Right vs. Left is Logic vs. Emotion

[JonKoch]

Sorry Cupcake, the Washingtontimes ISN'T Wapo

/---- It was a typo. You're grasping for straws with that. Snicker
View attachment 130957

And yet you "believe" a rag like that? Shocking Cupcake

/---- Maybe you were two in 2008 which would make you about 11 now. I remember the stories and how it was being hyped on other message boards and Hildabeast blogs. You playing stupid doesn't change anything..

Sure you do Buttercup, I "believe" you


Hillary Clinton and/or members of her 2008 presidential campaign started the "birther" movement questioning whether Barack Obama was born in the U.S.

RATING: FALSE

Did Clinton Supporters Start the 'Birther' Movement?



Trump on Birtherism: Wrong, and Wrong
Trump on Birtherism: Wrong, and Wrong - FactCheck.org


Hillary Clinton and the birther movement: Still nothing there

No, Hillary Clinton didn't feed the birther movement

Donald Trump’s ridiculous claim that Hillary Clinton started the birther movement

WAPO


Donald Trump’s ridiculous claim that Hillary Clinton started the birther movement

AP fact check: Trump’s bogus birtherism claim about Clinton
AP fact check: Trump's bogus birtherism claim about Clinton


BUT WHAT WOULD I EXPECT FROM YOU FASCISTS WHO SUPPORT THE CHEETO

/----- So you reject the Washington Times but expect me to accept SNOOPES? BWHAHAHAHAHAHAHAHAHA
View attachment 130979

You meant SNOPES, AP, WAPO, FACTCHECK AND POLIFACT RIGHT CUPCAKE?

 

[P@triot]

polled 91 presidential historians

Are these the same people who were "polled" to determine that Hitlery Clinton would win in a landslide?

You dumb little monkey........you still haven't figured it out yet. 90 of those 91 "historians" were nothing more than left-wing nut-jobs with an agenda. Man alive are you stupid.

 

[P@triot]

real facts, data, science and history aren't allowed

That's the premise of this thread....snowflake. The left does not allow facts, data, science, history, etc. You people reject all of that because you place emotion and feelings above logic and reason.

 

[JonKoch]

polled 91 presidential historians

Are these the same people who were "polled" to determine that Hitlery Clinton would win in a landslide?

You dumb little monkey........you still haven't figured it out yet. 90 of those 91 "historians" were nothing more than left-wing nut-jobs with an agenda. Man alive are you stupid.

You do understand she DID win the popular vote, how polls are done Cupcake, by a LANDSLIDE of almost 3 million votes?

But no the 91 HISTORIANS POLLED IN THOSE 3 SEPARATE YEARS (SPANNING 16 YEARS) ALL SAY YOU ARE FULL OF SHIT CUPCAKE

 

[JonKoch]

real facts, data, science and history aren't allowed

That's the premise of this thread....snowflake. The left does not allow facts, data, science, history, etc. You people reject all of that because you place emotion and feelings above logic and reason.

Too funny Cupcake, your projection

 

[Cellblock2429]

/---- It was a typo. You're grasping for straws with that. Snicker
View attachment 130957

And yet you "believe" a rag like that? Shocking Cupcake

/---- Maybe you were two in 2008 which would make you about 11 now. I remember the stories and how it was being hyped on other message boards and Hildabeast blogs. You playing stupid doesn't change anything..

Sure you do Buttercup, I "believe" you


Hillary Clinton and/or members of her 2008 presidential campaign started the "birther" movement questioning whether Barack Obama was born in the U.S.

RATING: FALSE

Did Clinton Supporters Start the 'Birther' Movement?



Trump on Birtherism: Wrong, and Wrong
Trump on Birtherism: Wrong, and Wrong - FactCheck.org


Hillary Clinton and the birther movement: Still nothing there

No, Hillary Clinton didn't feed the birther movement

Donald Trump’s ridiculous claim that Hillary Clinton started the birther movement

WAPO


Donald Trump’s ridiculous claim that Hillary Clinton started the birther movement

AP fact check: Trump’s bogus birtherism claim about Clinton
AP fact check: Trump's bogus birtherism claim about Clinton


BUT WHAT WOULD I EXPECT FROM YOU FASCISTS WHO SUPPORT THE CHEETO

/----- So you reject the Washington Times but expect me to accept SNOOPES? BWHAHAHAHAHAHAHAHAHA
View attachment 130979

You meant SNOPES, AP, WAPO, FACTCHECK AND POLIFACT RIGHT CUPCAKE?

/---- Yes Snowflakes the same clowns that had Hildabeast in a landslide. BWHAHAHAAAHAHAHAHAHAH you tool.

 

[Cellblock2429]

polled 91 presidential historians

Are these the same people who were "polled" to determine that Hitlery Clinton would win in a landslide?

You dumb little monkey........you still haven't figured it out yet. 90 of those 91 "historians" were nothing more than left-wing nut-jobs with an agenda. Man alive are you stupid.

You do understand she DID win the popular vote, how polls are done Cupcake, by a LANDSLIDE of almost 3 million votes?

But no the 91 HISTORIANS POLLED IN THOSE 3 SEPARATE YEARS (SPANNING 16 YEARS) ALL SAY YOU ARE FULL OF SHIT CUPCAKE

/----- The popular vote is as meaningful as which ball team get the most hits in the world series as opposed to which team wins the most games. But we realize the Popular Vote is all you clowns have to crow about.

 

[danielpalos]

lol. Not at all; Thank You for proving my point.

re-state your alleged argument, right winger.

y'all usually just have, red herrings and other forms of diversions, like begging the question; which, are usually considered fallacies, to begin with.

I already restated twice, if you can't go back a re-read it, its on you. For a guy that claims he has solutions and pretends to be so much smarter than others, you have some serious comprehension issues.

if You don't really care but Only want to Protest too Much about it; why should I? I posted my argument, you declined to argue any refutation.

I win. It really is that simple, when those of the opposing view have nothing but repeal.

You posted nothing, I asked you to clarify and you have refused. I am done playing your silly diversion games when you get caught looking stupid. Either answer or don't. It is obvious you can't support your opinion otherwise it would have been done. Also repeal has nothing to do with the argument and another of your deflections which seem to get you off some how.

So, either clarify and if you don't and comeback with a stupid cliche, I know and so will everyone else that you have nothing to back up your silly argument.

How many times do I need to post an argument for you? Most people get it the first time and then go back and reread the post. Why can't you?

like i said; nothing but red herrings, and "emotion".

Like I said more cliches from you, you got nothing.

I'm not sure what your issue is, you made a statement, I asked for clarification and then you claim red herrings!

Could you please clarify your statement or you just going to continue your red herrings?

You are still complaining about Nothing; you have no argument.

 

[JonKoch]

And yet you "believe" a rag like that? Shocking Cupcake

/---- Maybe you were two in 2008 which would make you about 11 now. I remember the stories and how it was being hyped on other message boards and Hildabeast blogs. You playing stupid doesn't change anything..

