing factors but the mere presence of CRA loans doesn't equate to investors not understanding the risk of a CRA loan or sub-prime loans in general.

The problem wasn't with the CRA loans or really the sub-prime loans themselves but in the MBS that hid the risk inherent in the loans backing those MBS and the miscalculation of the risk inherent in the underlying mortgages. The financial institutions packaged the MBS and F&F and the rating agencies and the buyers of the MBS all thought they were AAA and they were all wrong.

Underlying these mistakes was a housing bubble brought out by changes in interest rates. Since people buy houses based on what they can afford per month lower interest rates meant they could afford to pay more for a house. This meant higher home prices.

This surge in home prices resulted in a lot of profit for a lot of financial institutions which attracted investors who were fleeing US treasuries which were offering very little return. To these investors they were buying AAA debt instruments. Some even considered them to be backed by the Federal government because of the involvement of F&F. This influx of capital just fueled the bubble. There were a lot of financial institutions making a lot of money on these MBS.

So I have to wonder how these financial institutions are able to earn massive amounts of money but are not the ones responsible for making financial decisions? Isn't that what they are paid for?

There is a lot of blame to go around and F&F played their part as did the Federal Reserve. The blame doesn't stop there (and neither did the profit) but the CRA mortgages by themselves had little to nothing to do with it. They didn't create the bubble and they didn't pop it either.

Again, if the CRA had nothing to do with it, and if F&F had nothing to do with it, then please give a logical, and rational explanation for why the sub-prime market was completely flat until 1997, and why there were no Sub-prime mortgage backed securities until 1997.

I've looked... and I can't find a single instance where a sub-prime mortgage was given a AAA rating until 1997. If you can show me an example where it happened before 1997, then you might have a point.

But until 1997, when Freddie Mac gave sub-prime mortgages a AAA rating, it didn't happen. I even have read that rating agencies never considered rating sub-prime loans because it was well established that they were not worth rating. Why rate something that you already know will fail to get even the lowest rating?

That is, until the Federal Government, through Freddie Mac, gave them a AAA rating.

This is what I don't get about you people on the left. You routinely want to use the power of government to influence the market. But then when government influences the market to do something bad, you blame "the market" for not ignoring the government, and doing the smart thing instead.

Sorry, you can't have it both ways. If you want government to influence the market with the CRA and Freddie and Fannie, then you should expect that when government pushes bad loans, that the market will follow. You lose the option of blaming the market for making bad loans, when you are suing banks to make bad loans, and pushing bad loans with F&F.

 

[Toro]

The GSEs don't rate loans. Freddie and Fannie don't give AAA ratings, or any ratings, to any pool of bonds. The federal government doesn't rate bonds.

 

[georgephillip]

Ok, I had thought we already posted all this, and established the facts. Someone seems to have missed the memo, so here it goes again.

Before 1997, there were no Sub-prime Mortgage Backed Securities. There were loans, but they were a niche market, but no MBS with sub-prime loans. If you think that there were, by all means provide the evidence of them.

According to Insider Mortgage Finance, it was only in 1997 that Sub-prime mortgages started shooting off.

As you can clearly see, sub-prime was a niche, flat line market before 1997 to 1998. So something must have happened in 1997 to 1998, to cause the Sub-prime loans to take off.

What was it? Two things. It was the carrot, and the stick.

First, the Carrot. This press release was made by First Union, which later became Wachovia.

First Union Capital Markets Corp. and Bear, Stearns & Co. Inc. have priced a $384.6 million offering of securities backed by Community Reinvestment Act (CRA) loans - marking the industry's first public securitization of CRA loans.
The affordable mortgages were originated or acquired by First Union Corporation and subsidiaries. Customers will experience no impact - they will continue to make payments to and be serviced by First Union Mortgage Corp. CRA loans are loans targeted to low and moderate income borrowers and neighborhoods under the Community Reinvestment Act of 1977.
"The securitization of these affordable mortgages allows us to redeploy capital back into our communities and to expand our ability to provide credit to low and moderate income individuals," said Jane Henderson, managing director of First Union's Community Reinvestment and Fair Lending Programs. "First Union is committed to promoting home ownership in traditionally underserved markets through a comprehensive line of competitive and flexible affordable mortgage products. This transaction enables us to continue to aggressively serve those markets."
The $384.6 million in senior certificates are guaranteed by Freddie Mac and have an implied "AAA" rating.​

Now again, who made this deal? Freddie Mac did. The government did. This was backed by the CRA. And who gave the senior certificates guaranteed by Freddie Mac an implied AAA rating? Freddie Mac did. The Government did.

Freddie Mac was not "fooled by the rating agencies". Sorry, YOU ARE WRONG. Freddie Mac MADE THE DEAL. Freddie Mac GAVE THEM THE RATING. You are wrong sir. Sorry.

