Posted on 02/17/2010 6:34:00 PM PST by PurpleMountains
First we all learn the truth about Man-made Global Warming; now comes the truth about the housing bubble and its collapse:
We are hearing lots of jokes about the Obamaites continuing to blame Bush for all the ills of America here in the year 2010. What has been swept under the rug, though, is the real blame for the economic meltdown of 2008 – the policies and the corruption of liberal Democrats who first imposed the Community Reinvestment Act that was the proximate cause of the housing bubble, and then the actions of Barney Frank, Chris Dodd and Barack Obama who resisted all efforts to bring Fannie Mae and Fannie Mac under control.
The true facts finally come out in the open:
Fannie, Freddie Housing Goals May Exclude Subprime
By Theo Francis February 17, 2010 Business Week (Excerpt)
(Excerpt) Read more at forthegrandchildren.blogspot.com ...
You’re right up to a point,but perhaps more important is the media...what the pubbies say (unless it’s really stupid) is never covered. So, the health plan that they put out last year was never talked about by the media.
Its not Wall Street nonsense it Big Government Failure. Wall St. didn’t change, over time corrupt politicians failed to do their job. They took money from Wall Street, and bought the votes of poor people by forcing banks to loan money to them.
Given the large number of contributory factors — the Fed’s low interest rates, the Community Reinvestment Act, Fannie and Freddie’s actions, Basel I, the Recourse Rule, and Basel II — it has been said that the financial crisis was a perfect storm of regulatory error.
http://www.cato.org/pubs/policy_report/v32n1/cpr32n1-1.html
It might help your arguement if you could explain in detail how the repeal of Glass Steagle led to Fannie Mae and Freddie Mac having 400 billion and counting in losses.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a2Z5GnTAPcuo
Sounds to me like another, possibly catastrophic Big Government failure.
Gov’t failed, of course. But one can not blame just the police when a group of thugs break into houses and steal stuff. One must also blame the thieves.
The first Cato blurb was good, and not overtly wrong, but I did not notice any real indictment of the financial community. And, what wrong with the FDIC for heaven’s sake. A little insurance to cover the deposits.
Then the conclusion:
“This premise would be questionable enough even if we started with a blank legal slate. But we don’t. And there is no conceivable way that we, the people — or our agents in government — can know how to solve the problems of modern societies when our efforts have, in fact, been preceded by generations of previous efforts that have littered the ground with a tangle of rules so thick that we can’t possibly know what they all say, let alone how they might interact to create another perfect storm.”
Oh, BEEEE ESSSSS! Sure we know enough to fix some of this stuff. Back with Glass Steagall for starters. Which I will address in my next reply to you.
First, lets imitate Einstein and play a thought game. Suppose someone develops an insurance program to reimburse gamblers who make bad really bad bets on the ponies and have really bad losses. Now if the risk is spread across all ponies, and nearly every gambler participates, the insurer can probably make some moolah.
And lets suppose one gambler owns a gambling parlor where for a fee, he accepts the bet money and holds it. And a gambler can bet on other gamblers bets. Not the horses, but the bets.
And, lets suppose gambler 1, who owns a parlor, knows some ponies are real dogs, and are going to lose really big. Everybody else thinks the “dogs” are great. So gambler 1, in his parlor capacity, takes money from gambler 2 to place a bet for Sea Biscuit in the fourth. Gambler 1 makes 2% for placing the bet. Good money but nothing to write home about. Sure money, but nothing to write home about.
But gambler 1 knows Sea Biscuit is one step away from the glue factory. So, gambler 1 puts a bet on gambler 2 failing and losing big money. Gambler 1 puts a side bet on the loss and sits back and waits for Sea Biscuit to slide in the mud out of the gate. And makes more money on the side bet, than running a parlor.
So now, Gambler 1 has a way to make money. The only problem is, he needs to herd some more gamblers to these crappy bets. Gambler 1 needs some more real dogs for this scheme to work. And some really dumb gamblers.
