House Republicans Invite the Architect of the Financial Crisis for Advice

[g5000]

The GSEs were the traditional buyers of subprime paper. They had the largest market share. But it was not a big market. They did this at a very conservative rate for decades.

It was Wall Street which put that market on steroids. The GSEs held back and then joined the feeding frenzy later.

It was Wall Street who began pumping and dumping ARMs and Pick-A-Pays. It was Wall Street which made the subprime market become much, much bigger.

They elbowed their way in "in a very large way".

 

[mikegriffith1]

How on earth was Phil Gramm the "architect of the financial crisis"? The chief culprits behind the financial crisis were Freddie and Fannie, who secured or financed well over $1 trillion in high-risk home loans, which in turn grossly distorted the housing market. If there had not been hundreds of billions of dollars of unwise home loans, there would have been no such loans to bundle into "toxic assets" in the first place and the financial crisis either would have been avoided or markedly less severe.

And when the financial crisis hit, the misguided and unrealistic mark-to-market restrictions imposed by Sarbanes-Oxley prevented companies from responding to devaluation pressure the way they could and should have.

That said, I agree with you about Gramm's comments regarding the compensation of his friend at AT&T. How many millions of dollars is enough? His comments show he is far out of touch with most Americans. Most people would be appalled to hear him complain about someone "only" getting millions of dollars.

 

[g5000]

How on earth was Phil Gramm the "architect of the financial crisis"? The chief culprits behind the financial crisis were Freddie and Fannie, who secured or financed well over $1 trillion in high-risk home loans, which in turn grossly distorted the housing market

Another fool carefully hand fed manufactured bullshit.

Read my previous two posts. The GSEs followed Wall Street's lead.

 

[nuhuh]

How on earth was Phil Gramm the "architect of the financial crisis"? The chief culprits behind the financial crisis were Freddie and Fannie, who secured or financed well over $1 trillion in high-risk home loans, which in turn grossly distorted the housing market. If there had not been hundreds of billions of dollars of unwise home loans, there would have been no such loans to bundle into "toxic assets" in the first place and the financial crisis either would have been avoided or markedly less severe.

And when the financial crisis hit, the misguided and unrealistic mark-to-market restrictions imposed by Sarbanes-Oxley prevented companies from responding to devaluation pressure the way they could and should have.

That said, I agree with you about Gramm's comments regarding the compensation of friend at AT&T. How many millions of dollars is enough?

Certainly

There isn't a "sole" architect, I can think of more than a dozen, yet as Chairman of the Senate Banking Committee he certainly had a powerful voice and an influential hand in making policy and law and along with Alan Greenspan, Robert Rubin they lobbied successfully to prevent regulation to derivative markets.

 

[g5000]

An allegory.

Bob buys and sells cars. Blue cars, green cars, red cars, yellow cars, black cars.

Yellow cars aren't very popular, so Bob doesn't carry that many on his lot.

Joe also sells cars, but he lets Bob sell most of the yellow cars in town since they are a risk to buy as they don't sell very well.

Then one day, Joe figures out a way to make yellow cars EXTREMELY popular. He creates a no down payment scheme, with low low payments for the first three years. So Joe starts buying and selling as many yellow cars as he can. Joe moves into the yellow car market "in a very large way".

Bob doesn't get it at first, so he waits. But after a while, he sees how wildly popular yellow cars have become and realizes he is missing out on a huge cash cow. So now Bob starts buying and selling as many yellow cars as he can.

Where Bob once had 90 percent of a very small yellow car market, he now has less than 50 percent of a much, much larger yellow car market.

Joe gets a little ticked off. He does not like Bob biting into his yellow car market share. So Joe tries to get the city council to rezone Bob's car lot into a residential district. But this plan fails. If it had succeeded, Bob would have been out of the yellow car business, and Joe would own the entire market.

Two years later, the city council changes. It is now dominated by the opposite party.

