The Real Causes Of The Great Recession

[mudwhistle]

Purported relationship to the 2008 financial crisis
See also: Subprime mortgage crisis and Global financial crisis of 2008–2009
Economist Stan Liebowitz wrote in the New York Post that a strengthening of the CRA in the 1990s encouraged a loosening of lending standards throughout the banking industry. He also charged the Federal Reserve with ignoring the negative impact of the CRA.[102] According to Manhattan Institute scholar Howard Husock, the CEO of a midsize bank reported that 20% of his institution's CRA-related mortgages were delinquent in their first year and probably 7% would end in foreclosure.[107] In a commentary for CNN, Congressman Ron Paul, who serves on the United States House Committee on Financial Services, charged the CRA with "forcing banks to lend to people who normally would be rejected as bad credit risks."[108] In a Wall Street Journal opinion piece, economist Russell Roberts wrote that the CRA subsidized low-income housing by pressuring banks to serve poor borrowers and poor regions of the country.[109]

The Financial Crisis Inquiry Commission formed by the US Congress in 2009 to investigate the causes of the 2008 financial crisis, concluded "the CRA was not a significant factor in subprime lending or the crisis".[110] Ben Bernanke, then Chairman of the Federal Reserve, wrote that experience and research contradict "the charge that CRA was at the root of, or otherwise contributed in any substantive way to, the current mortgage difficulties."[111]

Other economists and government officials, including Janet Yellen, then President and CEO of the Federal Reserve Bank of San Francisco,[112] FDIC Chair Sheila Bair,[113] Comptroller of the Currency John C. Dugan,[114] and Federal Reserve Governor Randall Kroszner,[115] also hold that the CRA did not significantly contribute to the subprime crisis. According to Yellen, now current Chair of the Federal Reserve, independent mortgage companies made risky "higher-priced" loans at more than twice the rate of the banks and thrifts; most CRA loans were responsibly made, and were not the "higher-priced" loans that have contributed to the current crisis.[112][116][117]

Others concluded the CRA did not contribute to the financial crisis, notably New York Times columnist and Nobel laureate Paul Krugman,[118] Tim Westrich of the Center for American Progress,[119] Robert Gordon of the American Prospect,[120] Ellen Seidman of the New America Foundation,[121] Daniel Gross of Slate,[122] and Aaron Pressman from BusinessWeek.[123]

However, according to American Enterprise Institute fellow Edward Pinto, Bank of America reported in 2008 that its CRA portfolio, which constituted 7% of its owned residential mortgages, was responsible for 29 percent of its losses. He charged that "approximately 50 percent of CRA loans for single-family residences ... [had] characteristics that indicated high credit risk", yet, per the standards used by the various government agencies to evaluate CRA performance at the time, were not counted as "subprime" because borrower credit worthiness was not considered.[124][125][126][127] Paul Krugman argues that Pinto's category of "other high-risk mortgages" incorrectly includes loans that were not high-risk, that instead were like traditional conforming mortgages.[128] Another CRA critic, Joseph Fried, concedes that "some of this CRA subprime lending might have taken place, even in the absence of CRA. For that reason, the direct impact of CRA on the volume of subprime lending is not certain."[129]

Law professor Michael S. Barr, a Treasury Department official under President Clinton,[63][130] stated that approximately 50% of subprime loans were made by independent mortgage companies that were not regulated by the CRA, and another 25% to 30% came from only partially CRA regulated bank subsidiaries and affiliates. Barr noted that institutions fully regulated by CRA made "perhaps one in four" sub-prime loans, and that "the worst and most widespread abuses occurred in the institutions with the least federal oversight".[131]

During a 2008 House Committee on Oversight and Government Reform hearing on the role of Fannie Mae and Freddie Mac in the financial crisis, including in relation to the Community Reinvestment Act, when asked if the CRA provided the "fuel" for increasing subprime loans, former Fannie Mae CEO Franklin Raines said it might have been a catalyst encouraging bad behavior, but it was difficult to know. Raines also cited information that only a small percentage of risky loans originated as a result of the CRA.[132]

Economists at the National Bureau of Economic Research concluded that banks undergoing CRA-related regulatory exams took additional mortgage lending risk. The authors of a study entitled "Did the Community Reinvestment Act Lead to Risky Lending?" compared "the lending behavior of banks undergoing CRA exams within a given census tract in a given month (the treatment group) to the behavior of banks operating in the same census tract-month that did not face these exams (the control group). This comparison clearly indicates that adherence to the CRA led to riskier lending by banks." They concluded: "The evidence shows that around CRA examinations, when incentives to conform to CRA standards are particularly high, banks not only increase lending rates but also appear to originate loans that are markedly riskier." Loan delinquency averaged 15% higher in the treatment group than the control group one year after mortgage origination.[133]

Community Reinvestment Act - Wikipedia the free encyclopedia​

 

[mudwhistle]

