Hypocrisy….thy name is Obama: (h/t Gateway Pundit)
Over the last couple of weeks, I’ve been traveling around the country and talking with folks about my blueprint for an economy built to last. It’s a blueprint that focuses on restoring the things we’ve always done best. Our strengths. American manufacturing. American energy. The skills and education of American workers.
And most importantly, American values like fairness and responsibility.
We know what happened when we strayed from those values over the past decade – especially when it comes to our housing market.
Lenders sold loans to families who couldn’t afford them. Banks packaged those mortgages up and traded them for phony profits. It drove up prices and created an unsustainable bubble that burst – and left millions of families who did everything right in a world of hurt.
It was wrong. The housing crisis has been the single biggest drag on our recovery from the recession. It has kept millions of families in debt and unable to spend, and it has left hundreds of thousands of construction workers out of a job.
Who created the policies that forced these banks to make loans to people who had no business getting those loans?
And who helped push those policies?
Why Mr. Obama did.
And now he wants to whine that the banks shouldn’t of given those high-risk loans out when they were REQUIRED to?
Now, we know what happens, because we’ve just seen it — what happened when we stray from those values. We saw what happened over the past decade when we strayed from those values — especially when it comes to the massive housing bubble that burst and hurt so many people. Millions of families who did the right and the responsible thing, folks who shopped for a home that they could afford, secured a mortgage, made their payments each month — they were hurt badly by the irresponsible actions of other people who weren’t playing by the same rules, weren’t taking the same care, weren’t acting as responsibly. By lenders who sold loans to people who they knew couldn’t afford the mortgages; and buyers who bought homes they knew they couldn’t afford; and banks that packaged those mortgages up and traded them to reap phantom profits, knowing that they were building a house of cards.
So which is it? Could those people afford that house or not?
Either way, these banks were FORCED to give these loans by the social do-gooders and this was one of the major reasons for the collapse in our economy, as Mata pointed out in her “US Economy – A “perfect storm” of housing and lending events” post.
But now we see the line of attack Obama will be using this election season. And what better foil does he have to use it against than a Mitt Romney?
It appears we need to focus on keeping the House and taking the Senate this election season, because we are going to get another four years of Obama.
See author page
Obama didn’t really give a damn how a loan request turned out. If a loan got approved, another customer was added to the supporters of liberalism. If a loan got turned down, then Obama and his cohorts got to sue for damages. Either way, the path to power was there. The entire situation was a lose-lose for the banking firms targeted by the CRA and the ambulance-chasing lawyers waiting on their front porch.
With this level of analysis, we are lucky the liberals will be handling the consequences of “W”z economy, until 2016.
Snerd
Loans were made by the industry to people who couldn’t afford them because loan officers and loan originators made money up front by increasing their volume, and then escaped the consequences of issuing bad loans by concealing the risk level and passing them on to other financial entities. It was an intentional scam from the bottom all the way up the food chain to the top, where bundled loans and deliberate falsification of their risk level were finally used to unload the bad paper onto unsuspecting investors–once again, for a profit. After extorting money from the government–that is, the U.S. taxpayer–to keep the damage done from killing the entire economy, they then had the temerity to pay financial industry CEOs bonuses out of the bailout money.
That wouldn’t have happened in a properly regulated environment. The main fault I find with subsequent financial industry reform since Obama took office is that it hasn’t gone nearly far enough.
It’s also outrageous that there haven’t been full investigations that have named names and brought charges wherever possible.
Efforts to roll back the reform measures that have been managed, and to pin the methodical looting of the financial system on democrats and financial industry service consumers, is ridiculous.
If you want to find the looters, just follow the trails to find out where the money went.
Same ol talking point, and same ol avoidance of reality.
Loan orginators for banks and brokerages cannot make loans that they cannot sell on the secondary market. Therefore if Fannie and Freddie weren’t prodded into purchasing them, the loans would never have been made. The private sector did not significantly participate until 2002 and later, after Fannie and Freddie had already loaded up their portfolio with them since the 90s.
One of this days, you might get it, Greg… but I ain’t counting on it.
CURT
yes the ultimate hypocrite, no other words match
Talking point? What’s described there was the beginning point of the entire situation. Had that one first step been prevented, we might never have seen all of the individual little problems that grew into one monumental problem–the financial disaster of 2008.
If you’re going to tar and feather Fannie and Freddie, prepare to splatter Newt Gingrich. You might also want to think about Vin Weber’s position as Mitt Romney’s Special Adviser on Policy, and the fact that his firm made $360,297 in 2006 alone from Freddie Mac. Nor were they the only republican political figures to do so. Maybe somebody should make up a list.
Freddie Mac and Fannie Mae, as Greg pointed out, are the problem. Of course, he likely doesn’t see the CRA as a tool to encourage stupid lending practices.
Simply put, if FMs didn’t exist, then banks would have had to hold the paper. And if you are on the hook for wins and losses, you are going to take great care who you loan money to. If you get money from the origination and don’t care about the long term viability of the loans because someone else is taking all the risk, then you get the bubble.
As someone who recently refinanced a house, I can tell you the environment has swung entirely to the other direction. There’s a valid complaint in the fact that lending isn’t happening. I have a 795 credit score. I paid off my second mortgage. And it still took 90 days to complete my loan. If it take that long for someone like me, I can only imagine the nightmare anyone else.
The pendulum will swing back to more of a balanced approach. But the government encouraging loaning people money is messed up. Add to that, at one point, the government was telling lenders that you couldn’t deny a loan solely on the criteria they couldn’t afford it. To me, that’s the sole reason to deny a loan.
As usual, some of the liberals have the right goal in mind but the implementation is ass-backwards.
There is no hope for progs. Their understanding of all thing true is made up of their blinding devotion to the most brilliant, well spoken, affirmative action community organizer they have seen in their life time. He has spoken in all 57 states, traveled the intercontinental railroad and praise the the Army corpse of Engineers.
As Peter Wallison has explained, and we’ve linked here a ga’zillion times, the “beginning point of the entire situation” began in the early 90s.
And I’m not done with you yet, Greg:
Gingrich’s consulting job for Fannie and Freddie had nothing to do with what started in the 90s, Greg. What the heck are you talking about? Additionally, Newt had said “don’t bail them out! ” He advocated for reform and those in charge of oversight doing their jobs… as was prevented by your party for years. Do you need reminders of Barney Frank and Maxine Waters insisting that the GSEs weren’t in trouble in the 2004-05 hearings?
As for Romney, based on the only returns he’s provided, he didn’t start investing in the GSEs until 2008 to catch the last of the gravy train of subprime boom. I don’t have a problem with him doing so. My problem is that he states he wanted these companies dismantled, but still invested in them. That’s not illegal, nor necessarily a bad decision, but it is an unprincipled maneuver.
