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Old 11-09-2013, 05:31 AM   #76
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Thanks for the perfect illustration of the kind of question that's not worth bothering with.

Why answer a question when the asker isn't genuinely interested in the answer?

The difference between arguing and debate.

You don't debate, you just regurgitate talking points and don't do research.
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Old 11-09-2013, 07:24 AM   #77
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You don't debate, you just regurgitate talking points and don't do research.
"11 katrillion majillion in Corporate Welfare!"

Have a look in the mirror.
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Old 11-09-2013, 08:33 AM   #78
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You are grossly misinformed comrade.

Overzealous Keynsesian government spending and crony capitalism have created (and continue to create) massive wealth disparity. Ever hear of inflation? People either have assets or they don't. If you don't have assets and only hold worthless paper money. You are poor. End of story. The value of the dollar has dropped 98% since the Federal Reserve was instituted.

You complain about the last few years of government policy (stimulus, bailouts, etc.) and actually have the GALL to attribute this to Libertarian's? WTF?

The few Libertarian's that there are in congress vote against those policies everytime the Socialists try to pass them. Libertarian's want to audit the federal reserve, and eliminate crony capitalism.

Libertarian's are against debt-accumulation, and all policies that create wealth disparity. You have no clue what you're even talking about. Do you actually believe the crap you type? Good lord, man.
Bull****. This disaster was caused by deregulation. Specifically, deregulation of the financial sector. Deregulation is the hallmark of laissez faire capitalism. LF capitalism is the hallmark of libertarianism, according to Ayn Rand who stated that there should be a separation between capitalism and state as meaningful as the separation of church and state. Once again, because libertarianism is nothing more than an ideological construct, every time one of its facets is implemented and proves to be a disaster, the libertarians simply blame somebody else and move the goalposts. Why? Because libertarianism is perfect and the only reason it fails is because it is not wholly and perfectly implemented, or some other such bull****. Or, the next thing the libertarian will tell you is, Ayn Rand doesn't speak for us.

Like Humpty Dumpty said, "My words mean whatever I want them to mean."

What we are experiencing now is a massive failure of capitalism. And it's not the first time it's happened.
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Old 11-09-2013, 08:47 AM   #79
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Beavis, 2x + 8 = 10.

What does X equal?
x=9 genius
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Old 11-09-2013, 08:48 AM   #80
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I googled it req.
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Old 11-09-2013, 09:00 AM   #81
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Wouldn't x = 1?
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Old 11-09-2013, 10:55 AM   #82
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Bull****. This disaster was caused by deregulation.
The Real Estate Bubble was cause by the Clinton Administration mandating ultra-high levels (as a % of overall mortgage lending) of sub-prime mortgages. The US government has been inflating home prices through deregulation, tax rebates, and interest rate manipulation since the 1980's.

You're an idiot, if you claim Libertarian's promote risky lending practices and other disastrous speculative activities of big banks.

The trash you spew is just outright FALSE.
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Old 11-09-2013, 03:22 PM   #83
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The Real Estate Bubble was cause by the Clinton Administration mandating ultra-high levels (as a % of overall mortgage lending) of sub-prime mortgages. The US government has been inflating home prices through deregulation, tax rebates, and interest rate manipulation since the 1980's.

You're an idiot, if you claim Libertarian's promote risky lending practices and other disastrous speculative activities of big banks.

The trash you spew is just outright FALSE.
That's the perfect libertarian argument: We support deregulation and the separation of capitalism and state! We are also opposed to all the **** that will create!
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Old 11-09-2013, 03:42 PM   #84
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That's the perfect libertarian argument: We support deregulation and the separation of capitalism and state! We are also opposed to all the **** that will create!
The federal government through Fannie created mortgage backed securities in an effort to make risk look less 'risky'

They then took it a step further and mandated lenders take on a certain percentage of riskier debt.

The problem in this case wasn't the market. It was government encouraging and even reinforcing irrationality in the market.
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Old 11-09-2013, 05:33 PM   #85
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The federal government through Fannie created mortgage backed securities in an effort to make risk look less 'risky'

They then took it a step further and mandated lenders take on a certain percentage of riskier debt.