Financial Crisis Inquiry Commission

The Financial Crisis Inquiry Commission (FCIC) is a ten-member commission appointed by the United States government with the goal of investigating the causes of the financial crisis of 2007–2010. The Commission[1] has been nicknamed the Angelides Commission after the chairman, Phil Angelides. The Commission has been compared to the Pecora Commission, which investigated the causes of the Great Depression in the 1930s, and has been nicknamed the New Pecora Commission. Analogies have also been made to the 9/11 Commission, which examined the September 11 terrorist attacks. The Commission does have the ability to subpoena documents and witnesses for testimony, a power that the Pecora Commission had but the 9/11 Commission did not. The first public hearing of the Commission was held on January 13, 2010, with the presentation of testimony from various banking officials.[2] Hearings continued during 2010 with "hundreds" of other persons in business, academia, and government testifying.[3]

The Commission reported its findings in January 2011. In briefly summarizing its main conclusions the Commission stated: "While the vulnerabilities that created the potential for crisis were years in the making, it was the collapse of the housing bubble—fueled by low interest rates, easy and available credit, scant regulation, and toxic mortgages—that was the spark that ignited a string of events, which led to a full-blown crisis in the fall of 2008. Trillions of dollars in risky mortgages had become embedded throughout the financial system, as mortgage-related securities were packaged, repackaged, and sold to investors around the world. When the bubble burst, hundreds of billions of dollars in losses in mortgages and mortgage-related securities shook markets as well as financial institutions that had significant exposures to those mortgages and had borrowed heavily against them. This happened not just in the United States but around the world. The losses were magnified by derivatives such as synthetic securities."[4][5]

 

[mudwhistle]

Findings of the Financial Crisis Inquiry Commission:

The Commission reached nine main conclusions (directly quoted):[11]

• We conclude this financial crisis was avoidable.

"There was an explosion in risky subprime lending and securitization, an unsustainable rise in housing prices, widespread reports of egregious and predatory lending practices, dramatic increases in household mortgage debt, and exponential growth in financial firms' trading activities, unregulated derivatives, and short-term "repo" lending markets, among many other red flags. Yet there was pervasive permissiveness; little meaningful action was taken to quell the threats in a timely manner." The Commission especially singles out the Fed's "failure to stem the flow of toxic mortgages."

• We conclude widespread failures in financial regulation and supervision proved devastating to the stability of the nation's financial markets.

"More than 30 years of deregulation and reliance on self-regulation by financial institutions, championed by former Federal Reserve chairman Alan Greenspan and others, supported by successive administrations and Congresses, and actively pushed by the powerful financial industry at every turn, had stripped away key safeguards, which could have helped avoid catastrophe. This approach had opened up gaps in oversight of critical areas with trillions of dollars at risk, such as the shadow banking system and over-the-counter derivatives markets. In addition, the government permitted financial firms to pick their preferred regulators in what became a race to the weakest supervisor."

• We conclude dramatic failures of corporate governance and risk management at many systemically important financial institutions were a key cause of this crisis.

"Too many of these institutions acted recklessly, taking on too much risk, with too little capital, and with too much dependence on short-term funding. ... [Large investment banks and bank holding companies] took on enormous exposures in acquiring and supporting subprime lenders and creating, packaging, repackaging, and selling trillions of dollars in mortgage-related securities, including synthetic financial products." The report goes on to fault "poorly executed acquisitionand integration strategies that made effective management more challenging," narrow emphasis on mathematical models of risk as opposed to actual risk, and short-sighted compensation systems at all levels.

• We conclude a combination of excessive borrowing, risky investments, and lack of transparency put the financial system on a collision course with crisis.

"In the years leading up to the crisis, too many financial institutions, as well as too many households, borrowed to the hilt. ... [A]s of 2007, the leverage ratios [of the five major investment banks] were as high as 40 to 1, meaning for every $40 in assets, there was only $1 in capital to cover losses. Less than a 3% drop in asset values could wipe out a firm. To make matters worse, much of their borrowing was short-term, in the overnight market—meaning the borrowing had to be renewed each and every day. ... And the leverage was often hidden—in derivatives positions, in off-balance-sheet entities, and through "window dressing" of financial reports available to the investing public. ... The heavy debt taken on by some financial institutions was exacerbated by the risky assets they were acquiring with that debt. As the mortgage and real estate markets churned out riskier and riskier loans and securities, many financial institutions loaded up on them."

• We conclude the government was ill prepared for the crisis, and its inconsistent response added to the uncertainty and panic in the financial markets.

"[K]ey policy makers ... were hampered because they did not have a clear grasp of the financial system they were charged with overseeing, particularly as it had evolved in the years leading up to the crisis. This was in no small measure due to the lack of transparency in key markets. They thought risk had been diversified when, in fact, it had been concentrated. ... There was no comprehensive and strategic plan for containment, because they lacked a full understanding of the risks and interconnections in the financial markets. ... While there was some awareness of, or at least a debate about, the housing bubble, the record reflects that senior public officials did not recognize that a bursting of the bubble could threaten the entire financial system. ... In addition, the government's inconsistent handling of major financial institutions during the crisis—the decision to rescue Bear Stearns and then to place Fannie Mae and Freddie Mac into conservatorship, followed by its decision not to save Lehman Brothers and then to save AIG—increased uncertainty and panic in the market."