Second, the stick.

How The Democrats Caused The Financial Crisis: Starring Bill Clinton's HUD Secretary Andrew Cuomo And Barack Obama; With Special Guest Appearances By Bill Clinton And Jimmy Carter - YouTube

The Clinton Administration directly sued banks to make sub-prime loans. Cuomo in this footage, at 3 minutes, even admits openly that they are higher risk, and will have a higher default rate.

They all knew exactly what they were doing, and they did it anyway.

And you want to tell me that government was "fooled by the credit agencies"? Bull crap dude. They knew back in 1998 they were pushing loans that would have a higher default rate. Even Obama, if you watch the video to the end, said "the idea was a good one". He knew what he was doing when he was a lawyer for ACORN suing Citigroup to make bad loans.

They all knew.

So let's review huh? They sued banks to make bad loans. Community activist groups sued banks based on the CRA, to make bad loans. Freddie Mac, and later Fannie Mae, guaranteed and bought sub-prime loans, and gave those loans a AAA rating.

And you think the CRA had nothing to do with it? Remember First Union, which became Wachovia, after signing that deal with Freddie Mac?

Read this press release:

Wachovia has earned an "Outstanding" Community Reinvestment Act (CRA) rating, the highest possible, from the Office of the Comptroller of the Currency (OCC). Only 14 percent of banks regulated by the OCC achieve the "Outstanding" rating.
Regulators from the OCC analyzed Wachovia's lending, investing and service activities for the period of Oct. 1, 2000 to June 30, 2003. The merger of First Union National Bank and Wachovia Corp. occurred during this time. "I'm proud that we earned the highest possible rating for our active involvement in the community," said Ken Thompson, Chairman and CEO.

Its high levels of community development lending. During the assessment period, Wachovia supplied more than $3.3 billion in community development loans.
* Its extensive use of Low Income Housing Tax Credits (LIHTC). LIHTC are complex investments that provide equity financing for affordable housing projects. Uniquely, Wachovia makes LIHTC investments directly, rather than through third party intermediaries.
* Its leadership role in the creation of the Section 8 Rental Housing Choice Voucher Program, which allows low-income families to apply Section 8 rental vouchers toward mortgage payments for up to 15 years. Wachovia partnered with Fannie Mae to develop and pilot this innovative mortgage program, which seeks to increase homeownership among low-income families.

In 2004, Wachovia:
* Provided $25 billion in community loans and investments to revitalize neighborhoods.
* Helped an average of 475 lower-income families buy a home each week.
* Originated almost $25 billion in mortgage loans, with nearly $6 billion in loans directly benefiting lower-income families and neighborhoods.
* Received the Fannie Mae Community Lending Hero award for leadership and creativity in addressing low- and moderate-income homeownership issues.
* Worked with 176 community mortgage partners to provide homeownership counseling and mortgages to more than 1,000 first-time homebuyers.
* Invested $223 million in equity to create more than 5,000 affordable rental-housing units.
* Pledged more than $75 billion over five years in community loans and investments to serve communities affected by the SouthTrust merger.
​

And what happened after doing all these low-income Community investment loans, under the CRA, working with Fannie Mae?

They went bankrupt, just like Bear Stearns did.

I'm sorry... but if you believe that the CRA had no involvement in the crash, when there is tons of direct evidence to the contrary, then you are just denying reality, just like you have in other posts where you accuse me of "hate". Empty argument. Empty claims. Denying clear cut facts. Living in a hole of ignorance. Time to come out into the light. See how the world really is.

F&F are not ratings agencies.

Not all sub-prime loans are CRA loans.

The crisis is a result of a lot of contributing factors but the mere presence of CRA loans doesn't equate to investors not understanding the risk of a CRA loan or sub-prime loans in general.

The problem wasn't with the CRA loans or really the sub-prime loans themselves but in the MBS that hid the risk inherent in the loans backing those MBS and the miscalculation of the risk inherent in the underlying mortgages. The financial institutions packaged the MBS and F&F and the rating agencies and the buyers of the MBS all thought they were AAA and they were all wrong.

Underlying these mistakes was a housing bubble brought out by changes in interest rates. Since people buy houses based on what they can afford per month lower interest rates meant they could afford to pay more for a house. This meant higher home prices.

This surge in home prices resulted in a lot of profit for a lot of financial institutions which attracted investors who were fleeing US treasuries which were offering very little return. To these investors they were buying AAA debt instruments. Some even considered them to be backed by the Federal government because of the involvement of F&F. This influx of capital just fueled the bubble. There were a lot of financial institutions making a lot of money on these MBS.

So I have to wonder how these financial institutions are able to earn massive amounts of money but are not the ones responsible for making financial decisions? Isn't that what they are paid for?

