Democrats caused recession in 2007

[IcebergSlim]

The "optimal" tax is 10%?

The Federal take has been roughly 18% of gdp historically......

Totally, we can tax 10% and get 18% revenue - true story, Kaz himself said so.

His source is a tax attorney.....

 

[IcebergSlim]

Again that's not how it works, you are making up horses and whats on their back - it's a completely false analogy that doesn't represent reality of public DEBT's effect on economy.

The single biggest contributor to our deficits have been tax-cutting policies - would you say that those tax-cuts caused growth or contraction?

Tax cuts don't grow deficits, not at the rate we're taxing. You're a government lover, the more the better. I get it. I'm a liberty lover. Big government is in direct conflict with that

Tax cuts don't grow deficits


Please stop.....

Actually, you cut the part "not at the rate we're taxing."

Same book I just recommended

For Good and Evil: The Impact of Taxes on the Course of Civilization: Charles Adams: 9781568332352: Amazon.com: Books

Because absent some frame of reference, the comment is meaningless...

What about my post is unclear to you?

Because it doesn't "fix" the rate to which you are referring...... The fact that tax rate reductions DO, in fact, contribute to the deficit notwithstanding.

 

[AntonToo]

The "optimal" tax is 10%?

The Federal take has been roughly 18% of gdp historically......

Totally, we can tax 10% and get 18% revenue - true story, Kaz himself said so.

His source is a tax attorney.....

I doubt even his source would say that 10% across the board income tax can possibly make for 18% of GDP revenues.

 

[IcebergSlim]

The "optimal" tax is 10%?

The Federal take has been roughly 18% of gdp historically......

Totally, we can tax 10% and get 18% revenue - true story, Kaz himself said so.

His source is a tax attorney.....

I doubt even his source would say that 10% across the board income tax can possibly make for 18% of GDP revenues.

These flat tax freaks have an answer for everything...

 

[kaz]

When you are talking about a single variable, you analyze it according to the principle "all else held equal."

Laughing.....no, what YOU are talking about is a single variable, insisting that if we increase our debt supply, we devalue our currency.

I'm talking about the actual currency valuations and the actual forces that drive currency value. Which is far more complex than your cartoon simple assumptions.......which the actual history of currency valuation contradicts.

Which is why when we apply your theory to the real world.......your theory doesn't work. Our debt increases significantly....while the value of the dollar increases. Exactly opposite of what you insist 'should' happen.

You don't know how to have a logical discussion. Saying "all else held equal" does not mean that's the only variable, it means that's the effect that one variable has on the equation. I'll give you one more chance to have an actual discussion, then I'm going to just to back and mock you for not having ever taken an academic class. Let's say arbitrarily for three years there are only three variables that affect currency.

Year 1
Economic growth: +2%
Productivity: +1%
Printing money: -2%

Year 2
Economic growth: -2%
Productivity: -1%
Printing money: -2%

Year 1
Economic growth: +3%
Productivity: +5%
Printing money: -2%

Note that printing money in this example devalued the currency 2% each year. Let's assume that the inflation numbers are additive and not cumulative just to make the math easier, doesn't change the point

You're saying, the value of money in this case grew by 2%! Printing money didn't devalue the currency! Yes, it did.

Why? Economic growth and productivity had a net +8% increase while printing money was net -6%.

All else held equal means we only focus on the printing money part of that equation, it doesn't mean the rest of it doesn't exist. But the fact remains, had we not printed money in this example, the value of a dollar would have grown by 8%, not 2%.

Do you understand?

WTF?

You realize that you are demonstrating the validity of your premise by assuming that your premise is valid....

He doesn't even understand the discussion because he's a dumb ass. I was explaining the principle. He keeps thinking when I say "all else held equal" that it means there are no other variables. That isn't what it means. It means we are analyzing the effect of one variable, not that there are no other variables.

I said the example itself was completely made up, but I was explaining that to him

There is a joke about economists, the punchline of which is

"Assume we have a can opener....."

Your illustration is a perfect example...

That made no sense in the context of anything I said.

To a liberal, being snarky is a "perfect example" of anything

 

[kaz]

Tax cuts don't grow deficits, not at the rate we're taxing. You're a government lover, the more the better. I get it. I'm a liberty lover. Big government is in direct conflict with that

Tax cuts don't grow deficits


Please stop.....

Actually, you cut the part "not at the rate we're taxing."

Same book I just recommended

For Good and Evil: The Impact of Taxes on the Course of Civilization: Charles Adams: 9781568332352: Amazon.com: Books

Because absent some frame of reference, the comment is meaningless...