• We conclude there was a systemic breakdown in accountability and ethics.

"In our economy, we expect businesses and individuals to pursue profits, at the same time that they produce products and services of quality and conduct themselves well. Unfortunately ... [l]enders made loans that they knew borrowers could not afford and that could cause massive losses to investors in mortgage securities. ... And the report documents that major financial institutions ineffectively sampled loans they were purchasing to package and sell to investors. They knew a significant percentage of the sampled loans did not meet their own underwriting standards or those of the originators. Nonetheless, they sold those securities to investors. The Commission's review of many prospectuses provided to investors found that this critical information was not disclosed.

• We conclude collapsing mortgage-lending standards and the mortgage securitization pipeline lit and spread the flame of contagion and crisis.

"Many mortgage lenders set the bar so low that lenders simply took eager borrowers' qualifications on faith, often with a willful disregard for a borrower's ability to pay. ... While many of these mortgages were kept on banks' books, the bigger money came from global investors who clamored to put their cash into newly created mortgage-related securities. It appeared to financial institutions, investors, and regulators alike that risk had been conquered. ... But each step in the mortgage securitization pipeline depended on the next step to keep demand going. From the speculators who flipped houses to the mortgage brokers who scouted the loans, to the lenders who issued the mortgages, to the financial firms that created the mortgage-backed securities, collateralized debt obligations (CDOs), CDOs squared, and synthetic CDOs: no one in this pipeline of toxic mortgages had enough skin in the game. When borrowers stopped making mortgage payments, the losses—amplified by derivatives—rushed through the pipeline. As it turned out, these losses were concentrated in a set of systemically important financial institutions."

• We conclude over-the-counter derivatives contributed significantly to this crisis.

"The enactment of legislation in 2000 to ban the regulation by both the federal and state governments of over-the-counter (OTC) derivatives was a key turning point in the march toward the financial crisis. ... OTC derivatives contributed to the crisis in three significant ways. First, one type of derivative—credit default swaps (CDS) fueled the mortgage securitization pipeline. CDS were sold to investors to protect against the default or decline in value of mortgage-related securities backed by risky loans. ... Second, CDS were essential to the creation of synthetic CDOs. These synthetic CDOs were merely bets on the performance of real mortgage-related securities. They amplified the losses from the collapse of the housing bubble by allowing multiple bets on the same securities and helped spread them throughout the financial system. ... Finally, when the housing bubble popped and crisis followed, derivatives were in the center of the storm. AIG, which had not been required to put aside capital reserves as a cushion for the protection it was selling, was bailed out when it could not meet its obligations. The government ultimately committed more than $180 billion because of concerns that AIG's collapse would trigger cascading losses throughout the global financial system. In addition, the existence of millions of derivatives contracts of all types between systemically important financial institutions—unseen and unknown in this unregulated market—added to uncertainty and escalated panic, helping to precipitate government assistance to those institutions."

• We conclude the failures of credit rating agencies were essential cogs in the wheel of financial destruction.

"The three credit rating agencies were key enablers of the financial meltdown. The mortgage-related securities at the heart of the crisis could not have been marketed and sold without their seal of approval. Investors relied on them, often blindly. In some cases, they were obligated to use them, or regulatory capital standards were hinged on them. ... [T]he forces at work behind the breakdowns at Moody's ... includ[ed] the flawed computer models, the pressure from financial firms that paid for the ratings, the relentless drive for market share, the lack of resources to do the job despite record profits, and the absence of meaningful public oversight."

Financial Crisis Inquiry Commission - Wikipedia the free encyclopedia​

 

[Iceweasel]

The real cause? George W. Bush. The dam was leaking before W. took office, but he's the one who told the Congress to take their fingering out of the leak.

So everything that contradicts that is fabricated? You have to really try hard to get to your level.

 

[mudwhistle]

Dissenting Statements
Hennessey, Holtz-Eakin, and Thomas
In a 27 page dissenting statement, Vice Chairman Bill Thomas and Commissioners Keith Hennessey and Douglas Holtz-Eakin criticized the majority report for being an “account of bad events” rather than a “focused explanation of what happened and why.” According to the three Republicans, the majority report ignored the global nature of the financial crisis and, consequently, focused too narrowly on US regulatory policy and supervision. For those reasons, the dissent argues that the majority’s conclusion that the crisis could have been avoided with more restrictive regulations, in conjunction with more aggressive regulators and supervisors, is false.

The dissent lists ten essential causes of the financial and economic crisis:[12]

• I. Credit bubble.
• II. Housing bubble.
• III. Nontraditional mortgages.
• IV. Credit ratings and securitization.
• V. Financial institutions concentrated correlated risk.
• VI. Leverage and liquidity risk.
• VII. Risk of contagion.
• VIII. Common shock.
• IX. Financial shock and panic.
• X. Financial crisis causes economic crisis.

