“He’s going to have to be more assertive than he’s been,” House Financial Services Committee Chairman Barney Frank, D-Mass
“The Obama team has to step up,” Sen. Christopher Dodd, chairman of the Senate Banking Committee and one of the lead negotiators, said Nov. 21 in Hartford, Conn. “In the minds of the people, this is the Obama administration. I don’t think we can wait until January 20.”
Of course, Frank and Dodd have been largely fingered as main players in the cause of the financial sector meltdown by Republicans, many Democrats, and the msm at large. But…what we really need is a first class, level 1 spinmeister to start complaining about Obama’s preference for rhetoric of work…preferably a Democrat; someone like….
Sen. Carl Levin of Michigan, a point man in helping his state’s main industry, called on Obama to help resolve the dispute over money for the auto loan package.
“It would be very helpful if the president-elect would become more involved in resolving the issue over the source of the funds,” he said. “I want him to offer his assistance. He is a person who can really bring people together.”
YES! That’s IT! Carl Levin-the man who is behind every myth about Iraq having nothing to do with Al Queda…he’s perfect! Only a top level, ingrained, hardcore, DC insider like Levin could really get Obama to at least use some words to make a difference.
Nope? No. I guess not. Even with Carl’s urging, Senator Obama won’t take a stand on a simple matter of legislation. President Bush is in the waning days of a Presidency when the only real action a White House occupant does is pardon people, light the National Christmas tree, pass the buck on all issues to the next admin, and pack. The Democrats’ Congress (with an approval at 15%) is actually gonna have to step up and decide on their own, with no political cover/scapegoat, what to do.
Meanwhile, my home state of Ohio’s unemployment is closing in on 7.5%. Yeah, nice work guys. How many trips to Ohio did Senator Obama make during his 2yr term as a Senator for Illinois/his Presidential campaign? What will come of those trips now?
ANSWER: 8.5% unemployment in January.
link
Author of “Reparations and America’s 2nd Civil War
Reparations and America’s 2nd Civil War: Malensek, Scott: 9798864028674: Amazon.com: Books
Michigan—proof that tax and spend libs have no business being in charge.
OHIO-proof that voting for someone doesn’t get you due representation in DC (be it President, Congressman, or Senator)
Hey Scott, what do you think Obama should do today about this issue?
The idea that Frank and Dodd were the “main players in the financial meltdown” is not true.
We went over and over this before the election. Fannie/Freddie were only involved with 1/4 to 1/3 of the subprime loans. Only 9% of the subprime loans were for first mortgages on primary residences. Less than 1%of the subprime loans were for the Community Reinvestment type loans promoted by Frank and Dowd. Not a single one of the hundred or so failed banks has blamed Fannie/Freddie, the CRA, Frank, of Dowd for their failure.
No one forced Merrill Lynch, Bear Stearns, Lehman Brothers, Wachovia, Washington Mutual, AGI, or any of the smaller, failed banks to buy subprime mortgage backed securities or to get involved in highly leveraged speculation in credit default swaps. These investment decisions were driven by the pursuit of profit, in a financial market awash with capital because of absurdly low interest rates which were being maintained at those rates by Greenspan to allow the economy to grow enough to pay for the massive Bush tax cuts. Ant time you can borrow money at 1% or so, you do so, if you are any good as an investor. But what if there are not enough sound investments to meet the demand of the capital markets? Answer, you invent new, exotic, risky, and ultimately unwise securities instruments.
The proof that neither the Democrats nor Frank nor Dowd had anything at all to do with the root causes of the meltdown is that neither John McCain nor Sarah Palin nor the GOP Senate/House candidates in general made a serious attempt to blame the financial crisis on Dowd, Frank, or Democrats in general. This was not raised as an issue in any of the 4 debates, beyond McCain saying that he’d signed a “letter” warning of risk, long after the House had already passed regulatory legislation, with strong (i.e. majority) Democratic support.
We have previously discussed how the House passed this Fannie Mae regulatory legislation which was killed by the GOP senate leadership with the backing of the President and how the Senate did not introduce alternative legislation for debate and a floor vote because of the actions of Republican lobbyists. This was all referenced on a pre-election thread.