There is a lot of blame to go around and F&F played their part as did the Federal Reserve. The blame doesn't stop there (and neither did the profit) but the CRA mortgages by themselves had little to nothing to do with it. They didn't create the bubble and they didn't pop it either.

Again, if the CRA had nothing to do with it, and if F&F had nothing to do with it, then please give a logical, and rational explanation for why the sub-prime market was completely flat until 1997, and why there were no Sub-prime mortgage backed securities until 1997.

I've looked... and I can't find a single instance where a sub-prime mortgage was given a AAA rating until 1997. If you can show me an example where it happened before 1997, then you might have a point.

But until 1997, when Freddie Mac gave sub-prime mortgages a AAA rating, it didn't happen. I even have read that rating agencies never considered rating sub-prime loans because it was well established that they were not worth rating. Why rate something that you already know will fail to get even the lowest rating?

That is, until the Federal Government, through Freddie Mac, gave them a AAA rating.

This is what I don't get about you people on the left. You routinely want to use the power of government to influence the market. But then when government influences the market to do something bad, you blame "the market" for not ignoring the government, and doing the smart thing instead.

Sorry, you can't have it both ways. If you want government to influence the market with the CRA and Freddie and Fannie, then you should expect that when government pushes bad loans, that the market will follow. You lose the option of blaming the market for making bad loans, when you are suing banks to make bad loans, and pushing bad loans with F&F.

It is even more sorry (and telling) that you can't provide any evidence of Fannie or Freddy or any other federal governmental agency rating bonds, isn't it?

Why do you regularly post lies, distortions, and disinformation?

 

[Indofred]

Capitalism produces inequality because some people are better than others.
Some people are lazy whilst others work hard.
Some people are bright but some are stupid.
Some fuck about in school but others do every homework.

The bright and hard working tend to get paid more or run business.
The rest are toilet cleaners or whatever.

Live with it.

It's like Republicans think there's no reason people are smart or stupid. It's an inborn trait (that is inherited?). Believe it or not people can be trained to be smart or stupid. It largely depends on their surroundings and esteem, less so on raw "mental giftedness."

Socrates wanted to prove this point. He took an illiterate and "dumb" Athenian and spent the day with him. In the sand he tried to get the slave to derive basic mathematical conclusions (geometrical in nature) without direct help. End of the day the slave had made several deductions with minimal prodding. Socrates notes this shows mankind understands universal principles if brought into a setting that awakens that epistemology. This has application for today: treat people similarly with similar education and we'd see very different world than we see today in America.

For Rightwingers, it's a matter of overcoming hatred for a certain class of people that are exactly like you except they were born into different circumstances that discouraged human flourishing and skill development. By the luck of the draw you could have been born into the poor family who is despised by all Republicans.

Disclaimer: I disagree with Obama/Democrats as much as I do any Republican official.

I am what you would call a republican but I choose the title, Conservative.
I was inspired by the wonderful Maggie, the angel who saved England from the silly socialists.
As for believing intelligence is down to your surrounding, I do not.
Intelligence is an individual thing and nothing to do with family, upbringing or surroundings.
It does not follow that a shit shovelling low life will have an equally stupid son or daughter.
However, basic genetics makes this more likely.

As for Socrates, you misrepresented the story. If I recall, he took a slave and asked him questions.
That's an important problem with the tale. We have no idea who the slave was and know nothing of his background, only that he was a slave.
He could easily have been a member of a noble family that was defeated and enslaved.
Socrates made basic errors and, even worse, his sample was far too small to show suggest any conclusive results.

As for hatred, not at all.
I have little or no respect for people who want everything but can't be bothered to do something about making themselves worth that pay rise.
That doesn't suggest or imply hatred.

Actually, the other way around.
As I mentioned before, I'm a proud capitalist and, as such, I dislike waste.
That in mind, I suggest a mandatory IQ test at the earliest possible age for ALL children, regardless of background.
The top 5% should be given free education at the best possible schools and universities (dependent on their willingness to work - if they're lazy; toss them back).
That way, the best, in ability and attitude, will rise to the top and (Bonus for the lefties), they're help support their poor families whilst making a massive contribution to the world.
That'll help everyone concerned and, bonus for the right wing, if the best are supporting their previously welfare dependent family, the government has to spend less.

There you are - potential free education at the best schools, even for shit shoveller's sons.

 

[Toddsterpatriot]

Capitalism produces inequality because some people are better than others.
Some people are lazy whilst others work hard.
Some people are bright but some are stupid.
Some fuck about in school but others do every homework.

The bright and hard working tend to get paid more or run business.
The rest are toilet cleaners or whatever.

Live with it.

It's like Republicans think there's no reason people are smart or stupid. It's an inborn trait (that is inherited?). Believe it or not people can be trained to be smart or stupid. It largely depends on their surroundings and esteem, less so on raw "mental giftedness."