Sure you do Buttercup, I "believe" you


Hillary Clinton and/or members of her 2008 presidential campaign started the "birther" movement questioning whether Barack Obama was born in the U.S.

RATING: FALSE

Did Clinton Supporters Start the 'Birther' Movement?



Trump on Birtherism: Wrong, and Wrong
Trump on Birtherism: Wrong, and Wrong - FactCheck.org


Hillary Clinton and the birther movement: Still nothing there

No, Hillary Clinton didn't feed the birther movement

Donald Trump’s ridiculous claim that Hillary Clinton started the birther movement

WAPO


Donald Trump’s ridiculous claim that Hillary Clinton started the birther movement

AP fact check: Trump’s bogus birtherism claim about Clinton
AP fact check: Trump's bogus birtherism claim about Clinton


BUT WHAT WOULD I EXPECT FROM YOU FASCISTS WHO SUPPORT THE CHEETO

/----- So you reject the Washington Times but expect me to accept SNOOPES? BWHAHAHAHAHAHAHAHAHA
View attachment 130979

You meant SNOPES, AP, WAPO, FACTCHECK AND POLIFACT RIGHT CUPCAKE?

/---- Yes Snowflakes the same clowns that had Hildabeast in a landslide. BWHAHAHAAAHAHAHAHAHAH you tool.

You DO know what 2.9+ million more votes is right Cupcake?


National Polling Accurately Nails Popular Vote

National Polling Accurately Nails Popular Vote

You keep "believing " Hil started the Trump racist meme on Obama's birther nonsense Cupcake

 

[JonKoch]

polled 91 presidential historians

Are these the same people who were "polled" to determine that Hitlery Clinton would win in a landslide?

You dumb little monkey........you still haven't figured it out yet. 90 of those 91 "historians" were nothing more than left-wing nut-jobs with an agenda. Man alive are you stupid.

You do understand she DID win the popular vote, how polls are done Cupcake, by a LANDSLIDE of almost 3 million votes?

But no the 91 HISTORIANS POLLED IN THOSE 3 SEPARATE YEARS (SPANNING 16 YEARS) ALL SAY YOU ARE FULL OF SHIT CUPCAKE

/----- The popular vote is as meaningful as which ball team get the most hits in the world series as opposed to which team wins the most games. But we realize the Popular Vote is all you clowns have to crow about.
View attachment 130995

Don't understand much how national polling has been done for decades huh Cupcake?

 

[Rustic]

polled 91 presidential historians

Are these the same people who were "polled" to determine that Hitlery Clinton would win in a landslide?

You dumb little monkey........you still haven't figured it out yet. 90 of those 91 "historians" were nothing more than left-wing nut-jobs with an agenda. Man alive are you stupid.

You do understand she DID win the popular vote, how polls are done Cupcake, by a LANDSLIDE of almost 3 million votes?

But no the 91 HISTORIANS POLLED IN THOSE 3 SEPARATE YEARS (SPANNING 16 YEARS) ALL SAY YOU ARE FULL OF SHIT CUPCAKE

Crazy Cali does not count.... The electoral college works perfectly to keep the Crazys at bay....
Trying to keep up fester

 

[danielpalos]

polled 91 presidential historians

Are these the same people who were "polled" to determine that Hitlery Clinton would win in a landslide?

You dumb little monkey........you still haven't figured it out yet. 90 of those 91 "historians" were nothing more than left-wing nut-jobs with an agenda. Man alive are you stupid.

You do understand she DID win the popular vote, how polls are done Cupcake, by a LANDSLIDE of almost 3 million votes?

But no the 91 HISTORIANS POLLED IN THOSE 3 SEPARATE YEARS (SPANNING 16 YEARS) ALL SAY YOU ARE FULL OF SHIT CUPCAKE

Crazy Cali does not count.... The electoral college works perfectly to keep the Crazys at bay....
Trying to keep up fester

it is ok; the left can always blame the Electoral College.

 

[Rustic]

polled 91 presidential historians

Are these the same people who were "polled" to determine that Hitlery Clinton would win in a landslide?

You dumb little monkey........you still haven't figured it out yet. 90 of those 91 "historians" were nothing more than left-wing nut-jobs with an agenda. Man alive are you stupid.

You do understand she DID win the popular vote, how polls are done Cupcake, by a LANDSLIDE of almost 3 million votes?

But no the 91 HISTORIANS POLLED IN THOSE 3 SEPARATE YEARS (SPANNING 16 YEARS) ALL SAY YOU ARE FULL OF SHIT CUPCAKE

Crazy Cali does not count.... The electoral college works perfectly to keep the Crazys at bay....
Trying to keep up fester

it is ok; the left can always blame the Electoral College.

Close only counts in horseshoes, and elections have consequences I think barry said that once... lol

 

[ShaklesOfBigGov]

People violate the law every day (they are called Dumbocrats). That includes left-wing Supreme Court Justices intentionally ignoring the U.S. Constitution in favor of their own personal political agenda.

Weird, it's like YOU live in some ALTERNATE UNIVERSE where facts and history don't matter like when you blame Gov't policy like CRA for Dubya's failure to reign in the Banksters in their WORLD WIDE SUBPRIME BUBBLE?



Yeah I can see how THIS was on BJ Bill's shoulders Cupcake:

Looks to me you're already started writing your autobiography. In case you haven't been paying attention I already recently debunked all that "blame Bush and banks" BS through an earlier post. However here it is again in showing you're completely wrong yet again. Wow, surprising as it may be.


.
Up until 1995 the Community Reinvestment Act was largely a requirement to support "community groups" in poor neighborhoods. ... But after 1995 the scope of the law was dramatically increased.

Over the strenuous objections of the banks themselves and some Republicans in Congress, CRA was renewed and modified in such a way that it gave far more power to the federal government to punish banks for not lending more widely in poor neighborhoods. The classic "fair housing" laws from the Martin Luther King Jr. era of civil rights were deemed insufficient. ... Subprime loans to minority applicants exploded ten fold in the mid-1990s as a result. ..]

Under New Deal-era regulatory rules of Glass-Steagall, commercial banks and investment banks were separated. When that act was repealed as part of banking deregulation in 1999, commercial banks and investment banks were able to merge, subject to approval by regulators.

However, the banks' CRA rating was taken into account in the decision. This meant that a high CRA rating became an important prerequisite for mergers, which increased the pressure on the banks to make these risky loans. The banks also were given permission to put these loans into packages of securities that could then be sold into investment markets.

Economist's View: Yet Again, It Wasn't the Community Reinvestment Act...



This below taken from an actual government document, identified by the GAO/GGD abbreviated attachment, outlining the changes:


Federal Reserve Board: Merger Process Needs Guidelines for Community Reinvestment Issues

( letter report 9/24/1999 GAO/GGD-99-180 )


In 1993, the Clinton Administration instructed the federal bank regulators to revise the CRA regulations by moving from a process- and paperwork-based system to a performance-based system focusing on results, especially the results in LMI areas of an institution's communities. Based on these instructions, the federal banking agencies replaced the qualitative CRA examination system with a more quantitative system that is based on actual performance.

