Sub-prime meltdown: More evidence where it came from.

[Andy]

Another nifty video showing exactly where the sub-prime melt down came from, and who is to blame for it.


This is Andrew Coumo, in charge at HUD during Clinton's second term.
In the first two minutes, it goes over a lawsuit settlement with a bank, to force it to lend $2.1 Billion dollars in sub-prime loans.

At the two minute mark, he admits that the people getting these loans would not have qualified (a prime loan) except by affirmative action of the bank, mainly due to this law suit.

At three minutes, he openly states that he expects a higher default rate on these higher risk mortgages.

At 5:30, Overspend Obama himself, says he as an attorney represented affordable housing.

Once again, clear cut evidence on how we got into this situation is presented to you. What answer do you democrats have?

 

[pocketfullofshells]

Is that part of the problem? of course...but is it the main reason for the problem? no I doubt it. Also care to post info on what the actul case was and why it was done, rather then a cut and spliced clip of one guy giving the basics of what I would guess was a very complicated issue.

Also does not change the fact that over 8 years Bush did not do much to fix this or other issues.

And I am no a Dem or a Clinton supporter so no I don't have to Defend them.

 

[Little-Acorn]

...but is it the main reason for the problem?

Of course not.

The main reason for the problem, was politicians who wanted to buy the votes of people by "giving" them something they couldn't otherwise get, namely mortgages for houses they couldn't afford. They dressed it up by pretending the reason those people couldn't get mortgages previously, was some kind of racial discrimination instead of the real reason (they couldn't pay back the loans).

The lawsuit described in the video, is just one of the instruments they used to push that farce, and eventually half-destroy the mortgage market.

 

[pocketfullofshells]

Of course not.

The main reason for the problem, was politicians who wanted to buy the votes of people by "giving" them something they couldn't otherwise get, namely mortgages for houses they couldn't afford. They dressed it up by pretending the reason those people couldn't get mortgages previously, was some kind of racial discrimination instead of the real reason (they couldn't pay back the loans).

The lawsuit described in the video, is just one of the instruments they used to push that farce, and eventually half-destroy the mortgage market.

had nothing to do with companies who made lots of profits off those for some time, nooooo .

 

[Andy]

Is that part of the problem? of course...but is it the main reason for the problem? no I doubt it. Also care to post info on what the actul case was and why it was done, rather then a cut and spliced clip of one guy giving the basics of what I would guess was a very complicated issue.

Also does not change the fact that over 8 years Bush did not do much to fix this or other issues.

And I am no a Dem or a Clinton supporter so no I don't have to Defend them.

Then why are you defending them? I'm always amused when you say that right after trying to claim "it wasn't the main reason".

But I'll bite. Here's a clip from Wiki about the 1995 legislative changes to the CRA. It was based on these changes, that ACORN, with Bailout Barack, sued and pushed banks to make sub-prime loans. Amazingly, this prediction was made back in 1995, and we only realized it 13 years later.

During March 1995 congressional hearings William A. Niskanen, chair of the Cato Institute, criticized the proposals for political favoritism in allocating credit and micromanagement by regulators, and that there was no assurance that banks would not be expected to operate at a loss. He predicted they would be very costly to the economy and banking system, and that the primary long term effect would be to contract the banking system. He recommended Congress repeal the Act.

Of course the average Americans, sadly, are too stupid to get the idea of "long-term effects". In 1997, the government happily announced that sub-prime loans were just as profitable as regular loans, and the default rate wasn't that much higher!

So instead, the raising sub-prime loans, and related defaults, didn't cause a massive crash until 2007, so clearly it couldn't be because of this 1995 CRA push for sub-prime loans.

 

[Andy]

had nothing to do with companies who made lots of profits off those for some time, nooooo .

Between the 1970s and late 1990s, the sub-prime market was very small, and logically so. After all, who wants to make a loan, the loanee isn't likely to pay back? I'm broke and have no job, can you give me money? Err.. no.