What about my post is unclear to you?

Because it doesn't "fix" the rate to which you are referring...... The fact that tax rate reductions DO, in fact, contribute to the deficit notwithstanding.

Again you know more than the field of economics, again you can't explain how you know that. Lawyer worship? Hillary told you, so it must be true! She's a lawyer.

I know this is shocking, but lawyers lie. Stunning, huh?

 

[IcebergSlim]

Laughing.....no, what YOU are talking about is a single variable, insisting that if we increase our debt supply, we devalue our currency.

I'm talking about the actual currency valuations and the actual forces that drive currency value. Which is far more complex than your cartoon simple assumptions.......which the actual history of currency valuation contradicts.

Which is why when we apply your theory to the real world.......your theory doesn't work. Our debt increases significantly....while the value of the dollar increases. Exactly opposite of what you insist 'should' happen.

You don't know how to have a logical discussion. Saying "all else held equal" does not mean that's the only variable, it means that's the effect that one variable has on the equation. I'll give you one more chance to have an actual discussion, then I'm going to just to back and mock you for not having ever taken an academic class. Let's say arbitrarily for three years there are only three variables that affect currency.

Year 1
Economic growth: +2%
Productivity: +1%
Printing money: -2%

Year 2
Economic growth: -2%
Productivity: -1%
Printing money: -2%

Year 1
Economic growth: +3%
Productivity: +5%
Printing money: -2%

Note that printing money in this example devalued the currency 2% each year. Let's assume that the inflation numbers are additive and not cumulative just to make the math easier, doesn't change the point

You're saying, the value of money in this case grew by 2%! Printing money didn't devalue the currency! Yes, it did.

Why? Economic growth and productivity had a net +8% increase while printing money was net -6%.

All else held equal means we only focus on the printing money part of that equation, it doesn't mean the rest of it doesn't exist. But the fact remains, had we not printed money in this example, the value of a dollar would have grown by 8%, not 2%.

Do you understand?

WTF?

You realize that you are demonstrating the validity of your premise by assuming that your premise is valid....

He doesn't even understand the discussion because he's a dumb ass. I was explaining the principle. He keeps thinking when I say "all else held equal" that it means there are no other variables. That isn't what it means. It means we are analyzing the effect of one variable, not that there are no other variables.

I said the example itself was completely made up, but I was explaining that to him

There is a joke about economists, the punchline of which is

"Assume we have a can opener....."

Your illustration is a perfect example...

That made no sense in the context of anything I said.

To a liberal, being snarky is a "perfect example" of anything

In order to demonstrate that "printing money" devalues currency, you assume that printing money devalues currency......

 

[IcebergSlim]

Tax cuts don't grow deficits


Please stop.....

Actually, you cut the part "not at the rate we're taxing."

Same book I just recommended

For Good and Evil: The Impact of Taxes on the Course of Civilization: Charles Adams: 9781568332352: Amazon.com: Books

Because absent some frame of reference, the comment is meaningless...

What about my post is unclear to you?

Because it doesn't "fix" the rate to which you are referring...... The fact that tax rate reductions DO, in fact, contribute to the deficit notwithstanding.

Again you know more than the field of economics, again you can't explain how you know that. Lawyer worship? Hillary told you, so it must be true! She's a lawyer.

I know this is shocking, but lawyers lie. Stunning, huh?

I've done a bit of work in the field, academically and professionally....

The deficit is a function of both revenues and expenditures....tax rate reductions are considered a "tax expenditure" because they reduce revenues and thereby have a direct effect on the spread which constitutes the deficit (or surplus)...

 

[kaz]

You don't know how to have a logical discussion. Saying "all else held equal" does not mean that's the only variable, it means that's the effect that one variable has on the equation. I'll give you one more chance to have an actual discussion, then I'm going to just to back and mock you for not having ever taken an academic class. Let's say arbitrarily for three years there are only three variables that affect currency.

Year 1
Economic growth: +2%
Productivity: +1%
Printing money: -2%

Year 2
Economic growth: -2%
Productivity: -1%
Printing money: -2%

Year 1
Economic growth: +3%
Productivity: +5%
Printing money: -2%

Note that printing money in this example devalued the currency 2% each year. Let's assume that the inflation numbers are additive and not cumulative just to make the math easier, doesn't change the point

You're saying, the value of money in this case grew by 2%! Printing money didn't devalue the currency! Yes, it did.

Why? Economic growth and productivity had a net +8% increase while printing money was net -6%.