– Larry Weisenthal/Huntington Beach, CA
Yes Larry we went over this before the election. You were wrong then and you are wrong now.
And if you missed the “proof” that Dems were to blame I can point you to the debate transcripts were McCain did just that.
Will that satisfy you or just cause another spin cycle to take place until you get dizzy and fall down?
Larry, I still disagree with you the influence that Fannie/Freddie had with Frank+Dodd as well as their influence on the financial market crisis, but it could be just a matter of my lack of clarity in commenting; I don’t seem to state strongly enough that there were other factors leading to the economy.
Blast, I think Obama should do what Levin says and make it clear where the bailout money should come from. I also think Obama should decide on trickle DOWN or trickle UP economics. He campaigned on trickle UP economics that penalized investors (increasing Capital Gains tax and wealthiest 5% who do most of the investing in US), and pumped juice/cash into the bottom portion of the country first and foremost. Instead, we see him pushing for bailouts etc that will help the top 5% first and let that help trickle DOWN to the rest of us. We’re a consumer country, and people are in debt. Give people their money FIRST. We’ll spend our money to get out of debt (ie, WE will pay the banks-not the Feds), and if we don’t have debt or pay it off and have extra, then we’ll either invest it (hello, Wall Street likes that) or spend it (corporations like that). OR…tell dying companies to eat it and do nothing (which is really what we’re doing now).
If Congress took that $850bn, and sent it to the 102mil American homeowners, then they’d all either pass that money on to their bank to get caught back up on mortgages, OR spend it (refueling the consumer-spending-based economy-or invest it. THIS is trickle UP economics. Instead, the money goes to…well, we really don’t know. Do we?
Republic Steel here in Ohio just idled their blast furnaces here last week. Did they get a bailout? Are they critical to natsec? Are they a major employer? Can they compete globally if Obama just announces that foreign (Chinese) steel can no longer be dumped in US at below global market pricing? Yet…Obama didn’t even do that. Instead, they sent everyone home for the next 6months minimum. Please don’t tell me that his Commerce Sec needs to get up to speed either. Obama’s been campaigning for 2yrs and made dozens of trips to Ohio. He and his people KNOW what’s going on. His Commerce Sec did the same AND has yrs of experience-he knows what’s going on. Did we get a simple statement that could have saved tens of thousands of jobs? Nope. Merry Christmas pink slips instead.
Obama is not doing enough. If he just started giving some definitive statements that took a stance (yeah, I know… Hell might freeze over first) then he could actually do something-make a difference as an American citizen-before even taking office.
Delusional Larry W strikes again.
1) That so called strong regulatory legislation was nothing of the kind. It was a joke that did nothing.
2) Ummmm, RNC spokesman Danny Diaz isn’t part of the GOP?
3) Would it kill you to not spew dem talking points?
As for the dems not being responsible, here’s some articles showing otherwise.
http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=75717
http://www.ibdeditorials.com/IBDArticles.aspx?id=306370789279709
http://www.washingtontimes.com/news/2008/oct/07/do-facts-matter/
http://www.politico.com/blogs/thecrypt/0908/RNC_Dems_are_to_blame_for_the_whole_housing_meltdown_.html
http://193.41.38.249:8080/pub/block.mp?s=6459038D053E6C4C&u=http://www.stoptheaclu.com/archives/2008/09/18/democrats-to-blame-for-financial-crisis/
McCain was leading in the polls until the financial meltdown. Nothing but nothing would have resurrected his campaign as proving that the Democrats were the cause. I watched each and every debate. I particularly paid attention, Mike, when you advised me to pay attention to the second debate, when McCain was set to raise this as a major issue. As I commented at the time, all McCain did was to refer to a letter which he co-signed, which is nothing at all, given that he was unable to convince his own Party’s Senate leadership to bring a reform bill to the Senate floor, because of the influence of GOP lobbyists against the bill. And that was the only time the issue was even raised peripherally, the whole time he and the GOP were sinking to electoral defeat.