Wallison
American Enterprise Institute senior fellow Peter Wallison authored a 93-page dissent in which he disagreed with both the majority report and the three other Republican appointees. Wallison argued that the US government’s housing policies–implemented primarily through the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac— caused the financial crisis. [13]

In specific, Wallison named the GSEs’ Affordable Housing goals, heightened enforcement of the Community Reinvestment Act, and the Department of Housing and Urban Development’s Best Practices Initiative as the primary culprits. According to Wallison, these programs, which were intended to give low- and moderate-income borrowers better access to mortgage credit, ultimately required Fannie Mae and Freddie Mac to reduce the mortgage underwriting standards they used when acquiring loans from originators. Because the GSEs dominated the mortgage market, they set the underwriting standards for the entire industry and pushed private institutions into riskier loans. Wallison concludes that these policies fueled a massive housing bubble full of non-traditional, risky loans that ultimately led to a financial crisis.

Financial Crisis Inquiry Commission - Wikipedia the free encyclopedia

 

[April]

Let's keep it on topic without the insults, folks.

 

[mudwhistle]

The housing crisis was just one of a series of created crisis that gave the Obama Administration a foot in the door. A perfect example of this is the GM and Chrysler takeover. The big 3 were in financial trouble yet Ford elected not to take any bailout money and did just fine. GM and Chrysler took the money and the cash was essentially used to bailout union pensions. This was paybacks for union support for Democrats.

Leading up to Obamacare regulation changes screwed up health care in this country. Something was going on behind the scenes. So in comes Obamacare to save the day. Now health care is tied in with the IRS and it is more expensive and confusing than every before. Hardly an improvement.

 

[mudwhistle]

Obama is leading the way of a massive takeover of everything that effects our lives. He even has his dirty paws in the movie industry. This Sony hacking scheme is just an excuse to get the federal government into controlling the content of movies and which movies are made. The kicker was when it was discovered that a Sony CEOs emails were revealed by a hacker discussing racist viewpoints. Before you knew it Al Sharpton was at their doorstep, a dead giveaway to White House involvement.

 

[Iceweasel]

It's just amazing how some people can blame everything on their favorite bogeyman in order to dismiss all the moving parts that were mostly put in place by the party of big government. As if on election, the president was supposed to single handedly dismantle it all before it all went south, like there would be no outcry from the left. AND ignore all the evidence contrary to the charge.

Setting the Record Straight Six Years of Unheeded Warnings for GSE Reform
Today, the Washington Times incorrectly accused the White House of ignoring warnings of trouble ahead for government-sponsored enterprises (GSEs) and neglecting to "adopt any reform until this summer," when it was too late. "Neither the White House nor Congress heeded the warnings, Fannie and Freddie retained strong bipartisan support during the 1990s and early part of this decade." (Editorial, "Hear, See And Speak No Evil About Fannie And Freddie," The Washington Times, 10/9/08)

Over the past six years, the President and his Administration have not only warned of the systemic consequences of failure to reform GSEs but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. In fact, it was Congress that flatly rejected President Bush's call more than five years ago to reform the GSEs. Over the years, the President's repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems with the GSEs.

2001

• April: The Administration's FY02 budget declares that the size of Fannie Mae and Freddie Mac is "a potential problem," because "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity." (2002 Budget Analytic Perspectives, pg. 142)

2002

• May: The Office of Management and Budget (OMB) calls for the disclosure and corporate governance principles contained in the President's 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)

2003

• February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market.
  
  
• September: Then-Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact "legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises" and set prudent and appropriate minimum capital adequacy requirements.
  
  
• September: Then-House Financial Services Committee Ranking Member Barney Frank (D-MA) strongly disagrees with the Administration's assessment, saying "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." (Stephen Labaton, "New Agency Proposed To Oversee Freddie Mac And Fannie Mae," The New York Times, 9/11/03)
  
  
• October: Senator Thomas Carper (D-DE) refuses to acknowledge any necessity for GSE reforms, saying "if it ain't broke, don't fix it." (Sen. Carper, Hearing of Senate Committee on Banking, Housing, and Urban Affairs, 10/16/03)
  
  
• November: Then-Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any "legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk." To reduce the potential for systemic instability, the regulator would have "broad authority to set both risk-based and minimum capital standards" and "receivership powers necessary to wind down the affairs of a troubled GSE." (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)

2004

• February: The President's FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital and calls for creation of a new, world-class regulator: "The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore … should be replaced with a new strengthened regulator." (2005 Budget Analytic Perspectives, pg. 83)
  
  
• February: Then-CEA Chairman 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." (N. Gregory Mankiw, Op-Ed, "Keeping Fannie And Freddie's House In Order," Financial Times, 2/24/04)
  
  
• April: Rep. Frank ignores the warnings, accusing the Administration of creating an "artificial issue." At a speech to the Mortgage Bankers Association conference, Rep. Frank said "people tend to pay their mortgages. I don't think we are in any remote danger here. This focus on receivership, I think, is intended to create fears that aren't there." ("Frank: GSE Failure A Phony Issue," American Banker, 4/21/04)
  
  
• June: Then-Treasury Deputy Secretary Samuel Bodman spotlights the risk posed by the GSEs and calls for reform, saying "We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System." (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)