As far as who’s involved, members of Congress from both parties… and that includes your’s Greg, made cash for regulations that they advocated. You’d find the list of Dems that benefited not only from the GSE holdings, but their campaign contributions, quite heavy with Democrats.
I disagree with Romney and Obama, both of whom want to dismantle the GSEs. Now that virtually every asset they have – all guaranteed by the taxpayer as the major shareholder, and our treasury guarantees – there’s no way to liquidate all that inventory except at a huge loss to the taxpayer. And that’s if you can find someone dumb enough in the private sector to buy them.
The GSEs have done a pile of good for home ownership since their inception. What got out of control was Congressional and POTUS desires to push the boundaries of safe secondary mortgage purchases in order to increase homeownership numbers. Since the damage is done, all dismantling can do is compound the damage. The inventory loss is going to have to be absorbed slowly over time.
Larry and I went over and over on this… again… in early December on another thread (you can start anywhere around the comment #45 mark, if you like). He chooses to view the entire subprime problem in the span of 3-4 years (as do you), and discount the lead up from the decade before on to Fannie and Freddie’s book. Additionally, the dissent like’s to pick and choose what they want to classify as a “subprime loan” when evaluating what the GSEs purchased… hoping to lessen the perception they were engaging in the problem to the degree they were.
@chipset, no clue why any particular deal would have taken 90 days. But then very real estate transaction is different. If it was a short sale, then 90 days is quick as lickety-split. If it was a bank foreclosure from a private bank (not Fannie or Freddie held), then delays can be because they have foreclosure departments that are over flowing the brim, and shaved down staffs that handle an unbelievable amount of files. It can sometimes take 2-3 weeks just to get the formally signed accepted offer from a buyer. And no sane buyer starts the process of due diligence (home inspections, etc) until you have that acceptance in writing.
Once that’s done, if there are any repairs or negotiations that need to happen in order for the buyer’s lender to finance, those hoops have to be hurdled.
Lastly, depending on the loan originator you used (broker or banker), they are subject to a heavily loaded underwriting department and shadow staff as well. Then the appraisal comes in and underwriters, whose butts are on the line for the home’s LTV (loan to value), they often grill the appraisers and make them further justify a value… which can also take time.
Loans used to get run thru in 20-35 days easily. These days, 45 days is more the norm and, if there are delays for any of the above, over 60 isn’t unusual.
The lending problem is not the time it takes to get a loan thru successfully. It’s getting both the buyers and the property to meet their criteria.
@chipset, #6:
Indeed, I don’t.
Nowhere did the Community Reinvestment Act instruct lenders to issue loans to people who clearly couldn’t afford to repay them. Nowhere did it suggest that loan application entries should be routinely falsified without the applicant’s knowledge, or that information supplied on loan applications should not be routinely verified.
The motive for such totally irresponsible behavior was simple: The more loans you issued, the more money you made.
Add to that the fact that the loans subsequently became someone else’s problem far up the chain, and the fact that there was absolutely no accountability that would ever work it’s way back down to you.
Fannie and Freddie unquestionably had serious problems. That does not mean they’re responsible for the bad behavior of the entire financial industry.
Ah…it was Bush who told lending companies to relax their standards. Liar.
Dang… can you spread yourself any more thinly on massively different subjects without becoming a wraith, Greg? One at a time:
1: CRA are regulations. These regulations limit what any financial institution may do… including growing, merging, etc… Therefore if a bank who was *not* a CRA bank wanted to alter their business structure, they had to meet CRA regulators, or be denied. You don’t call this “forcing”? Okay… can you call it denial to invest/grow their business? And remember, nothing that they created as a loan would have been made if Fannie or Freddie, and their lowered criteria, didn’t agree to buy it.
Would you be making arsenic cookies for sale if you couldn’t sell them wholesale to the grocery outlets distribution networks, Greg? Of course no. No market for a product for resale, no product. Simple as that.
2: Loan applications routinely falsified. Two points on this.
a: There were scumbags in the business. However the scumbag cannot function without the willing signature of a buyer to sign on the dotted line and agree to a contract. Why you assume that the only perpetrators of fraud were the loan originators, and not the borrowers themselves, is beyond me.
b: With the exotic loan packages created that enabled easier loans that could be sold to Fannie and Freddie, it was rarely needed to “falsify” loan docs. Stated income, or no doc loans, did not require any verification of employment or income. It was based on acceptable credit reports (most had good credit in those days), the value of the property involved, and the borrowers word that they had the income they “stated” they did.
Some of these loans were sold off to the GSEs. And some sold off to the private sector when they started getting in on the action a decade after Fannie and Freddie started accepting them. The GSEs should not have accepted these loans as part of their lending criteria to begin with… which is the point I keep trying to make to you over and over. Government regulators set the standards, under pressure from both Congress and the WH… not the financial institutions. They just met the low standards, and had a field day.
Let me give you another hint, Greg. Any borrower that lies or falsifies a loan application… and that includes deliberately giving false information to a loan originator to plug into the automated underwriting for acceptance with the GSEs… is, and even was back then, committing loan fraud. That carried a penalty of at least $1 mil in fines and perhaps 10 years in jail. Know any of these lying borrowers that are serving any time for their falsification? Or are you only concerned with the financial institutions?
Point? Not all loan originators are the villains. And not all borrowers are the victims.
You let humans off too easy for taking on debt that they very well knew they could not pay back. What most did was assume that their homes would enjoy double digit gains every year, and when their cheap ARM rates reset, they’d just get into a new cheap ARM. Using this, they thought they could afford homes that they never would were they on a fixed rate loan package. That doesn’t work when the astronomical prices on housing was a fake bubble, and values go down.
But ARM loans, interest only, bridge loans, no or low doc, stated income loans all are a financial tool that, when used wisely, were extremely helpful in the business.
A house flipper could get an interest only loans because he was only holding it for a short time, and didn’t need to pay down the principle.
Bridge loans were handy for those relocating from one area to another, enabling them to buy the new home first, defer the payments for six months while the original primary residence was sold. This was great when market time was more predictable. If the home didn’t sell, the buyers ended up having to rent it out. But moving to a new area made qualifying for loans more difficult since they generally required a certain amount of time on the new job.
ARM loans were great for those who were in an area temporarily… such as military stationed for maybe 2-5 years at one base before given orders to a new base. Or even a private company who planned on a temporary relocation. Since you could get ARM for anywhere from 3 to 10 years, this enabled the temporary homeowners to pay less interest on a house they knew they weren’t keeping long term.