( PAGE 4 )


After the performance-based CRA regulations were issued in 1995, FFIEC published Interagency Questions and Answers regarding Community Reinvestment in 1997 and 1999. The 1989 statement was withdrawn effective April 5, 1999, and replaced by the Interagency Questions and Answers regarding Community Reinvestment.13 The 1989 Statement, which was in effect during the mergers contained in our study, including guidance on the following issues: * the basic components of an effective CRA policy, * the role of examination reports on CRA performance in reviewing applications, * the need for periodic review and documentation by financial institutions of their CRA performance, and * the role of commitments in assessing and institution's performance. Most notably, the regulators concluded in the Statement that the CRA record of the institution, as reflected in its examination reports, would be given great weight in the application process. In the Interagency Questions and Answers for 1999, the regulators continued to stress the significants of the CRA examination in the application process, and they stated the examination is an important, and often controlling, factor in the consideration of an institution's record. 14 According to the 1989 Statement, the CRA examination is not conclusive evidence in the face of significant and supported allegations from a commenter. Moreover, the balance may be shifted further when the examination is not recent or the particular issue raised in the 13 Questions and Answers regarding Community Reinvestment, 64 Fed. Reg. 23618-23648 (1999). 14 64 Fed. Reg. at 23641. GAO/GGD-99-180

(Page 9)


Guidelines for Community of Reinvestment Issues B-280468 application preceding was not addressed in the examination. During the development of the performance-based CRA regulations, a number of commenters expressed concern that the regulators may provide a "safe harbor" to depository institutions from challenges to their CRA performance record in the application process if they achieved an outstanding CRA rating. However, in the preamble of the 1995 final rule on the CRA regulations, the regulators reconfirmed the importance of the public comments in the applications process by acknowledging that materials related to CRA performance received during the applications process can and do provide relevant and valuable information.

Federal Reserve Board: Merger Process Needs Guidelines for



"It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I'm not saying I'm sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn't have gotten them without that."

"But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it's one target, it's easy to blame them and congress certainly isn't going to blame themselves. At the same time, Congress is trying to pressure banks to loosen their lending standards to make more loans. This is exactly the same speech they criticized them for."

Bloomberg: 'Plain and simple,' Congress caused the mortgage crisis, not the banks | Capital New York

CUPCAKE YOUR FIRST LINK


Yet Again, It Wasn't the Community Reinvestment Act...

Another attempt to blame the Community Reinvestment Act for the subprime crisis. Don't believe a word of it:

Economist's View: Yet Again, It Wasn't the Community Reinvestment Act...


AS FOR BLOOMBERGS BS, A WORLD WIDE CREDIT BUBBLE AND BUST WAS CONGRESS'S FAULT BUTTERCUP??? LOL



Let’s just be clear about what the CRA does and doesn’t do. It simply says that if you open a branch office in a low income neighborhood and collect deposits there, you are obligated to do a certain amount of lending in that neighborhood. In other words, you can’t open a branch office in Harlem and use deposits from there to only fund loans in high-end Tribeca. A bank must make credit available on the same terms in both neighborhoods. In other words, a “red line” can’t be drawn around Harlem, a term that dates to when banks supposedly used colored pencils to draw no-loan zones on maps.

Showing that the CRA wasn’t the cause of the financial crisis is rather easy. As Warren Buffett pal Charlie Munger says, “Invert, always invert.” In this case, let’s assume Moore and Kudlow are correct, and the CRA did require banks to lend to unqualified, low-income buyers. What would that world have looked like?

Here’s what we should have seen:

• Home sales and prices in urban, minority communities would have led the national home market higher, with gains in percentage terms surpassing national figures;
  
  
• CRA mandated loans would have defaulted at higher rates;
  
  
• Foreclosures in these distressed urban CRA neighborhoods should have far outpaced those in the suburbs;
  
  
• Local lenders making these mortgages should have failed at much higher rates;
  
  
• Portfolios of banks participating in the Troubled Asset Relief Program should have been filled with securities made up of toxic CRA loans;
  
  
• Investors looking to profit should have been buying up properties financed with defaulted CRA loans; and
  
  
• Congressional testimony of financial industry executives after the crisis should have spelled out how the CRA was a direct cause, with compelling evidence backing their claims.

Yet none of these things happened. And they should have, if the CRA was at fault. It’s no surprise that in congressional testimony, various experts were asked about the CRA -- from former Federal Deposit Insurance Corp. Chairman Sheila Bair to the Federal Reserve’s director of Consumer and Community Affairs -- and none blamed the crisis on the CRA.

If that isn’t enough to dismiss the claim, consider this: Where did mortgages, especially subprime mortgages, default in large numbers?

It wasn’t Harlem, Philadelphia, Baltimore, Chicago, Detroit or any other poor, largely minority urban area covered by the CRA. No, the crisis was worst in Florida, Arizona, Nevada and California. Indeed, the vast majority of the housing collapse took place in the suburbs and exurbs, not the inner cities.

Now consider that much of the rest of the developed world also had a boom and bust in residential real estate that was worse than in the U.S. Oh, right -- those countries didn’t have the CRA.

What's more, many of the lenders that made the subprime loans that contributed so much to the collapse were private non-bank lenders that weren’t covered by the CRA. Almost 400 of these went bankrupt soon after housing began to wobble.

I have called the CRA blame meme “the big lie” -- and with good reason. It’s an old trope, tinged with elements of dog-whistle politics, blaming low-income residents in the inner cities regardless of what the data show.

Lending to Poor People Didn't Cause the Financial Crisis


BANKSTERS DROPPED ALL UNDERWRITING STANDARDS CUPCAKE, YOU KNOW WHAT THOSE ARE? HINT GOV'T BACKED LOANS REQUIRED THEM

Did you miss the government document siting the lowering of banks standards as a condition for bank mergers in allowing for more homeowners that previously failed through basic credit checks to be approved. Nothing you've stated had been able to discredit a government document source I provided which outlied the standards banks are to follow and used those standards as weight into bank mergers. You can keep challenging if you like, I've done the research with plenty more that I can provide. Trust me ... from what I've seen, you don't have enough knowledge on the subject. Keep your conspiracy theories, fruitcake, and let me know when you are old enough to have an honest discussion. You see, anyone who knows anything about the housing market KNOWS these changes that took effect happened well before the Bush Administration.

"You see, anyone who knows anything about the housing market KNOWS these changes that took effect happened well before the Bush Administration."

WEIRD CUPCAKE

From Bush's President's Working Group on Financial Markets March 2008

The Presidents Working Group's March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.



Q Did the Community Reinvestment Act under Carter/Clinton caused it?


A "Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "

Did the CRA cause the mortgage market meltdown? | Federal Reserve Bank of Minneapolis

SOMETHING HAPPENED ABOUT 2003 CUPCAKE, CAN YOU FIGURE IT OUT?