This is just like the fanciful claim that Saddam shipped WMD to Syria for safe keeping before the Iraq invasion. I’ll consider the claim when President Bush makes the claim. Instead, Bush repeatedly (as in four times) stated that “we were wrong” about the WMD and that this was because of “bad intelligence.” In the exit interview that Bush just did with Charles Gibson, he was asked what he regretted most. Bush replied it was the “bad intelligence” on Iraq’s WMD.
– Larry Weisenthal/Huntington Beach, CA
Ah here you are. So you don’t actually do anything.
Thought so
Ron
“This is just like the fanciful claim that Saddam shipped WMD to Syria for safe keeping before the Iraq invasion. ”
What WMD specifically are you talking about (or is WMD just an acronym serving as a synonym for “stuff”)?
Scott, I appreciate your response. Frankly, I think Levin is desperate with GM looking at running out of coin by the end of the month. No doubt some fix should be put in place to keep them breathing until a proper restructure can take place, but President Bush is still the president and should be making the executive decisions of this government. I tend to think Bush just does not want to be responsible for fixing a problem on his watch, since it will be against Republican “free market” orthodoxy.
On the situation with Republic Steel. I am sorry to hear about the lay offs. Our trade policies have been screwed up for a long time. We have allowed dumping, undervaluation of the the Yuan and much more. Now China owns a significant amount of American debt… now they have the power to damage our weakened economy even more. How did that happen! Who was watching out for our national interests?
Blast, I totally agree. The only thing I’d add is that Obama is a citizen of considerable clout. Bill Gates has clout. Warren Buffet’s got clout. Lots of Americans have a lotta clout & can do a lot to help this country just by making statements. In the last few weeks of a Presidency, a President should still be President (see also Bill Clinton/USS Cole-my hot button issue), but reality is reality & all a President is gonna do between 12/1 and 1/21 is light the Xmas tree, pardon some people, pass the buck, and pack. Obama’s gonna inherit big problems (as every President does). I think he should be doing everything in his power to make it easier to address them when he’s sworn in.
There are more lay offs at bigger companies in this area coming next week too, but I’m not allowed to say who, where, etc until Christmas. Sad. Used to be a time when companies gave out bonuses at Christmas-not pink slips.
Scott
At least you see him as a citizen… lol.
Obama needs to get his team together so he can manage the country when he takes office… that is his first priority as the 20th will be here soon. With that said however, it is widely known that Obama has already done unprecedented things as it relates to a President-Elect. I am not saying there is not more he can do, but we only have one president at a time.
I don’t think we have had a president in our lifetime (unless you are over 60) seen as many big problems as Obama will be facing. Two wars, active terrorists plotting against us, huge deficit, huge national debt (largest in our history), unprecedented consumer debt, historic falling prices in home values… and our crown jewels of manufacturing GM etc, are on the verge of total collapse. We better hope and pray he is successful as there will not be a do over in 4 years for some other president.
I wonder if Dodd or that man fanny pirate Frank realize that Conrade Obama is at the moment, just a citizen, he gave up his senate seat….. where’s that hack Pelosi at?
Barney’s Fwank sure gets him in a lot of trouble.
While I’m not wild about seeing people lose their jobs, I think it would be best to let GM declare bankruptcy and shed the union contracts. The union workers pay has been artificially inflated and in need of a correction for some time now.
As for who is watching America, if the citizens won’t we shouldn’t expect Congress to.
Give the democrats their due. In 2006 with the stock market bumping 15,000 and unemployment at 4.5% they promised to change the direction of the country if you put them in charge. Well they took charge in Jan 2007, so how much more change do you want? I just couldn’t figure out how 50 million or so voting age Americans got so stupid and then I looked at what the libby colleges turn out and the light comes on.
I don’t understand what Obama is supposed to do yet. he is not even the president. The illuminati have made to many promises and have thrust Obama into the middle of things way to soon. I am not sure he can do half of what they say anyway but i am at least willing to wait till he is actually president to see.
This is just like the fanciful claim that Saddam shipped WMD to Syria for safe keeping before the Iraq invasion. I’ll consider the claim when President Bush makes the claim. Instead, Bush repeatedly (as in four times) stated that “we were wrong” about the WMD and that this was because of “bad intelligence.” In the exit interview that Bush just did with Charles Gibson, he was asked what he regretted most. Bush replied it was the “bad intelligence” on Iraq’s WMD.