Ultimately, the yellow car bubble implodes. The low low payment period ends, and now the yellow car owners have to start making much bigger payments. Many of them can't afford the bigger payments and they put their yellow cars up for sale. Now the yellow car market is saturated and the price of yellow cars plummets.

Along comes a retarded politician who says, "Bob's the culprit. He initiated this bubble and it would never have happened were it not for fucking Bob!"

An even bigger retard comes along and says, "It's the fault of the current city council! Look at all these underwater yellow cars that happened on their watch!"

The biggest retard of all says, "Bob was FORCED to sell those yellow cars!"

 

[Dot Com]

LOL, freaking DNC Washington Compost. My freaking gawd are they lower than a snake

can you refute any of it staphanie?

 

[occupied]

Gramm wasn't he the guy who thwarted the Presidents request to reform Fannie and Freddie, telling us "these two entities... Are not in any financial difficulties"

If it was up to you guys we would have bubble after bubble after bubble and everything would be just fine as long as you could find some way to blame it on someone other than bankers.

 

[OnePercenter]

Architect of the financial crisis? Do you mean Barney Frank? Lest we forget the democrat party held the majority in both houses when Fannie Mae went under, bringing down the financial market. Frank was chairperson of the powerful House Banking Committee which had oversight responsibility for Fannie Mae and Frank told Americans (and the world) that Fannie was solvent and doing fine when it was clearly on the verge of collapse. Frank was either a fool who didn't have a clue or he planned the collapse as the biggest October surprise in history. Nobody ever asked him what the hell he was talking about before he retired and ran off with his boyfriend.

If BushCo had policed the financial institutions 2007-2008 wouldn't have occurred.

 

[g5000]

Gramm wasn't he the guy who thwarted the Presidents request to reform Fannie and Freddie, telling us "these two entities... Are not in any financial difficulties"

If it was up to you guys we would have bubble after bubble after bubble and everything would be just fine as long as you could find some way to blame it on someone other than bankers.

We're in an even bigger bubble right now.

And the Too Big To Fail banks, a.k.a. SIFIs (Systemically Important Financial Institutions), are bigger than ever. When the bubble pops, we will be calling them Too Big To Save, and we are all fucked.

 

[whitehall]

Architect of the financial crisis? Do you mean Barney Frank? Lest we forget the democrat party held the majority in both houses when Fannie Mae went under, bringing down the financial market. Frank was chairperson of the powerful House Banking Committee which had oversight responsibility for Fannie Mae and Frank told Americans (and the world) that Fannie was solvent and doing fine when it was clearly on the verge of collapse. Frank was either a fool who didn't have a clue or he planned the collapse as the biggest October surprise in history. Nobody ever asked him what the hell he was talking about before he retired and ran off with his boyfriend.

I didn't expect you to pull out what you learned in your Fascist re-education camp, but there is a reason why the bill that replaced Glass-Steagall is called Gramm-Leach-Blilely no mistake that all three are prominent Republicans.

Is it alleged By the useful idiots on the left that Graham-Leach, signed into law by Bill Clinton was the cause of Fannie Mae's collapse? How freaking absurd

 

[Stephanie]

Architect of the financial crisis? Do you mean Barney Frank? Lest we forget the democrat party held the majority in both houses when Fannie Mae went under, bringing down the financial market. Frank was chairperson of the powerful House Banking Committee which had oversight responsibility for Fannie Mae and Frank told Americans (and the world) that Fannie was solvent and doing fine when it was clearly on the verge of collapse. Frank was either a fool who didn't have a clue or he planned the collapse as the biggest October surprise in history. Nobody ever asked him what the hell he was talking about before he retired and ran off with his boyfriend.

I didn't expect you to pull out what you learned in your Fascist re-education camp, but there is a reason why the bill that replaced Glass-Steagall is called Gramm-Leach-Blilely no mistake that all three are prominent Republicans.