Tools are wonderful things. A hammer for the right job is irreplaceable. But a hammer, wielded in the hands of a novice, can result in serious injury. In the housing boom/easy money/low rates era, we had a lot of novices wielding hammers because they thought they could build a better birdhouse.
Gawd… it’s so frustrating trying to teach this to the partisan types. Again, Greg… if the loans had no one to purchase them on the secondary market, they wouldn’t sell them. If you wanted to stop the “more money” they made, the GSEs had to stop buying the loans. The GSEs set the criteria.. not the banks.
pffft
Clinton was the first. Liar
In fact, the NYTs was whining about it in 1999… oh how some like to forget.
And that doesn’t even include the earlier lightening up of the criteria, as mentioned in the 5th paragraph. The NYTs was late to the party to notice what the Clinton admin was doing.
… fish in a barrel
I am simply amazed at the level of ignorance Greg is showing here regarding exactly how the toxic loans originated. Fact, after fact, after fact, after fact, after fact is thrown his way and instead of stopping to think about the ENTIRE situation, he continues to throw out non-sensical accusations of greed on the part of the banks as being the sole and only cause. Deliberately obtuse is how I would characterize his attitude.
I’m sure I’m not the only one, johngalt, but I could do this all day with my bookmarked source data. I expect Greg, libdud or Larry W will never leave their tunnel vision zone of comfort. To them, the subprime housing crisis and collapse will only be confined to a few years during the Bush admin, and when it started and how it got created will forever be ignored by those that refuse to expand their horizons with facts. To do so would shake their partisan religion.
@Greg: You said:
Let’s just let that statement sink in for a moment…
The banking industry is the most regulated industry on the planet, save maybe for the insurance sector.
And here we see Greggie’s Marxist roots shine through. Obama hasn’t gone “far enough,” looks like Greggie favors a police state.
Agreed, we might start with:
@liberalchild: Hush now, the grown ups are talking. Besides, there are no fatherless infants here for you to pick on.
Dang Greg.. how can you deny, what REALLY went down?? the CRA FORCED these CRAP loans, then, a banker, not wanting to get SHAFTED when (not if, a guy with a BRAIN, knew these people could NOT handle these mortgages for long) they went bad.. packaged and sold em off…. now, were they being prudent, to protect the BANK, and IT’S INVESTORS? YES! Did they SCREW the people they sold em to?? Well, these loans WERE guaranteed, weren’t they?? So?? The PROBLEM was… EVERY BANK, was dumping the FED MANDATED TRASH at once!! And when the Chickens came home to roost, meaning, those, the DEMOCRATS forced the banks to give loans to, FAILED TO PAY…… KABOOM!!
You want to lay blame GREG?? Look in the Mirror… LIBERAL……
Want to know, HOW, it could have been AVOIDED??? How about, if the DEMOCRATS, had LEFT the OLD RULES alone!! Such as 10-20% DOWN.. no more then 28% of your income could be the mortgage payment etc,,,, those rules, worked JUST FINE… until the LIBERALS, wanted housing, to be a RIGHT…. and like ALL Liberal give a way BS programs.. IT FAILED . End of story. Now grow up, and deal with your failings….
@MataHarley:
I have a thought on the reasoning behind Greg’s reluctance to admit where the blame for things actually lies. Essentially, it’s an observation, over a long period of time, on how the real investment(s) that the liberal/progressives have made is in the fantasy of the welfare state. And, because their investment is so great in this idea, they will not ever admit to any failures in any plan/program based on this welfare state idea, for, if they did admit to failure in a plan/program they support, they would, in essence, be admitting to their own failure. This is why Obama is so quick to blame everyone but himself, or throw someone under the bus, as a sacrifice, so that he doesn’t have to admit to failure.
@johngalt: Pretty astute observation jg.
@Hankster58, #18:
Because I believe that to be a rationalization by some, and a politically motivated distortion of reality by others.
If this was all the fault of democrats and the CRA–if there was no systemic culpability on the part of the private financial sector–how does one explain the fact that bad loans were routinely bundled with the good to hide them as they passed upward through each level of the financial system, and that the safety ratings of the complex investment instruments that they were eventually incorporated into were deliberately distorted to make it possible to sell them to trusting conservative investors across the entire damn planet? Who got taken to the cleaners in the end? Whose pockets were finally picked? Whose retirement plans were severely damaged? And who got away with the loot?
The original crime was bad enough. Then the taxpayers had to cough up to keep the whole system from collapsing. Now we’re being told that the industry did nothing wrong, and that their activities shouldn’t be interfered with because that messes up the optimal workings of the economy.
I’m thinking that the manure wagon was already loaded to capacity, and that most people know it.
Long before ”Occupy Wall Street,” there used to be massive gatherings of ACORN and other thugs at banks that dared turn down a minority for a home loan.
I remember a local one that made our local news.
ACORN and Obama (early photo shows him training the Madeline Talbott ACORN Chicago group in this) Barney Frank and others must have thought you could simply shakedown banks and intimidate away the REALITY of being too poor to afford a mortgage.
Banks could be intimidated but reality could not be.
Obama is a huge hypocrite if he thinks a few sites scrubbing themselves of his association with them will make people forget what they saw with their own eyes.
@Greg:
No one said it was all the fault of democrats and the CRA. There is enough blame to go around for everyone. You feel the need to blame only financial institutions while giving government a free pass. We have all linked indisputable evidence that this is not the case. There are justice department memos threatening to go after lending institutions if they did not make loans to low income people. You can’t have it both ways Greg. You can’t tell financial institutions that they must lend money to people that can’t pay it back and not believe they are going to find a way to make money off of it. What were they supposed to do, write off the mortgages out of the kindness of their hearts?
1994, Obama starts housing collapse…
1995, Clinton/Reno jump on board…
UPDATED: Obama Sued Citibank Under CRA to Force it to Make Bad Loans
Posted on 03 October 2008
Do you remember how we told you that the Democrats and groups associated with them leaned on banks and even sued to get them to make bad loans under the Community Reinvestment Act which was a factor in causing the economic crisis (see HERE ) … well look at what some fellow bloggers have dug up while researching Obama’s legal career. Looks like a typical ACORN lawsuit to get banks to hand out bad loans.
In these lawsuits, ACORN makes a bogus claim of Redlining (denying poor people loans because of their ethnic heritage). They protest and get the local media to raise a big stink. This stink means that the bank faces thousands of people closing their accounts and get local politicians to lobby to stop the bank from doing some future business, expansions and mergers. If the bank goes to court, they will win, but the damage is already done because who is going to launch a big campaign to get the bank’s reputation back?
It is important to understand the nature of these lawsuits and what their purpose is. ACORN filed tons of these lawsuits and ALL of them allege racism.
Thanks to the IUSB Vision Weblog for providing additional details of this story.