So Gambler 1 makes some stinko bets, and passes them off as AAA bets. Here come the gamblers to buy these AAA bets. But they ain’t totally stupid. They want gambler 1 to retain some of the risk when they buy his bets. OKEY DOKEY. Gambler 1 does, and buys insurance on the bets. That way his upcoming loss is covered by the insurance company. AND GAMBLER 1 HAS SOME BAD BETS HE CAN CLEAN UP ON BY BETTING AGAINST THEM. In fact, he can’t make real big money unless he has a bunch of stinko bets out there. He needs stinko deals.
Sho ‘nuff, the ponies flop and Gambler 1 cleans up on the side bets. But UH OH, he has to pay off the part of the risk he retained . No problemo. He has insurance to cover this. He has made out like a bandit.
So, gambler 1 calls up his insurance company, AIG, to collect enough to pay off the risk portion. UH OH. AIG has sold a slew of these policies. And paid the profits each year out as bonuses. AIG is broke.
So now, Gambler 1 calls his buddy over at Treasury and gets AIG bailed out. Whew, it works! 100 cents on the dollar! And gambler 1 can go about convincing the world he is a necessary part of the system. And whadduyuh know? Some people do believe. We call them republicans.
And gambler 1 is actually able to convince the republicans to eschew all this regulation stuff. I mean, nobody can interfere with the market, can they?
Now, I know this was long, but do you see the part played by the thief?
parsy, who says this is how it went down.
You admitted “Government failed” - that is entirely the point. There has been and will always be thieving bankers, there will always be fraudulent mortgage seekers. We live in a sinful thuggish world. That is why our entire system of government was designed to internally check itself. What we hadn’t had before was lefty ideologues with the levers of power, and probably politicians with as high a level of corruption.
Parsy gets the house analogy wrong. The house is in a bad neighborhood. Not the police, but the homeowner let the front door become broken. Despite his poor wife begging him to fix it, instead he began going out and hanging with the crooks in the neighborhood. The crooks got him drunk and while he was drunk went to his house and raped his wife and stole everything he had.
That is what happened, our elected leadership consorted with the crooks. They took money from bankers (bankers-guilty) but more importantly they bought votes by establishing whacky government companies (FM/FM) that competed with legitimate financial institutions. Then they began coercing legitimate institutions to abandon time tested mortgage standards.........
Andrew Cuomo, then Bill Clinton’s HUD Secretary, held a press conference on April 6, 1998, explaining a settlement reached with a major bank on a lending discrimination case based presumably on the CRA. Cuomo brags about how “this administration will enforce the law”, but he also makes a very telling admission about the $2.1 billion in subprime loans that the bank would offer as a result of the settlement.
He then admits that there would be “higher risk”, and a higher default rate, on the loans the Clinton administration forced this bank to make. He also admits that the action forced this bank to lower its standards on loan qualification as a remedy to supposed discriminatory action in the past
http://www.amren.com/mtnews/archives/2009/04/how_banks_were.php
In fact, the banks were bullied into lowering their lending standards by left-wing idealists intent on equal opportunities at any cost
I’ll ignore your thought game. Frankly, its convolution demonstrates with amazing clarity the operation of liberal logic, and the importance of Occam’s razor.
Read about the “gamblers” from the guy who wrote Liar’s Poker. See, where in all this, one could ever get the idea that poor bullied little bankers were the cause of the meltdown.
What you are missing is this: The Bankers NEEDED bad loans so they could bet against them. When the loans tanked, they made money. Read above where one guy discovered this and couldn’t believe what was going on wasn’t illegal.
Imagine this. You get to bet on whether somebody’s house burns down. Wouldn’t it be cool if you sold houses with really faulty wiring. And it was legal to do so?
parsy, who says it should have been illegal
You again make my point as does the article. Government failed - maliciously.
Rather than provide proper regulation, Chris Dodd, Barney Frank, et. al. were taking the liars and crooks donations. And following their lefty ideology they were using their power to socialize the housing market - redistributing real estate wealth from rich to poor. See NR article below.