Socrates wanted to prove this point. He took an illiterate and "dumb" Athenian and spent the day with him. In the sand he tried to get the slave to derive basic mathematical conclusions (geometrical in nature) without direct help. End of the day the slave had made several deductions with minimal prodding. Socrates notes this shows mankind understands universal principles if brought into a setting that awakens that epistemology. This has application for today: treat people similarly with similar education and we'd see very different world than we see today in America.

For Rightwingers, it's a matter of overcoming hatred for a certain class of people that are exactly like you except they were born into different circumstances that discouraged human flourishing and skill development. By the luck of the draw you could have been born into the poor family who is despised by all Republicans.

Disclaimer: I disagree with Obama/Democrats as much as I do any Republican official.

For Rightwingers, it's a matter of overcoming hatred for a certain class of people that are exactly like you except they were born into different circumstances

Rightwingers don't hate stupid liberals.

 

[Contumacious]

Capitalism produces inequality because some people are better than others.
Some people are lazy whilst others work hard.
Some people are bright but some are stupid.
Some fuck about in school but others do every homework.

The bright and hard working tend to get paid more or run business.
The rest are toilet cleaners or whatever.

Live with it.

 

[bedowin62]

The first warning that there was a problem with subprime mortgages came in August 2007. That's when Fannie Mae announced it would skip a benchmark debt offering for the first time since May 2006. This meant that even the highly-rated mortgage-backed securities offered by the government-sponsored entities were being rejected by the secondary market

==============================================================

GSEs were offering highly-rated mortgage-backed securities. it's what they do.
like it or not was as much to blame as de-regulation in the mortgage crisis

 

[dblack]

Capitalism produces inequality because some people are better than others.
Some people are lazy whilst others work hard.
Some people are bright but some are stupid.
Some fuck about in school but others do every homework.

The bright and hard working tend to get paid more or run business.
The rest are toilet cleaners or whatever.

Live with it.

I'm an ardent advocate of free markets, but this point of view never sets well with me. Economic success is a very narrow measure of a person, and its foolish to say that people who achieve it are 'better' than others. They're just better at economics, and perhaps more industrious. But those aren't the only virtues, not even the most important ones in my view.

 

[bedowin62]

lots of LWNs dont like capitalism i see. where is a place the idiotic Left finds a better example of how society should be then? all of the European Socialist democracies; the ones with the nanny-state benefits; are still capitalist in nature.

what is the idiotic Left's economic theory called anyway? they dont seem to be able to say. what is an example of it working? where? and if it isnt why not?

 

[RKMBrown]

The top 5% should be given free education at the best possible schools and universities (dependent on their willingness to work - if they're lazy; toss them back).

Lefties would never agree to that. Their plan would be to punish the top 5% as much as possible by forcing them to wait for the bottom 5% to catch up to them. Using your god given attributes that let you exceed over others is evil to libtards. You see, libtards are the folks who are failures in life, subsisting only on hand-outs.

 

[Bombur]

Ok, I had thought we already posted all this, and established the facts. Someone seems to have missed the memo, so here it goes again.

Before 1997, there were no Sub-prime Mortgage Backed Securities. There were loans, but they were a niche market, but no MBS with sub-prime loans. If you think that there were, by all means provide the evidence of them.

According to Insider Mortgage Finance, it was only in 1997 that Sub-prime mortgages started shooting off.

As you can clearly see, sub-prime was a niche, flat line market before 1997 to 1998. So something must have happened in 1997 to 1998, to cause the Sub-prime loans to take off.

What was it? Two things. It was the carrot, and the stick.

First, the Carrot. This press release was made by First Union, which later became Wachovia.

First Union Capital Markets Corp. and Bear, Stearns & Co. Inc. have priced a $384.6 million offering of securities backed by Community Reinvestment Act (CRA) loans - marking the industry's first public securitization of CRA loans.
The affordable mortgages were originated or acquired by First Union Corporation and subsidiaries. Customers will experience no impact - they will continue to make payments to and be serviced by First Union Mortgage Corp. CRA loans are loans targeted to low and moderate income borrowers and neighborhoods under the Community Reinvestment Act of 1977.
"The securitization of these affordable mortgages allows us to redeploy capital back into our communities and to expand our ability to provide credit to low and moderate income individuals," said Jane Henderson, managing director of First Union's Community Reinvestment and Fair Lending Programs. "First Union is committed to promoting home ownership in traditionally underserved markets through a comprehensive line of competitive and flexible affordable mortgage products. This transaction enables us to continue to aggressively serve those markets."
The $384.6 million in senior certificates are guaranteed by Freddie Mac and have an implied "AAA" rating.​

Now again, who made this deal? Freddie Mac did. The government did. This was backed by the CRA. And who gave the senior certificates guaranteed by Freddie Mac an implied AAA rating? Freddie Mac did. The Government did.