We pulled the docket down, but here’s a brief for your summary:
Case Name
Buycks-Roberson v. Citibank Fed. Sav. Bank Fair Housing/Lending/Insurance
Docket / Court 94 C 4094 ( N.D. Ill. ) FH-IL-0011
State/Territory Illinois
Case Summary
Plaintiffs filed their class action lawsuit on July 6, 1994, alleging that Citibank had engaged in redlining practices in the Chicago metropolitan area in violation of the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691; the Fair Housing Act, 42 U.S.C. 3601-3619; the Thirteenth Amendment to the U.S. Constitution; and 42 U.S.C. 1981, 1982. Plaintiffs alleged that the Defendant-bank rejected loan applications of minority applicants while approving loan applications filed by white applicants with similar financial characteristics and credit histories. Plaintiffs sought injunctive relief, actual damages, and punitive damages.
U.S. District Court Judge Ruben Castillo certified the Plaintiffs’ suit as a class action on June 30, 1995. Buycks-Roberson v. Citibank Fed. Sav. Bank, 162 F.R.D. 322 (N.D. Ill. 1995). Also on June 30, Judge Castillo granted Plaintiffs’ motion to compel discovery of a sample of Defendant-bank’s loan application files. Buycks-Roberson v. Citibank Fed. Sav. Bank, 162 F.R.D. 338 (N.D. Ill. 1995).
The parties voluntarily dismissed the case on May 12, 1998, pursuant to a settlement agreement.
Plaintiff’s Lawyers Alexis, Hilary I. (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Childers, Michael Allen (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Clayton, Fay (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Cummings, Jeffrey Irvine (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Love, Sara Norris (Virginia)
FH-IL-0011-9000
Miner, Judson Hirsch (Illinois)
FH-IL-0011-7500 | FH-IL-0011-9000
Obama, Barack H. (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Wickert, John Henry (Illinois)
FH-IL-0011-9000
UPDATE : Hotair.com comments on this story HERE .
New York Post Article HERE :
THE seeds of today’s financial meltdown lie in the Community Reinvestment Act – a law passed in 1977 and made riskier by unwise amendments and regulatory rulings in later decades.
CRA was meant to encourage banks to make loans to high-risk borrowers, often minorities living in unstable neighborhoods. That has provided an opening to radical groups like ACORN (the Association of Community Organizations for Reform Now) to abuse the law by forcing banks to make hundreds of millions of dollars in “subprime” loans to often uncreditworthy poor and minority customers.
Any bank that wants to expand or merge with another has to show it has complied with CRA – and approval can be held up by complaints filed by groups like ACORN.
In fact, intimidation tactics, public charges of racism and threats to use CRA to block business expansion have enabled ACORN to extract hundreds of millions of dollars in loans and contributions from America’s financial institutions .
The Woods Fund report makes it clear Obama was fully aware of the intimidation tactics used by ACORN’s Madeline Talbott in her pioneering efforts to force banks to suspend their usual credit standards. Yet he supported Talbott in every conceivable way. He trained her personal staff and other aspiring ACORN leaders, he consulted with her extensively, and he arranged a major boost in foundation funding for her efforts.
Under the Clinton administration, federal regulators began using the act to combat “red-lining,” a practice by which banks loaned money to some communities but not to others, based on economic status. “No loan is exempt, no bank is immune,” warned then-Attorney General Janet Reno. “For those who thumb their nose at us, I promise vigorous enforcement.”
The Clinton-Reno threat of “vigorous enforcement” pushed banks to make the now infamous loans that many blame for the current meltdown, Richman said. “Banks, in order to not get in trouble with the regulators, had to make loans to people who shouldn’t have been getting mortgage loans.”
This threat combined with the government backing of Fannie and Freddie set the stage for the current uncertainty, because the “banks could just sell the loans off to Fannie or Freddie,” who could buy them with little regard for negative financial outcomes, Richman said.
And, as the leader of another charity, the Chicago Annenberg Challenge, Obama channeled more funding Talbott’s way – ostensibly for education projects but surely supportive of ACORN’s overall efforts.
1999, NYT warning…
@ aqua.. I pretty much agree with you here, with one caveat. Since the FEDS.. FORCED banks to make BAD LOANS…. does any rational person, really think, that the banks, would in GOOD CONSCIENCE, and Business practice, KEEP THEM?? If You had a PERSONAL Business, and you knew you were forced to make BAD DEALS, that could RUIN you, and you had, a LEGAL Chance, (remember, bundling WAS Legal, tho a bit sleazy) to move them off your books, WOULDN’T you?? I’m sure, as a smart guy, you would!! You have YOUR family to worry about, YOUR stockholders, etc. Greg is in Denial… the CRA, was the SOURCE of all the bad moves that flowed from it’s inception…. FACT..
@ GREG.. so, I see, you freely ADMIT, your DELUSIONS, are SELF IMPOSED…. seek Good quality Psychiatric help. Where, did anyone say, what you claim?? Did the banks, do something ILLEGAL?? Nope…. does it seem UNETHICAL?? Perhaps so. But, you then FAIL to see, the “unethical act” was DIRECTLY contributable, to the CRA act!! It’s called “connecting the dots” Greg. Had CONGRESS not stuck their OVER REGULATING noses, where they were NOT needed, it would NEVER have happened this way!!! And, WHAT was the reason, they DID IT?? LIBERAL SOCIALISM…. making the POOR.. look and FEEL “richer”…. while being so STUPID, as to not consider, they were not FISCALLY able to MAINTAIN the ILLUSION…… Sorry to tell you GREG.. LIBERALISM, is an exercise in LIES, and STUPIDITY. And it’s bought and worshiped by fools, losers, and leeches
And, lastly….. “Caveat Emptor”…. “Let the buyer beware”….. why don’t you hold the BUYERS.. of these TRASH PACKAGES.. up to accountability??? Greed and the “lets make a fast buck” crowd GAMBLED.. and LOST…. there are NO GUARANTEES in the GAMBLING WORLD…..why don’t you rip on THOSE guys?? There is no FREE and EASY way to riches…. the faster, you LIBERAL FOOLS, realize, you have to WORK to gain.. the faster the USA will turn around….. And if you freeloaders don’t like it…. LEAVE!! We don’t want, or NEED you leeches here…. don’t let the door hit ya in the posterior on the way out…. bye…
First of all, I’d say that @Aqua accurately pointed out the same ol tired and falsified meme that any of us says it was *only* CRA, *only* Democrats or *only* anything else. Thus the reason I named my 2008 post “The Perfect Storm” of events that came together. If you wanted to single out the final icing on the cake that made it collapse, you can say it was the unnatural and unsustainable rise of housing prices. But an honest person has to go back thru the information chain and figure out why those prices were driven up.