The problem in this case wasn't the market. It was government encouraging and even reinforcing irrationality in the market.
Completely unadulterated bull****, as per usual:

What does Forbes have to say?

"It is clear to anyone who has studied the financial crisis of 2008 that the private sector’s drive for short-term profit was behind it. More than 84 percent of the sub-prime mortgages in 2006 were issued by private lending. These private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year. Out of the top 25 subprime lenders in 2006, only one was subject to the usual mortgage laws and regulations. The nonbank underwriters made more than 12 million subprime mortgages with a value of nearly $2 trillion. The lenders who made these were exempt from federal regulations.

....

Even this morning, November 22, 2011, a seemingly smart guy like Joe Kernan was saying on CNBC’s Squawkbox, “When the losses at Fannie and Freddie reach $200 billion… how can the ‘deniers’ say that Fannie and Freddie were enablers for a lot of the housing crisis. When it gets up to that levels, how can they say that they were only into sub-prime late, and they were only in it a little bit?”

The reason that people can say that is because it is true. The $200 billion was a mere drop in the ocean of derivatives which in 2007 amounted to three times the size of the entire global economy.
[/B]"

And's here's an abbreviated list of items from the OFP that lays out the general timeline, major events:

"In 1998, banks got the green light to gamble: The Glass-Steagall legislation, which separated regular banks and investment banks was repealed in 1998. This allowed banks, whose deposits were guaranteed by the FDIC, i.e. the government, to engage in highly risky business."

"Derivatives were unregulated: Derivatives had become a uniquely unregulated financial instrument. They are exempt from all oversight, counter-party disclosure, exchange listing requirements, state insurance supervision and, most important, reserve requirements. This allowed AIG to write $3 trillion in derivatives while reserving precisely zero dollars against future claims."

"The SEC loosened capital requirements: In 2004, the Securities and Exchange Commission changed the leverage rules for just five Wall Street banks. This exemption replaced the 1977 net capitalization rule’s 12-to-1 leverage limit. This allowed unlimited leverage for Goldman Sachs [GS], Morgan Stanley, Merrill Lynch (now part of Bank of America [BAC]), Lehman Brothers (now defunct) and Bear Stearns (now part of JPMorganChase–[JPM]). These banks ramped leverage to 20-, 30-, even 40-to-1. Extreme leverage left little room for error. By 2008, only two of the five banks had survived, and those two did so with the help of the bailout."

"The federal government overrode anti-predatory state laws. In 2004, the Office of the Comptroller of the Currency federally preempted state laws regulating mortgage credit and national banks, including anti-predatory lending laws on their books (along with lower defaults and foreclosure rates). Following this change, national lenders sold increasingly risky loan products in those states. Shortly after, their default and foreclosure rates increased markedly."

"Private sector lenders fed the demand: These mortgage originators’ lend-to-sell-to-securitizers model had them holding mortgages for a very short period. This allowed them to relax underwriting standards, abdicating traditional lending metrics such as income, credit rating, debt-service history and loan-to-value."

"Commercial banks jumped in: To keep up with these newfangled originators, traditional banks jumped into the game. Employees were compensated on the basis loan volume, not quality."

"Fannie and Freddie jumped in the game late to protect their profits: Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom. The vast majority of subprime mortgages — the loans at the heart of the global crisis — were underwritten by unregulated private firms. These were lenders who sold the bulk of their mortgages to Wall Street, not to Fannie or Freddie. Indeed, these firms had no deposits, so they were not under the jurisdiction of the Federal Deposit Insurance Corp or the Office of Thrift Supervision.

Fannie Mae and Freddie Mac market share declined. The relative market share of Fannie Mae and Freddie Mac dropped from a high of 57 percent of all new mortgage originations in 2003, down to 37 percent as the bubble was developing in 2005-06. More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions. The government-sponsored enterprises were concerned with the loss of market share to these private lenders — Fannie and Freddie were chasing profits, not trying to meet low-income lending goals."