2005

• April: Then-Secretary Snow repeats his call for GSE reform, saying "Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America … Half-measures will only exacerbate the risks to our financial system." (Secretary John W. Snow, "Testimony Before The U.S. House Financial Services Committee," 4/13/05)
  
  
• July: Then-Minority Leader Harry Reid rejects legislation reforming GSEs, "while I favor improving oversight by our federal housing regulators to ensure safety and soundness, we cannot pass legislation that could limit Americans from owning homes and potentially harm our economy in the process." ("Dems Rip New Fannie Mae Regulatory Measure," United Press International, 7/28/05)

2007

• August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying "first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options." (President George W. Bush, Press Conference, the White House, 8/9/07)
  
  
• August: Senate Committee on Banking, Housing and Urban Affairs Chairman Christopher Dodd ignores the President's warnings and calls on him to "immediately reconsider his ill-advised" position. (Eric Dash, "Fannie Mae's Offer To Help Ease Credit Squeeze Is Rejected, As Critics Complain Of Opportunism," The New York Times, 8/11/07)
  
  
• December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying "These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I've called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon." (President George W. Bush, Discusses Housing, the White House, 12/6/07)

2008

• February: Assistant Treasury Secretary David Nason reiterates the urgency of reforms, saying "A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully." (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)
  
  
• March: President Bush calls on Congress to take action and "move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages." (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)
  
  
• April: President Bush urges Congress to pass the much needed legislation and "modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes." (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)
  
  
• May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.
  • "Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow state housing agencies to issue tax-free bonds to refinance sub-prime loans." (President George W. Bush, Radio Address, 5/3/08)
    
    
  • "[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator." (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)
    
    
  • "Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans." (President George W. Bush, Radio Address, 5/31/08)
• June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying "we need to pass legislation to reform Fannie Mae and Freddie Mac." (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)
  
  
• July: Congress heeds the President's call for action and passes reform legislation for Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.
  
  
• September: Democrats in Congress forget their previous objections to GSE reforms, as Senator Dodd questions "why weren't we doing more, why did we wait almost a year before there were any significant steps taken to try to deal with this problem? … I have a lot of questions about where was the administration over the last eight years." (Dawn Kopecki, "Fannie Mae, Freddie 'House Of Cards' Prompts Takeover," Bloomberg, 9/9/08)

 

[JoeB131]

He didn't even have time to read it all and he claims it's all false. Took him less than 2 minutes to absorb all of that stuff and he's already responded. You must read really fast.

You don't really need to plod through the whole thing.

Even the Banking Industry isn't claiming the CRA caused the housing meltdown. Of the 25 banks that failed, only ONE dealt in CRA loans.

The meltdown was not caused by banks selling houses to poor people. It was caused by banks selling McMansions to middle class folks that they couldn't afford, but hoped to flip in a couple of years. The banks then took those bad loans and sold them as investments.

 

[zeke]

Damn Muddy. Obama Derangement Syndrome is STRONG in you today.
Seek help.

 

[JoeB131]

Obama is leading the way of a massive takeover of everything that effects our lives. He even has his dirty paws in the movie industry. This Sony hacking scheme is just an excuse to get the federal government into controlling the content of movies and which movies are made. The kicker was when it was discovered that a Sony CEOs emails were revealed by a hacker discussing racist viewpoints. Before you knew it Al Sharpton was at their doorstep, a dead giveaway to White House involvement.

Guy, is Obama paying you rent on all the space he occupies in your head?

 

[Freewill]

I guess Bush should have used the same dictatorial power that Obama has used and done it all on his lonesome. Silly him for trying to follow the COTUS.

 

[zeke]

The meltdown was not caused by banks selling houses to poor people.

You are correct.
Where the poorer people got shafted was in the refinance arena.
I used to work phone banks, dialing for dollars we called it. We had phone lists by zip code so we knew the area we were dialing into. And the offer of refinancing the existing mortgage with cash out from inflated appraisals was just too attractive for many many low income home owners. (though the home owner didn't really understand that their appraisal was artificially inflated)

Of course none of the borrowers were being solicited for A paper loans. They were being sold on adjustable rate, non conforming loans, sub prime loans. Cause with the inflated appraisal a loan officer could bury several "points" into the loan amount and make a great commission on a modest loan amount. And the borrower had some money in hand and the promise that they could refinance at a later date to a better rate. LMAO Sure.

These poor borrowers didn't have much of a chance against a loan officer making 100k a year who's income depended on closing loans. Over coming objections at the closing table was a big part of closing the loan.
Explaining away real concerns these borrowers had was a piece of cake.

No it wasn't the purchase money transactions that killed the poorer borrowers. It was refinances.

 

[Iceweasel]

The meltdown was not caused by banks selling houses to poor people.

You are correct.
Where the poorer people got shafted was in the refinance arena.
I used to work phone banks, dialing for dollars we called it. We had phone lists by zip code so we knew the area we were dialing into. And the offer of refinancing the existing mortgage with cash out from inflated appraisals was just too attractive for many many low income home owners. (though the home owner didn't really understand that their appraisal was artificially inflated)

Of course none of the borrowers were being solicited for A paper loans. They were being sold on adjustable rate, non conforming loans, sub prime loans. Cause with the inflated appraisal a loan officer could bury several "points" into the loan amount and make a great commission on a modest loan amount. And the borrower had some money in hand and the promise that they could refinance at a later date to a better rate. LMAO Sure.

