Congressional Democrats Say Obama Not Doing Enough To Fix Mess They Created

Michigan—proof that tax and spend libs have no business being in charge.

Hey Scott, what do you think Obama should do today about this issue?

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?

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/

Ah here you are. So you don’t actually do anything.

Thought so

Ron

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?

Scott

Obama is a citizen of considerable clout.

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.

Obama’s gonna inherit big problems (as every President does).

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.

Barney’s Fwank sure gets him in a lot of trouble.

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.

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… you’re at it again..

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.

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.

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.

Oh and Craig, that’s only half of their mental illness. I won’t kill the huge amounts of bandwidth going into more detail.

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

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.

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.

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.

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:

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 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.

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.

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.

Interestingly, subprime market growth in the 1990s occurred largely without the participation of Fannie Mae and Freddie Mac. The GSEs started showing interest in this market toward the end of the decade and now purchase A-minus mortgages as a regular part of their business. National Mortgage News, a trade publication, estimates their combined market share in 2001 grew by 74 percent, representing about 11.5 percent of all subprime loan originations in that year. Some market analysts estimate that GSEs will soon be purchasing as much as one-half of all subprime originations.

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.