Is it alleged By the useful idiots on the left that Graham-Leach, signed into law by Bill Clinton was the cause of Fannie Mae's collapse? How freaking absurd

You can't expect them to be HONEST. everything is the fault of Republicans and they are going to STICK to that until they crawl to the polls to vote for their masters in the Democrat party. WashintonCompost is not A FREIND to any Republican. they have become a Mouthpiece of Propaganda for the DNC

 

[nuhuh]

Architect of the financial crisis? Do you mean Barney Frank? Lest we forget the democrat party held the majority in both houses when Fannie Mae went under, bringing down the financial market. Frank was chairperson of the powerful House Banking Committee which had oversight responsibility for Fannie Mae and Frank told Americans (and the world) that Fannie was solvent and doing fine when it was clearly on the verge of collapse. Frank was either a fool who didn't have a clue or he planned the collapse as the biggest October surprise in history. Nobody ever asked him what the hell he was talking about before he retired and ran off with his boyfriend.

I didn't expect you to pull out what you learned in your Fascist re-education camp, but there is a reason why the bill that replaced Glass-Steagall is called Gramm-Leach-Blilely no mistake that all three are prominent Republicans.

Is it alleged By the useful idiots on the left that Graham-Leach, signed into law by Bill Clinton was the cause of Fannie Mae's collapse? How freaking absurd

There is clearly a raft of people who can be blamed for the financial crisis, Phil Gramm was merely one of them and his prominence makes him an important figure in the cause and effect. So to you drooling, corporate-whoring ignoramuses, suck it up, we can list the causes all day long and in the end you will still be scratching your head because none of it will be what you heard on Fox News.

 

[occupied]

Architect of the financial crisis? Do you mean Barney Frank? Lest we forget the democrat party held the majority in both houses when Fannie Mae went under, bringing down the financial market. Frank was chairperson of the powerful House Banking Committee which had oversight responsibility for Fannie Mae and Frank told Americans (and the world) that Fannie was solvent and doing fine when it was clearly on the verge of collapse. Frank was either a fool who didn't have a clue or he planned the collapse as the biggest October surprise in history. Nobody ever asked him what the hell he was talking about before he retired and ran off with his boyfriend.

I didn't expect you to pull out what you learned in your Fascist re-education camp, but there is a reason why the bill that replaced Glass-Steagall is called Gramm-Leach-Blilely no mistake that all three are prominent Republicans.

Is it alleged By the useful idiots on the left that Graham-Leach, signed into law by Bill Clinton was the cause of Fannie Mae's collapse? How freaking absurd

Not that F+F was the entire source of the problem but you might be interested to learn that in 2005 and 2006 the same F+F reform bill died in congress because republicans did not want to pass regulation. It was already too late by then but a reform bill finally passed in 2007, sponsored by Nancy Pelosi. All that is water under the bridge now. The next bubble is student loans, everyone knows it, let's watch republicans do something to avert it. LOL they ain't going to do shit be cause they know that when the whole thing collapses they can just blame it on people who went to college and couldn't afford it, and Obama of course.

 

[OnePercenter]

You can't expect them to be HONEST. everything is the fault of Republicans and they are going to STICK to that until they crawl to the polls to vote for their masters in the Democrat party. WashintonCompost is not A FREIND to any Republican. they have become a Mouthpiece of Propaganda for the DNC

If BushCo had policed with existing laws, would the economic crash of 2007-2008 occurred? Please post Yes or No, and Why.

 

[OnePercenter]

There is clearly a raft of people who can be blamed for the financial crisis, Phil Gramm was merely one of them and his prominence makes him an important figure in the cause and effect. So to you drooling, corporate-whoring ignoramuses, suck it up, we can list the causes all day long and in the end you will still be scratching your head because none of it will be what you heard on Fox News.

Let's not forget the contribution of Phil Gramm to the S&L crisis.