Do not argue with Larry W., he is completely blinded by his LOVE for Obama; he has lost all judgment. A real Obamaton!
Obama is such a crook that just to think that he could be sworn in in January gives me goose pimples. Imagine that idiot being in charge of all that bailout money? All his wicked friends will be asking for some in return for their fidelity to him. And what about the 3 millions fans that he will be bringing to the White House after he is sworn in? OMG, God help America!
I sure hope that the SCOTUS will dismiss him:
“The man claiming the job of POTUS, Barack Hussein Obama, has already admitted his dual citizenship at birth and his Indonesian citizenship through adoption in his writings, interviews, and on his website. These multiple citizenships at birth and throughout his life instantly disqualify him from the office of POTUS under Article II of the Constitution of the United States.”
Dr. Kate: STAND BY ME
http://texasdarlin.wordpress.com/2008/12/05/stand-by-me/#comments
Larry… you’re at it again..
1: Fannie and Freddie increased their buyout of bundled loans and purchased.. just like Wall St. fat cats… “arsenic cookies” that were sold as packages. They overleveraged, just like investment banks. Dodd and Frank denied Fannie/Freddie was in trouble, and in fact encouraged their over purchases. If what you said was true, they would not have been the first bailout.
GOP in Congress (McCain and Bush) did sound the warning… not loud and strident enuf. But it was deliberately ignored by 100% of Dems, and too many GOP that were on the take, and blinded by reality by lack of real estate and financial savvy.
2: I will say this again. You only want to consider CRA banks and their supposed “redlined” loans. This is deliberately ignoring the reality of the free market and fair housing. You can not legally create loans that cater to financially unqualified minorities, and not offer it to the rest of the nation. That is not only really fiscally stupid, but blatant discrimination. Only a financially unstable minority person can get a no doc/low doc/stated income type of loan??? Oh my…. what a concept.
Rewrite of the CRA regs by Bob Rubin (now busy with his hand out for Citibank… still a stellar “financial” guy…) in 1995 created the environment to create the EZ money. The demand for these loans went beyond the CRA banks. Demand creates competition…. MANY people used these exotic loans to their benefit and have *not* defaulted. They were a financial tool.
With a demand far greater than CRA banking institutions could handle, they became common, and prevalent. Like I said… surely you are not one who supports a loan package that is only offered to a minority class of US citizen , unqualified financially for a conventional loan – and deny that same standard of loan to qualified individuals? Please say yes you would. I’ll have your tush in court so fast your head will spin, and it is sooooo American to sue for cash income…. LOL.
3: Increased buyers by this EZ money made for increased demand over existing supply…. inflating home prices. The inflation was compounded by low interest rates in late Clinton years, and then by Greenspan holding them down too long from 911 and after. By then the housing prices were out of control, and raising the interest rates to control them was impossible.
4: Securitization played a factor when the secondary market could buy more in ratio to their assets. However this wouldn’t have been a problem if they were buying good product, and not “arsenic cookies”.
This is the perfect storm of so many events. However I’m really incensed with you giving a pass to the CRA regs that formed the foundation of the dominoes in this financial crisis. You are really too smart a light bulb to fall for that nonsense.
Word’s Sunday Funnies had a ‘toonist that actually “got it” on this sequence of events… all of which started with CRA regs, and was compounded with the ensuing events. Take a look at all the events, and the ‘toonist’s point. He is mocking the attitude you persist in holding. THe only item he’s missing is the overinflated housing prices that played a huge part…. (or else they are labeled “subprime bubble” – meaning prices)… Without the overinflation, foreclosures today would be a breeze, as they have been for decades. Trade one defaulting buyer for an like valued mortgage/property for a new qualified buyer in the same mortgage/property amount.
BTW, Larry… you seem to believe the financial causes aren’t facts because McCain didn’t raise them as campaign points.
Let me see….. just how well do you think it would go over if you blamed unqualified minorities buying homes as the starting point for this mess? Yeah…. that would be good. The left would spin it as “fat cat blames poor minorities for financial mess”.
