NYTimes 9 Years ago...

[freeheelbillie 0]

I know that this has been debated over and over again here but I found something last night that brought it back to mind. (see attached doc.) There is plenty of blame to go around but Fannie and Freddie triggered the current economic condition. The lesson to learn to me is that short term "solutions" have long term effects, and there are unintended consequences of poorly thought out decisions. Consider the current Obama plan underway to spend trillions....it may in fact create some short term stimulus but it's long term consequences are truly frightening. Remember we have to pay it back with interest.

On top of this, Congress announced that they are going to "increase" spending an additional 8% over last year's budget this will be in addition to "stimulus" spending. People, you are witnessing the destruction of your children's and grandchildren's future. It appears the only hope is that wiser men/women will be elected at mid term who can stop irresponsible spending. I doubt that a wed-site of oversight will accomplish this alone, or idol threats from obama.

Fannie and Freddieare obviously only part of the current problem, and there is plenty of blame to go around. I am simply pointing out a trigger, fully aware of the drunken spending practices of the Bush Admin. The argument that we must spend to get out of this mess seems silly. Would a business operate successfully in this way?

Interesting reading regardless of your political affiliation. If you're a Democrat, please do recall that G.W.B. was not inaugurated until January 2000. This Times story is from September 30, 1999.

See Attached.

Gently pushing comfort zones since 1976...

[Capt.Slog 0]

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I know that this has been debated over and over again here.

Yes, why bother to bring it up again?

[freeheelbillie 0]

Because if you dont know how you arrived at a situation you are doomed to repeat it...I though the article (considering the date) was valid and was worth posting. The boat was sinking a long time ago and nothing was done about it, on either side of the isle. This was not due to deregulation of the Bush Admin. but pressure from the Clinton Admin. to extend risky loans. "Banks" are blamed over and over again for "this mess" but no real blame is shared by the government who helped get them there.

Gently pushing comfort zones since 1976...

[loumeinhart 0]

do you have the second page?

[freeheelbillie 0]

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do you have the second page?

its just as bleak...

link;

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=2

Gently pushing comfort zones since 1976...

[pirana 0]

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The lesson to learn to me is that short term "solutions" have long term effects, and there are unintended consequences of poorly thought out decisions.

The way it works is we go further into debt to try to generate commerce that will stimulate the economy, create jobs, get back on track, and eventually pay off said debt.

It has been shown to work (usually), but does not reduce the total pain. Just spreads the pain out further into the future. The real debate is the balance between (potentially) incredibly painful consequences for the short term, or mild pain over a longer term.

There is no pat answer as economics is a behavioral science, not a pure science. Which is to say that given the exact same inputs, the results will vary if for nothing else than the mood of the darn humans involved. People see economists using charts and graphs and numbers and think it is like math; that if something is shown to equal something else, it will always equal that something. It's more like psychology and is dependent on that fragile emotionasl thing called the human mind.

As an aside, read Why Things Bite Back for some really good material on unintended consequences brought on by good intentions.

By the way, I'm not disagreeing with you, just saying this is why they are doing it, that it is just one of the options, that there is no way to know the exact consequences of any of the options, and . . .

SPLUNGE.

" . . . the lust for power can be just as completely satisfied by suggesting people into loving their servitude as by flogging them and kicking them into obedience." -- Aldous Huxley

[base428 1]

Smells and looks like a smoking gun to me.....

(c)2010 Vertical Visions. No unauthorized duplication permitted. <==For the media only

[nerdgirl 0]

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I know that this has been debated over and over again here but I found something last night that brought it back to mind. (see attached doc.)

That's fine, imo. Hopefully each time a few more folks learn a little more and the story gets a little fuller – because it is very complicated. I've learned from folks here. And there does seem to be some forward progress, e.g., the fewer folks asserting simplistic “blame the CRA” hypotheses.

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There is plenty of blame to go around but Fannie and Freddie triggered the current economic condition.

“Triggered” – do you mean to imply some casual factor? Maybe it did" … I suspect it was a dependent not an independent variable, tho'.

The article you posted does suggest something worth investigating. It doesn’t prove causality (“smoking gun”).

If one wants to point to NY Times articles that might prompt other investigations into correlations and causalities for the mortgage crisis one might look to increase in McMansion’s, this one on accounting mismanagement by executives at an insurance corporation, this one on deregulation and collapse of large energy corporations as indicative of corporate malfeasance, this one from 1995 on derivatives and lack of regulation, this one from 2005 on risks of derivatives still not being adequately addressed, or this one from 1988 on securitization of consumer loans.