FACTS on Dubya's great recession

Oh my little fruitcake, you really don't know anything about housing market or the recession that followed. This below is a matter of public record. Plenty more additional evidence to follow if you need any actual facts on the subject. If you want to continue down this path, you won't get very far


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

 

[danielpalos]

The rich got to keep their multimillion dollar bonuses due to public policy, but the poor get less in food stamps, due to public policies.

 

[JonKoch]

Weird, it's like YOU live in some ALTERNATE UNIVERSE where facts and history don't matter like when you blame Gov't policy like CRA for Dubya's failure to reign in the Banksters in their WORLD WIDE SUBPRIME BUBBLE?



Yeah I can see how THIS was on BJ Bill's shoulders Cupcake:

Looks to me you're already started writing your autobiography. In case you haven't been paying attention I already recently debunked all that "blame Bush and banks" BS through an earlier post. However here it is again in showing you're completely wrong yet again. Wow, surprising as it may be.


.
Up until 1995 the Community Reinvestment Act was largely a requirement to support "community groups" in poor neighborhoods. ... But after 1995 the scope of the law was dramatically increased.

Over the strenuous objections of the banks themselves and some Republicans in Congress, CRA was renewed and modified in such a way that it gave far more power to the federal government to punish banks for not lending more widely in poor neighborhoods. The classic "fair housing" laws from the Martin Luther King Jr. era of civil rights were deemed insufficient. ... Subprime loans to minority applicants exploded ten fold in the mid-1990s as a result. ..]

Under New Deal-era regulatory rules of Glass-Steagall, commercial banks and investment banks were separated. When that act was repealed as part of banking deregulation in 1999, commercial banks and investment banks were able to merge, subject to approval by regulators.

However, the banks' CRA rating was taken into account in the decision. This meant that a high CRA rating became an important prerequisite for mergers, which increased the pressure on the banks to make these risky loans. The banks also were given permission to put these loans into packages of securities that could then be sold into investment markets.

Economist's View: Yet Again, It Wasn't the Community Reinvestment Act...



This below taken from an actual government document, identified by the GAO/GGD abbreviated attachment, outlining the changes:


Federal Reserve Board: Merger Process Needs Guidelines for Community Reinvestment Issues

( letter report 9/24/1999 GAO/GGD-99-180 )


In 1993, the Clinton Administration instructed the federal bank regulators to revise the CRA regulations by moving from a process- and paperwork-based system to a performance-based system focusing on results, especially the results in LMI areas of an institution's communities. Based on these instructions, the federal banking agencies replaced the qualitative CRA examination system with a more quantitative system that is based on actual performance.

( PAGE 4 )


After the performance-based CRA regulations were issued in 1995, FFIEC published Interagency Questions and Answers regarding Community Reinvestment in 1997 and 1999. The 1989 statement was withdrawn effective April 5, 1999, and replaced by the Interagency Questions and Answers regarding Community Reinvestment.13 The 1989 Statement, which was in effect during the mergers contained in our study, including guidance on the following issues: * the basic components of an effective CRA policy, * the role of examination reports on CRA performance in reviewing applications, * the need for periodic review and documentation by financial institutions of their CRA performance, and * the role of commitments in assessing and institution's performance. Most notably, the regulators concluded in the Statement that the CRA record of the institution, as reflected in its examination reports, would be given great weight in the application process. In the Interagency Questions and Answers for 1999, the regulators continued to stress the significants of the CRA examination in the application process, and they stated the examination is an important, and often controlling, factor in the consideration of an institution's record. 14 According to the 1989 Statement, the CRA examination is not conclusive evidence in the face of significant and supported allegations from a commenter. Moreover, the balance may be shifted further when the examination is not recent or the particular issue raised in the 13 Questions and Answers regarding Community Reinvestment, 64 Fed. Reg. 23618-23648 (1999). 14 64 Fed. Reg. at 23641. GAO/GGD-99-180

(Page 9)


Guidelines for Community of Reinvestment Issues B-280468 application preceding was not addressed in the examination. During the development of the performance-based CRA regulations, a number of commenters expressed concern that the regulators may provide a "safe harbor" to depository institutions from challenges to their CRA performance record in the application process if they achieved an outstanding CRA rating. However, in the preamble of the 1995 final rule on the CRA regulations, the regulators reconfirmed the importance of the public comments in the applications process by acknowledging that materials related to CRA performance received during the applications process can and do provide relevant and valuable information.

Federal Reserve Board: Merger Process Needs Guidelines for



"It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I'm not saying I'm sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn't have gotten them without that."

"But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it's one target, it's easy to blame them and congress certainly isn't going to blame themselves. At the same time, Congress is trying to pressure banks to loosen their lending standards to make more loans. This is exactly the same speech they criticized them for."

Bloomberg: 'Plain and simple,' Congress caused the mortgage crisis, not the banks | Capital New York

CUPCAKE YOUR FIRST LINK


Yet Again, It Wasn't the Community Reinvestment Act...

Another attempt to blame the Community Reinvestment Act for the subprime crisis. Don't believe a word of it:

Economist's View: Yet Again, It Wasn't the Community Reinvestment Act...


AS FOR BLOOMBERGS BS, A WORLD WIDE CREDIT BUBBLE AND BUST WAS CONGRESS'S FAULT BUTTERCUP??? LOL



Let’s just be clear about what the CRA does and doesn’t do. It simply says that if you open a branch office in a low income neighborhood and collect deposits there, you are obligated to do a certain amount of lending in that neighborhood. In other words, you can’t open a branch office in Harlem and use deposits from there to only fund loans in high-end Tribeca. A bank must make credit available on the same terms in both neighborhoods. In other words, a “red line” can’t be drawn around Harlem, a term that dates to when banks supposedly used colored pencils to draw no-loan zones on maps.

Showing that the CRA wasn’t the cause of the financial crisis is rather easy. As Warren Buffett pal Charlie Munger says, “Invert, always invert.” In this case, let’s assume Moore and Kudlow are correct, and the CRA did require banks to lend to unqualified, low-income buyers. What would that world have looked like?

Here’s what we should have seen:

• Home sales and prices in urban, minority communities would have led the national home market higher, with gains in percentage terms surpassing national figures;
  
  
• CRA mandated loans would have defaulted at higher rates;
  
  
• Foreclosures in these distressed urban CRA neighborhoods should have far outpaced those in the suburbs;
  
  
• Local lenders making these mortgages should have failed at much higher rates;
  
  
• Portfolios of banks participating in the Troubled Asset Relief Program should have been filled with securities made up of toxic CRA loans;
  
  
• Investors looking to profit should have been buying up properties financed with defaulted CRA loans; and
  
  
• Congressional testimony of financial industry executives after the crisis should have spelled out how the CRA was a direct cause, with compelling evidence backing their claims.

Yet none of these things happened. And they should have, if the CRA was at fault. It’s no surprise that in congressional testimony, various experts were asked about the CRA -- from former Federal Deposit Insurance Corp. Chairman Sheila Bair to the Federal Reserve’s director of Consumer and Community Affairs -- and none blamed the crisis on the CRA.