All else held equal means we only focus on the printing money part of that equation, it doesn't mean the rest of it doesn't exist. But the fact remains, had we not printed money in this example, the value of a dollar would have grown by 8%, not 2%.

Do you understand?

WTF?

You realize that you are demonstrating the validity of your premise by assuming that your premise is valid....

He doesn't even understand the discussion because he's a dumb ass. I was explaining the principle. He keeps thinking when I say "all else held equal" that it means there are no other variables. That isn't what it means. It means we are analyzing the effect of one variable, not that there are no other variables.

I said the example itself was completely made up, but I was explaining that to him

There is a joke about economists, the punchline of which is

"Assume we have a can opener....."

Your illustration is a perfect example...

That made no sense in the context of anything I said.

To a liberal, being snarky is a "perfect example" of anything

In order to demonstrate that "printing money" devalues currency, you assume that printing money devalues currency......

It was an example of what it means to analyze a single variable. You're stupid as fuck. How do you not grasp that?

Skylar keeps thinking when I said "all else held equal," it meant there are no other variables. If you hacks had gone to college, you'd have had to have come across that concept before. It's basic to any analysis discussion.

Ceteris paribus - Wikipedia, the free encyclopedia

 

[kaz]

Actually, you cut the part "not at the rate we're taxing."

Same book I just recommended

For Good and Evil: The Impact of Taxes on the Course of Civilization: Charles Adams: 9781568332352: Amazon.com: Books

Because absent some frame of reference, the comment is meaningless...

What about my post is unclear to you?

Because it doesn't "fix" the rate to which you are referring...... The fact that tax rate reductions DO, in fact, contribute to the deficit notwithstanding.

Again you know more than the field of economics, again you can't explain how you know that. Lawyer worship? Hillary told you, so it must be true! She's a lawyer.

I know this is shocking, but lawyers lie. Stunning, huh?

I've done a bit of work in the field, academically and professionally....

The deficit is a function of both revenues and expenditures....tax rate reductions are considered a "tax expenditure" because they reduce revenues and thereby have a direct effect on the spread which constitutes the deficit (or surplus)...

Tax cuts are relevant to deficits, both ways. But it's not as simple as that. I'm tired of explaining simple things to you. You don't grasp them even after repeated explanations of the same simple concept

 

[AntonToo]

Tax cuts are relevant to deficits, both ways. But it's not as simple as that. I'm tired of explaining simple things to you. You don't grasp them even after repeated explanations of the same simple concept

Bottom line is more or less that simple...minus some dynamic effects and avoidance factors, plus interest on debt, if you really want to geek out.

 

[ShaklesOfBigGov]

In the aftermath of the US Treasury’s decision to seize control of Fannie Mae and Freddie Mac, critics have hit at lax oversight of the mortgage companies.


The dominant theme has been that Congress let the two government-sponsored enterprises morph into a creature that eventually threatened the US financial system. Mike Oxley will have none of it.

Instead, the Ohio Republican who headed the House financial services committee until his retirement after mid-term elections last year, blames the mess on ideologues within the White House as well as Alan Greenspan, former chairman of the Federal Reserve.


The critics have forgotten that the House passed a GSE reform bill in 2005 that could well have prevented the current crisis, says Mr Oxley, now vice-chairman of
Nasdaq.


He fumes about the criticism of his House colleagues. “All the handwringing and bedwetting is going on without remembering how the House stepped up on this,” he says. “What did we get from the White House? We got a one-finger salute.”

Oxley hits back at ideologues - FT.com

Public record accounts of Fannie Mae and Freddie Mac as they occurred, and the concerns that were shared.


September 1999

With pressure from the Clinton Administration, Fannie Mae eased credit requirements on loans it would purchase from lenders, making it easier for banks to lend to borrowers unqualified for conventional loans. Raines explained that "there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market," reported the New York Times.

With this action, Fannie Mae put itself at substantial risk in the event of an economic downturn. "From the perspective of many people, including me, this is another thrift industry growing up around us," warned Peter Wallison. "If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry." The danger was known.


March 2000

Rep. Richard Baker (R-Louisiana) proposed a bill to reform Fannie and Freddie's oversight in a House Subcommittee on Capital Markets.

Rep. Frank (D-Massachusetts) dismissed the idea, saying concerns about the two were "overblown" and that there was "no federal liability there whatsoever."


June 2000

Rep. Marge Roukema (R-New Jersey): "very few banks or S&Ls could, even in this day and age, even now, meet the stress-testing requirements which Fannie and Freddie are required to meet."

Rep. Carolyn Maloney (D-New York) regarding the Treasury Department line of credit: "It is really symbolic, it is obsolete, it has never been used." "Would you explain why it would be important to repeal something that seems to be of little use?"