If Fannie Mae and Freddie Mac are to blame for the “current economic condition,” there is one test that one can do: those are American institutions; have similar housing bubbles and subsequent mortgage default crises been observed in other nation-states?

If no, that would support the hypothesis that Fannie Mae and Freddie Mac were independent variables (something causal) in the economic crisis.

If yes, it suggests that Fannie Mae and Freddie Mac were responding/pressured/changed/adjusted in response to some other variable in the larger system.

Mortgage turmoil spread through Europe to South America, particularly Brazil, and to Russia.

Does anyone want to argue that Putin created a housing program for poor, minority people? Altho’ *he* has tried to blame the US :

“it is the U.S. banks’ careless policy as well as the U.S. Congressmen unwillingness to undertake measures to rectify the situation that is to be blamed for it [Russia's financial crisis]” …

If it’s all the Democrats fault (or the Republicans for that matter), how is Iceland’s meltdown explained?

In addition to the less than complete but much better than most descriptions depicted in the video I posted over the weekend: Credit Crisis Visualized, the 3 most complete and causal explanations have been from Stiglitz (Nobel prize winning economist), Greenspan (on the challenges of regulating risk), and a Kansas City MO columnist (on the asset price bubble), imo.

Would love to pull those apart more … but I have a couple North Koreans to meet with on nuclear issues (along w/folks from US State).

/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[chuckakers 370]

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The lesson to learn to me is that short term "solutions" have long term effects, and there are unintended consequences of poorly thought out decisions.

The way it works is we go further into debt to try to generate commerce that will stimulate the economy, create jobs, get back on track, and eventually pay off said debt.

It has been shown to work (usually), but does not reduce the total pain.

When has it worked? Details. please.

Chuck Akers
D-10855
Houston, TX

[airdvr 197]

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If Fannie Mae and Freddie Mac are to blame for the “current economic condition,” there is one test that one can do: those are American institutions; have similar housing bubbles and subsequent mortgage default crises been observed in other nation-states?

What difference does that make? It may have happened in other nation-states. It might not have.

We knew Fannie and Freddie were trouble and Dems looked the other way.

http://www.youtube.com/watch?v=cMnSp4qEXNM&NR=1

Please don't dent the planet.

Destinations by Roxanne

[chuckakers 370]

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I know that this has been debated over and over again here.

Yes, why bother to bring it up again?

Because there are still many on this forum that want to deny it.

Chuck Akers
D-10855
Houston, TX

[DanG 1]

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Because there are still many on this forum that want to deny it.

And there are still many here who don't understand the difference between corrolation and causation.

All the "evidence" that you and others have posted shows that Democrats, namely Barney Frank (who I agree is a total asshole) were warned that Fannie and Freddie were in trouble. We're supposed to take that evidence and leap to the conclusion that the entire financial and economic crisis was caused by Clinton lowering lending standards with Frank's and ACORN's collusion. Sorry, but to people without an agenda, the links are not as obvious as you imply.

You've yet to show proof, beyond opinion pieces, that the crisis was caused by action or inaction on the part of Fannie/Freddie, Frank, or the Democrats. You also brush off the fact that Republicans were in charge of Congress during the time that Frank was supposedly forcing all this down the throats of the financial sector. nerdgirl has posted numerous links suggesting that there may have been other forces at work, too. That evidence is routinely ignored.

I don't want to "deny" anything, but before I accept your hypothesis, I'd like to see some actual evidence. Please no more links to Fox and Newsmax. Thanks.

- Dan G

[Capt.Slog 0]

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I know that this has been debated over and over again here.

Yes, why bother to bring it up again?

Because there are still many on this forum that want to deny it.

Because it's irrelevant, as Marg and others have patiently explained.

Don't you just love Marg's posts?

[chuckakers 370]

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I know that this has been debated over and over again here but I found something last night that brought it back to mind. (see attached doc.) There is plenty of blame to go around but Fannie and Freddie triggered the current economic condition. The lesson to learn to me is that short term "solutions" have long term effects, and there are unintended consequences of poorly thought out decisions. Consider the current Obama plan underway to spend trillions....it may in fact create some short term stimulus but it's long term consequences are truly frightening. Remember we have to pay it back with interest.