These poor borrowers didn't have much of a chance against a loan officer making 100k a year who's income depended on closing loans. Over coming objections at the closing table was a big part of closing the loan.
Explaining away real concerns these borrowers had was a piece of cake.

No it wasn't the purchase money transactions that killed the poorer borrowers. It was refinances.

Holy moly. Thanks for owning up to that. Adjustable rates was a real killer for many low income folks. It sounds good at first, until the squeeze hits. Like a cable company offering discounts if you sign up for x number of years. When the promotion runs out you get hammered.

I'm going to spare you what I've thought of telemarketers for a loooong time now.

 

[zeke]

Holy moly. Thanks for owning up to that.

Owning up to what?

Some people were actually helped by this refinance process.

Borrowers who took out an A paper Fannie or Freddie loan, whether it be a one year adj or a 3/1 adjustable and they have held onto those loans....... love them.

Adjustable s had caps, both up and down. Most adjustable loans that have been in place for a few years now have seen the interest rate decline significantly

You ever look at the yield numbers on one year T bills? Lots of ARMS use the T bills for their index.

 

[Iceweasel]

Adjustable-Rate Mortgages Fuel Foreclosure Crisis NPR

Adjustable-Rate Mortgages Fuel Foreclosure Crisis
New foreclosure filings hit an all-time high this spring. And that was before the latest turmoil in the mortgage market.


Defaults are heavily concentrated in seven states, according to the Mortgage Bankers Association. Three of those — Michigan, Indiana and Ohio — have been hit with heavy job losses. But the other four — California, Arizona, Nevada and Florida — have a different problem.


"What's going on in these four states is, first of all, they tend to have very high levels of adjustable-rate mortgages," says Doug Duncan, chief economist for the association.


When those mortgages adjust upward, some people are unable to make the payments, and the problem is likely to continue for at least another year.

 

[zeke]

Adjustable-Rate Mortgages Fuel Foreclosure Crisis

Those would be sub prime adjustable rate loans. With much higher caps. A much higher margin and the ability to make adjustments greater than the 2% max that Fannie and Freddie ARMs had.

Keep trying.

 

[Wry Catcher]

This is the kind of shit that makes this place so unpleasant. All of the dickheads that pull this same ole same ole.

I'd rather post pretty pictures than talk to all of you jizzbreath mofos.

Obama and ACORN - Bing Images

This is an article that was posted 2 months before Obama took office. Everything in it has proven to be true. It's strange how all of this information has been out there for years yet little bits and pieces of it keep surfacing. The left will claim that it's all old news and they'll say that anyone who brings it up is just trolling. I expect the usual USMB members to do their jobs and attack me personally. Well, bring it on:

​

As a New York Post article describes it:

A 1995 strengthening of the Community Reinvestment Act required banks to find ways to provide mortgages to their poorer communities. It also let community activists intervene at yearly bank reviews, shaking the banks down for large pots of money.


Banks that got poor reviews were punished; some saw their merger plans frustrated; others faced direct legal challenges by the Justice Department.

Flexible lending programs expanded even though they had higher default rates than loans with traditional standards. On the Web, you can still find CRA loans available via ACORN with "100 percent financing . . . no credit scores . . . undocumented income . . . even if you don't report it on your tax returns." Credit counseling is required, of course.

Ironically, an enthusiastic Fannie Mae Foundation report singled out one paragon of nondiscriminatory lending, which worked with community activists and followed "the most flexible underwriting criteria permitted." That lender's $1 billion commitment to low-income loans in 1992 had grown to $80 billion by 1999 and $600 billion by early 2003.

The lender they were speaking of was Countrywide, which specialized in subprime lending and had a working relationship with ACORN.

Investor's Business Daily added:

The revisions also allowed for the first time the securitization of CRA-regulated loans containing subprime mortgages. The changes came as radical "housing rights" groups led by ACORN lobbied for such loans. ACORN at the time was represented by a young public-interest lawyer in Chicago by the name of Barack Obama. (Emphasis, mine.)

Since these loans were to be underwritten by the government sponsored Fannie Mae and Freddie Mac, the implicit government guarantee of those loans absolved lenders, mortgage bundlers and investors of any concern over the obvious risk. As Bloomberg reported: "It is a classic case of socializing the risk while privatizing the profit."

And if you think Washington policy makers cared about ACORN's negative influence, think again. Before this whole mess came down, a Democrat-sponsored bill on the table would have created an "Affordable Housing Trust Fund," granting ACORN access to approximately $500 million in Fannie Mae and Freddie Mac revenues with little or no oversight.

Even now, unbelievably -- on the brink of national disaster -- Democrats have insisted ACORN benefit from bailout negotiations! Senator Lindsay Graham reported last night (9/25/08) in an interview with Greta Van Susteren of On the Record that Democrats want 20 percent of the bailout money to go to ACORN!