Smith: "as long as the pipeline is there, it is like it is very expandable. . . . It is only $2 billion today. It could be $200 billion tomorrow."

Because of Democrat obfuscation, Smith's "tomorrow" arrived in 2008 when Treasury Secretary Henry Paulson put Fannie and Freddie into conservatorship.


February 2003

OFHEO reports that "although investors perceive an implicit Federal guarantee of [GSE] obligations . . . the government has provided no explicit legal backing for them," warning that unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market, according to a White House release.


June 2003

Freddie Mac reported it had understated its profits by $6.9 billion. OFHEO director Armando Falcon Jr. requested that the White House audit Fannie Mae.


July 2003

Sens. Chuck Hagel (R-Nebraska), Elizabeth Dole (R-North Carolina) and John Sununu (R-New Hampshire) introduced legislation to address Regulation of Fannie Mae and Freddie Mac. The bill was blocked by Democrats.


September 2003

In an interview with Ron Insana for CNN Money, Rep. Baker warned, "I have concerns that if appropriate resources aren't allocated for internal risk management, the consequences will be far more severe than just a real estate slowdown. The losses would fall quickly through the capital these companies have and down to shareholders and taxpayers. These companies have some of the lowest capital margins of any financial institution in the nation, yet, at the same time, they are two of the largest. The concern is that if something doesn't work out the way they predict, the American taxpayer could be called on to pay off the debt in some sort of bailout."

Rep. Barney Frank (D-Massachusetts): "These two entities - Fannie Mae and Freddie Mac - are not facing any kind of financial crisis. . . . The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."


October 2003

Fannie Mae discloses $1.2 billion accounting error.


November 2003

Council of the Economic Advisers Chairman Greg Mankiw warned, "The enormous size of the mortgage-backed securities market means that any problems at the GSEs matter for the financial system as a whole. This risk is a systemic issue also because the debt obligations of the housing GSEs are widely held by other financial institutions. The importance of GSE debt in the portfolios of other financial entities means that even a small mistake in GSE risk management could have ripple effects throughout the financial system," from a White House release.


February 2004

Mankiw cautions Congress to "not take [the financial market's] strength for granted." Again, the call from the Administration was to reduce this risk by "ensuring that the housing GSEs are overseen by an effective regulator," says a White House release.

OFHEO reported that Fannie Mae and CEO Raines had manipulated its accounting to overstate its profits.Congress and the Bush administration sought strong new regulation and authority to put the GSEs under conservatorship if necessary. As the Washington Post reports, Fannie Mae and Freddie Mac responded by orchestrating a major campaign "by traditional allies including real estate agents, home builders and mortgage lenders. Fannie Mae ran radio and television ads ahead of a key Senate committee meeting, depicting a Latino couple who fretted that if the bill passed, mortgage rates would go up." Again, GSE pressure prevailed.


October 2004

In a subcommittee testimony, Democrats vehemently reject regulation of Fannie Mae in the face of dire warning of a Fannie Mae oversight report. A few of them, Black Caucus members in particular, are very angry at the OFHEO Director as they attempt to defend Fannie Mae and protect their CRA extortion racket.

Rep. Maxine Waters (D-California): "Through nearly a dozen hearings where, frankly, we were trying to fix something that wasn't broke."

Rep. Maxine Waters (D-California): "Mr. Chairman, we do not have a crisis at Freddie Mac, and particularly at Fannie Mae, under the outstanding leadership of Mr. Frank Raines."

Rep. Ed Royce (R-California): "In addition to our important oversight role in this committee, I hope that we will move swiftly to create a new regulatory structure for Fannie Mae, for Freddie Mac, and the federal home loan banks."

Rep. Lacy Clay (D-Missouri): "This hearing is about the political lynching of Franklin Raines."

Rep. Ed Royce (R-California): "There is a very simple solution. Congress must create a new regulator with powers at least equal to those of other financial regulators, such as the OCC or Federal Reserve."

Rep. Barney Frank (D-Massachusetts): "Uh, I, this, you, you, you seem to me saying, ‘Well, these are in areas which could raise safety and soundness problems.' I don't see anything in your report that raises safety and soundness problems."

Rep. Maxine Waters (D-California): "Under the outstanding leadership of Mr. Frank Raines, everything in the 1992 Act has worked just fine. In fact, the GSEs have exceeded their housing goals. What we need to do today is to focus on the regulator, and this must be done in a manner so as not to impede their affordable housing mission, a mission that has seen innovation flourish from desktop underwriting to 100% loans."