But I want to focus on one particular phrase you used, Greg… that being “…how does one explain the fact that bad loans were routinely bundled with the good to hide them…”.
One explains this the same way that Obama and Romney explain their mandates on healthcare… that you have to mandate packaging/bundling healthy people with those needing the medical care in order to spread the risk. It’s also the same reason anyone gets a better price with a group plan rather than an individual plan… the risk is shared.
It’s the same reason that you’ll find a few bad apples or potatoes when you buy them by the bag cheaper, than picking out individual apples or potatoes.
Needless to say, the statement itself lends credibility that your grasp of the entire scenario is quite limited.
As far as the “safety ratings”… that’s the reason that the SEC is suing GSE CEOs… for deliberately misrepresenting the quality of the loans they willingly purchased. (mid Dec 2011 announcement). Another story here from December from Forbes. This all goes back to Larry W and that thread, when he was attempting to use the commission’s suggestion that the GSEs really didn’t have that many subprime loans because they cherry picked a definition of what *was* a subprime loan.
Loan originators/lenders do not “bundle” bad and good loans to sell to Fannie/Freddie. The GSEs purchase *only* loans that meet their criteria – and there is a record with the automated underwriting system for each and every single loan – and they in turn bundle some to sell off. Since these are backed by US Treasury… and now owned by the taxpayers since the bailout… investors believed that government backed bundled loans were a relatively safe bet.
Had the criteria not been dangerously lowered that enabled risky loans to enter their portfolio, the GSEs bundled loans would indeed be a relatively safe haven. HUD had the responsibility of oversight, and turned their heads. Thus the hearings and warnings circa 2004-05, where Barney Frank and Maxine Waters (two large beneficiaries of the GSEs) insisted the were not in trouble. Ergo the entire reason that Newt was saying “don’t bail them out” and that they needed reform and diligent oversight. It’s not that there weren’t regulations and entities in place to keep their eye on Fannie/Freddie. It was that they deliberately did not do their jobs and instead encouraged the risky loans, redefined what *was* a risky loan. Then Fannie/Freddie packaged it up as MBS and sent it on it’s way.
So Greg… who would you like to blame? The federal government agencies and Congress were charged with their regulations, their oversight. They had that power, and chose not to use it, and made the situation worse.
But you say it’s the private sector’s fault?
Like I said… don’t ever expect you to “get it”… it would rock the very foundation of your partisan religion.
The taxpayers got taken to the cleaners while the recipients of Fannie/Freddie campaign donations made out like bandits for turning their heads to any reform. Those who also made out like bandits were the people like ACORN’s poster child, Donna Hanks who originally purchased a home for a price she could afford, sucked out the equity with a refinance loan she couldn’t afford, used the money for any thing *but* paying the mortgage and then whined to ACORN when she lost the house.
Yup… she made out like a bandit, getting away with the loot… to the tune of approximately $175,000. Will you hold her greed culpable, Greg? Did anyone tie her up, hold her hostage, to take out a loan she couldn’t afford, abscond with the money,and then piss it away? All for a house that wasn’t worth the loan she got? Because I assure you, banks aren’t interested in giving out loans for assets/collateral that doesn’t protect their money under normal circumstances. But of course, Ms. Hanks fit the perfect profile of perceived “red-lining”.
As far as the “retirement plans severely damaged”… nope. Aren’t you the one praising how the stock market is just dandy and the Obama economy just wonderful? The only saving grace for many Americans is that their retirement plans, parked in the evil Wall Street market, are doing well. And that’s also thanks to Congress and the Federal Reserve, keeping the banks not only afloat with no risk, but extremely profitable. At least that profit is shared with the shareholders… i.e. those with retirement plans. It’s the only aspect they are doing well … at the expense of the nation, our currency stability and our national debt.
Greg likes to hint at “Greed” being the motivating factor behind the banks making bad loans. My question, then, is what about the “Greed” of those seeking the loans? Are they not to blame as well? You cannot assign blame, based on “Greed”, to one group, while completely ignoring the same motivating activity from others. And, what’s more, you imply that those seeking the loans are victims.
The real culprit is the welfare state mentality of BigGovernment politicians. Those politicians gave us the CRA initially, they changed that same CRA to ease loan requirements, and used the power of Government to essentially force upon private business conditions that most economically literate people wouldn’t agree with, and it was all done in order to pander to certain segments of society and promote more welfare state politics. That the financial institutions found a way to minimize the negative effect of these loans on themselves was inevitable, given the “requirements” for doing mortgage business in that environment. From there, it really shouldn’t have been all that hard to predict what could/would happen.
@MataHarley:
To add to your last paragraph, I have kept my 401k holdings virtually the same as they were prior to the bailouts. The reason why? Because as it is, and the financial companies gaining those bailouts, I figured that the funds that I dispensed my 401k contributions to would be relatively stable. If, however, the bailouts had not happened, and those financial institutions were allowed to fail, I can guarantee that I would have had my portfolio’s makeup of funds changed at the earliest opportunity.
Yep, johngalt. Since Obama, Congress and Bernanke are allowing the financial institutions to make cash hands over fist with virtually zero-interest, risk free money, vested American workers can ride their coattails with their own investments. Thus the idiocy of Greg’s remark about the wiped out (not) retirement plans.
HANKSTER58
HI,
that’s perfect and clear as could be, they lure the ones,into a false hunger of looking rich without having to earn it, that is what the DEMOCRATS THINK because they live out of the PEOPLE ‘S POCKETS,
they don’t earn it to the sweat of their forehead, ALL OF THEM ON THE SMALLEST STEPS BELOW
TO THE TOP OF THE LADDER, THEY JUST HAVE TO PAY A BUNCH OF LAWYERS TO DO THEIR JOBS,
THEY JUST HAVE TO START AGENCIES WHICH HIRE TO HAVE THEIR WORK DONE FOR THEM,
all earning extreme pay and benefits to give orders sitting on their ass checking the WALLSTREET market,
and using the money till there is no more, because they can make some more, while they never touch their own money. no wonder ROMNEY want the job,
Snerd Gronk
on your 2, NO we won’t let the liberals be in charge of more failure, they will be out in NOVEMBER like it or not,
Private Wall Street Companies Caused The Financial Crisis — Not Fannie Mae, Freddie Mac Or The Community Reinvestment Act
The page above provides links to dozens of articles and factual sources supporting that assertion.
I find the following to be of particular interest:
I remember a period when I was getting regular telemarketing calls pitching ARM refinancing and subprime loans; when advertising cards and fliers were turning up in my mailbox every few days flogging the same; when there were commercials trying to get people to call toll free to inquire about them every time I turned on the TV.