What the CRA did was push banks to make the loans. When banks start make such loans, it legitimizes the action to other banks. Hey, Bear Stearns is make tons of sub-prime loans, and they are still in business! (Bear Stearns btw, was the first bank to take up Fannie Mae on marketing sub-prime loans)

More over, the cost of litigation with ACORN and other liberal nut case organizations, is very high. To make a few million sub-prime loans to keep the idiots off the law suit fence, is worth it in many cases.

Finely, Fannie Mae and Freddie Mac were both forced by HUD to purchase more sub-prime loans. This is a big big deal. If Bank of America is going to be sued if they don't offer sub-prime loans, but if they do, can sell them off to Fannie Mae, that's a darn good deal.

Both of these situations, validated the sub-prime market, and caused the risky loans to seem safe.

This isn't to excuse the banks from growing a spine, standing up to the government, and realizing the dangers of their actions. But we are trying to find the origin of the problem. If the CRA had not pushed banks to make these loans, they never would have happened. The market would never have been validated. The companies would never have made risky loans with such a low chance of being repaid.

 

[Little-Acorn]

had nothing to do with companies who made lots of profits off those for some time, nooooo .

Those companies (and many others) have been trying to do exactly that, for decades if not centuries. It's the purpose of their business, in fact: to make profits. Why would they bother to run the business at all, if they couldn't?

But we never had this kind of sub-prime mortgage meltdown, until the politicians I mentioned and their supporters, got into the act, and began threatening lenders with lawsuits etc. if they didn't lend to proportionate numbers of minorities and others who couldn't pay their loans back.

Tell me, are you one of those people who simply oppose profits, and who snarl and hiss reflexively whenever any company is shown to actually earn money?

 

[chestnut]

Simply put, the more government involvement in our lives, the worse our lives will be.

 

[pocketfullofshells]

Those companies (and many others) have been trying to do exactly that, for decades if not centuries. It's the purpose of their business, in fact: to make profits. Why would they bother to run the business at all, if they couldn't?

But we never had this kind of sub-prime mortgage meltdown, until the politicians I mentioned and their supporters, got into the act, and began threatening lenders with lawsuits etc. if they didn't lend to proportionate numbers of minorities and others who couldn't pay their loans back.

Tell me, are you one of those people who simply oppose profits, and who snarl and hiss reflexively whenever any company is shown to actually earn money?

yes I hate profits,

I hate profits when they are done threw unethical practices, and profits that are made with fancy book keeping ( aka illegal or semi illegal) or profits that do not get passed down the company line ( Top in comany make billions , main workers, min wage...) Companies made loans to people they should not becuse they are profitable , late fees, high interest....its all great so long as you can string them along and keep up the fees...only cost them when they go to far and bleed them dry...They profit on hooking people wiht great sounding deals, but hidden tricks and fees that no common person will understand...or notice. and then all the sudden that loan for 8% interest , its now 33% or 39%...


As for Andy, where was I Defending anyone? I am not here deffending Clinton, and yes I will attack Bush...he was president for 8 years while this whole thing fell apart and what did he do about it? nothing. If this was a problem from the CLintons...then he had 8 years to fix it, he failed, and I will put that on him.

 

[chestnut]

yes I hate profits,

I hate profits when they are done threw unethical practices, and profits that are made with fancy book keeping ( aka illegal or semi illegal) or profits that do not get passed down the company line ( Top in comany make billions , main workers, min wage...) Companies made loans to people they should not becuse they are profitable , late fees, high interest....its all great so long as you can string them along and keep up the fees...only cost them when they go to far and bleed them dry...They profit on hooking people wiht great sounding deals, but hidden tricks and fees that no common person will understand...or notice. and then all the sudden that loan for 8% interest , its now 33% or 39%...


As for Andy, where was I Defending anyone? I am not here deffending Clinton, and yes I will attack Bush...he was president for 8 years while this whole thing fell apart and what did he do about it? nothing. If this was a problem from the CLintons...then he had 8 years to fix it, he failed, and I will put that on him.

Profits are how business especially chemical / pharmaceutical / energy companies do research & development.

Those profits are necessary if products are going to advance. Look at all the products you use every day Pocket and tell me how they would be without R&D.


As for people and loans, no one forces them to take money. People have just forgotten how to live within their means.