If that isn’t enough to dismiss the claim, consider this: Where did mortgages, especially subprime mortgages, default in large numbers?

It wasn’t Harlem, Philadelphia, Baltimore, Chicago, Detroit or any other poor, largely minority urban area covered by the CRA. No, the crisis was worst in Florida, Arizona, Nevada and California. Indeed, the vast majority of the housing collapse took place in the suburbs and exurbs, not the inner cities.

Now consider that much of the rest of the developed world also had a boom and bust in residential real estate that was worse than in the U.S. Oh, right -- those countries didn’t have the CRA.

What's more, many of the lenders that made the subprime loans that contributed so much to the collapse were private non-bank lenders that weren’t covered by the CRA. Almost 400 of these went bankrupt soon after housing began to wobble.

I have called the CRA blame meme “the big lie” -- and with good reason. It’s an old trope, tinged with elements of dog-whistle politics, blaming low-income residents in the inner cities regardless of what the data show.

Lending to Poor People Didn't Cause the Financial Crisis


BANKSTERS DROPPED ALL UNDERWRITING STANDARDS CUPCAKE, YOU KNOW WHAT THOSE ARE? HINT GOV'T BACKED LOANS REQUIRED THEM

Did you miss the government document siting the lowering of banks standards as a condition for bank mergers in allowing for more homeowners that previously failed through basic credit checks to be approved. Nothing you've stated had been able to discredit a government document source I provided which outlied the standards banks are to follow and used those standards as weight into bank mergers. You can keep challenging if you like, I've done the research with plenty more that I can provide. Trust me ... from what I've seen, you don't have enough knowledge on the subject. Keep your conspiracy theories, fruitcake, and let me know when you are old enough to have an honest discussion. You see, anyone who knows anything about the housing market KNOWS these changes that took effect happened well before the Bush Administration.

"You see, anyone who knows anything about the housing market KNOWS these changes that took effect happened well before the Bush Administration."

WEIRD CUPCAKE

From Bush's President's Working Group on Financial Markets March 2008

The Presidents Working Group's March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.



Q Did the Community Reinvestment Act under Carter/Clinton caused it?


A "Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "

Did the CRA cause the mortgage market meltdown? | Federal Reserve Bank of Minneapolis

SOMETHING HAPPENED ABOUT 2003 CUPCAKE, CAN YOU FIGURE IT OUT?

FACTS on Dubya's great recession

Oh my little fruitcake, you really don't know anything about housing market or the recession that followed. This below is a matter of public record. Plenty more additional evidence to follow if you need any actual facts on the subject. If you want to continue down this path, you won't get very far


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

Oh Goodie Cupcake, you go for the old out of context vids and loans performing well and Clinton $2 BILLION dollar experiment in 1999 that he ended in late 2000, WHERE CLINTON RESTRICED USE OF SUBPRIMES TO MEET THE AFFORDABLE HOUSING GOALS (DUBYA CHANGED THAT IN 2004 AND RAMPED IT UP FROM 50% TO 56% CUPCAKE) WooHoo


BTW, BIPARTISAN BILL PASSED THE HOUSE ON GSE REFORM, WHAT HAPPENED IN THE SENATE WHERE THE BILL GOT OUT OF THE COMMITTEE AGAIN?



You know Dubya got 2 UNFUNDED TAX CUTS, 2 UNFUNDED WARS, UNFUNDED MEDICARE EXPANSION THAT COST AS MUCH AS OBAMACARES 2013-2020 (CBO), AND A BILL TO GET BETWEEN A HUSBAND AND WIFE (SCHIAVO) BUT COULDN'T PASS GSE "REFORM" CUPCAKE?? LOL



GSE Critics Ignore Loan Performance

There is no data anywhere to cast doubt on the vastly superior loan performance of the GSEs. Year after year, decade after decade, before, during and after the housing crash, GSE loan performance has consistently been two-to-six times better than that of any other segment of the market. The numbers are irrefutable, and they show that the entire case against GSE underwriting standards, and their role in the financial crisis, is based on social stereotyping, smoke and mirrors, and little else.


...Or check out the FHFA study that compares, on an apples-to-apples basis, GSEs loan originations with those for private label securitizations. The study segments loans four ways, by ARMs-versus-fixed-rate, as well as by vintage, by FICO score and by loan-to-value ratio. In almost every one of 1800 different comparisons covering years 2001 through 2008, GSE loan performance was exponentially better. On average, GSE fixed-rate loans performed four times better, and GSE ARMs performed five times better.


AMERICAN BANKER

GSE Critics Ignore Loan Performance


“The idea that they were leading this charge is just absurd,” said Guy Cecala, publisher of Inside Mortgage Finance, an authoritative trade publication. “Fannie and Freddie have always had the tightest underwriting on earth…They were opposite of subprime.”

Wall Street, Not Fannie and Freddie, Led Mortgage Meltdown

 

[JonKoch]

Weird, it's like YOU live in some ALTERNATE UNIVERSE where facts and history don't matter like when you blame Gov't policy like CRA for Dubya's failure to reign in the Banksters in their WORLD WIDE SUBPRIME BUBBLE?



Yeah I can see how THIS was on BJ Bill's shoulders Cupcake:

Looks to me you're already started writing your autobiography. In case you haven't been paying attention I already recently debunked all that "blame Bush and banks" BS through an earlier post. However here it is again in showing you're completely wrong yet again. Wow, surprising as it may be.


.
Up until 1995 the Community Reinvestment Act was largely a requirement to support "community groups" in poor neighborhoods. ... But after 1995 the scope of the law was dramatically increased.

Over the strenuous objections of the banks themselves and some Republicans in Congress, CRA was renewed and modified in such a way that it gave far more power to the federal government to punish banks for not lending more widely in poor neighborhoods. The classic "fair housing" laws from the Martin Luther King Jr. era of civil rights were deemed insufficient. ... Subprime loans to minority applicants exploded ten fold in the mid-1990s as a result. ..]

Under New Deal-era regulatory rules of Glass-Steagall, commercial banks and investment banks were separated. When that act was repealed as part of banking deregulation in 1999, commercial banks and investment banks were able to merge, subject to approval by regulators.

However, the banks' CRA rating was taken into account in the decision. This meant that a high CRA rating became an important prerequisite for mergers, which increased the pressure on the banks to make these risky loans. The banks also were given permission to put these loans into packages of securities that could then be sold into investment markets.

Economist's View: Yet Again, It Wasn't the Community Reinvestment Act...



This below taken from an actual government document, identified by the GAO/GGD abbreviated attachment, outlining the changes:


Federal Reserve Board: Merger Process Needs Guidelines for Community Reinvestment Issues

( letter report 9/24/1999 GAO/GGD-99-180 )


In 1993, the Clinton Administration instructed the federal bank regulators to revise the CRA regulations by moving from a process- and paperwork-based system to a performance-based system focusing on results, especially the results in LMI areas of an institution's communities. Based on these instructions, the federal banking agencies replaced the qualitative CRA examination system with a more quantitative system that is based on actual performance.