Freddie Mac was not "fooled by the rating agencies". Sorry, YOU ARE WRONG. Freddie Mac MADE THE DEAL. Freddie Mac GAVE THEM THE RATING. You are wrong sir. Sorry.

Second, the stick.

How The Democrats Caused The Financial Crisis: Starring Bill Clinton's HUD Secretary Andrew Cuomo And Barack Obama; With Special Guest Appearances By Bill Clinton And Jimmy Carter - YouTube

The Clinton Administration directly sued banks to make sub-prime loans. Cuomo in this footage, at 3 minutes, even admits openly that they are higher risk, and will have a higher default rate.

They all knew exactly what they were doing, and they did it anyway.

And you want to tell me that government was "fooled by the credit agencies"? Bull crap dude. They knew back in 1998 they were pushing loans that would have a higher default rate. Even Obama, if you watch the video to the end, said "the idea was a good one". He knew what he was doing when he was a lawyer for ACORN suing Citigroup to make bad loans.

They all knew.

So let's review huh? They sued banks to make bad loans. Community activist groups sued banks based on the CRA, to make bad loans. Freddie Mac, and later Fannie Mae, guaranteed and bought sub-prime loans, and gave those loans a AAA rating.

And you think the CRA had nothing to do with it? Remember First Union, which became Wachovia, after signing that deal with Freddie Mac?

Read this press release:

Wachovia has earned an "Outstanding" Community Reinvestment Act (CRA) rating, the highest possible, from the Office of the Comptroller of the Currency (OCC). Only 14 percent of banks regulated by the OCC achieve the "Outstanding" rating.
Regulators from the OCC analyzed Wachovia's lending, investing and service activities for the period of Oct. 1, 2000 to June 30, 2003. The merger of First Union National Bank and Wachovia Corp. occurred during this time. "I'm proud that we earned the highest possible rating for our active involvement in the community," said Ken Thompson, Chairman and CEO.

Its high levels of community development lending. During the assessment period, Wachovia supplied more than $3.3 billion in community development loans.
* Its extensive use of Low Income Housing Tax Credits (LIHTC). LIHTC are complex investments that provide equity financing for affordable housing projects. Uniquely, Wachovia makes LIHTC investments directly, rather than through third party intermediaries.
* Its leadership role in the creation of the Section 8 Rental Housing Choice Voucher Program, which allows low-income families to apply Section 8 rental vouchers toward mortgage payments for up to 15 years. Wachovia partnered with Fannie Mae to develop and pilot this innovative mortgage program, which seeks to increase homeownership among low-income families.

In 2004, Wachovia:
* Provided $25 billion in community loans and investments to revitalize neighborhoods.
* Helped an average of 475 lower-income families buy a home each week.
* Originated almost $25 billion in mortgage loans, with nearly $6 billion in loans directly benefiting lower-income families and neighborhoods.
* Received the Fannie Mae Community Lending Hero award for leadership and creativity in addressing low- and moderate-income homeownership issues.
* Worked with 176 community mortgage partners to provide homeownership counseling and mortgages to more than 1,000 first-time homebuyers.
* Invested $223 million in equity to create more than 5,000 affordable rental-housing units.
* Pledged more than $75 billion over five years in community loans and investments to serve communities affected by the SouthTrust merger.
​

And what happened after doing all these low-income Community investment loans, under the CRA, working with Fannie Mae?

They went bankrupt, just like Bear Stearns did.

I'm sorry... but if you believe that the CRA had no involvement in the crash, when there is tons of direct evidence to the contrary, then you are just denying reality, just like you have in other posts where you accuse me of "hate". Empty argument. Empty claims. Denying clear cut facts. Living in a hole of ignorance. Time to come out into the light. See how the world really is.

F&F are not ratings agencies.

Not all sub-prime loans are CRA loans.

The crisis is a result of a lot of contributing factors but the mere presence of CRA loans doesn't equate to investors not understanding the risk of a CRA loan or sub-prime loans in general.

The problem wasn't with the CRA loans or really the sub-prime loans themselves but in the MBS that hid the risk inherent in the loans backing those MBS and the miscalculation of the risk inherent in the underlying mortgages. The financial institutions packaged the MBS and F&F and the rating agencies and the buyers of the MBS all thought they were AAA and they were all wrong.

Underlying these mistakes was a housing bubble brought out by changes in interest rates. Since people buy houses based on what they can afford per month lower interest rates meant they could afford to pay more for a house. This meant higher home prices.

This surge in home prices resulted in a lot of profit for a lot of financial institutions which attracted investors who were fleeing US treasuries which were offering very little return. To these investors they were buying AAA debt instruments. Some even considered them to be backed by the Federal government because of the involvement of F&F. This influx of capital just fueled the bubble. There were a lot of financial institutions making a lot of money on these MBS.