 

[edthecynic]

The chief culprits behind the financial crisis were Freddie and Fannie, who secured or financed well over $1 trillion in high-risk home loans, which in turn grossly distorted the housing market. If there had not been hundreds of billions of dollars of unwise home loans, there would have been no such loans to bundle into "toxic assets" in the first place and the financial crisis either would have been avoided or markedly less severe.

Not quite!

The subprime market took off in 2004-2006, a time when Fannie and Freddie’s activities in the housing market were surpassed by the involvement of investment banks in originating subprime loans and bundling them together to create subprime MBS.

 

[Dragonlady]

No matter how many times you channel Krugman, you're still off in the trillions column. Fannie and Freddie step the standard for the paper they wanted to buy. They underwrote subprime paper as AAA.

Get the basic facts right -- for once

Your bias is preventing you from ever understanding the facts.

The GSEs were just a part of the picture. In fact, Wall Street was the larger part of the picture. Wall Street was writing far more toxic paper than the GSEs, and had a much larger market share of the secondary market than the GSEs.

Reducing the portfolios of the GSEs in 2005 as Bush attempted to do would only have resulted in all that paper being moved onto the Wall Street's books. This is exactly what Wall Street wanted. Even more market share.

Therefore, the outcome would have been identical.

"They underwrote subprime paper as AAA" is nonsensical. You are a monkey trying to mimic your betters.

You just don't know anything about the topic, its comical. You're cutting and pasting Krugmans moronic ideas.

You're off in the trillions column and labor under the misconception "wall street" FORCED f/f to buy subprime paper.

There's no fixing that kind of stupid

Now you are just making shit up, and constructing straw men to boot.

No one was forced to make those loans.

No one. That's another bullshit meme parroted by clueless retards.

You also have a reading comprehension problem, which is not surprising after seeing your nonsensical statement above.

I am not saying Wall Street would have been forced to buy the GSE loans. I am saying if the GSEs stopped making loans, Wall Street would have made those loans instead. They would have filled the demand vacuum.

Therefore, identical outcome.

Idiot.

One last time, F/F were writing AAA rated paper, the set the top tier and everyone underwrote behind them.

They dropped their standards to accept subprime as AAA, they were the binary financial black holes at the epicenter of the meltdown

You can say it over and over again, but that won't make it true. Fannie and Freddie were not the source of the bubble. The bubble happened because Wall Street WANTED subprime loans, because writing them was so very, very profitable. They encouraged brokers to oversell mortgages to make them subprime because they made more money off of subprime than they did conventional mortgages.

Fannie and Freddie got into the subprime market late, and only to remain competitive with the other lenders who couldn't write their subprime loans fast enough.

Conservatives, as always, refuse to take responsibility for the shit they do to the economy and the damage they cause, but you guys own this one.

 

[Dragonlady]

Architect of the financial crisis? Do you mean Barney Frank? Lest we forget the democrat party held the majority in both houses when Fannie Mae went under, bringing down the financial market. Frank was chairperson of the powerful House Banking Committee which had oversight responsibility for Fannie Mae and Frank told Americans (and the world) that Fannie was solvent and doing fine when it was clearly on the verge of collapse. Frank was either a fool who didn't have a clue or he planned the collapse as the biggest October surprise in history. Nobody ever asked him what the hell he was talking about before he retired and ran off with his boyfriend.

I didn't expect you to pull out what you learned in your Fascist re-education camp, but there is a reason why the bill that replaced Glass-Steagall is called Gramm-Leach-Blilely no mistake that all three are prominent Republicans.

Is it alleged By the useful idiots on the left that Graham-Leach, signed into law by Bill Clinton was the cause of Fannie Mae's collapse? How freaking absurd

It's not an allegation, it's a proven fact. History is made up of facts, not allegations.

It's why one of the first areas Obama dealt with was to a reform of banking regulations, which he signed into law in 2010.

Denial is not just a river in Egypt.

 

[Remodeling Maidiac]

House Republicans Invite the Architect of the Financial Crisis for Advice

Barney Frank was invited?