( PAGE 4 )


After the performance-based CRA regulations were issued in 1995, FFIEC published Interagency Questions and Answers regarding Community Reinvestment in 1997 and 1999. The 1989 statement was withdrawn effective April 5, 1999, and replaced by the Interagency Questions and Answers regarding Community Reinvestment.13 The 1989 Statement, which was in effect during the mergers contained in our study, including guidance on the following issues: * the basic components of an effective CRA policy, * the role of examination reports on CRA performance in reviewing applications, * the need for periodic review and documentation by financial institutions of their CRA performance, and * the role of commitments in assessing and institution's performance. Most notably, the regulators concluded in the Statement that the CRA record of the institution, as reflected in its examination reports, would be given great weight in the application process. In the Interagency Questions and Answers for 1999, the regulators continued to stress the significants of the CRA examination in the application process, and they stated the examination is an important, and often controlling, factor in the consideration of an institution's record. 14 According to the 1989 Statement, the CRA examination is not conclusive evidence in the face of significant and supported allegations from a commenter. Moreover, the balance may be shifted further when the examination is not recent or the particular issue raised in the 13 Questions and Answers regarding Community Reinvestment, 64 Fed. Reg. 23618-23648 (1999). 14 64 Fed. Reg. at 23641. GAO/GGD-99-180

(Page 9)


Guidelines for Community of Reinvestment Issues B-280468 application preceding was not addressed in the examination. During the development of the performance-based CRA regulations, a number of commenters expressed concern that the regulators may provide a "safe harbor" to depository institutions from challenges to their CRA performance record in the application process if they achieved an outstanding CRA rating. However, in the preamble of the 1995 final rule on the CRA regulations, the regulators reconfirmed the importance of the public comments in the applications process by acknowledging that materials related to CRA performance received during the applications process can and do provide relevant and valuable information.

Federal Reserve Board: Merger Process Needs Guidelines for



"It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I'm not saying I'm sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn't have gotten them without that."

"But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it's one target, it's easy to blame them and congress certainly isn't going to blame themselves. At the same time, Congress is trying to pressure banks to loosen their lending standards to make more loans. This is exactly the same speech they criticized them for."

Bloomberg: 'Plain and simple,' Congress caused the mortgage crisis, not the banks | Capital New York

CUPCAKE YOUR FIRST LINK


Yet Again, It Wasn't the Community Reinvestment Act...

Another attempt to blame the Community Reinvestment Act for the subprime crisis. Don't believe a word of it:

Economist's View: Yet Again, It Wasn't the Community Reinvestment Act...


AS FOR BLOOMBERGS BS, A WORLD WIDE CREDIT BUBBLE AND BUST WAS CONGRESS'S FAULT BUTTERCUP??? LOL



Let’s just be clear about what the CRA does and doesn’t do. It simply says that if you open a branch office in a low income neighborhood and collect deposits there, you are obligated to do a certain amount of lending in that neighborhood. In other words, you can’t open a branch office in Harlem and use deposits from there to only fund loans in high-end Tribeca. A bank must make credit available on the same terms in both neighborhoods. In other words, a “red line” can’t be drawn around Harlem, a term that dates to when banks supposedly used colored pencils to draw no-loan zones on maps.

Showing that the CRA wasn’t the cause of the financial crisis is rather easy. As Warren Buffett pal Charlie Munger says, “Invert, always invert.” In this case, let’s assume Moore and Kudlow are correct, and the CRA did require banks to lend to unqualified, low-income buyers. What would that world have looked like?

Here’s what we should have seen:

• Home sales and prices in urban, minority communities would have led the national home market higher, with gains in percentage terms surpassing national figures;
  
  
• CRA mandated loans would have defaulted at higher rates;
  
  
• Foreclosures in these distressed urban CRA neighborhoods should have far outpaced those in the suburbs;
  
  
• Local lenders making these mortgages should have failed at much higher rates;
  
  
• Portfolios of banks participating in the Troubled Asset Relief Program should have been filled with securities made up of toxic CRA loans;
  
  
• Investors looking to profit should have been buying up properties financed with defaulted CRA loans; and
  
  
• Congressional testimony of financial industry executives after the crisis should have spelled out how the CRA was a direct cause, with compelling evidence backing their claims.

Yet none of these things happened. And they should have, if the CRA was at fault. It’s no surprise that in congressional testimony, various experts were asked about the CRA -- from former Federal Deposit Insurance Corp. Chairman Sheila Bair to the Federal Reserve’s director of Consumer and Community Affairs -- and none blamed the crisis on the CRA.

If that isn’t enough to dismiss the claim, consider this: Where did mortgages, especially subprime mortgages, default in large numbers?

It wasn’t Harlem, Philadelphia, Baltimore, Chicago, Detroit or any other poor, largely minority urban area covered by the CRA. No, the crisis was worst in Florida, Arizona, Nevada and California. Indeed, the vast majority of the housing collapse took place in the suburbs and exurbs, not the inner cities.

Now consider that much of the rest of the developed world also had a boom and bust in residential real estate that was worse than in the U.S. Oh, right -- those countries didn’t have the CRA.

What's more, many of the lenders that made the subprime loans that contributed so much to the collapse were private non-bank lenders that weren’t covered by the CRA. Almost 400 of these went bankrupt soon after housing began to wobble.

I have called the CRA blame meme “the big lie” -- and with good reason. It’s an old trope, tinged with elements of dog-whistle politics, blaming low-income residents in the inner cities regardless of what the data show.

Lending to Poor People Didn't Cause the Financial Crisis


BANKSTERS DROPPED ALL UNDERWRITING STANDARDS CUPCAKE, YOU KNOW WHAT THOSE ARE? HINT GOV'T BACKED LOANS REQUIRED THEM

Did you miss the government document siting the lowering of banks standards as a condition for bank mergers in allowing for more homeowners that previously failed through basic credit checks to be approved. Nothing you've stated had been able to discredit a government document source I provided which outlied the standards banks are to follow and used those standards as weight into bank mergers. You can keep challenging if you like, I've done the research with plenty more that I can provide. Trust me ... from what I've seen, you don't have enough knowledge on the subject. Keep your conspiracy theories, fruitcake, and let me know when you are old enough to have an honest discussion. You see, anyone who knows anything about the housing market KNOWS these changes that took effect happened well before the Bush Administration.

"You see, anyone who knows anything about the housing market KNOWS these changes that took effect happened well before the Bush Administration."

WEIRD CUPCAKE

From Bush's President's Working Group on Financial Markets March 2008

The Presidents Working Group's March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.



Q Did the Community Reinvestment Act under Carter/Clinton caused it?


A "Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "

Did the CRA cause the mortgage market meltdown? | Federal Reserve Bank of Minneapolis

SOMETHING HAPPENED ABOUT 2003 CUPCAKE, CAN YOU FIGURE IT OUT?