Rep. Don Manzullo (R-Illinois): "Mr. Raines, 1.1 million bonus and a $526,000 salary. Jamie Gorelick, $779,000 bonus on a salary of 567,000. This is, what you state on page eleven is nothing less than staggering."

Rep. Don Manzullo (R-Illinois): "The 1998 earnings per share number turned out to be $3.23 and 9 mills, a result that Fannie Mae met the EPS maximum payout goal right down to the penny."

Rep. Don Manzullo (R-Illinois): "Fannie Mae understood the rules and simply chose not to follow them that if Fannie Mae had followed the practices, there wouldn't have been a bonus that year."

"The bill prohibited the GSEs from holding portfolios, and gave their regulator prudential authority (such as setting capital requirements) roughly equivalent to a bank regulator. In light of the current financial crisis, this bill was probably the most important piece of financial regulation before Congress in 2005 and 2006," reports the Wall Street Journal.

Greenspan testified that the size of GSE portfolios "poses a risk to the global financial system. It would be difficult, if not impossible, to bail out the lenders [GSEs] . . . should one get into financial trouble." He added, "If we fail to strengthen GSE regulation, we increase the possibility of insolvency and crisis . . . We put at risk our ability to preserve safe and sound financial markets in the United States, a key ingredient of support for homeownership."

Greenspan warned that if the GSEs "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 . . . We are placing the total financial system of the future at a substantial risk."

Bloomberg writes, "If that bill had become law, then the world today would be different. . . . But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter. That such a reckless political stand could have been taken by the Democrats was obscene even then."



April 2007

In "A Nightmare Grows Darker," the New York Times writes that the "democratization of credit" is "turning the American dream of homeownership into a nightmare for many borrowers." The "newfangled mortgage loans" called "affordability loans" "represent 60 percent of foreclosures."


2007-2008

The housing bubble began to burst, bad mortgages began to default, and finally the Fannie Mae and Freddie Mac portfolios were revealed to be what they were, in collapse. And the testimony is evident as to why. As Wallison noted, "Fannie and Freddie were, I would say, the poster children for corporate welfare."


Archived-Articles: Why the Mortgage Crisis Happened

Did you see any reference to the 2005 proposals in that purge?

Actually the bill that prohibited the GSEs from holding portfolios, and gave their regulator prudential authority (such as setting capital requirements) roughly equivalent to a bank regulator, was from 2005. However democrats announced that this would be a partisan issue and they wouldn't play a part in it

 

[IcebergSlim]

WTF?

You realize that you are demonstrating the validity of your premise by assuming that your premise is valid....

He doesn't even understand the discussion because he's a dumb ass. I was explaining the principle. He keeps thinking when I say "all else held equal" that it means there are no other variables. That isn't what it means. It means we are analyzing the effect of one variable, not that there are no other variables.

I said the example itself was completely made up, but I was explaining that to him

There is a joke about economists, the punchline of which is

"Assume we have a can opener....."

Your illustration is a perfect example...

That made no sense in the context of anything I said.

To a liberal, being snarky is a "perfect example" of anything

In order to demonstrate that "printing money" devalues currency, you assume that printing money devalues currency......

It was an example of what it means to analyze a single variable. You're stupid as fuck. How do you not grasp that?

Skylar keeps thinking when I said "all else held equal," it meant there are no other variables. If you hacks had gone to college, you'd have had to have come across that concept before. It's basic to any analysis discussion.

Ceteris paribus - Wikipedia, the free encyclopedia

How does assuming the value of the single variable "test" it?

That is Tautologicus paribus...

I went to perfectly good college, and spent more hours delving into macro econ over the past 6 months than you have in your entire 22 years on the planet.

 

[ShaklesOfBigGov]

It doesn't meet the technical definition of a "recession" for sure. But we've had nothing but sluggish economic growth throughout the reign of Obama. Considering that follows a deep recession, we are in reality in the same recession.

The word RECESSION means economic contraction, slow growth is...wait for it....GROWTH.

We now have more GDP, more jobs, higher stock market, and nearly full employment - we are clearly past the ditch.

Nearly half of U.S. workers consider themselves underemployed, report says
Three-quarters of those who label themselves as such say they're not working in a job that uses their education and training. One quarter say they are working part time but want full-time work.
Nearly half of U.S. workers consider themselves underemployed, report says

• The unemployment rate for new college grads is 5.6 percent, compared with 5.5 percent in 2007.
• Young high school grads have an unemployment rate of 17.9 percent, compared with 15.9 percent in 2007.

for recent high-school graduates, about one-third are currently underemployed, compared with roughly 27 percent in 2007

Young college grads are suffering from an underemployment rate of 12.6 percent, compared with 9.6 percent in 2007

At the same time, many are entering the workforce with higher levels of debt, thanks to tuition fees that have increased far faster than median family income.