"Looking at these events it is absurd to suggest, as Bloomberg did, that “Congress forced everybody to go and give mortgages to people who were on the cusp.”

Many actors obviously played a role in this story. Some of the actors were in the public sector and some of them were in the private sector. But the public sector agencies were acting at behest of the private sector. It’s not as though Congress woke up one morning and thought to itself, “Let’s abolish the Glass-Steagall Act!” Or the SEC spontaneously happened to have the bright idea of relaxing capital requirements on the investment banks. Or the Office of the Comptroller of the Currency of its own accord abruptly had the idea of preempting state laws protecting borrowers. These agencies of government were being strenuously lobbied to do the very things that would benefit the financial sector and their managers and traders. And behind it all, was the drive for short-term profits.

(emphasis added)


In short: gutting of financial regulations + greed = global financial ****up.

And, the irony is, it IS government at the root of it. Government being taken over by idiotic, libertarian, laissez-faire idealogues who think regulation should be abolished.

And now, after a paultry pullback post recession, it's all starting to go back in that direction, and it WILL blow up in our faces again.


http://www.forbes.com/sites/steveden...11/11/22/5086/

Last edited by Fedaykin; 11-09-2013 at 06:34 PM..
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Old 11-09-2013, 05:46 PM   #86
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Completely unadultared bull****, as per usual
I've read more than one right-winger blame the whole thing on Franks and Waters - you know, the homo and the N-word.
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Old 11-10-2013, 12:05 AM   #87
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Completely unadulterated bull****, as per usual:

What does Forbes have to say?

"It is clear to anyone who has studied the financial crisis of 2008 that the private sector’s drive for short-term profit was behind it. More than 84 percent of the sub-prime mortgages in 2006 were issued by private lending. These private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year. Out of the top 25 subprime lenders in 2006, only one was subject to the usual mortgage laws and regulations. The nonbank underwriters made more than 12 million subprime mortgages with a value of nearly $2 trillion. The lenders who made these were exempt from federal regulations.

....

Even this morning, November 22, 2011, a seemingly smart guy like Joe Kernan was saying on CNBC’s Squawkbox, “When the losses at Fannie and Freddie reach $200 billion… how can the ‘deniers’ say that Fannie and Freddie were enablers for a lot of the housing crisis. When it gets up to that levels, how can they say that they were only into sub-prime late, and they were only in it a little bit?”

The reason that people can say that is because it is true. The $200 billion was a mere drop in the ocean of derivatives which in 2007 amounted to three times the size of the entire global economy.
[/B]"

And's here's an abbreviated list of items from the OFP that lays out the general timeline, major events:

"In 1998, banks got the green light to gamble: The Glass-Steagall legislation, which separated regular banks and investment banks was repealed in 1998. This allowed banks, whose deposits were guaranteed by the FDIC, i.e. the government, to engage in highly risky business."

"Derivatives were unregulated: Derivatives had become a uniquely unregulated financial instrument. They are exempt from all oversight, counter-party disclosure, exchange listing requirements, state insurance supervision and, most important, reserve requirements. This allowed AIG to write $3 trillion in derivatives while reserving precisely zero dollars against future claims."

"The SEC loosened capital requirements: In 2004, the Securities and Exchange Commission changed the leverage rules for just five Wall Street banks. This exemption replaced the 1977 net capitalization rule’s 12-to-1 leverage limit. This allowed unlimited leverage for Goldman Sachs [GS], Morgan Stanley, Merrill Lynch (now part of Bank of America [BAC]), Lehman Brothers (now defunct) and Bear Stearns (now part of JPMorganChase–[JPM]). These banks ramped leverage to 20-, 30-, even 40-to-1. Extreme leverage left little room for error. By 2008, only two of the five banks had survived, and those two did so with the help of the bailout."

"The federal government overrode anti-predatory state laws. In 2004, the Office of the Comptroller of the Currency federally preempted state laws regulating mortgage credit and national banks, including anti-predatory lending laws on their books (along with lower defaults and foreclosure rates). Following this change, national lenders sold increasingly risky loan products in those states. Shortly after, their default and foreclosure rates increased markedly."