On top of this, Congress announced that they are going to "increase" spending an additional 8% over last year's budget this will be in addition to "stimulus" spending. People, you are witnessing the destruction of your children's and grandchildren's future. It appears the only hope is that wiser men/women will be elected at mid term who can stop irresponsible spending. I doubt that a wed-site of oversight will accomplish this alone, or idol threats from obama.

Fannie and Freddieare obviously only part of the current problem, and there is plenty of blame to go around. I am simply pointing out a trigger, fully aware of the drunken spending practices of the Bush Admin. The argument that we must spend to get out of this mess seems silly. Would a business operate successfully in this way?

Interesting reading regardless of your political affiliation. If you're a Democrat, please do recall that G.W.B. was not inaugurated until January 2000. This Times story is from September 30, 1999.

See Attached.

Thank you. I've been trying to explain this to the "other side" on this forum for a while now. Every time I mention it, I get the same ol' "it wasn't the CRA that caused the problem" line. When I try to educate them about the crap that was going on from Clinton forward, they don't want to hear it or they go off on an unrelated rant as NerdGirl has done on this thread.

Bill "I never had sex with that woman" Clinton, Chris "I got a sweetheart deal on my house from the CEO of Countrywide" Dodd, and Barney "Fannie and Freddie are not in trouble" Frank own this one.

Affordable housing should mean buying a house you can afford. Sometimes that's an apartment.

Chuck Akers
D-10855
Houston, TX

[marks2065 0]

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The lesson to learn to me is that short term "solutions" have long term effects, and there are unintended consequences of poorly thought out decisions.

The way it works is we go further into debt to try to generate commerce that will stimulate the economy, create jobs, get back on track, and eventually pay off said debt.

It has been shown to work (usually), but does not reduce the total pain.

When has it worked? Details. please.

It has never worked! What is suprising is that the liberal's teach things like history but they never seem to learn.

The new deal in the thirties is a perfect example, alot of spending but no fiscal responsibility, causing a large debt and only small temporary relief. The new deal lasted only a couple years before things headed back to what they were at the beginning of FDR's 1st term. This left a large debt for people to pay along with the interest. I for one would rather pay the cheaper price now than the interest inflated price later.

there is no backbone left in America, all we have is alot of weak minded poeple looking for the easy way out by sending their problems down the road to someone else. I don't want money from the government, I don't want to pay for their bailouts, and I don't want to work hard only to have my earnings taken from me and given to the lazy, irresponsible people of this country. once again the hard work of many is being used to offset the few that can't seem to pay their own way.

on a side note, I heard last night on the news(and I don't know how true it is) that if you took every penny from everyone that makes over 250k you could still not pay off the debt that this government is spending. A sobering thought that even those making less than 250k should seriously think about!

[DanG 1]

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there is no backbone left in America, all we have is alot of weak minded poeple looking for the easy way out by sending their problems down the road to someone else.

Holy shit, every citizen of the United States is a freeloading shitbag. How depressing.

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I don't want money from the government, I don't want to pay for their bailouts, and I don't want to work hard only to have my earnings taken from me and given to the lazy, irresponsible people of this country.

Oh thank God, there's one decent person left in the whole country. I feel much better now.

- Dan G

[marks2065 0]

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there is no backbone left in America, all we have is alot of weak minded poeple looking for the easy way out by sending their problems down the road to someone else.

Holy shit, every citizen of the United States is a freeloading shitbag. How depressing.

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no not everyone, just enough to sway the balance of power in the wrong direction

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I don't want money from the government, I don't want to pay for their bailouts, and I don't want to work hard only to have my earnings taken from me and given to the lazy, irresponsible people of this country.

Oh thank God, there's one decent person left in the whole country. I feel much better now.

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no there are alot of good people, just not enough in washington

[chuckakers 370]

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Because there are still many on this forum that want to deny it.

And there are still many here who don't understand the difference between corrolation and causation.

All the "evidence" that you and others have posted shows that Democrats, namely Barney Frank (who I agree is a total asshole) were warned that Fannie and Freddie were in trouble. We're supposed to take that evidence and leap to the conclusion that the entire financial and economic crisis was caused by Clinton lowering lending standards with Frank's and ACORN's collusion. Sorry, but to people without an agenda, the links are not as obvious as you imply.