That wasn’t Freddie or Fannie. It wasn’t the work of a private financial sector whose arm was being twisted to force compliance. They were enthusiastically beating the bushes looking for any warm bodies to extend low interest loans to, because they were making a bundle by providing them.
The expansion, and eventual explosion, of the housing bubble are crowning glories of Powerful Government Social and Economic ENGINEERING.
This is just not what Madison and Jefferson had mind.
Today, the socialist hides the desire for more “Engineering” through demands for ‘regulation’. “Regulation” in the socialist dictionary means “increase government bureaucracy”. Congress always acquiesces because there is money, (payoffs, committee meetings, research, influence peddling, etc.) in them-thar-hills of constructing new bureaucracies.
There isn’t as much political coin or growth of socialist ideology by effective application of laws, or demand for such. Too many charges would expose the idiocy of the ‘Social Engineering’ we’ve witnessed for 25 years.
The outcome was obvious when the process began. Wall Street and banks were happy to comply, and they couldn’t believe their luck. They got a glimpse of the billions which could be accumulated by allowing the wingnuts of the left to play their experiments. On the right, the fear of appearing ‘politically incorrect’ let many to sideline common sense. Greenspan and Bernanke sat on their thumbs with brains in neutral as the disaster travelled down the ‘obvious’ road, and eventually arrived.
Bernanke still sits in the power position at The Fed, leaving interest rates at near zero and continuing the economic killers – ‘debt promotion’ and ‘discouragement of savings’.
Only leaches and those who know how to manipulate them demand more government intervention and social engineering. The framers didn’t have that in mind. This Painting by McNaughton says it all, doesn’t it?
#9, @MataHarley.
I wasn’t doing a short sale, buying a foreclosure, or even really buying. I refinanced my home and paid off my second in the process. And it was just short of my 90 day lock. Wells Fargo was slow, as Chase has been. I’m not the only person I know having an issue refinancing to a lower rate.
GREG says…”I find the following to be of particular interest:
Federal Reserve Board data show that:”
Um, Greg.. you quote the FED?? the “we’re not allowed to audit them” FED?? The unaccountable to the PEOPLE FED?? The we’re not able to VERIFY anything they say or do FED?? THAT FED?? Uh huh…. so you trust, quotes from those you cannot verify the truth from…. interesting….
@Hankster58, #34:
Do you think the quoted percentages concerning who made the bulk of the subprime loans are incorrect?
Do you think it’s also incorrect that only 1 of the top 25 subprime lenders was directly subject to the housing law that conservatives are pinning most of the blame on?
If all of that were true, the anti-Obama, anti-government, pro-private sector argument would seem to be built on a largely imaginary foundation. We would have to look at other possibilities, wouldn’t we? Assuming, of course, that we really wanted to know the truth.
I’d be happy to consider any credible source offering different percentages.
@Greg, as I said before… those like you, Larry W and libdud tend to think that the subprime era of loans purchased on the secondary market only occurred during the Bush years. Greg proves his tunnel vision of history again by cherry picking an article that only quotes the year of 2006.
Instead he says:
??? So is this supposed to be a trick question, revolving around some fairy tale that 2006 is the only year where percentages matter? You got one bizarre view of history and timelines, guy.
So Greg, how about all the years between 1992 and 2008? Don’t they count in your narrow, partisan world?
At the height of the subprime market, the GSEs held $2 trillion in subprime loans, or 42% of all their single residence portfolio.
So Greg… how do ya think that happened? How and when did all those risks get on the GSE book? Or aren’t you in the least bit curious?
Well, that’s what the SEC wants to know of the Fannie/Freddie CEOs they are suing. They want to know why Fannie told their investors in 2007 that they only purchased $4.8 billion of subprime loans when they had closer to $43 billion. Freddie said they had “”basically no subprime exposure.”
But former Fannie chief credit officer, Edward Pinto, used SEC data and came up with the figure that it was actually closer to $2 trillion in 2008. That makes even those numbers of Fannie’s 11% (they lied and said 2%) and Freddie’s 14% portfolio (who lied and said “basically no subprime exposure” further exaggerations in reality.
In 2010, Pinto released a study with his findings on the actions of Congress, special interest groups, the regulators saying:
I’ll remind you that Bush didn’t take office until Jan 2001, which means that Pinto was documenting the activity prior to the year 2000 and Bush’s POTUS term, as well as the years when the bubble started getting to max capacity before a burst.
The collapse of the dominoes was inevitable under the over inflated priced homes, the increased defaults (2nd to those that started in 1997) that began in 2006 in droves by borrowers who took out loans they could not afford (i.e. those like Donna Hanks), and finally the freeze on lending after the widespread losses.
A little more history in the years before 2006, where Greg lives for his talking points.
Need more proof that that this isn’t confined to events and purchases between 2004 and 2008?
All documented with citations provided… and considerably more thorough that the subpar historians at Media Matters or McClatchy do, Greg.
I know you think that the world’s woes began in Jan 2001, when Bush took the oath of office, and the parting of the waters and healing of the earth began when Obama took the oath in Jan 2009. But considering you say you’ve been around the block a few times, it’s surprising that you believe there is no history in housing prior to 2001 that started the snowball on the housing collapse rolling down the hill.
But I find it somewhat embarrassing for you that you choose to frame your questions and challenges in such a way that your limited perspectives are a glow in the dark bullseye for the rest of us.
Like I said… I can keep doing this all day (when not swamped with work, that is). fish in a barrel
@chipset, refinances are a different animal. Underwriters departments triage refinances down from new purchases because of contractual deadlines. I’ve had friends tell me they were quoted 60 days, and it went longer. Others were quoted 45 and it was about right. Just depends on how many other files were being pushed thru the central underwriting department at the time. Also on whether or not the appraisal was done to their satisfaction.
I deal with loans and deadlines all the time. 90 day closings aren’t the norm. But 45-60 days is now. A year or so ago? It was closer to 60 days. Re’fis? Not as predictable. Like I said, depends on how long the line is in front of your file.
Bush Called For Reform of Fannie/Freddie 34 Times Since 2001
Posted 09/22/08 Read all 3 opinions +2 Rave share this Share The Carter-era Community Reinvestment Act forced banks to lend to uncreditworthy borrowers, mostly in minority areas.
Bush Called For Reform of Fannie Mae & Freddie Mac 34 Times Since Taking Office In 2001… Dems Ignored Warnings
Obama not only has ignored warnings but received over $129,000 from Fannie Mae and has 2 CEO’s from Fannie Mae as his Economic Advisors.
For many years the President and his Administration have not only warned of the systemic consequences of financial turmoil at a housing government-sponsored enterprise (GSE) but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform.
http://gatewaypundit.blogspot.com/2008/09/bush-called-for-ref…
** 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
May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac.
