Housing Policies Provoked Economic Meltdown

[rushmc 18]

Should be an interesting debate.


http://www.nytimes.com/2010/12/15/business/economy/15panel.html?_r=2&ref=business


One comment from the link

Quote

Citing several government agencies, the document argues that “the government subsidized and, in some cases, mandated the extension of credit to high-risk borrowers, propagating risks for financial firms, the mortgage market, taxpayers, and ultimately the financial system.” (emphasis mine)

The document also examines the unappreciated risks that accompanied the transformation of mortgages into complex securities — like collateralized debt obligations — that could be sold to investors. “Put simply, the risk of a housing collapse was simply not appreciated,” the document states. The document also examines how the crisis intensified after the government allowed Lehman Brothers to collapse in September 2008, an event that caused bondholders to panic. It argues that the Federal Reserve and the Treasury Department acted appropriately to stanch the crisis.

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[Andrewwhyte 1]

One thing I have constantly heard outside the country, but seldom if ever by US commentators is that the policy of giving tax breaks on mortgage service costs is a subsidy on debt that made the crash inevitable. I was hearing this as early as the late '90s.

[rushmc 18]

Quote

One thing I have constantly heard outside the country, but seldom if ever by US commentators is that the policy of giving tax breaks on mortgage service costs is a subsidy on debt that made the crash inevitable. I was hearing this as early as the late '90s.

Yes

And many (including GW Bush) tried to get congress to start doing something about it. But Fannie and Freddie were cash cows to the Dems that were not to be touched

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[futuredivot 0]

That's a damn dirty lie. Barney Frank himself promised that everything was fine. He wouldn't lie, would he?

You are only as strong as the prey you devour

[rushmc 18]

Quote

That's a damn dirty lie. Barney Frank himself promised that everything was fine. He wouldn't lie, would he?

I dont know

I never can understand him

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[rehmwa 2]

Quote

Should be an interesting debate.

not that interesting, it's pretty apparent now in retrospect

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[rushmc 18]

Quote

Quote

Should be an interesting debate.

not that interesting, it's pretty apparent now in retrospect

For those who care to learn

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[kelpdiver 2]

Quote

One thing I have constantly heard outside the country, but seldom if ever by US commentators is that the policy of giving tax breaks on mortgage service costs is a subsidy on debt that made the crash inevitable. I was hearing this as early as the late '90s.

In and of itself, it's not inevitable. But when liar loans and 0% down and no actual checkout of the customers occur (considerable fraud occurred), you put yourself in a bad spot.

The money policy that drove down interest rates was the bigger problem - it drove up real estate prices as people are encouraged to borrow the max allowed (guideline is 36% of gross income for all debt), so lower rates mean more can be borrowed which means higher bid.

And because the interest rate is effectively lowered by the tax deduction, removing it would remove a third of the property value right off the bat. Nevermind cheating those with loans already. As a renter, I would benefit greatly, but it still seems a bit unfair. And it's not enough to grandfather current home owners - they wouldn't be able to sell without a great loss for 5-10 years. And with so many already underwater right now, adding on wouldn't be good.

[DaVinci 0]

Not surprised.

CRA was signed by Carter, pushed bigger by Clinton. The dems have tried several times to make home ownership for everyone no matter their ability to pay.

Heck the 105th Congress Rangel tried to pass an Amendment to the Constitution to "To establish the right to a home"

http://www.gpo.gov/fdsys/pkg/BILLS-105hjres73ih/pdf/BILLS-105hjres73ih.pdf


But this whole thing is not news to anyone that was paying attention.

http://www.forbes.com/2009/02/13/housing-bubble-subprime-opinions-contributors_0216_peter_wallison_edward_pinto.html

In a recent meeting with the Council on Foreign Relations, Barney Frank--the chair of the House Financial Services Committee and a longtime supporter of Fannie and Freddie--admitted that it had been a mistake to force homeownership on people who could not afford it.

July 2003,
Senators Chuck Hagel (R-NE), Elizabeth Dole (R-NC) and John Sununu
(R-NH) introduced legislation to address regulation of Freddi and Fanny.

What did the Dems say in 2001?

Quote

“I do not think we are facing any kind of a crisis. That is, in my view, the
two government sponsored entities we are talking about here, Fannie Mae
and Freddie Mac, are not in crisis…. I do not think at this point there is a
problem with a threat to the Treasury…. I believe that we, as the Federal
Government, have probably done too little rather than too much to push
them to meet the goals of affordable housing and to set reasonable goals.”-- Barney Frank

2005 Republican Senators Hagel, Sununu, Dole, and later John McCain
reintroduced legislation to once again address regulation of Fannie and
Freddie. In essence, the bill would have required Fannie and Freddie to
eliminate their investments in risky subprime loans.

[hwt 0]

http://www.youtube.com/watch?v=cMnSp4qEXNM
http://www.youtube.com/watch?v=_MGT_cSi7Rs

But...but...but i thought it was all Bush's fault.