And to trivialize the government bullying bankers simply shows that you have just a blind faith and love for the State and Big Brother. Who is on the One’s enemies list? Who’s next for you to sit in the show-trial jury and condemn? Oil companies? Health Care Companies? Doctors who charge too much for removing a foot? When will it be Parsy’s turn for bullying?
Hmmm, who else has been bullied lately? Toyota? GM bond holders? News Companies? Radio personalities? Coal companies? Spitzer and his ‘legal’ bullying terminally executed a company in my town for the most trivial legalistic transgression. Guess that’s ok, they were jobs in Wisconsin, not on Wall St.
——”You get to bet on whether somebody’s house burns down. Wouldn’t it be cool if you sold houses with really faulty wiring. And it was legal to do so?” -—
And in a country of laws the only way you could sell the house is if you paid off the city building inspector.
Growing up in Chicago, that’s how its done. And if you have ever lived in a country of corruption, like Haiti, you would know that the government failure to enforce building codes leads to death from failing buildings.
http://article.nationalreview.com/374045/planting-seeds-of-disaster/stanley-kurtz?page=3
At this point, both ACORN and the Clinton administration were working together to impose large numerical targets or “set asides” (really a sort of poor and minority loan quota system) on Fannie and Freddie. ACORN called for at least half of Fannie and Freddie loans to go to low-income customers. At first the Clinton administration offered a set-aside of 30 percent. But eventually ACORN got what it wanted. In early 1994, the Clinton administration floated plans for committing $1 trillion in loans to low- and moderate-income home-buyers, which would amount to about half of Fannie Mae’s business by the end of the decade.
“——”You get to bet on whether somebody’s house burns down. Wouldn’t it be cool if you sold houses with really faulty wiring. And it was legal to do so?” -—
And in a country of laws the only way you could sell the house is if you paid off the city building inspector.”
Oh No! Let me show you another way. A whole big bunch of people in the city are Republicans. Being badly influenced by some thuggish Libertarians, they have been convinced that “City Building Inspectors” are just a waste of the city’s money. As all good Republicans know, gov’t don’t do nothing but “maliciously fail” anyway.
And plus, the housing business can police itself. The consumer and the construction guys ought to work this kind of stuff out between themselves. That’s what free enterprise is all about.Free markets and none of this regulation stuff.
So now, admit this-—I gotcha! This is how the failure to properly regulate only goes to harm the consumer.
And sure, the bldg inspectors could have been on the take. And if they were, and houses burned down, citizens could be calling for prosecution. (Like Karl Denninger at market Ticker .com does!) (And Eliot Spitzer, etc.)
BUT-—WITHOUT THE UNDERLYING REGULATIONS THE VICTIMS ARE UP DOO DOO CREEK WITHOUT A PADDLE!
parsy, who likes caps
——A whole big bunch of people in the city are Republicans. Being badly influenced by some thuggish Libertarians, they have been convinced that “City Building Inspectors” are just a waste of the city’s money.
Nice try (you are defending corrupt democrats - I get it) but —just like Congress when this subprime mess was being cooked up— big cities are run by Democrats. The bribes for the building inspectors — they get kicked back to the alderman and da mayor. The people that are immolated in the houses that burn down because of the wiring violations? - they are the little minority people that the Democrats said they were going to protect from the ‘exploitative racist Republicans’.
——In that vein, who got the greedy bankers money all those years? Fanny Mae Freddie Mac
Dodd, Christopher J S D-CT $133,900
Kerry, John S D-MA $111,000
Obama, Barack S D-IL $105,849 (in just 2 years)
Clinton, Hillary S D-NY $75,550
And of course the Democrats are always punishing the financials right?????
Democrats are darlings of Wall St.
http://articles.latimes.com/2008/mar/21/nation/na-wallstdems21
Wall Street Bets On The Democrats
http://mydd.com/2006/4/24/wall-street-bets-on-the-democrats
Hedge Funds, Buyout Firms Favor Democrats With Campaign Money
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=abPcaWGJlFwo
Yes, citizens should be calling for prosecution of Elliot Spitzer (perverting the law as attorney general of NY)
It appears the Feds are suing Elliot Spitzer over his lawsuits in the Mortgage Industry. The New York State Attorney General, Elliot Spitzer is getting sued by the Office of the Comptroller of the Currency (OCC). The NY AG’s abuses of power has been noticed by the Federal Government as the lawsuit against the mortgage industry by Spitzer appeared to be a power play to extort more money from the deep pocket companies.
http://www.advancingwomen.com/politics/39129.php
Not sure why you say you got me.