 

[pocketfullofshells]

Profits are how business especially chemical / pharmaceutical / energy companies do research & development.

Those profits are necessary if products are going to advance. Look at all the products you use every day Pocket and tell me how they would be without R&D.


As for people and loans, no one forces them to take money. People have just forgotten how to live within their means.

that is part of it yes, pushed by the goverment and media...after all what did Bush tell us to do after sept 11? the nation was ready to sacrifice...he said go shop and spend...

And of course I am all for that, I am in commison sales, so please spend...but I also dont try trick people into spending more and getting them to sign a contract they dont fully understand with hidden loopholes in it to rape them later like many banks and credit cards.

 

[BigRob]

that is part of it yes, pushed by the goverment and media...after all what did Bush tell us to do after sept 11? the nation was ready to sacrifice...he said go shop and spend...

Laugh at Bush all you want, but at least he understood we are a consumer based economy, and spending is critical to its survival.

And of course I am all for that, I am in commison sales, so please spend...but I also dont try trick people into spending more and getting them to sign a contract they dont fully understand with hidden loopholes in it to rape them later like many banks and credit cards.

Bush saying "go spend" did not trick anyone into doing anything. Further, if you sign a contract you do not understand, it is your own fault.

 

[Mr. Shaman]

Is that part of the problem? of course...but is it the main reason for the problem? no I doubt it. Also care to post info on what the actul case was and why it was done, rather then a cut and spliced clip of one guy giving the basics of what I would guess was a very complicated issue.

Also does not change the fact that over 8 years Bush did not do much to fix this or other issues.

....As-a-matter-of-fact, he did the complete-OPPOSITE!​

"Spitzer had become increasingly public in blaming the Bush administration for the subprime crisishttp://www.projectcensored.org/top-stories/articles/25-bushs-real-problem-with-eliot-spitzer/. He testified in mid-February before the US House of Representatives Financial Services subcommittee and later that day, in a national CNBC interview, laid blame squarely on the administration for creating an environment ripe for predatory lenders.

On February 14, the Washington Post published an editorial by Spitzer titled, “Predatory Lenders’ Partner in Crime: How the Bush Administration Stopped the States From Stepping In to Help Consumers,” which charged, “Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.”

 

[top gun]

The fact is that both sides to a great extent were for opening up the housing market.

The Democrats were big on the idea that owners that had an actual ownership stake in a community would take better care of it. Which is true but you do have to have the income to make the payments and stay an owner.

Many Republicans liked the idea of more business for the banks, Realtors etc. But once again if the lending institutions get too carried away and get into predatory lending territory that's a recipe for disaster as well.

So on this one it amazes me when either side points fingers... hell they were both well intentioned (how often does that happen at the same time?) in many instances the outcome simply just not turn out as they had hoped or expected.

But here's the other part of the reality. Only 12% of the mortgage meltdown was attributed to these kinds of loans anyway. That means 88% were not low income incentive loans at all... 88%!

So on this one I go back to the big picture and what was missing was better and stricter regulation across the board... low income... middle income... high income... had regulations on lending been tighter all across the board when the economy slowed the mortgage problem would have not been nearly as big a deal.

Lesson: Better regulation, more money down or more collateral, looking for adequate income for after an ARM adjusts not just at loan inception... these kinds of things.

This isn't a blame a Party thing. If we're going to go that route because the Dems wanted more home ownership then we also would have to look at the Republicans overall policy of pushing for deregulation on all businesses including banks.

This is something that needed fixed granted but it's disingenuous to point fingers on this one.

 

[Mr. Shaman]

So on this one I go back to the big picture and what was missing was better and stricter regulation across the board... low income... middle income... high income... had regulations on lending been tighter all across the board when the economy slowed the mortgage problem would have not been nearly as big a deal.

....So, when you read:​

"In 2003, during the height of the predatory lending crisis, the Office of the Comptroller of the Currency (OCC) invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation."

......you don't consider WHERE THE HELL WAS THE ATTORNEY GENERAL??!!!

We're NOT (exactly) talkin'-about some ROOKIE, here!!!​