FACTS on Dubya's great recession

Oh my little fruitcake, you really don't know anything about housing market or the recession that followed. This below is a matter of public record. Plenty more additional evidence to follow if you need any actual facts on the subject. If you want to continue down this path, you won't get very far


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

Q When did the Bush Mortgage Bubble start?

A The general timeframe is it started late 2004.

From Bush's President's Working Group on Financial Markets March 2008

The Presidents Working Groups March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.



Q Did the Community Reinvestment Act under Carter/Clinton caused it?


A "Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "
Did the CRA cause the mortgage market meltdown? | Federal Reserve Bank of Minneapolis

Q Why is it commonly called the subprime bubble ?

A Because the Bush Mortgage Bubble coincided with the explosive growth of Subprime mortgage and politics. Also the subprime MBS market was the first to collapse in late 2006. In 2003, 10 % of all mortgages were subprime. In 2006, 40 % were subprime. This is a 300 % increase in subprime lending. (and notice it coincides with the dates of the Bush Mortgage bubble that Bush and the Fed said)


Right-wingers Want To Erase How George Bush's "Homeowner Society" Helped Cause The Economic Collapse


2004 Republican Convention:

Another priority for a new term is to build an ownership society, because ownership brings security and dignity and independence.
...

Thanks to our policies, home ownership in America is at an all- time high.

(APPLAUSE)

Tonight we set a new goal: 7 million more affordable homes in the next 10 years, so more American families will be able to open the door and say, "Welcome to my home."



FACTS on Dubya's great recession

 

[P@triot]

it is ok; the left can always blame the Electoral College.

Right? More evidence that the left rejects facts, science, data, and history in favor of emotion.

 

[P@triot]

Would that be the same guy who swore up and down (including before a Grand Jury) that he "did not have sexual relations with that woman)?

I feel like you're a toddler JonKoch - I have to tell you the obvious on everything. If you're going to make a case about facts - you can't post a quote and/or meme from a known pathological liar. You continue to prove the premise of this thread. Thank you.

 

[ShaklesOfBigGov]

Looks to me you're already started writing your autobiography. In case you haven't been paying attention I already recently debunked all that "blame Bush and banks" BS through an earlier post. However here it is again in showing you're completely wrong yet again. Wow, surprising as it may be.


.
Up until 1995 the Community Reinvestment Act was largely a requirement to support "community groups" in poor neighborhoods. ... But after 1995 the scope of the law was dramatically increased.

Over the strenuous objections of the banks themselves and some Republicans in Congress, CRA was renewed and modified in such a way that it gave far more power to the federal government to punish banks for not lending more widely in poor neighborhoods. The classic "fair housing" laws from the Martin Luther King Jr. era of civil rights were deemed insufficient. ... Subprime loans to minority applicants exploded ten fold in the mid-1990s as a result. ..]

Under New Deal-era regulatory rules of Glass-Steagall, commercial banks and investment banks were separated. When that act was repealed as part of banking deregulation in 1999, commercial banks and investment banks were able to merge, subject to approval by regulators.

However, the banks' CRA rating was taken into account in the decision. This meant that a high CRA rating became an important prerequisite for mergers, which increased the pressure on the banks to make these risky loans. The banks also were given permission to put these loans into packages of securities that could then be sold into investment markets.

Economist's View: Yet Again, It Wasn't the Community Reinvestment Act...



This below taken from an actual government document, identified by the GAO/GGD abbreviated attachment, outlining the changes:


Federal Reserve Board: Merger Process Needs Guidelines for Community Reinvestment Issues

( letter report 9/24/1999 GAO/GGD-99-180 )


In 1993, the Clinton Administration instructed the federal bank regulators to revise the CRA regulations by moving from a process- and paperwork-based system to a performance-based system focusing on results, especially the results in LMI areas of an institution's communities. Based on these instructions, the federal banking agencies replaced the qualitative CRA examination system with a more quantitative system that is based on actual performance.

( PAGE 4 )


After the performance-based CRA regulations were issued in 1995, FFIEC published Interagency Questions and Answers regarding Community Reinvestment in 1997 and 1999. The 1989 statement was withdrawn effective April 5, 1999, and replaced by the Interagency Questions and Answers regarding Community Reinvestment.13 The 1989 Statement, which was in effect during the mergers contained in our study, including guidance on the following issues: * the basic components of an effective CRA policy, * the role of examination reports on CRA performance in reviewing applications, * the need for periodic review and documentation by financial institutions of their CRA performance, and * the role of commitments in assessing and institution's performance. Most notably, the regulators concluded in the Statement that the CRA record of the institution, as reflected in its examination reports, would be given great weight in the application process. In the Interagency Questions and Answers for 1999, the regulators continued to stress the significants of the CRA examination in the application process, and they stated the examination is an important, and often controlling, factor in the consideration of an institution's record. 14 According to the 1989 Statement, the CRA examination is not conclusive evidence in the face of significant and supported allegations from a commenter. Moreover, the balance may be shifted further when the examination is not recent or the particular issue raised in the 13 Questions and Answers regarding Community Reinvestment, 64 Fed. Reg. 23618-23648 (1999). 14 64 Fed. Reg. at 23641. GAO/GGD-99-180

(Page 9)


Guidelines for Community of Reinvestment Issues B-280468 application preceding was not addressed in the examination. During the development of the performance-based CRA regulations, a number of commenters expressed concern that the regulators may provide a "safe harbor" to depository institutions from challenges to their CRA performance record in the application process if they achieved an outstanding CRA rating. However, in the preamble of the 1995 final rule on the CRA regulations, the regulators reconfirmed the importance of the public comments in the applications process by acknowledging that materials related to CRA performance received during the applications process can and do provide relevant and valuable information.

Federal Reserve Board: Merger Process Needs Guidelines for



"It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I'm not saying I'm sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn't have gotten them without that."

"But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it's one target, it's easy to blame them and congress certainly isn't going to blame themselves. At the same time, Congress is trying to pressure banks to loosen their lending standards to make more loans. This is exactly the same speech they criticized them for."

Bloomberg: 'Plain and simple,' Congress caused the mortgage crisis, not the banks | Capital New York

CUPCAKE YOUR FIRST LINK


Yet Again, It Wasn't the Community Reinvestment Act...

Another attempt to blame the Community Reinvestment Act for the subprime crisis. Don't believe a word of it:

Economist's View: Yet Again, It Wasn't the Community Reinvestment Act...


AS FOR BLOOMBERGS BS, A WORLD WIDE CREDIT BUBBLE AND BUST WAS CONGRESS'S FAULT BUTTERCUP??? LOL



Let’s just be clear about what the CRA does and doesn’t do. It simply says that if you open a branch office in a low income neighborhood and collect deposits there, you are obligated to do a certain amount of lending in that neighborhood. In other words, you can’t open a branch office in Harlem and use deposits from there to only fund loans in high-end Tribeca. A bank must make credit available on the same terms in both neighborhoods. In other words, a “red line” can’t be drawn around Harlem, a term that dates to when banks supposedly used colored pencils to draw no-loan zones on maps.