True INRE EZ money for unqualified buyers who used poor judgment by purchasing more than they could afford? Yes.
Politically smart? uh… nope.
McCain ran a deplorable campaign. Frankly, I thought our choices were horrendous for POTUS this year. Truly depressing. I preferred McCain’s ideology – once having his liberal spending tendencies tempered by Palin. But if he implemented that with the inefficiency he did his campaign??… we’d be listening to whining for the next four years about the “Camelot” we’d be living under with Obama.
Now the truth’s in the performance. Dems have almost a super majority. They have their Messiah. I hold my judgment for a year or so. And I’m not fooled by this transition period. Frankly, the opportunism sought with so many press conferences to spout policy, while saying “there’s only one president at a time” doesn’t make my heart bode well.
I do agree… it’s too early to expect anything of a man who’s not president yet. He cannot influence a Congress that will be completely remade in another month. And what influence he is wielding, I’m not yet bowled over. But… I repeat , the proof in the pudding is a year or two downline.
In the meantime, my daily mantra is… “It is what it is…” And I don’t sweat the stuff in the interim. It used to be because I had faith that this nation didn’t wish to be another Russia, Cuba or Venezuela. Now I’m not sure. But then, old enough to not have to live under it for long.
Mata,
Boy you are patient. I admire your patience. I have none with ignorant people who doesn’t make the effort to find the real facts. Those facts are right here on this site and on many other excellent sites, but they sure are not in the MSM. I have more patience with low IQ people who really do not understand. But with educated people that try to spin things their way so to match their obsession with Obama, I have NONE. They can twist the facts all they want, they are still wrong and they know it and so do we. Such people really irritate me. They have the same Obama’s Modus Operandi with facts and reality: Deny, Delay and Destroy.
I’m with you Craig, just not as nice about it. They are incapable of accepting that which is contrary to their beliefs. They have a lot emotionally invested in their views. They feel being a liberal makes them superior to others and feel good about themselves. By superior I mean they think it makes them smarter and morally superior. If they accept that they are wrong, then it could lead to a domino like collapse. It would mean they aren’t smarter, morally superior, or the “good” people they think they are. Liberals REALLY need to feel good about themselves and better than others. This is why no matter how wrong they are proven, they will come back a bit later with the same talking point like nothing ever happened.
Oh and Craig, that’s only half of their mental illness. I won’t kill the huge amounts of bandwidth going into more detail.
Firstly, the personal attacks are really getting tiresome. If you guys don’t want me writing on this blog, just tell me so and I’ll stop. I write here because I like to debate issues. If Flopping Aces is just supposed to be a mutual support group for the GOP conservative base and no one else is welcome to offer opinions, then this should be made clear on the mast head.
So tell me, Craig and Mike: Am I welcome here or am I not? If I’m not welcome, I’ll simply go to another serious blog where discussants are capable of understanding the principle of the honest difference of opinion.
For now:
Mata, Sorry, but, but the numbers don’t add up. The concept that the CRA is in anyway responsible for what happened isn’t supported by any serious economist — at least not by any whom I’ve run across.
So many things…
First, here’s a list of failed banks:
http://www.fdic.gov/bank/individual/failed/banklist.html
Not a single executive in a single bank has blamed either the CRA or government in general for their failures. The idea that banks became insolvent because they were forced to make unwise loans is not correct.
As previously noted, Fannie/Freddie were involved in only 1/4 to 1/3 of all subprime loans. Fannie/Freddie are guilty of doing the same thing that all the other financial institutions were doing: they were guilty of trying to make a profit. Whatever mistakes any of the financial institutions made — either the quasi-public Fanny/Freddie or the entirely private sector which made 2/3 to 3/4 of the loans — were made in the pursuit of profit and not because of the heavy hand of Democrats forcing them to make those loans. And, remember, of all the sub prime loans, only 9% were for owner occupied first residences (the “target” for housing expansion) and certainly less than 1% of the total (dollar wise) were directly CRA related. Bank of America probably made more CRA-related loans than any financial institution (I’m guessing here, but it’s an educated guess) and B of A not only didn’t go under but it was financially solvent enough to assume all the bad debt of Merrill-Lynch in acquiring Merrill-Lynch.