"Private sector lenders fed the demand: These mortgage originators’ lend-to-sell-to-securitizers model had them holding mortgages for a very short period. This allowed them to relax underwriting standards, abdicating traditional lending metrics such as income, credit rating, debt-service history and loan-to-value."

"Commercial banks jumped in: To keep up with these newfangled originators, traditional banks jumped into the game. Employees were compensated on the basis loan volume, not quality."

"Fannie and Freddie jumped in the game late to protect their profits: Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom. The vast majority of subprime mortgages — the loans at the heart of the global crisis — were underwritten by unregulated private firms. These were lenders who sold the bulk of their mortgages to Wall Street, not to Fannie or Freddie. Indeed, these firms had no deposits, so they were not under the jurisdiction of the Federal Deposit Insurance Corp or the Office of Thrift Supervision.

Fannie Mae and Freddie Mac market share declined. The relative market share of Fannie Mae and Freddie Mac dropped from a high of 57 percent of all new mortgage originations in 2003, down to 37 percent as the bubble was developing in 2005-06. More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions. The government-sponsored enterprises were concerned with the loss of market share to these private lenders — Fannie and Freddie were chasing profits, not trying to meet low-income lending goals."

"Looking at these events it is absurd to suggest, as Bloomberg did, that “Congress forced everybody to go and give mortgages to people who were on the cusp.”

Many actors obviously played a role in this story. Some of the actors were in the public sector and some of them were in the private sector. But the public sector agencies were acting at behest of the private sector. It’s not as though Congress woke up one morning and thought to itself, “Let’s abolish the Glass-Steagall Act!” Or the SEC spontaneously happened to have the bright idea of relaxing capital requirements on the investment banks. Or the Office of the Comptroller of the Currency of its own accord abruptly had the idea of preempting state laws protecting borrowers. These agencies of government were being strenuously lobbied to do the very things that would benefit the financial sector and their managers and traders. And behind it all, was the drive for short-term profits.

(emphasis added)


In short: gutting of financial regulations + greed = global financial ****up.

And, the irony is, it IS government at the root of it. Government being taken over by idiotic, libertarian, laissez-faire idealogues who think regulation should be abolished.

And now, after a paultry pullback post recession, it's all starting to go back in that direction, and it WILL blow up in our faces again.


http://www.forbes.com/sites/steveden...11/11/22/5086/
Pretty comical you want to paint the bubble as if it all started in 2006. People saw the trouble coming. And it was long before 2006.

http://www.slate.com/articles/busine...ut_fannie.html

Its beyond definition to fault "the market" for following the business model laid out explicitly by a federally sponsored enterprise.
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Old 11-10-2013, 12:30 AM   #88
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Pretty comical you want to paint the bubble as if it all started in 2006. People saw the trouble coming. And it was long before 2006.
LMAO, dive for a strawman, dive for it!

I in no way tried to claim the bubble started in 2006. Learn to read and learn to interact with integrity bub.

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Its beyond definition to fault "the market" for following the business model laid out explicitly by a federally sponsored enterprise.
Read my article again (more likely, for the first time). Then demonstrate that you understand what it is saying. Clearly, you don't.
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Old 11-10-2013, 09:40 AM   #89
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The banks ONLY made these loans because they KNEW they could sell the toxic paper to American Taxpayers via a complicit Congress under a direct governmental subprime mandate.

Anybody claiming that Libertarians would make American taxpayers liable for vast amounts toxic mortgage paper is utterly and completely dishonest. It goes COMPLETELY against Libertarian principles.
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Old 11-10-2013, 10:13 AM   #90
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The banks ONLY made these loans because they KNEW they could sell the toxic paper to American Taxpayers via a complicit Congress under a direct governmental subprime mandate.