So I have to wonder how these financial institutions are able to earn massive amounts of money but are not the ones responsible for making financial decisions? Isn't that what they are paid for?

There is a lot of blame to go around and F&F played their part as did the Federal Reserve. The blame doesn't stop there (and neither did the profit) but the CRA mortgages by themselves had little to nothing to do with it. They didn't create the bubble and they didn't pop it either.

Again, if the CRA had nothing to do with it, and if F&F had nothing to do with it, then please give a logical, and rational explanation for why the sub-prime market was completely flat until 1997, and why there were no Sub-prime mortgage backed securities until 1997.

I've looked... and I can't find a single instance where a sub-prime mortgage was given a AAA rating until 1997. If you can show me an example where it happened before 1997, then you might have a point.

But until 1997, when Freddie Mac gave sub-prime mortgages a AAA rating, it didn't happen. I even have read that rating agencies never considered rating sub-prime loans because it was well established that they were not worth rating. Why rate something that you already know will fail to get even the lowest rating?

That is, until the Federal Government, through Freddie Mac, gave them a AAA rating.

This is what I don't get about you people on the left. You routinely want to use the power of government to influence the market. But then when government influences the market to do something bad, you blame "the market" for not ignoring the government, and doing the smart thing instead.

Sorry, you can't have it both ways. If you want government to influence the market with the CRA and Freddie and Fannie, then you should expect that when government pushes bad loans, that the market will follow. You lose the option of blaming the market for making bad loans, when you are suing banks to make bad loans, and pushing bad loans with F&F.

You keep presenting incorrect facts and I keep correcting them. F&F are not ratings agencies. I am in no way denying that F&F thought that the MBS were AAA when they were not.

The practice was to create AAA rated MBS by mixing different types of loans together. They(Financial Institutions, F&F, and ratings agencies) used a formula(85:15 ratio) to justify this rating. In addition the ratings of the underlying mortgages was incorrect. The regulation of the creation of these mortgages and the creation of these MBS decreased during this time as well.

There were a lot of problems that contributed to the incorrect ratings of both the mortgages and the MBS but the biggest one was the fact that they were not taking into account the bubble that was created by the Federal Reserve lowering interest rates. This failure only lead to the bubble growing bigger as capital flowed to these MBS.

During this time there was a growth in sub-prime loans other than CRA loans in large part due to the fact that the financial institutions were making billions off of the market and were chasing the profit levels they had at the start of the bubble.

These financial institutions make a lot of money off of these MBS so I have to wonder if you live in a world where they are not responsible for making decisions then why are they making money in the first place?

 

[RKMBrown]

F&F are not ratings agencies.

Not all sub-prime loans are CRA loans.

The crisis is a result of a lot of contributing factors but the mere presence of CRA loans doesn't equate to investors not understanding the risk of a CRA loan or sub-prime loans in general.

The problem wasn't with the CRA loans or really the sub-prime loans themselves but in the MBS that hid the risk inherent in the loans backing those MBS and the miscalculation of the risk inherent in the underlying mortgages. The financial institutions packaged the MBS and F&F and the rating agencies and the buyers of the MBS all thought they were AAA and they were all wrong.

Underlying these mistakes was a housing bubble brought out by changes in interest rates. Since people buy houses based on what they can afford per month lower interest rates meant they could afford to pay more for a house. This meant higher home prices.

This surge in home prices resulted in a lot of profit for a lot of financial institutions which attracted investors who were fleeing US treasuries which were offering very little return. To these investors they were buying AAA debt instruments. Some even considered them to be backed by the Federal government because of the involvement of F&F. This influx of capital just fueled the bubble. There were a lot of financial institutions making a lot of money on these MBS.

So I have to wonder how these financial institutions are able to earn massive amounts of money but are not the ones responsible for making financial decisions? Isn't that what they are paid for?

There is a lot of blame to go around and F&F played their part as did the Federal Reserve. The blame doesn't stop there (and neither did the profit) but the CRA mortgages by themselves had little to nothing to do with it. They didn't create the bubble and they didn't pop it either.

Again, if the CRA had nothing to do with it, and if F&F had nothing to do with it, then please give a logical, and rational explanation for why the sub-prime market was completely flat until 1997, and why there were no Sub-prime mortgage backed securities until 1997.

I've looked... and I can't find a single instance where a sub-prime mortgage was given a AAA rating until 1997. If you can show me an example where it happened before 1997, then you might have a point.

But until 1997, when Freddie Mac gave sub-prime mortgages a AAA rating, it didn't happen. I even have read that rating agencies never considered rating sub-prime loans because it was well established that they were not worth rating. Why rate something that you already know will fail to get even the lowest rating?

That is, until the Federal Government, through Freddie Mac, gave them a AAA rating.