And this doesn’t even take into account what appears to be the biggest factor in the meltdown– the credit default swaps. These entirely led to the AIG failure (with the — what is it now? — close to $150 billion bail out) and the Lehman Brothers failure and played a very large role in most of the other large financial institution failure, as well.
Mata, are you aware of anything McCain did, other than co-sign a single letter? That’s the only thing he took credit for in the debate and the letter was the only thing he raised during the entire campaign concerning the financial crisis.
The GOP lost the Presidency and took on big losses in Senate and House and everyone agrees that this was primarily due to the financial meltdown. They needn’t have blamed minorities (who — once again — had NOTHING to do with the meltdown); they could have just blamed Democrats. But they didn’t. They pissed away the Presidency. They pissed away the Supreme Court. The pissed away the Senate. They pissed away the House. They pissed it all away while totally holding their tongues when it came to blaming Democrats for the meltdown. Why? Because they were at least equally complicit. The cause of the meltdown was the 1% interest rates which led to a capital glut and the reason for the 1% interest rates was the need to grow the economy enough to avoid huge deficits as a result of the enormous Bush tax cuts to the wealthiest Americans.
With regard to Fannie/Freddie regulation, the Senate had the opportunity to bring regulatory legislation to the floor for debate; draft legislation was prepared, but this was all killed — not by Democrats but by Republican lobbyists. This is the ugly fact which ruins an otherwise beautiful Flopping Aces theory.
In response to Hard Right:
I don’t reply to posts which do not offer serious debate but which only list a blizzard of links. As if I’m supposed to read all of them and figure out what precise point you are trying to make and then have to take an hour to write a point by point rebuttal. If you have a particular point that you want to make, then take the time to explain it, and we can debate it. This is what Mata does so well. Anyone who knows how to use Google can quickly come up with lots of links. Just posting links without explaining what point you are trying to make isn’t debate.
I’ll address one thing. The concept that the RNC did try to blame Democrats for the meltdown.
Here’s the single quote from Hard Right’s link about the RNC (from Comment #7, above):
This was dated September 25. Again, McCain’s “push” for reform came from co-signing a single letter. McCain didn’t “work” to reform the system, which is why he never claimed to “work” to reform the system. He only claimed to co-sign a single letter, which is all he did. And the fact that this line of attack was dropped as quickly as it was raised is owing to the fact that not only was the GOP “asleep at the wheel,” its leadership capitulated to Republican lobbyists in killing regulatory legislation.
Once again, the GOP pissed away all three branches of government because of the economic meltdown and no prominent GOP politician alleged that the cause of the meltdown was Democrats.
Along with the math and all the other facts related to what happened, this conspicuous silence refutes the assertion that somehow the Democrats were responsible for the meltdown.
– Larry Weisenthal/Huntington Beach, CA
Mata P.S. (sorry to make this a second posting; I’d just edit my first, but it is “awaiting moderation.”)
You attempt to make the following point: Banks were “forced” to offer low interest rates to unqualified buyers and then lending institutions had to make those same rates available to everyone. Firstly, I don’t believe that this is true. The CRA, as I understand it, made loans available to otherwise red lined communities at market rates. The problem was that the loans previously weren’t being made. So the CRA did not lead to the lowering of interest rates generally. Secondly, the purpose of the CRA was to turn tenants of slum lords into first time home owners. There would have been no “discrimination” at all in having higher interest rates for re-financings and vacation homes and investment real estate, which were a huge part of the subprime market. Thirdly, the CRA performed brilliantly during the 90s and there was no problem at all with the housing market until the mid-00s, when the capital glut led to the creation of mortgage backed securities, which is what drove the dramatic expansion of the sub prime lending market, of which 91% of the loans went for things other than principle first residences and certainly less than 1% (by dollar amount) would have had anything at all to do with the CRA. The largest share of this money was entirely private sector, non-Fannie/Freddie related and the largest share of this largest share was for re-financings and investment homes and vacation homes.
Once again, the clearest proof of the fact that the financial meltdown wasn’t related to the Democratic Party politics was the deafening silence among Republicans on a national basis, while they watched all three branches of government being flushed down the drain.