(OMB Prompt Letter to OFHEO, 5/29/02)
** 2003
January: Freddie Mac announces it has to restate financial results for the previous three years.
February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that “although investors perceive an implicit Federal guarantee of [GSE] obligations,” “the government has provided no explicit legal backing for them.” As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market.
(“Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO,” OFHEO Report, 2/4/03)
September: Fannie Mae discloses SEC investigation and acknowledges OFHEO’s review found earnings manipulations.
September: 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.
October: Fannie Mae discloses $1.2 billion accounting error.
November: 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 called 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: 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)
June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called 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: Treasury Secretary John 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)
In 2005– Senator John McCain partnered with three other Senate Republicans to reform the government’s involvement in lending.
Democrats blocked this reform, too.
** 2007
July: Two Bear Stearns hedge funds invested in mortgage securities collapse.
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)
September: RealtyTrac announces foreclosure filings up 243,000 in August – up 115 percent from the year before.
September: Single-family existing home sales decreases 7.5 percent from the previous month – the lowest level in nine years. Median sale price of existing homes fell six percent from the year before.
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
January: Bank of America announces it will buy Countrywide.
January: Citigroup announces mortgage portfolio lost $18.1 billion in value.
February: Assistant Secretary David Nason reiterates the urgency of reforms, says “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: Bear Stearns announces it will sell itself to JPMorgan Chase.
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 of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.
Greg, since you do better with pictures…. here’s the graph of the acquisition of mortgages from 1990 to 2008, separated out between GSEs, non GSEs (private secondary market), Fannie/Freddie, Ginnie Mae (VA loans) and the black line being the total loan originations.
You’ll note that the GSEs were piling it on hot and heavy all thru the 90s, including securitizing them. The foreclosures began in 1997, and really stepped up in 2006.
Since, as Wallison says and this chart accurately portrays, the private secondary market didn’t get in on the action until 2002-03, those like you who want to cherry pick a single year for partisan defense of the indefensible, automatically go for the era where the GSEs (Fannie/Freddie) were at their lowest.
However it’s beyond dishonest to ignore all those loans acquired in the 90s, leading to their over leveraged portfolio filled with risky loans. Or to dismiss that those loans were acquired as a direct result of Congressional actions, special interest pressure by those like NPA and ACORN, and regulations that lowered the lending criteria.
You can read the study, Guaranteed to Fail as posted on the St. Louis Fed Reserve site. You’ll also see that they also referenced both Edward Pinto’s and Peter Wallison’s research, as it was complete in it’s scope.
Greg.. you’re like a broken record..
by the way, do you also swear the reported UNEMPLOYMENT #’s are correct as well??? LOL!!
Mata said” At the height of the subprime market, the GSEs held $2 trillion in subprime loans, or 42% of all their single residence portfolio.”
GREG.. so, you say then, ONE LENDER, cut 2 trillion in subprime loans?? And, you really think, those other banks, made KNOWN BAD LOANS, just for the fun of it?? REALLY??? Dunce…
You’re so patently PRO-OBAMA it’s sickening…sad really…
I’ll let you fantasize in your little liberal utopia dreamworld… enjoy. The intelligent folk here know the truth… the only reason, they acknowledge you, is for the ENTERTAINMENT value only…. LOL!!! Have a nice night.. I am.. MY Superbowl pick WON…. see ya!! Loser.
@MataHarley, #37:
That’s a relevant statistic?
I would think far more important numbers would be the percentage of all subprime mortgages held by Fannie and Freddie, as compared with the percentage of all subprime mortgages held by the private sector. The question is who contributed the most to the overall problem, not who had the bigger percentage among their own holdings. Some theoretical financial entity might have had 80% of its holdings in the subprime market. What would be the relevance to the question at hand, if their overall market share represented less than 1%?
So, what was Freddie and Fannie’s total combined share of the subprime market? Is it possible that the answer is less than 25%? That would seem to throw a little doubt on the constantly repeated assertion that the GSEs were the main culprits.
I have absolutely no expectation that republicans will begin singing a different tune anytime soon. They’ve got way too much invested in the comic opera that they’ve presently got going. God help us all if the production runs beyond this coming November.
Fannie, Freddie and the Foreclosure Crisis
@MataHarley: #37,
Mata, through the past few years it’s become evident that your articles and comments on this subject are well researched and catalogued. You also have a great flow in your writing style which makes the presentation of a subject you are intimately familiar with, clear and succinct. You also regularly and accurately point to motive. The fact that you take no prisoners is a bonus. Considering how much misrepresentation and myth surrounds the Mother of all Socioeconomic Experiments in history – you are probably a stone’s throw from a worthwhile and necessary book.
It would be an exposure of the devastation wrought by the implementation of overreaching socialist programs launched by misguided ideologues, and abused by the ever-present, ready, willing and able, parasites in our system.
Greg.. what do you think of BAWNEY FWANK??? He was in charge of BOTH Fannie and Freddie.. knew all the daily briefing $$$ reports on them.. and swore, even on the day they CRASHED, that they were SOLVENT and SAFE…….. WHY, didn’t he tell the people, the TRUTH????
More to the point, why did he LIE, about their condition???? WHAT and WHO, was he covering for??
Hint:.. it starts with a “D”……… Later.
GREG : “That’s a relevant statistic?”
You claim only ONE bank was subject to CRA rules.. then this stat IS important…. it says YOU CLAIM, the other 24 lenders committed MALFEASANCE on purpose. IF SO… Why isn’t Obama and Holder PROSECUTING them?? YOUR GUYS, do not back YOUR THEORIES….. Nice try tho Greggy…..
sigh…. I do resent the intellectually lazy. Especially since you can lead Democrat iconic azz… er donkey… to water, and he still doesn’t drink.
Let me summarize… not only were they leading the pack for absorbing the risky loans, for creating the market standard for lowered criteria, which the private investors started mimicking in 2002-03, they were king of the market place as the single largest entity of all those high risk loans made. When the private sector started cutting into their neat pie in 2002-2003 for a couple of years, they upped the ante and quadrupled their portfolio in the years leading up to the crash.
Hint… the last column in the graph above – titled “GSE Share in High risk activity” – (i.e. all high risk activity) gives you your answer. The only three years they weren’t king of the hill – getting 42-51% of the all high risk loan activity – just happens to be the very years that you limited, tunnel vision partisan types like to cite while you ignore the rest of their involvement from the decade before.
… ain’t that convenient?
25%? In your dreams… Or perhaps found in some pundit’s deplorable analysis of cherry picked real data. As you can see, those numbers are only the percentage of the GSE’s own portfolio. Not the total market.