It is I who has said all along that the government (Chris Dodd, Barney Frank, Andrew Cuomo, Pres Clinton, and some Republicans as well) failed to regulate ......identifiably when it forced lenders to make bad mortgages inspired by leftist ideology and the flood of cash that the financial industry shovelled to the Congressional thugs and thieves.
OMG, you are chugging full of Republican Bed Time Stories. Let’s see, it wasn’t Wall Street, it was those bad minorities and ACORN and the CRA. Now goody two shoes little Republicans can go to bed at nite smug in the knowledge that our Republic is safe if we can just cut the poor out of the loop. AND, it was those mean old crooked Democrats that caused this mess, and once again, we can sleep secure with little dreams of clipping coupons for a living, if we just get back in power.
BALONEY!
I like Ann Coulter, but Karl had to spank her bad little bottom for this same kind of nonsense. He spanked her so well that I’ll start there. (And if it was me it would have been a lot harder, because I would have included Phil Gramm, Leach, Bliley, and other Republicans:
parsy, who says consider your self on time out in the corner
Yes, all that (yawn). Didn’t like hearing about how all the mob-connected, big city Democrats screw the little people did you?
Hmmm, wouldn’t Democratic Union workers also be protected by good building construction regulation?
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
“It’s horrifying and incredible that people in such great positions of responsibility would abuse the authority entrusted in them and risk the lives of construction workers and the people of the City,” said New York construction accident lawyer David Perecman, who was also amazed that the bribe amounts were so minuscule compared to the risks.
Based on the latest national census of fatal occupational injuries from the Department of Labor’s Bureau of Labor Statistics, construction jobs already rank high on the list of the most dangerous jobs in America. Building inspectors are presumed to maintain construction site safety, as one of their many responsibilities.
http://www.prweb.com/releases/construction/accident/prweb2928604.htm
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Big Cities -— Shoving all the poor black kids into chaotic, violent warehouses that don’t educate them and instead buying votes from the teachers. — Yeah Democrats care about the poor, how to have more of them for those sure Democratic votes.
Oh, for bedtime stories lets hear a little more about sainted Jack Kennedy and Camelot and his odd relationship with Sam Giancana. Do you suppose the Mob hit him because of his double cross with Bobby going against organized crime? Or how about John Edwards exploiting his wife’s cancer to get sympathy votes while cheating on her?
The important thing is that you finally admitted that it was the government that failed -Our Congressmen just like Our Building inspectors- and it is still failing us - with Democrats in charge they are trying to give even more sub prime mortgages out. What a great way to redistribute wealth!!!! Go socialism!!!
“””Phil Gramm, Leach, Bliley,”””
— Other than Gramm, I’ll see you those no names and raise you
Chris (sweetheart deals from Countryside Angelo - unreported cottage in Ireland) Dodd
Barney (prostitution ring in his house — 8 year affair with Fanny Mae Executive Herb Moses) Frank
Charlie (unreported income from real estate — multiple rent-controlled NY properties — but he writes our tax law) Rangel
and
Maxine (married to a bank board member —”but I’m a hard core communist) Waters
Dude, I don’t have your myoptic vision. I see the lousy democrats AND I see the lousy republicans. Lookie at my tagline: One of ‘ems rubbish inside the fort. The other is rubbish outside the fort. They are separated by rubbish, which metaphorically could be the really partisan people who refuse to see the rubbish on their side of the rubbish pile.
So, I raise you a Greenspan or two. A Bush or two. A Newt. Whatever.
Can you see the light yet? It ain’t just the democrats and the left. It ain’t just the republicans and the right. It’s a great big ball of dung and they are kneaded together.
