Posted on 11/01/2011 11:51:44 AM PDT by Hojczyk
Michael Bloomberg tried to explain that to Occupy Wall Street protesters this morning, and pointed out the contradiction between their protests and their demands:
“I hear your complaints,” Bloomberg said. “Some of them are totally unfounded. It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I’m not saying I’m sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn’t gave gotten them without that.
“But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it’s one target, it’s easy to blame them and congress certainly isn’t going to blame themselves. At the same time, Congress is trying to pressure banks to loosen their lending standards to make more loans. This is exactly the same speech they criticized them for.”
Bloomberg went on to say it’s “cathartic” and “entertaining” to blame people, but the important thing now is to fix the problem.
(Excerpt) Read more at hotair.com ...
Maybe if the messenger was Corzine rather than Bloomberg?
My understanding of banking is admittedly limited, but I consider the loan selling/derivatives to be the real mess, not the mortgages by themselves. Maybe one had to happen because of the other, but of Fannie and Freddie were backing the loans, then I don’t understand why the former had to happen.
Holy crap, the anti-salt warrior actually gets something right.
It is very rare you hear anything but a conservative put the blame on what really caused this mess - and Bloomberg is most certainly not a conservative.
Wall Street is always looking for somebody to create value, because they are trying to buy low and sell high. It is innovation and wealth creation that provides the fuel that runs the Wall Street engine.
K Street lobbyists are looking out for the people who already have the money, and buy favors from the government to help them keep it. Part of that process is stifling the very people who innovate and create value, in order to keep down the competition. Helping the wealthy keep and expand their wealth is the fuel that runs the K Street engine.
We don’t have a problem with Wall Street. We have a problem with K Street.
This is from The Onion, right?
Three words.....Clinton; Dodd; Frank.
If you read the history of the subprime mortgage crisis, one thing is clear: the mortgage companies were happily raking in billions issuing crap loans to unqualified individuals and selling them to the big investment firms and banks to fuel their hedge funds. To try to paint Wall Street as an unwilling, unwitting victim of the government here is pure revisionism. The push to get more people into homes certainly threw more gas on the fire, but the situation was heading for a meltdown in any case.
Correct. Here’s the culprit: http://www.fdic.gov/regulations/laws/rules/5000-3860.html
From the Q&A attached to that law: “A lender who rejects an application from an applicant who is a member of a protected class and who has ratios above those of the guidelines and approved an application from another applicant with similar ratios should be prepared to show that the reason for the rejection was based on factors that are applied consistently without regard to any of the prohibited factors.”
Given the squishiness of the reality of applying the law, vs. the severity of crossing an unspecified line, the only answer was to get lax with approvals, and to create “credit default swaps” as a mechanism to cope with the inevitable outcome of such sloppy lending. In their haste to implement such a new financial mechanism, and under the weight of what turned out a huge cost of prolific overextention of credit, the banks found out the hard way that the new mechanism was, after all, inadequate to the task.
Kinda like ordering a small group to cross a steep slope at risk of falling, the group members tying themselves together on the premise that if one falls the rest can save him, and discovering the hard way that gravity has a different view: when one falls, everyone tied to him falls too.
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