Showing that the CRA wasn’t the cause of the financial crisis is rather easy. As Warren Buffett pal Charlie Munger says, “Invert, always invert.” In this case, let’s assume Moore and Kudlow are correct, and the CRA did require banks to lend to unqualified, low-income buyers. What would that world have looked like?

Here’s what we should have seen:

• Home sales and prices in urban, minority communities would have led the national home market higher, with gains in percentage terms surpassing national figures;
  
  
• CRA mandated loans would have defaulted at higher rates;
  
  
• Foreclosures in these distressed urban CRA neighborhoods should have far outpaced those in the suburbs;
  
  
• Local lenders making these mortgages should have failed at much higher rates;
  
  
• Portfolios of banks participating in the Troubled Asset Relief Program should have been filled with securities made up of toxic CRA loans;
  
  
• Investors looking to profit should have been buying up properties financed with defaulted CRA loans; and
  
  
• Congressional testimony of financial industry executives after the crisis should have spelled out how the CRA was a direct cause, with compelling evidence backing their claims.

Yet none of these things happened. And they should have, if the CRA was at fault. It’s no surprise that in congressional testimony, various experts were asked about the CRA -- from former Federal Deposit Insurance Corp. Chairman Sheila Bair to the Federal Reserve’s director of Consumer and Community Affairs -- and none blamed the crisis on the CRA.

If that isn’t enough to dismiss the claim, consider this: Where did mortgages, especially subprime mortgages, default in large numbers?

It wasn’t Harlem, Philadelphia, Baltimore, Chicago, Detroit or any other poor, largely minority urban area covered by the CRA. No, the crisis was worst in Florida, Arizona, Nevada and California. Indeed, the vast majority of the housing collapse took place in the suburbs and exurbs, not the inner cities.

Now consider that much of the rest of the developed world also had a boom and bust in residential real estate that was worse than in the U.S. Oh, right -- those countries didn’t have the CRA.

What's more, many of the lenders that made the subprime loans that contributed so much to the collapse were private non-bank lenders that weren’t covered by the CRA. Almost 400 of these went bankrupt soon after housing began to wobble.

I have called the CRA blame meme “the big lie” -- and with good reason. It’s an old trope, tinged with elements of dog-whistle politics, blaming low-income residents in the inner cities regardless of what the data show.

Lending to Poor People Didn't Cause the Financial Crisis


BANKSTERS DROPPED ALL UNDERWRITING STANDARDS CUPCAKE, YOU KNOW WHAT THOSE ARE? HINT GOV'T BACKED LOANS REQUIRED THEM

Did you miss the government document siting the lowering of banks standards as a condition for bank mergers in allowing for more homeowners that previously failed through basic credit checks to be approved. Nothing you've stated had been able to discredit a government document source I provided which outlied the standards banks are to follow and used those standards as weight into bank mergers. You can keep challenging if you like, I've done the research with plenty more that I can provide. Trust me ... from what I've seen, you don't have enough knowledge on the subject. Keep your conspiracy theories, fruitcake, and let me know when you are old enough to have an honest discussion. You see, anyone who knows anything about the housing market KNOWS these changes that took effect happened well before the Bush Administration.

"You see, anyone who knows anything about the housing market KNOWS these changes that took effect happened well before the Bush Administration."

WEIRD CUPCAKE

From Bush's President's Working Group on Financial Markets March 2008

The Presidents Working Group's March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.



Q Did the Community Reinvestment Act under Carter/Clinton caused it?


A "Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "

Did the CRA cause the mortgage market meltdown? | Federal Reserve Bank of Minneapolis

SOMETHING HAPPENED ABOUT 2003 CUPCAKE, CAN YOU FIGURE IT OUT?

FACTS on Dubya's great recession

Oh my little fruitcake, you really don't know anything about housing market or the recession that followed. This below is a matter of public record. Plenty more additional evidence to follow if you need any actual facts on the subject. If you want to continue down this path, you won't get very far


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

Oh Goodie Cupcake, you go for the old out of context vids and loans performing well and Clinton $2 BILLION dollar experiment in 1999 that he ended in late 2000, WHERE CLINTON RESTRICED USE OF SUBPRIMES TO MEET THE AFFORDABLE HOUSING GOALS (DUBYA CHANGED THAT IN 2004 AND RAMPED IT UP FROM 50% TO 56% CUPCAKE) WooHoo


BTW, BIPARTISAN BILL PASSED THE HOUSE ON GSE REFORM, WHAT HAPPENED IN THE SENATE WHERE THE BILL GOT OUT OF THE COMMITTEE AGAIN?



You know Dubya got 2 UNFUNDED TAX CUTS, 2 UNFUNDED WARS, UNFUNDED MEDICARE EXPANSION THAT COST AS MUCH AS OBAMACARES 2013-2020 (CBO), AND A BILL TO GET BETWEEN A HUSBAND AND WIFE (SCHIAVO) BUT COULDN'T PASS GSE "REFORM" CUPCAKE?? LOL



GSE Critics Ignore Loan Performance

There is no data anywhere to cast doubt on the vastly superior loan performance of the GSEs. Year after year, decade after decade, before, during and after the housing crash, GSE loan performance has consistently been two-to-six times better than that of any other segment of the market. The numbers are irrefutable, and they show that the entire case against GSE underwriting standards, and their role in the financial crisis, is based on social stereotyping, smoke and mirrors, and little else.


...Or check out the FHFA study that compares, on an apples-to-apples basis, GSEs loan originations with those for private label securitizations. The study segments loans four ways, by ARMs-versus-fixed-rate, as well as by vintage, by FICO score and by loan-to-value ratio. In almost every one of 1800 different comparisons covering years 2001 through 2008, GSE loan performance was exponentially better. On average, GSE fixed-rate loans performed four times better, and GSE ARMs performed five times better.


AMERICAN BANKER

GSE Critics Ignore Loan Performance


“The idea that they were leading this charge is just absurd,” said Guy Cecala, publisher of Inside Mortgage Finance, an authoritative trade publication. “Fannie and Freddie have always had the tightest underwriting on earth…They were opposite of subprime.”

Wall Street, Not Fannie and Freddie, Led Mortgage Meltdown

“The idea that they were leading this charge is just absurd,” said Guy Cecala, publisher of Inside Mortgage Finance, an authoritative trade publication. “Fannie and Freddie have always had the tightest underwriting on earth…They were opposite of subprime.”

Wall Street, Not Fannie and Freddie, Led Mortgage Meltdown


Already been debunked there fruitcake, October 2003. Also here is something more about Fannie Mae's credit lending practices of 1999. In case you havent quite figured that out, as I now feel I have to go through the extra effort to explain basic "common sense" to you, that would place Fannie Mae's easing practices BEFORE President Bush.

October 2003

Fannie Mae discloses $1.2 billion accounting error



Source: New York Times 1999
Fannie Mae Eases Credit To Aid Mortgage Lending

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

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


Care to keep this up and embarrass yourself further? There's still more.