So maybe us democrats ought to start fessing up, and you republicans, too. That’s the point Denniger was making. BTW, I didn’t tell you could get out of that corner yet!
parsy, who says “Nose to the wall, until you learn your lesson!”
“Wall Street didn’t just become greedy overnite and that is precisely why it was so stupid to deregulate thru the overturn of Glass Steagall protection.”
Blaming repeal of Glass Steagall is like blaming the firemen for ruining your stuff because they got it wet while putting out the fire you started by falling asleep with a cigarette in your mouth.
The tricks that Wall Street and yes the republicans & democrats came up with to try and deal with all this bad debt may not have helped anything in the long run but it bought time to try and get to the root of the problem, Fannie and Freddie.
If there was No bad debt from turning the mortgage industry into a welfare program, there would have been no need to come up with ways to hide/hedge against/insure it or whatever else they did to try and mitigate the effect. The collapse was going to happen and kill the economy one way or another.
Unfortunately, all the time in the world couldn’t drag the democrats away from their favorite vote-buying program and not to mention their favorite slush funds. Not only did Fannie and Freddie enrich the ex-Clintonites running them into the ground but we were/are allowing them to bribe the very congressmen that were/are supposed to be overseeing them. This regulation was supposed to stop excess not breed it but liberalism always brings about the opposite of it’s stated intent. Obama took in more per year from Fannie/Freddie than anyone else in Congress but do you remember hearing that from anyone during the election ?
Regulation was the problem not deregulation. We trusted our mortgage system to politicians and got what we deserved for trusting politicians. What happened in Wall Street afterwards was a problem but not the root of the problem without it this all would have still blown up in our faces.
Parsy made the first partisan snipe with his post 13 ((((Wednesday, February 17, 2010 10:28:26 PM by parsifal)))
when he said::::::::::::
This is just GOP revisionism at work to cover up for Wall Street.
:::::::::::::
Sound quite MYOPIC to me. You weren’t seeing lousy Democrats then. Then you were obsessing on greedy bankers (most of whom contribute to Democrats as I documented) with the implication that they were favored by Republicans.
I am eager to vote out any Republican who won’t vote for smaller, cleaner government. And I sure as hell would vote out anyone with the ethical clouds that Dodd and Rangel have. I’ve been to tea parties and can’t wait to see some crap rino empire builders and freedom takers go. All the crooks in government need to go. But don’t imply its only Republicans who cover for Wall St. That is more contrafactual partisan dung.
I don’t. BOTH parties are to blame. The Democrats are even getting worse, now. They have the power to fix things, and have refused. Obama is deep in bed with the crooks. I’m thinking of leaving them and joining the Green Party or something.
self ping
Not only wasn't it illegal but...
Crucial to the passing of this Act [Gramm-Leach-Bliley] was an amendment made to the GLBA, stating that no merger may go ahead if any of the financial holding institutions, or affiliates thereof, received a "less than satisfactory [sic] rating at its most recent CRA exam", essentially meaning that any merger may only go ahead with the strict approval of the regulatory bodies responsible for the Community Reinvestment Act (CRA).[17] This was an issue of hot contention, and the Clinton Administration stressed that it "would veto any legislation that would scale back minority-lending requirements." [18]
...it was made a requirement by the Feds.
Disagree. first, you had the S&L crisis. Why. Because the rules against S&L geting involved in certain kinds of business were over-turned. Deregulated.
The the repeal of Glass Steagall and the failure to regulate derivative, which off the top of my head, I think was all in the CMA. Then you have the dot-com bubble and this one.
(I need to double check on Long Term Capital collapse, but I seem to recall that was linked to derivatives on Russian Bonds.)
So, when you had Glass Steagall, you had none of these meltdown size problems. Glass Steagall goes and you have at lest two meltdown size problems.
I see the problem as a “police”. If the police don’t do their job, or are on the take, you have a crime problem. Get rid of the police, and you have a worse crime problem.
That is what we have done. Our police are crooks. And we restricted them from being on duty between 10pm and 7am. We get the worst of both worlds.
parsy
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