Anybody claiming that Libertarians would make American taxpayers liable for vast amounts toxic mortgage paper is utterly and completely dishonest. It goes COMPLETELY against Libertarian principles.
you and your liberatarian fantasys. JC, wake up.
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Old 11-10-2013, 10:34 AM   #91
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1. Socialists create Fannie Mae and Freddie Mac forcing American taxpayers to underwrite the entire mortgage industry.
2. Then Socialists mandate that American taxpayers underwrite subprime borrowers.
3. Greedy Lenders (seeing the opportunity to make a quick buck) write as many bad loans as they possibly can, and sell them to the American taxpayers making billions and billions of dollars.
4. The Socialists then bail out "too big to fail" institutions who still have remaining toxic paper (not already sold to the American taxpayer).

Make no mistake, the real estate bubble was ENTIRELY created by government intervention in the private real estate market.

You see exactly how apprehensive banks are to lend money if they are liable for losses to be incurred on those loans.
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Old 11-10-2013, 11:01 AM   #92
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1. Socialists create Fannie Mae and Freddie Mac forcing American taxpayers to underwrite the entire mortgage industry.
2. Then Socialists mandate that American taxpayers underwrite subprime borrowers.
3. Greedy Lenders (seeing the opportunity to make a quick buck) write as many bad loans as they possibly can, and sell them to the American taxpayers making billions and billions of dollars.
4. The Socialists then bail out "too big to fail" institutions who still have remaining toxic paper (not already sold to the American taxpayer).

Make no mistake, the real estate bubble was ENTIRELY created by government intervention in the private real estate market.

You see exactly how apprehensive banks are to lend money if they are liable for losses to be incurred on those loans.
you and hobow/****4brains must be sharing notes.
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Old 11-10-2013, 05:15 PM   #93
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Originally Posted by pricejj View Post
1. Socialists create Fannie Mae and Freddie Mac forcing American taxpayers to underwrite the entire mortgage industry.
2. Then Socialists mandate that American taxpayers underwrite subprime borrowers.
3. Greedy Lenders (seeing the opportunity to make a quick buck) write as many bad loans as they possibly can, and sell them to the American taxpayers making billions and billions of dollars.
4. The Socialists then bail out "too big to fail" institutions who still have remaining toxic paper (not already sold to the American taxpayer).

Make no mistake, the real estate bubble was ENTIRELY created by government intervention in the private real estate market.

You see exactly how apprehensive banks are to lend money if they are liable for losses to be incurred on those loans.
As usual, you have the facts bass-ackwards...

Private sector loans, not Fannie or Freddie, triggered crisis

http://www.mcclatchydc.com/2008/10/1...ot-fannie.html

WASHINGTON — As the economy worsens and Election Day approaches, a conservative campaign that blames the global financial crisis on a government push to make housing more affordable to lower-class Americans has taken off on talk radio and e-mail.

Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.

Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.

Federal Reserve Board data show that:

More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.

Conservative critics claim that the Clinton administration pushed Fannie Mae and Freddie Mac to make home ownership more available to riskier borrowers with little concern for their ability to pay the mortgages.

"I don't remember a clarion call that said Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster," said Neil Cavuto of Fox News.

Fannie, the Federal National Mortgage Association, and Freddie, the Federal Home Loan Mortgage Corp., don't lend money, to minorities or anyone else, however. They purchase loans from the private lenders who actually underwrite the loans.

It's a process called securitization, and by passing on the loans, banks have more capital on hand so they can lend even more.

This much is true. In an effort to promote affordable home ownership for minorities and rural whites, the Department of Housing and Urban Development set targets for Fannie and Freddie in 1992 to purchase low-income loans for sale into the secondary market that eventually reached this number: 52 percent of loans given to low-to moderate-income families.

To be sure, encouraging lower-income Americans to become homeowners gave unsophisticated borrowers and unscrupulous lenders and mortgage brokers more chances to turn dreams of homeownership in nightmares.

But these loans, and those to low- and moderate-income families represent a small portion of overall lending. And at the height of the housing boom in 2005 and 2006, Republicans and their party's standard bearer, President Bush, didn't criticize any sort of lending, frequently boasting that they were presiding over the highest-ever rates of U.S. homeownership.

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

During those same explosive three years, private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.

In 1999, the year many critics charge that the Clinton administration pressured Fannie and Freddie, the private sector sold into the secondary market just 18 percent of all mortgages.