@James Raider, that’s kind words indeed. But it’s a tired plot by now. And those that need to read it… ahem, Greg… either are incapable of doing so, or just can’t focus on the facts.
I’d say writing a chintzy romance novel would pay off better… LOL
@MataHarley: You said:
They are way too busy drinking the koolaid to have any time or inclination to drink the water…
OK, I’m looking at Viral V. Acharya’s Table 4 in its original source.
I’m still not seeing a percentage reflecting the distribution of the grand total of all subprime housing loans between private sector lenders and the GSEs.
Annual percentages over a period of 5 years don’t really give me the one number that I’m looking for. Nor am I finding the table easy to interpret. I can’t seem to find all of the figures listed for any given year that are necessary to determine how the percentages were calculated–to make no mention of the fact that pages 6 through 13 might as well have been written in Sanskrit.
If failing to grasp the content of this document is an indication of intellectual laziness, maybe I really am intellectually lazy. On the other hand, I would speculate that 99% of the people frequenting this forum probably wouldn’t know what the hell he’s talking about either.
duh… Greg, the graph is in front of your nose in the comment above. Already did your homework for you, since you wouldn’t click on the link I provided (instead going somewhere different for a different analytical study, based on the same data).
That graph is found on page 47. You asked a very specific question… what total share of all (private and GSEs) risky loans did the GSEs hold. I answered your very specific question even in graph form – from the link provided. All you had to do was read and you would have found your answer. Prior to the private sectors entry in 2002-03, the GSEs pretty much had all of it, except for obvious loan shark stuff. That doesn’t meet even their lowered criteria.
It’s no “25%”… and you can look until the cows come home. The GSEs have always had the highest percentage of the risky loans, with the except of a couple of years. When the private industry started raiding their treasure trove, they stepped up and regained their 80% plus share of the subprime market.
Focus problem perhaps?
What part about their share of all risky loans (GSEs and private) seems to slide thru the ears, and over the top of the bifocals?
And please note that the study you are attempting to read cites the link to “Guaranteed to Fail” released the year before, which I’ve already linked above, and provided the very same graphs you are choosing not to look at.
???
If you find this stuff too difficult to absorb, then maybe you should stop making embarrassing and obviously erroneous statements about the GSEs and their historic and financial involvement in the subprime mortage market, based solely on what you want to believe because of your politics. Even we old dogs can learn new tricks. Stop the meme… you’re doing your credibility on this subject no good whatsoever.
I might also add, Greg, that the subject you broached, and I answered, was about Fannie/Freddie. The appropriate study that deals with Fannie/Freddie’s history and statistics was provided to you. Acharya’s “shadow Government” piece you linked, was a year after and he founded his analysis of whether government intervention was wise or not based on that study… of which he was one of the co-authors.
You should have had a heads up when he said, on pg 3:
Considering you’re linking to a study that was a later work of the co-author, who says exactly the same… that this entire housing collapse was originally orchestrated by Congress, special interest groups and regulators by increased activity for risky loans in the 90s (ahem… subprime) by the GSEs… you’re effectively shooting yourself in the foot. It says the same thing I’ve been trying to say over and over to you, to no avail.
You’ve gotta be jokin’ me… Greg, can you not even read a graph? The one I posted in comment #46?? Dang, guy… I even told you what column to look at… the last one on the right that says
“GSE Share in High Risk Activity”.
The second to the last column is the percentage of just Fannie/Freddie’s business alone that is subprime. And that’s the “25%” you seem to think is all they are responsible for. And that was only 2003. It was 36% of all their portfolio in 2007. Ergo, the 2008 data that, by then, it comprised 42% of all their residential housing loans.
oops…
So the facts in simple bulleted points
1: The private market didn’t start substantially start engaging in the high risk loans until late 2002-03. Prior to that, virtually the entire bank of subprime loans made in the 90s were held in Fannie/Freddie. Therefore high 80% to high 90% were all the GSEs (that’s Fannie and Freddie to you)
2: When the private market started coming in, they took some of GSEs share, so by 2003, the GSEs had about 74% of *all the high risk loans made*.
3: 2004 thru 2006… the era you lib/progs like to focus on only… the GSE’s lost more of their share to the private industry, and went down to 42%, then stepped up to increase it again to 48% then 51%. By 2007, they had recouped what they had lost and were back up to 87% *of all the high risk loans made*.
4: The short story for the intellectually lazy, from 1992 thru 2003, Fannie/Freddie virtually had all the high risk loans. For two years the private sector had a little over half, and then Fannie and Freddie again gained the majority and then back up to 87% share once again.
This means that Fannie and Freddie owned the bulk of all high risk loans for 12 years, and the private industry had three years with 49%, 52% and 58% of the loans.
Now, I expect you to alter your talking points after this. Better yet, since I’ve had to explain a simple graph, even after telling you what columns to look in, perhaps you should avoid subjects clearly out of your area of knowledge. I’m really not interested in hearing you say it’s all the private industry’s fault any more, in light of all the data spoon fed to you.
Hey, just post the percentage, why don’t you? For the benefit of intellectually lazy leftists, who can’t figure out how to click on a link.
Mata has said it, and laid it all out better than I ever could.. or have the time and patience for…GOD BLESS HER!! Now, Read it, and if you do not UNDERSTAND THE WORDS…… copy, paste, print.. and take em to your GURU, priest, Psychiatrist, or whoever you know, with a standard or better IQ, (higher than yours) to “splain it to you”…… LOL!!! SHEESH!
And Greg.. you’re letting you LAZY LIBERAL side show.. she asked you to simple click on a link and READ…. and what do YOU do?? ask her, to do YOUR HOME WORK FOR YOU…. abd post what YOU want to see!! Proving our point.. Libs are lazy people, who wants OTHERS, to carry the load FOR them! JEEZ!! You prove OUR POINTS time and time again YOURSELF.. and are too blind, to even realize THAT! LOL!!
What Mata has compiled here is the factual evidence backing up what conservatives have been saying for going on four years running. And every time, Greg, or another liberal/progressive like him, begins the accusations against the private banking industry on up to the Big financial firms, and the deregulation of the GLB Act. And they continue to conveniently leave out the culpability of Fannie and Freddie, their water carriers in Barney Frank and Maxine Waters, the CRA and the changes made to it.
Not one conservative here, that I remember, has claimed ALL blame lies with the Democrats. However, nearly every liberal/progressive have laid the blame for the housing market crash solely at the feet of the Republicans. It goes along with my observation concerning liberal/progressives and their inability/unwillingness to admit any failure on their part, or the part of those they support.
Huge kudos to Mata for trying to explain to greg the propagandist the facts. The problem is, he doesn’t care about the truth. He only cares about pushing marxism.
On the bright side, she lays out an easy to understand explanation of what happened for the uninitiated.