– Larry Weisenthal/Huntington Beach, CA
Larry, it is not because we do not want to discuss with you, it is because it is hopeless. You think you know better, but you don’t. We could point every fact in your face and you would still deny them. I realized it on the Health Care thread with you. Mata might have the patience with you, I don’t anymore, you do not listen and you don’t want to understand, you just want to be right even if you are wrong. When somebody really wants to know about something, I have all the patience in the world to teach him. But when somebody like you comes along and does not want to KNOW the facts and all he wants is to be right, I do not waste my time with him. On the blame of the financial crisis it is clear that you are wrong but will never admit it… so what is the point of discussing it with you? You will never admit you are wrong. We all know you have a PhD in your field of work (medicine, biology or something) and I am sure you are very good in what you do, but that doesn’t make you a politic and economic genius.
Your statement: “Once again, the clearest proof of the fact that the financial meltdown wasn’t related to the Democratic Party politics was the deafening silence among Republicans on a national basis”… is stunning! McCain wanted to look like the good guy (a loser attitude in my mind); he wanted to be seen as the bipartisan one. That is why he shut up, Mata explained it to you. This is the problem with you; we explain you and you come back the next day with the same arguments that some people here had the patience to debunk so well. So as far as I am concern, I do not argue with you anymore, it is a waste of time and energy because you do not want to KNOW you just want to continue to BELEIVE what you already believe falsely. And by the way, Democrats were the guilty ones on the financial crisis here but that doesn’t mean that Republicans did all they could have done, but they at least tried. Maybe not hard enough but with a bunch of stubborn Democrats who wants to be right all the time even if they are wrong, it was almost hopeless.
My previous post is awaiting moderation so I cannot had this Post-Scriptum on it. I don’t know if this one will go thru, if it does before the other one comes out, please go and read it to be able to understand this comment.
Post-Scriptum: BTW Larry, what doesn’t help you is your repetitive Sarah’s bashing. We are all very proud of Sarah here, we think she is the best. So your endless disaproval and bashing of Sarah is like if you were telling all of us how stupid we are. So relax a bit and look in the mirror. If you want to bash Sarah and brag about Obama , maybe it would be a good idea to do it on a leftist blog, because you will never get us to agree with you on these two issues.
I like Larry’s posts & hope he stays & continues posting.
🙂
First of all, Larry… I’m with Scott. I like your presence here. And while we may disagree on some things (and not on others…), I always find civil and healthy debate helpful. And yes, I’m guilty of losing my patience with some as well. So I think you’ll find that all of us have not only dished out, but been on the receiving end of insults. Hang in there, and don’t take it personal. Few would actually have the cahones to say the same to your face. The internet is like that… the perfect example of the end of good manners and a civil society.
To a couple of your points (since I’m still trying to catch up after the return from Florida…) First, I need to straighten you out on a misconception in one of your later posts.
This isn’t the point I was trying to make, and perhaps I wasn’t clear enough. You are confusing the creation of the exotic loans to meet compliance regulations with loan rates that control inflation. Two different animals in the puzzle. So let me try again.
CRA BANKS AND NON-CONFORMING (not jumbo, but B/C loans) MORTGAGES
CRA banks were forced to make loans to unqualified buyers to prove they were not redlining. This has nothing to do with the rates they used, which were usually based on prime, or points above, depending upon the credit scores of the borrower.
Prior to 1996, banks merely had to prove they were not redlining by showing attempts to make loans to minorities via advertising, etc. Bob Rubin, Clinton’s Treasury Secy, changed all that when he rewrote the compliance regulations just before the GOP took control of Congress in 1996.
Those compliance regulations changed from proving “intent” to having a certain amount of these loans on the books for minorities.
I don’t know if you are aware of how lending works, but loan officers (mortgage bankers *and* mortgage brokers) end up running a potential borrower thru an automated underwriting systems (LPI or DU) that utilize Fannie/Freddie guidelines since most mortgages end up being purchased by them on the secondary market. They (the GSEs) in turn package and sell to investors with a guarantee of payment. By the end of 2007, they had purchased $4.9 trillion of loans, 70% of which they repackaged and sold to the investment market.