• Recent grads who are "idled" -- neither enrolled in school nor employed -- is still higher than before the recession. For college grads, the rate is now almost 10 percent, compared with 8.4 percent in 2007. About 15.5 percent of young high-school grads are now idled, compared with 13.7 percent in 2007.
• People of color are especially hard-hit. Young black college grads have an unemployment rate of 9.4 percent, compared with 8.9 percent in April 2007.

Job quality has eroded. In 2001, almost 42 percent of new college grads found jobs with pensions. That declined to just over 29 percent in 2015
Welcome to the job market, class of 2016: It still stinks

Looks like we have a very long way to go before we can say we "have recovered" in this economy

 

[IcebergSlim]

In the aftermath of the US Treasury’s decision to seize control of Fannie Mae and Freddie Mac, critics have hit at lax oversight of the mortgage companies.


The dominant theme has been that Congress let the two government-sponsored enterprises morph into a creature that eventually threatened the US financial system. Mike Oxley will have none of it.

Instead, the Ohio Republican who headed the House financial services committee until his retirement after mid-term elections last year, blames the mess on ideologues within the White House as well as Alan Greenspan, former chairman of the Federal Reserve.


The critics have forgotten that the House passed a GSE reform bill in 2005 that could well have prevented the current crisis, says Mr Oxley, now vice-chairman of
Nasdaq.


He fumes about the criticism of his House colleagues. “All the handwringing and bedwetting is going on without remembering how the House stepped up on this,” he says. “What did we get from the White House? We got a one-finger salute.”

Oxley hits back at ideologues - FT.com

Public record accounts of Fannie Mae and Freddie Mac as they occurred, and the concerns that were shared.


September 1999

With pressure from the Clinton Administration, Fannie Mae eased credit requirements on loans it would purchase from lenders, making it easier for banks to lend to borrowers unqualified for conventional loans. Raines explained that "there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market," reported the New York Times.

With this action, Fannie Mae put itself at substantial risk in the event of an economic downturn. "From the perspective of many people, including me, this is another thrift industry growing up around us," warned Peter Wallison. "If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry." The danger was known.


March 2000

Rep. Richard Baker (R-Louisiana) proposed a bill to reform Fannie and Freddie's oversight in a House Subcommittee on Capital Markets.

Rep. Frank (D-Massachusetts) dismissed the idea, saying concerns about the two were "overblown" and that there was "no federal liability there whatsoever."


June 2000

Rep. Marge Roukema (R-New Jersey): "very few banks or S&Ls could, even in this day and age, even now, meet the stress-testing requirements which Fannie and Freddie are required to meet."

Rep. Carolyn Maloney (D-New York) regarding the Treasury Department line of credit: "It is really symbolic, it is obsolete, it has never been used." "Would you explain why it would be important to repeal something that seems to be of little use?"

Smith: "as long as the pipeline is there, it is like it is very expandable. . . . It is only $2 billion today. It could be $200 billion tomorrow."

Because of Democrat obfuscation, Smith's "tomorrow" arrived in 2008 when Treasury Secretary Henry Paulson put Fannie and Freddie into conservatorship.


February 2003

OFHEO reports that "although investors perceive an implicit Federal guarantee of [GSE] obligations . . . the government has provided no explicit legal backing for them," warning that unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market, according to a White House release.


June 2003

Freddie Mac reported it had understated its profits by $6.9 billion. OFHEO director Armando Falcon Jr. requested that the White House audit Fannie Mae.


July 2003

Sens. Chuck Hagel (R-Nebraska), Elizabeth Dole (R-North Carolina) and John Sununu (R-New Hampshire) introduced legislation to address Regulation of Fannie Mae and Freddie Mac. The bill was blocked by Democrats.


September 2003

In an interview with Ron Insana for CNN Money, Rep. Baker warned, "I have concerns that if appropriate resources aren't allocated for internal risk management, the consequences will be far more severe than just a real estate slowdown. The losses would fall quickly through the capital these companies have and down to shareholders and taxpayers. These companies have some of the lowest capital margins of any financial institution in the nation, yet, at the same time, they are two of the largest. The concern is that if something doesn't work out the way they predict, the American taxpayer could be called on to pay off the debt in some sort of bailout."