Fueled by low interest rates and cheap credit, home prices between 2001 and 2007 galloped beyond anything ever seen, and that fueled demand for mortgage-backed securities, the technical term for mortgages that are sold to a company, usually an investment bank, which then pools and sells them into the secondary mortgage market.

About 70 percent of all U.S. mortgages are in this secondary mortgage market, according to the Federal Reserve.

Conservative critics also blame the subprime lending mess on the Community Reinvestment Act, a 31-year-old law aimed at freeing credit for underserved neighborhoods.

Congress created the CRA in 1977 to reverse years of redlining and other restrictive banking practices that locked the poor, and especially minorities, out of homeownership and the tax breaks and wealth creation it affords. The CRA requires federally regulated and insured financial institutions to show that they're lending and investing in their communities.

Conservative columnist Charles Krauthammer wrote recently that while the goal of the CRA was admirable, "it led to tremendous pressure on Fannie Mae and Freddie Mac — who in turn pressured banks and other lenders — to extend mortgages to people who were borrowing over their heads. That's called subprime lending. It lies at the root of our current calamity."

Fannie and Freddie, however, didn't pressure lenders to sell them more loans; they struggled to keep pace with their private sector competitors. In fact, their regulator, the Office of Federal Housing Enterprise Oversight, imposed new restrictions in 2006 that led to Fannie and Freddie losing even more market share in the booming subprime market.

What's more, only commercial banks and thrifts must follow CRA rules. The investment banks don't, nor did the now-bankrupt non-bank lenders such as New Century Financial Corp. and Ameriquest that underwrote most of the subprime loans.

These private non-bank lenders enjoyed a regulatory gap, allowing them to be regulated by 50 different state banking supervisors instead of the federal government. And mortgage brokers, who also weren't subject to federal regulation or the CRA, originated most of the subprime loans.

In a speech last March, Janet Yellen, the president of the Federal Reserve Bank of San Francisco, debunked the notion that the push for affordable housing created today's problems.

"Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans," she said. "The CRA has increased the volume of responsible lending to low- and moderate-income households."

In a book on the sub-prime lending collapse published in June 2007, the late Federal Reserve Governor Ed Gramlich wrote that only one-third of all CRA loans had interest rates high enough to be considered sub-prime and that to the pleasant surprise of commercial banks there were low default rates. Banks that participated in CRA lending had found, he wrote, "that this new lending is good business."
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Old 11-10-2013, 05:25 PM   #94
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Originally Posted by L.A. BRONCOS FAN View Post
As usual, you have the facts bass-ackwards...

Private sector loans, not Fannie or Freddie, triggered crisis

http://www.mcclatchydc.com/2008/10/1...ot-fannie.html

WASHINGTON — As the economy worsens and Election Day approaches, a conservative campaign that blames the global financial crisis on a government push to make housing more affordable to lower-class Americans has taken off on talk radio and e-mail.

Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.

Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.

Federal Reserve Board data show that:

More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.

Conservative critics claim that the Clinton administration pushed Fannie Mae and Freddie Mac to make home ownership more available to riskier borrowers with little concern for their ability to pay the mortgages.

"I don't remember a clarion call that said Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster," said Neil Cavuto of Fox News.

Fannie, the Federal National Mortgage Association, and Freddie, the Federal Home Loan Mortgage Corp., don't lend money, to minorities or anyone else, however. They purchase loans from the private lenders who actually underwrite the loans.

It's a process called securitization, and by passing on the loans, banks have more capital on hand so they can lend even more.

This much is true. In an effort to promote affordable home ownership for minorities and rural whites, the Department of Housing and Urban Development set targets for Fannie and Freddie in 1992 to purchase low-income loans for sale into the secondary market that eventually reached this number: 52 percent of loans given to low-to moderate-income families.

To be sure, encouraging lower-income Americans to become homeowners gave unsophisticated borrowers and unscrupulous lenders and mortgage brokers more chances to turn dreams of homeownership in nightmares.