This entire fiasco represents perhaps the pinnacle of ACORN's efforts to advance the Cloward-Piven Strategy and is a stark demonstration of the power they wield in Washington.

Enter Barack Obama

In attempting to capture the significance of Barack Obama's Radical Left connections and his relation to the Cloward Piven strategy, I constructed following flow chart . It is by no means complete. There are simply too many radical individuals and organizations to include them all here. But these are perhaps the most significant.

In his few years as a U.S. senator, Obama has received campaign contributions of $126,349, from Fannie and Freddie, second only to the $165,400 received by Senator Chris Dodd, who has been getting donations from them since 1988. What makes Obama so special?

His closest advisers are a dirty laundry list of individuals at the heart of the financial crisis: former Fannie Mae CEO Jim Johnson; Former Fannie Mae CEO and former Clinton Budget Director Frank Raines; and billionaire failed Superior Bank of Chicago Board Chair Penny Pritzker.

........
Most significantly, Penny Pritzker, the current Finance Chairperson of Obama's presidential campaign helped develop the complicated investment bundling of subprime securities at the heart of the meltdown. She did so in her position as shareholder and board chair of Superior Bank. The Bank failed in 2001, one of the largest in recent history, wiping out $50 million in uninsured life savings of approximately 1,400 customers. She was named in a RICO class action law suit but doesn't seem to have come out of it too badly.

As a young attorney in the 1990s, Barack Obama represented ACORN in Washington in their successful efforts to expand Community Reinvestment Act (CRA) authority. In addition to making it easier for ACORN groups to force banks into making risky loans, this also paved the way for banks like Superior to package mortgages as investments, and for the Government Sponsored Enterprises Fannie Mae and Freddie Mac to underwrite them. These changes created the conditions that ultimately lead to the current financial crisis.


​

Note the repeated theme of using existing laws and expanding their reach thus changing their intended purpose. This has been repeated over and over throughout Obama's tenure as president. He expands on existing laws or programs and renders them unrecognizable. He did this with Fast & Furious and several other programs. The excuse is always that it was a law or program from a previous administration. He's doing the same thing with the Patriot Act. Many liberals here think this is funny, but this is no joke.

ACORN has split up and changed it's name, but it is still highly active. Ferguson was one of it's babies.

Links:
Articles Barack Obama and the Strategy of Manufactured Crisis
Obama 8217 s new pardon chief funded ACORN
Obama and ACORN - WikiLeaks
Association of Community Organizations for Reform Now - Wikipedia the free encyclopedia
Obama 8217 s Secret Collaboration with ACORN Bosses FrontPage Magazine
Obama and ACORN Chicago-The Barack Obama Campaign 2004 - WikiLeaks​

The real cause? George W. Bush. The dam was leaking before W. took office, but he's the one who told the Congress to take their fingering out of the leak.

Clever. Now explain why.

Nothing clever about my remark, it is simply true, and your effort to remake history isn't honest, clever or unexpected. President Bush was the nation's leader when one horrific and one terrible event occurred: 9-11 and the nearly total crash of our economy. He was also President when we invaded and occupied Iraq, and cut taxes while spending an enormous amount of our treasury on expanding government, by establishing Homeland Security and prosecuting war, without raising the necessary revenue. Nor did he listen to the advice of those who warned of the housing bubble.

Thus, since the election of President Obama, an effort to rewrite the history of the 21st Century has commenced by dishonest partisans, some in fact who worked to prevent the recovery and now seem willing to admit the Great Recession is over simply because they controlled the H. or Rep. Ignoring the fact that shutting down the government in a foolish political stunt was costly.

 

[mudwhistle]

This is the kind of shit that makes this place so unpleasant. All of the dickheads that pull this same ole same ole.

I'd rather post pretty pictures than talk to all of you jizzbreath mofos.

Obama and ACORN - Bing Images

This is an article that was posted 2 months before Obama took office. Everything in it has proven to be true. It's strange how all of this information has been out there for years yet little bits and pieces of it keep surfacing. The left will claim that it's all old news and they'll say that anyone who brings it up is just trolling. I expect the usual USMB members to do their jobs and attack me personally. Well, bring it on:

​

As a New York Post article describes it:

A 1995 strengthening of the Community Reinvestment Act required banks to find ways to provide mortgages to their poorer communities. It also let community activists intervene at yearly bank reviews, shaking the banks down for large pots of money.


Banks that got poor reviews were punished; some saw their merger plans frustrated; others faced direct legal challenges by the Justice Department.

Flexible lending programs expanded even though they had higher default rates than loans with traditional standards. On the Web, you can still find CRA loans available via ACORN with "100 percent financing . . . no credit scores . . . undocumented income . . . even if you don't report it on your tax returns." Credit counseling is required, of course.

Ironically, an enthusiastic Fannie Mae Foundation report singled out one paragon of nondiscriminatory lending, which worked with community activists and followed "the most flexible underwriting criteria permitted." That lender's $1 billion commitment to low-income loans in 1992 had grown to $80 billion by 1999 and $600 billion by early 2003.