Rep. Barney Frank (D-Massachusetts): "These two entities - Fannie Mae and Freddie Mac - are not facing any kind of financial crisis. . . . The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."


October 2003

Fannie Mae discloses $1.2 billion accounting error.


November 2003

Council of the Economic Advisers Chairman Greg Mankiw warned, "The enormous size of the mortgage-backed securities market means that any problems at the GSEs matter for the financial system as a whole. This risk is a systemic issue also because the debt obligations of the housing GSEs are widely held by other financial institutions. The importance of GSE debt in the portfolios of other financial entities means that even a small mistake in GSE risk management could have ripple effects throughout the financial system," from a White House release.


February 2004

Mankiw cautions Congress to "not take [the financial market's] strength for granted." Again, the call from the Administration was to reduce this risk by "ensuring that the housing GSEs are overseen by an effective regulator," says a White House release.

OFHEO reported that Fannie Mae and CEO Raines had manipulated its accounting to overstate its profits.Congress and the Bush administration sought strong new regulation and authority to put the GSEs under conservatorship if necessary. As the Washington Post reports, Fannie Mae and Freddie Mac responded by orchestrating a major campaign "by traditional allies including real estate agents, home builders and mortgage lenders. Fannie Mae ran radio and television ads ahead of a key Senate committee meeting, depicting a Latino couple who fretted that if the bill passed, mortgage rates would go up." Again, GSE pressure prevailed.


October 2004

In a subcommittee testimony, Democrats vehemently reject regulation of Fannie Mae in the face of dire warning of a Fannie Mae oversight report. A few of them, Black Caucus members in particular, are very angry at the OFHEO Director as they attempt to defend Fannie Mae and protect their CRA extortion racket.

Rep. Maxine Waters (D-California): "Through nearly a dozen hearings where, frankly, we were trying to fix something that wasn't broke."

Rep. Maxine Waters (D-California): "Mr. Chairman, we do not have a crisis at Freddie Mac, and particularly at Fannie Mae, under the outstanding leadership of Mr. Frank Raines."

Rep. Ed Royce (R-California): "In addition to our important oversight role in this committee, I hope that we will move swiftly to create a new regulatory structure for Fannie Mae, for Freddie Mac, and the federal home loan banks."

Rep. Lacy Clay (D-Missouri): "This hearing is about the political lynching of Franklin Raines."

Rep. Ed Royce (R-California): "There is a very simple solution. Congress must create a new regulator with powers at least equal to those of other financial regulators, such as the OCC or Federal Reserve."

Rep. Barney Frank (D-Massachusetts): "Uh, I, this, you, you, you seem to me saying, ‘Well, these are in areas which could raise safety and soundness problems.' I don't see anything in your report that raises safety and soundness problems."

Rep. Maxine Waters (D-California): "Under the outstanding leadership of Mr. Frank Raines, everything in the 1992 Act has worked just fine. In fact, the GSEs have exceeded their housing goals. What we need to do today is to focus on the regulator, and this must be done in a manner so as not to impede their affordable housing mission, a mission that has seen innovation flourish from desktop underwriting to 100% loans."

Rep. Don Manzullo (R-Illinois): "Mr. Raines, 1.1 million bonus and a $526,000 salary. Jamie Gorelick, $779,000 bonus on a salary of 567,000. This is, what you state on page eleven is nothing less than staggering."

Rep. Don Manzullo (R-Illinois): "The 1998 earnings per share number turned out to be $3.23 and 9 mills, a result that Fannie Mae met the EPS maximum payout goal right down to the penny."

Rep. Don Manzullo (R-Illinois): "Fannie Mae understood the rules and simply chose not to follow them that if Fannie Mae had followed the practices, there wouldn't have been a bonus that year."

"The bill prohibited the GSEs from holding portfolios, and gave their regulator prudential authority (such as setting capital requirements) roughly equivalent to a bank regulator. In light of the current financial crisis, this bill was probably the most important piece of financial regulation before Congress in 2005 and 2006," reports the Wall Street Journal.

Greenspan testified that the size of GSE portfolios "poses a risk to the global financial system. It would be difficult, if not impossible, to bail out the lenders [GSEs] . . . should one get into financial trouble." He added, "If we fail to strengthen GSE regulation, we increase the possibility of insolvency and crisis . . . We put at risk our ability to preserve safe and sound financial markets in the United States, a key ingredient of support for homeownership."

Greenspan warned that if the GSEs "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 . . . We are placing the total financial system of the future at a substantial risk."

Bloomberg writes, "If that bill had become law, then the world today would be different. . . . But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter. That such a reckless political stand could have been taken by the Democrats was obscene even then."