Fannie and Freddie only held about 6% of guaranteed mortgage debt in 1971. By 2003, it had risen to 51%.
Back to your misconception of forced loans, and non-CRA banks becoming involved without Congressional mandates to do so.
Problem was, these borrowers were not qualified for conforming loans (loans that meet Fannie/Freddie guidelines), so they had to create exotic loans with different guidelines in order to get them thru. Fannie/Freddie didn’t start tightening up on the criteria for these exotic loans (ARMs, interest only, stated income, no or low doc) until July 2007.
When you create these loan packages, they are a great financial tool also for the solvent buyer. You cannot create an EZ, non-stringent loan package and only offer it to minorities who are unqualified. So these loans became in demand, and lending institutions…. stepping up to the supply/demand market… also started offering the loans. This is why it’s not just CRA banks. Nor can you implement this EZ credit only to a certain segment of Americans without truly being discriminatory.
RATES AND HOUSING PRICE INFLATION
Rates are the control over the housing price inflation. When you lower the rates, you can get more money… and pay more for a house. So the house prices go up. A second important piece to the puzzle is the home’s inflation. Otherwise the bad notes could just be resold for their face value. Banks are failing because of an exorbitant amount of bad notes with a face value far above the asset’s value.
Also, with a new, and vast, segment of the American population now qualifying for this EZ home loan – (between 1995-2001, the volume of loans increased by $2.249 trillion) – there was an increase in the demand for housing. With more demand, and the existing supply, both new construction and existing home sales also increased their prices…. supported by multiple bids in just days of being listed. This also drove up prices, in addition to the low rates.
Get the idea it isn’t just one event yet? But it all started with the CRA compliance regs being rewritten.
Now that I’ve cleared that up (hopefully for the final time…), the below is more easily addressed. You said:
As you see above, banks are insolvent *precisely* because they hold bad notes on overvalued property… either thru mortgages that that they directly issued, or investment banks purchased in MBS, ABS or REMIC packages from Fannie/Freddie or other entities. If the assets were worth the note’s value, they would not be insolvent.
Again, Fannie and Freddie are only a piece of the economic puzzle, Larry. But you can see that they also contributed by having loose exotic loan guidelines. By the end of the 90s, they were purchasing more subprime loans. This from an Oct 2002 article about their increased participating in the subprime market.
Remember, that was an article from 2002… and the GSE’s did indeed increase their purchases of the non-conforming loans to a higher percentage. Remember, the GSEs do not originate loans. They buy them from the originating banks. And Fannie/Freddie were leading the pack on relaxed guidelines. Banks rarely took risks they couldn’t resell on the secondary mortage market to the GSEs. They are the quintessential entities that set the pace and guidelines for all mortgage origination.
Now… in some of your other comments, you might be mistakenly lumping me with those who blame the Dems solely for this financial debacle. I am an equal disdain blame kind of girl, and frankly both sides of the aisle have this onus.
Yes, the Dems played a huge part… perhaps more than the GOP… in creating the environment for this to happen. But I hold a bi-partisan corrupt (or stupid) Congress primarily responsible for thrusting mandates on the industry to loan cash to unqualified buyers. But of course this practice of easy money and loose standards would be popular, and take off like wild fire in the free market. Why shouldn’t it?
I saw this mess back in 2004, tho not to the national extent. But I knew housing prices were too high, money too easy, and that the landing wasn’t going to be “soft” when the inevitable correction occurred. If I could see it, why didn’t our Congress? So yes, McCain and Bush were talking about this problem back in Bush’s first term. They didn’t stress the magnitude, and they were met with opposition from not only the Dems, but their own GOP members.
So as far as I’m concerned, all of them can accept the blame. Those that started the snowball down the hill, those that didn’t fight hard enough to stop the snowball at a higher elevation… before it became a financial avalanche.
BTW, least ye think this housing price inflation started with the Bush administration, here’s a stellar Oct 2002 article about the danger of the over inflated housing. At this time, the subprime problem had not yet leered it’s ugly head… it was merely another loan package. A blip on the radar screen to be ignored.