This is what I don't get about you people on the left. You routinely want to use the power of government to influence the market. But then when government influences the market to do something bad, you blame "the market" for not ignoring the government, and doing the smart thing instead.

Sorry, you can't have it both ways. If you want government to influence the market with the CRA and Freddie and Fannie, then you should expect that when government pushes bad loans, that the market will follow. You lose the option of blaming the market for making bad loans, when you are suing banks to make bad loans, and pushing bad loans with F&F.

You keep presenting incorrect facts and I keep correcting them. F&F are not ratings agencies. I am in no way denying that F&F thought that the MBS were AAA when they were not.

The practice was to create AAA rated MBS by mixing different types of loans together. They(Financial Institutions, F&F, and ratings agencies) used a formula(85:15 ratio) to justify this rating. In addition the ratings of the underlying mortgages was incorrect. The regulation of the creation of these mortgages and the creation of these MBS decreased during this time as well.

There were a lot of problems that contributed to the incorrect ratings of both the mortgages and the MBS but the biggest one was the fact that they were not taking into account the bubble that was created by the Federal Reserve lowering interest rates. This failure only lead to the bubble growing bigger as capital flowed to these MBS.

During this time there was a growth in sub-prime loans other than CRA loans in large part due to the fact that the financial institutions were making billions off of the market and were chasing the profit levels they had at the start of the bubble.

These financial institutions make a lot of money off of these MBS so I have to wonder if you live in a world where they are not responsible for making decisions then why are they making money in the first place?

Again you blame the bubble on lower interest rates, while completely ignoring the NEW PEOPLE BROUGHT INTO THE MARKET based on reduced qualifications ordered by law. The new people given loans that would not have been approved at all prior to CRA laws are a big part of the problem. When you are in a bubble and you add more buyers into the bubble that makes the bubble even larger. Why? Because the market at the time was a sellers market in which buyers were bidding up the prices of the homes to astronomical levels that had no support prior to the CRA enactment.

For example, if there's only one home available in a neighborhood and 10 people are trying to out bid each other to buy it, the mere fact that there are a thousand homes in the neighborhood that are NOT for sale is a moot point. The new buyers fighting for their piece of the bubble are the ones that typically inflate the bubble with rash decisions.

 

[ScienceRocks]

capitalism is simply the natural way human function. People want something for their work and capitalism answers the question to how we work together.

Not to say that some socialism isn't good too. That's why we have a hybrid system

 

[Indeependent]

Again, if the CRA had nothing to do with it, and if F&F had nothing to do with it, then please give a logical, and rational explanation for why the sub-prime market was completely flat until 1997, and why there were no Sub-prime mortgage backed securities until 1997.

I've looked... and I can't find a single instance where a sub-prime mortgage was given a AAA rating until 1997. If you can show me an example where it happened before 1997, then you might have a point.

But until 1997, when Freddie Mac gave sub-prime mortgages a AAA rating, it didn't happen. I even have read that rating agencies never considered rating sub-prime loans because it was well established that they were not worth rating. Why rate something that you already know will fail to get even the lowest rating?

That is, until the Federal Government, through Freddie Mac, gave them a AAA rating.

This is what I don't get about you people on the left. You routinely want to use the power of government to influence the market. But then when government influences the market to do something bad, you blame "the market" for not ignoring the government, and doing the smart thing instead.

Sorry, you can't have it both ways. If you want government to influence the market with the CRA and Freddie and Fannie, then you should expect that when government pushes bad loans, that the market will follow. You lose the option of blaming the market for making bad loans, when you are suing banks to make bad loans, and pushing bad loans with F&F.

You keep presenting incorrect facts and I keep correcting them. F&F are not ratings agencies. I am in no way denying that F&F thought that the MBS were AAA when they were not.

The practice was to create AAA rated MBS by mixing different types of loans together. They(Financial Institutions, F&F, and ratings agencies) used a formula(85:15 ratio) to justify this rating. In addition the ratings of the underlying mortgages was incorrect. The regulation of the creation of these mortgages and the creation of these MBS decreased during this time as well.

There were a lot of problems that contributed to the incorrect ratings of both the mortgages and the MBS but the biggest one was the fact that they were not taking into account the bubble that was created by the Federal Reserve lowering interest rates. This failure only lead to the bubble growing bigger as capital flowed to these MBS.

During this time there was a growth in sub-prime loans other than CRA loans in large part due to the fact that the financial institutions were making billions off of the market and were chasing the profit levels they had at the start of the bubble.

These financial institutions make a lot of money off of these MBS so I have to wonder if you live in a world where they are not responsible for making decisions then why are they making money in the first place?

Again you blame the bubble on lower interest rates, while completely ignoring the NEW PEOPLE BROUGHT INTO THE MARKET based on reduced qualifications ordered by law. The new people given loans that would not have been approved at all prior to CRA laws are a big part of the problem. When you are in a bubble and you add more buyers into the bubble that makes the bubble even larger. Why? Because the market at the time was a sellers market in which buyers were bidding up the prices of the homes to astronomical levels that had no support prior to the CRA enactment.