But these loans, and those to low- and moderate-income families represent a small portion of overall lending. And at the height of the housing boom in 2005 and 2006, Republicans and their party's standard bearer, President Bush, didn't criticize any sort of lending, frequently boasting that they were presiding over the highest-ever rates of U.S. homeownership.

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

During those same explosive three years, private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.

In 1999, the year many critics charge that the Clinton administration pressured Fannie and Freddie, the private sector sold into the secondary market just 18 percent of all mortgages.

Fueled by low interest rates and cheap credit, home prices between 2001 and 2007 galloped beyond anything ever seen, and that fueled demand for mortgage-backed securities, the technical term for mortgages that are sold to a company, usually an investment bank, which then pools and sells them into the secondary mortgage market.

About 70 percent of all U.S. mortgages are in this secondary mortgage market, according to the Federal Reserve.

Conservative critics also blame the subprime lending mess on the Community Reinvestment Act, a 31-year-old law aimed at freeing credit for underserved neighborhoods.

Congress created the CRA in 1977 to reverse years of redlining and other restrictive banking practices that locked the poor, and especially minorities, out of homeownership and the tax breaks and wealth creation it affords. The CRA requires federally regulated and insured financial institutions to show that they're lending and investing in their communities.

Conservative columnist Charles Krauthammer wrote recently that while the goal of the CRA was admirable, "it led to tremendous pressure on Fannie Mae and Freddie Mac — who in turn pressured banks and other lenders — to extend mortgages to people who were borrowing over their heads. That's called subprime lending. It lies at the root of our current calamity."

Fannie and Freddie, however, didn't pressure lenders to sell them more loans; they struggled to keep pace with their private sector competitors. In fact, their regulator, the Office of Federal Housing Enterprise Oversight, imposed new restrictions in 2006 that led to Fannie and Freddie losing even more market share in the booming subprime market.

What's more, only commercial banks and thrifts must follow CRA rules. The investment banks don't, nor did the now-bankrupt non-bank lenders such as New Century Financial Corp. and Ameriquest that underwrote most of the subprime loans.

These private non-bank lenders enjoyed a regulatory gap, allowing them to be regulated by 50 different state banking supervisors instead of the federal government. And mortgage brokers, who also weren't subject to federal regulation or the CRA, originated most of the subprime loans.

In a speech last March, Janet Yellen, the president of the Federal Reserve Bank of San Francisco, debunked the notion that the push for affordable housing created today's problems.

"Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans," she said. "The CRA has increased the volume of responsible lending to low- and moderate-income households."

In a book on the sub-prime lending collapse published in June 2007, the late Federal Reserve Governor Ed Gramlich wrote that only one-third of all CRA loans had interest rates high enough to be considered sub-prime and that to the pleasant surprise of commercial banks there were low default rates. Banks that participated in CRA lending had found, he wrote, "that this new lending is good business."
price isn't interested in facts,just whatever feeds his fantasy.
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Old 11-10-2013, 05:36 PM   #95
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price isn't interested in facts,just whatever feeds his fantasy.
His entire belief system is flawed, but his emotional commitment to that system prevents him from seeing it.
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Old 11-10-2013, 05:55 PM   #96
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Old 11-10-2013, 05:58 PM   #97
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Libertarianism is a religion. Like Scientology.
Except with less of a grasp on reality than Scientology.
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Old 11-10-2013, 07:37 PM   #98
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Except with less of a grasp on reality than Scientology.
And both were invented by sociopathic drunks.
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Old 11-11-2013, 11:59 AM   #99
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Know this.

They can ignore, deflect, and call names all they want. Progressive Socialists and their harmful policies FAIL and will ALWAYS FAIL.

Why? Because their policies are only meant to control YOU and YOUR money. They are against individual freedom, which creates creativity and prosperity.
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Old 11-11-2013, 12:02 PM   #100
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Know this.

They can ignore, deflect, and call names all they want. Progressive Socialists and their harmful policies FAIL and will ALWAYS FAIL.

Why? Because their policies are only meant to control YOU and YOUR money. They are against individual freedom, which creates creativity and prosperity.
Some MEN prefer freedom. Other men need the government to help them.
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