The lender they were speaking of was Countrywide, which specialized in subprime lending and had a working relationship with ACORN.

Investor's Business Daily added:

The revisions also allowed for the first time the securitization of CRA-regulated loans containing subprime mortgages. The changes came as radical "housing rights" groups led by ACORN lobbied for such loans. ACORN at the time was represented by a young public-interest lawyer in Chicago by the name of Barack Obama. (Emphasis, mine.)

Since these loans were to be underwritten by the government sponsored Fannie Mae and Freddie Mac, the implicit government guarantee of those loans absolved lenders, mortgage bundlers and investors of any concern over the obvious risk. As Bloomberg reported: "It is a classic case of socializing the risk while privatizing the profit."

And if you think Washington policy makers cared about ACORN's negative influence, think again. Before this whole mess came down, a Democrat-sponsored bill on the table would have created an "Affordable Housing Trust Fund," granting ACORN access to approximately $500 million in Fannie Mae and Freddie Mac revenues with little or no oversight.

Even now, unbelievably -- on the brink of national disaster -- Democrats have insisted ACORN benefit from bailout negotiations! Senator Lindsay Graham reported last night (9/25/08) in an interview with Greta Van Susteren of On the Record that Democrats want 20 percent of the bailout money to go to ACORN!

This entire fiasco represents perhaps the pinnacle of ACORN's efforts to advance the Cloward-Piven Strategy and is a stark demonstration of the power they wield in Washington.

Enter Barack Obama

In attempting to capture the significance of Barack Obama's Radical Left connections and his relation to the Cloward Piven strategy, I constructed following flow chart . It is by no means complete. There are simply too many radical individuals and organizations to include them all here. But these are perhaps the most significant.

In his few years as a U.S. senator, Obama has received campaign contributions of $126,349, from Fannie and Freddie, second only to the $165,400 received by Senator Chris Dodd, who has been getting donations from them since 1988. What makes Obama so special?

His closest advisers are a dirty laundry list of individuals at the heart of the financial crisis: former Fannie Mae CEO Jim Johnson; Former Fannie Mae CEO and former Clinton Budget Director Frank Raines; and billionaire failed Superior Bank of Chicago Board Chair Penny Pritzker.

........
Most significantly, Penny Pritzker, the current Finance Chairperson of Obama's presidential campaign helped develop the complicated investment bundling of subprime securities at the heart of the meltdown. She did so in her position as shareholder and board chair of Superior Bank. The Bank failed in 2001, one of the largest in recent history, wiping out $50 million in uninsured life savings of approximately 1,400 customers. She was named in a RICO class action law suit but doesn't seem to have come out of it too badly.

As a young attorney in the 1990s, Barack Obama represented ACORN in Washington in their successful efforts to expand Community Reinvestment Act (CRA) authority. In addition to making it easier for ACORN groups to force banks into making risky loans, this also paved the way for banks like Superior to package mortgages as investments, and for the Government Sponsored Enterprises Fannie Mae and Freddie Mac to underwrite them. These changes created the conditions that ultimately lead to the current financial crisis.


​

Note the repeated theme of using existing laws and expanding their reach thus changing their intended purpose. This has been repeated over and over throughout Obama's tenure as president. He expands on existing laws or programs and renders them unrecognizable. He did this with Fast & Furious and several other programs. The excuse is always that it was a law or program from a previous administration. He's doing the same thing with the Patriot Act. Many liberals here think this is funny, but this is no joke.

ACORN has split up and changed it's name, but it is still highly active. Ferguson was one of it's babies.

Links:
Articles Barack Obama and the Strategy of Manufactured Crisis
Obama 8217 s new pardon chief funded ACORN
Obama and ACORN - WikiLeaks
Association of Community Organizations for Reform Now - Wikipedia the free encyclopedia
Obama 8217 s Secret Collaboration with ACORN Bosses FrontPage Magazine
Obama and ACORN Chicago-The Barack Obama Campaign 2004 - WikiLeaks​

The real cause? George W. Bush. The dam was leaking before W. took office, but he's the one who told the Congress to take their fingering out of the leak.

Clever. Now explain why.

Nothing clever about my remark, it is simply true, and your effort to remake history isn't honest, clever or unexpected. President Bush was the nation's leader when one horrific and one terrible event occurred: 9-11 and the nearly total crash of our economy. He was also President when we invaded and occupied Iraq, and cut taxes while spending an enormous amount of our treasury on expanding government, by establishing Homeland Security and prosecuting war, without raising the necessary revenue. Nor did he listen to the advice of those who warned of the housing bubble.

Thus, since the election of President Obama, an effort to rewrite the history of the 21st Century has commenced by dishonest partisans, some in fact who worked to prevent the recovery and now seem willing to admit the Great Recession is over simply because they controlled the H. or Rep. Ignoring the fact that shutting down the government in a foolish political stunt was costly.

Iceweasle posted proof that Bush warned congress of the coming crisis for years, yet Frank and Dodd ignored the warnings.

Then you post this nonsense.

Sorry, but I think you should read his post before you continue to look foolish.