April 2007

In "A Nightmare Grows Darker," the New York Times writes that the "democratization of credit" is "turning the American dream of homeownership into a nightmare for many borrowers." The "newfangled mortgage loans" called "affordability loans" "represent 60 percent of foreclosures."


2007-2008

The housing bubble began to burst, bad mortgages began to default, and finally the Fannie Mae and Freddie Mac portfolios were revealed to be what they were, in collapse. And the testimony is evident as to why. As Wallison noted, "Fannie and Freddie were, I would say, the poster children for corporate welfare."


Archived-Articles: Why the Mortgage Crisis Happened

Did you see any reference to the 2005 proposals in that purge?

Actually the bill that prohibited the GSEs from holding portfolios, and gave their regulator prudential authority (such as setting capital requirements) roughly equivalent to a bank regulator, was from 2005. However democrats announced that this would be a partisan issue and they wouldn't play a part in it

Not exactly...

Here is the Republican co-sponsor (again)....

In October 2005 the House, by a vote of 331-90, passed a bill to establish a new federal regulator created for Fannie, Freddie and the Federal Home Loan Banks. The new regulator was authorized to set capital standards and, if it deemed necessary, require reductions in mortgage portfolios. The White House opposed the proposed legislation and instead supported the pending Senate bill. But the Senate bill never came up for a vote, and the legislation died.


In other words, the Republicans failed to negotiate a deal when they were in charge, and now place the blame on others. And once again, Fox News treats their distortions of history as reportable fact.

One Republican has a different take on events. Rep. Michael Oxley claimshis bill was opposed by White House “ideologues” who wanted to privatize Fannie and Freddie and who opposed a bigger government role.



Fox News: Barney Frank Escaped Blame for Fannie Mae's Problems Because He Is Gay

 

[AntonToo]

Nearly half of U.S. workers consider themselves underemployed, report says
Three-quarters of those who label themselves as such say they're not working in a job that uses their education and training. One quarter say they are working part time but want full-time work.
Nearly half of U.S. workers consider themselves underemployed, report says

Seems the article is self contradicting.

Do you see where they get anywhere near 50% from? I don't.

Here is what they do say:

Taking into account people who were working part time because they couldn't find full-time jobs as well as discouraged people who stopped looking, the rate was 9.7 percent, still above pre-recession levels of 8.4 percent, according to the Bureau of Labor Statistics.


So 9.7% now vs. 8.4% at height of the bubble, doesn't seem far off considering it came down from around 15%

 

[IcebergSlim]

Nearly half of U.S. workers consider themselves underemployed, report says
Three-quarters of those who label themselves as such say they're not working in a job that uses their education and training. One quarter say they are working part time but want full-time work.
Nearly half of U.S. workers consider themselves underemployed, report says

Seems the article is self contradicting.

Do you see where they get anywhere near 50% from? I don't.

Here is what they do say:

Taking into account people who were working part time because they couldn't find full-time jobs as well as discouraged people who stopped looking, the rate was 9.7 percent, still above pre-recession levels of 8.4 percent, according to the Bureau of Labor Statistics.


So 9.7% now vs. 8.4% at height of the bubble, doesn't seem far off considering it came down from around 15%

The 50% refers to survey respondents..... Not U6...

 

[Faun]

Democrats WANTED the recession, Democrats were desperate for the recession and fanned the flames every chance they got. Why? So they could retake congress and the White House. Untold millions thrown under the bus so a handful of Democrats to win an election. They are vile filth.

WTF? But Republicans were in control of the Congress and the executive branch.

 

[Faun]

I go by the data.....

You?

Only the data you want to believe

Oh? Is there data beyond GDP that supports the idiocy that we're still in a recession?

You mean compared to the 1970's or today? 95,000,000 people really want to know...

Did you ever reveal your source of this "95 million"?

Yes....

Public school?

You're lying. You have no source because there is no such source. Nowhere does the BLS indicate there are 95 million "want to be workers."

Which, of course, is why you don't provide a link -- since no such link exists.

 

[Juan de Fuca]

The very unavoidable simple fact is there were people lying in wait to profit over a recession and Donald Trump was vocal about it.

Two years before the housing market collapsed in 2008 and millions of Americans lost their homes, Donald Trump said he was hoping for a crash.

"I sort of hope that happens because then people like me would go in and buy," Trump said in a 2006 audiobook from Trump University, answering a question about "gloomy predictions that the real estate market is heading for a spectacular crash."

He isn't at fault himself, but he and many other speculators surely endorsed policies that would help them get to that point.