You've yet to show proof, beyond opinion pieces, that the crisis was caused by action or inaction on the part of Fannie/Freddie, Frank, or the Democrats. You also brush off the fact that Republicans were in charge of Congress during the time that Frank was supposedly forcing all this down the throats of the financial sector. nerdgirl has posted numerous links suggesting that there may have been other forces at work, too. That evidence is routinely ignored.

I don't want to "deny" anything, but before I accept your hypothesis, I'd like to see some actual evidence. Please no more links to Fox and Newsmax. Thanks.

I have never said that the crap they were pulling caused the "entire financial and economic crisis". I contend that it caused the bulk of the problems in the housing market by creating false demand that could never be self-sustaining.

And, as we all know now, the housing bubble is the lergest contributing factor to the overall economic problems we face today.

And what does Obama want to do to fix it? Pay down those people's loans - and issue new loans for up to 105% of the appraised value of the home! What the hell kind of sense does that make???????

Chuck Akers
D-10855
Houston, TX

[DanG 1]

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I have never said that the crap they were pulling caused the "entire financial and economic crisis". I contend that it caused the bulk of the problems in the housing market by creating false demand that could never be self-sustaining.

I'll take your word for it that you've been saying that all along. To my ears (eyes) it sounded a little different, but maybe that was my interpretation.

Now all I'll ask is that you back that up. Nothing you or anyone else has posted has come close to proving that statement.

And yes, I've read what people have posted, and watched the videos. In reaching your final conclusion above, you're making lots of assumptions that I and others have pointed out are not accurate.

- Dan G

[marks2065 0]

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I have never said that the crap they were pulling caused the "entire financial and economic crisis". I contend that it caused the bulk of the problems in the housing market by creating false demand that could never be self-sustaining.

I'll take your word for it that you've been saying that all along. To my ears (eyes) it sounded a little different, but maybe that was my interpretation.

Now all I'll ask is that you back that up. Nothing you or anyone else has posted has come close to proving that statement.

And yes, I've read what people have posted, and watched the videos. In reaching your final conclusion above, you're making lots of assumptions that I and others have pointed out are not accurate.

you are correct that the mortgage bubble is not entirely to blame, poor oversight on wall street and poor fiscal responsibility by everyone that over extended themselves also had alot to do with it, but the mortgage crisses played the major roll in the colapse of the financial industry and that caused the other businesses to faulter. I guess trickle down economics does work and maybe the currant government should use this as a model for putting it right again. If you fuck up the top end it fucks up the bottom and if you fix the top it fixes the bottom.

[mnealtx 0]

From the LA Times:

Quote

Fannie Mae Moves to Loosen Home Loan Credit Rules
By Daryl Strickland
October 01, 1999 in print edition C-1

The nation’s largest provider of mortgage funds, moving to increase homeownership among minorities and low-income citizens, unveiled a program Thursday to loosen lending standards for people with “slightly impaired” credit.

The Federal National Mortgage Assn. said it will encourage banks and other financial institutions to accept borrowers with blemished credit who may not otherwise qualify for conventional loans.

The program will begin on a pilot basis in 15 states, including California, and the District of Columbia. It is expected to expand nationwide early next year.

It is designed to provide homeownership opportunities for “many borrowers whose credit is just a notch below” qualifying for a loan, said Franklin Raines, Fannie Mae’s chairman and chief executive.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[DanG 1]

Why do people keep posting the same thing over and over again? Is this what passes for debate and discussion here?

I grant you that minimum lending standards were changed. That is really not in contention. What was the effect of those changes on the overall economy? What was the impact of those changes versus other things that were happening at the same time? Why is this question so hard to understand?

- Dan G

[chuckakers 370]

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I have never said that the crap they were pulling caused the "entire financial and economic crisis". I contend that it caused the bulk of the problems in the housing market by creating false demand that could never be self-sustaining.

I'll take your word for it that you've been saying that all along. To my ears (eyes) it sounded a little different, but maybe that was my interpretation.

Now all I'll ask is that you back that up. Nothing you or anyone else has posted has come close to proving that statement.

And yes, I've read what people have posted, and watched the videos. In reaching your final conclusion above, you're making lots of assumptions that I and others have pointed out are not accurate.

The only assumption I'm making is that the financial analysts that have been beating this drum since the time of that article are correct, and no one has stepped up to refute them.