For example, if there's only one home available in a neighborhood and 10 people are trying to out bid each other to buy it, the mere fact that there are a thousand homes in the neighborhood that are NOT for sale is a moot point. The new buyers fighting for their piece of the bubble are the ones that typically inflate the bubble with rash decisions.

Find me documentation where the lending standards were lowered.

 

[Bombur]

Again, if the CRA had nothing to do with it, and if F&F had nothing to do with it, then please give a logical, and rational explanation for why the sub-prime market was completely flat until 1997, and why there were no Sub-prime mortgage backed securities until 1997.

I've looked... and I can't find a single instance where a sub-prime mortgage was given a AAA rating until 1997. If you can show me an example where it happened before 1997, then you might have a point.

But until 1997, when Freddie Mac gave sub-prime mortgages a AAA rating, it didn't happen. I even have read that rating agencies never considered rating sub-prime loans because it was well established that they were not worth rating. Why rate something that you already know will fail to get even the lowest rating?

That is, until the Federal Government, through Freddie Mac, gave them a AAA rating.

This is what I don't get about you people on the left. You routinely want to use the power of government to influence the market. But then when government influences the market to do something bad, you blame "the market" for not ignoring the government, and doing the smart thing instead.

Sorry, you can't have it both ways. If you want government to influence the market with the CRA and Freddie and Fannie, then you should expect that when government pushes bad loans, that the market will follow. You lose the option of blaming the market for making bad loans, when you are suing banks to make bad loans, and pushing bad loans with F&F.

You keep presenting incorrect facts and I keep correcting them. F&F are not ratings agencies. I am in no way denying that F&F thought that the MBS were AAA when they were not.

The practice was to create AAA rated MBS by mixing different types of loans together. They(Financial Institutions, F&F, and ratings agencies) used a formula(85:15 ratio) to justify this rating. In addition the ratings of the underlying mortgages was incorrect. The regulation of the creation of these mortgages and the creation of these MBS decreased during this time as well.

There were a lot of problems that contributed to the incorrect ratings of both the mortgages and the MBS but the biggest one was the fact that they were not taking into account the bubble that was created by the Federal Reserve lowering interest rates. This failure only lead to the bubble growing bigger as capital flowed to these MBS.

During this time there was a growth in sub-prime loans other than CRA loans in large part due to the fact that the financial institutions were making billions off of the market and were chasing the profit levels they had at the start of the bubble.

These financial institutions make a lot of money off of these MBS so I have to wonder if you live in a world where they are not responsible for making decisions then why are they making money in the first place?

Again you blame the bubble on lower interest rates, while completely ignoring the NEW PEOPLE BROUGHT INTO THE MARKET based on reduced qualifications ordered by law. The new people given loans that would not have been approved at all prior to CRA laws are a big part of the problem. When you are in a bubble and you add more buyers into the bubble that makes the bubble even larger. Why? Because the market at the time was a sellers market in which buyers were bidding up the prices of the homes to astronomical levels that had no support prior to the CRA enactment.

For example, if there's only one home available in a neighborhood and 10 people are trying to out bid each other to buy it, the mere fact that there are a thousand homes in the neighborhood that are NOT for sale is a moot point. The new buyers fighting for their piece of the bubble are the ones that typically inflate the bubble with rash decisions.

The bubble was a direct result of the change in interest rates because people buy their home based on the monthly payment and can afford a mortgage based on the monthly payment.

I have not denied that there was an increase in sub-prime loans. Not all of those loans were CRA loans though. The fact that the market was taking on more risk free of the government doesn’t really help your point that the market was avoiding risk and had it forced upon them by government.

The idea that the CRA increased the prices by increasing demand may very well be true but that increase doesn’t even come close to mathematically justifying the size of the bubble or the massive capital inflows into the market that fueled that bubble. It doesn’t justify the increases in home prices for all homes. The majority of which are not impacted by the CRA.

 

[Contumacious]

Capitalism produces inequality because some people are better than others.
Some people are lazy whilst others work hard.
Some people are bright but some are stupid.
Some fuck about in school but others do every homework.

The bright and hard working tend to get paid more or run business.
The rest are toilet cleaners or whatever.

Live with it.

I'm an ardent advocate of free markets, but this point of view never sets well with me. Economic success is a very narrow measure of a person, and its foolish to say that people who achieve it are 'better' than others. They're just better at economics, and perhaps more industrious. But those aren't the only virtues, not even the most important ones in my view.

As a taxpayer and a producer those are the characteristics that matter to me.

The welfare/warfare police state will have no qualms about crushing me if I fail or refuse to financially support the parasites.

.