I suppose if I had nothing better to do, I could find actual documents to back up what the article and those analysts have said, but I don't see that as necessary. If it wasn't true, the libs would be proving it up with all kinds of evidence to the contrary.

Chuck Akers
D-10855
Houston, TX

[mnealtx 0]

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YOU are the one that asked for proof from someplace other than Fox News or Worldnet Daily - don't whine because I provided what you asked for.

But, here's a bit more for you -

Some snippets from the NYT:

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George Soros, the prominent financier, avoids using the financial contracts known as derivatives “because we don’t really understand how they work.” Felix G. Rohatyn, the investment banker who saved New York from financial catastrophe in the 1970s, described derivatives as potential “hydrogen bombs.”

And Warren E. Buffett presciently observed five years ago that derivatives were “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

One prominent financial figure, however, has long thought otherwise. And his views held the greatest sway in debates about the regulation and use of derivatives — exotic contracts that promised to protect investors from losses, thereby stimulating riskier practices that led to the financial crisis. For more than a decade, the former Federal Reserve Chairman Alan Greenspan has fiercely objected whenever derivatives have come under scrutiny in Congress or on Wall Street. “What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn’t be taking it to those who are willing to and are capable of doing so,” Mr. Greenspan told the Senate Banking Committee in 2003. “We think it would be a mistake” to more deeply regulate the contracts, he added.

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In 1997, the Commodity Futures Trading Commission, a federal agency that regulates options and futures trading, began exploring derivatives regulation. The commission, then led by a lawyer named Brooksley E. Born, invited comments about how best to oversee certain derivatives.

Ms. Born was concerned that unfettered, opaque trading could “threaten our regulated markets or, indeed, our economy without any federal agency knowing about it,” she said in Congressional testimony. She called for greater disclosure of trades and reserves to cushion against losses.

Ms. Born’s views incited fierce opposition from Mr. Greenspan and Robert E. Rubin, the Treasury secretary then. Treasury lawyers concluded that merely discussing new rules threatened the derivatives market. Mr. Greenspan warned that too many rules would damage Wall Street, prompting traders to take their business overseas.

“Greenspan told Brooksley that she essentially didn’t know what she was doing and she’d cause a financial crisis,” said Michael Greenberger, who was a senior director at the commission. “Brooksley was this woman who was not playing tennis with these guys and not having lunch with these guys. There was a little bit of the feeling that this woman was not of Wall Street.”

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Ms. Born pushed ahead. On June 5, 1998, Mr. Greenspan, Mr. Rubin and Mr. Levitt called on Congress to prevent Ms. Born from acting until more senior regulators developed their own recommendations. Mr. Levitt says he now regrets that decision. Mr. Greenspan and Mr. Rubin were “joined at the hip on this,” he said. “They were certainly very fiercely opposed to this and persuaded me that this would cause chaos.”

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In 2000, Mr. Harkin asked what might happen if Congress weakened the C.F.T.C.’s authority.

“If you have this exclusion and something unforeseen happens, who does something about it?” he asked Mr. Greenspan in a hearing.

Mr. Greenspan said that Wall Street could be trusted. “There is a very fundamental trade-off of what type of economy you wish to have,” he said. “You can have huge amounts of regulation and I will guarantee nothing will go wrong, but nothing will go right either,” he said.

Later that year, at a Congressional hearing on the merger boom, he argued that Wall Street had tamed risk.

“Aren’t you concerned with such a growing concentration of wealth that if one of these huge institutions fails that it will have a horrendous impact on the national and global economy?” asked Representative Bernard Sanders, an independent from Vermont.

“No, I’m not,” Mr. Greenspan replied. “I believe that the general growth in large institutions have occurred in the context of an underlying structure of markets in which many of the larger risks are dramatically — I should say, fully — hedged.”

The House overwhelmingly passed the bill that kept derivatives clear of C.F.T.C. oversight. Senator Gramm attached a rider limiting the C.F.T.C.’s authority to an 11,000-page appropriations bill. The Senate passed it. President Clinton signed it into law.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

• Quote

[DanG 1]

I officially give up.

You guys win. All the evidence needed to prove that the financial crises was because of Clinton, Barney Frank, and ACORN is contained in a single article (or references to the same story) about how some people expressed concerns over Fannie Mae and Freddy Mac in 1999.

Happy?

Edit:
mnealtx, why didn't you post that earlier? You realize, or course, that it has nothing to do with lending standards?

- Dan G