[kallend 1,683]

Quote

Should be an interesting debate.


http://www.nytimes.com/2010/12/15/business/economy/15panel.html?_r=2&ref=business


One comment from the link

Quote

Citing several government agencies, the document argues that “the government subsidized and, in some cases, mandated the extension of credit to high-risk borrowers, propagating risks for financial firms, the mortgage market, taxpayers, and ultimately the financial system.” (emphasis mine)

The document also examines the unappreciated risks that accompanied the transformation of mortgages into complex securities — like collateralized debt obligations — that could be sold to investors. “Put simply, the risk of a housing collapse was simply not appreciated,” the document states. The document also examines how the crisis intensified after the government allowed Lehman Brothers to collapse in September 2008, an event that caused bondholders to panic. It argues that the Federal Reserve and the Treasury Department acted appropriately to stanch the crisis.

According to "G.O.P. Panelists Dissent on Cause of Crisis".

OTOH, according to the Federal Reserve, CRA loans to low income borrowers were of far less consequence (lower default rate) than non CRA loans made by companies not subject to CRA rules.

...

The only sure way to survive a canopy collision is not to have one.

[rushmc 18]

Quote

Quote

Should be an interesting debate.


http://www.nytimes.com/2010/12/15/business/economy/15panel.html?_r=2&ref=business


One comment from the link

Quote

Citing several government agencies, the document argues that “the government subsidized and, in some cases, mandated the extension of credit to high-risk borrowers, propagating risks for financial firms, the mortgage market, taxpayers, and ultimately the financial system.” (emphasis mine)

The document also examines the unappreciated risks that accompanied the transformation of mortgages into complex securities — like collateralized debt obligations — that could be sold to investors. “Put simply, the risk of a housing collapse was simply not appreciated,” the document states. The document also examines how the crisis intensified after the government allowed Lehman Brothers to collapse in September 2008, an event that caused bondholders to panic. It argues that the Federal Reserve and the Treasury Department acted appropriately to stanch the crisis.

According to "G.O.P. Panelists Dissent on Cause of Crisis".

OTOH, according to the Federal Reserve, CRA loans to low income borrowers were of far less consequence (lower default rate) than non CRA loans made by companies not subject to CRA rules.

Ya
That is why I was honest enough to quote a bit from both and the article link

But we all know the Dem side is anti business pro big gov. And you will say the opposite for the R's. Hence the interesting debate.

But when one considers what some R's were saying before this really imploded some perspective comes to light
Dont you think?

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[marks2065 0]

Quote

Quote

Should be an interesting debate.


http://www.nytimes.com/2010/12/15/business/economy/15panel.html?_r=2&ref=business


One comment from the link

Quote

Citing several government agencies, the document argues that “the government subsidized and, in some cases, mandated the extension of credit to high-risk borrowers, propagating risks for financial firms, the mortgage market, taxpayers, and ultimately the financial system.” (emphasis mine)

The document also examines the unappreciated risks that accompanied the transformation of mortgages into complex securities — like collateralized debt obligations — that could be sold to investors. “Put simply, the risk of a housing collapse was simply not appreciated,” the document states. The document also examines how the crisis intensified after the government allowed Lehman Brothers to collapse in September 2008, an event that caused bondholders to panic. It argues that the Federal Reserve and the Treasury Department acted appropriately to stanch the crisis.

According to "G.O.P. Panelists Dissent on Cause of Crisis".

OTOH, according to the Federal Reserve, CRA loans to low income borrowers were of far less consequence (lower default rate) than non CRA loans made by companies not subject to CRA rules.

When the lending practices are changed for one group that trickles up to the other groups. When the lending standards of higher income groups were lowered to the standards of low income groups we opened up a huge can of worms and it exploded in our faces. This was just another form of trickle up poverty the dems like to practice and all the hard working americans will have to pay for another failed dem policy.

[Amazon 7]

Quote

Quote

Quote

Should be an interesting debate.


http://www.nytimes.com/2010/12/15/business/economy/15panel.html?_r=2&ref=business


One comment from the link

Quote

Citing several government agencies, the document argues that “the government subsidized and, in some cases, mandated the extension of credit to high-risk borrowers, propagating risks for financial firms, the mortgage market, taxpayers, and ultimately the financial system.” (emphasis mine)

The document also examines the unappreciated risks that accompanied the transformation of mortgages into complex securities — like collateralized debt obligations — that could be sold to investors. “Put simply, the risk of a housing collapse was simply not appreciated,” the document states. The document also examines how the crisis intensified after the government allowed Lehman Brothers to collapse in September 2008, an event that caused bondholders to panic. It argues that the Federal Reserve and the Treasury Department acted appropriately to stanch the crisis.

According to "G.O.P. Panelists Dissent on Cause of Crisis".

OTOH, according to the Federal Reserve, CRA loans to low income borrowers were of far less consequence (lower default rate) than non CRA loans made by companies not subject to CRA rules.

When the lending practices are changed for one group that trickles up to the other groups. When the lending standards of higher income groups were lowered to the standards of low income groups we opened up a huge can of worms and it exploded in our faces. This was just another form of trickle up poverty the dems like to practice and all the hard working americans will have to pay for another failed dem policy.

In case you missed the obvious AGAIN.. it is trickle down that you on the right trumpet as such a great thing for everyone.

The problem is your term trickle up is WAY OFF the mark. What we just witnessed is a FLOOD of Main Street wealth up to a very very few people who control Wall Street They are the ones who made vast amounts of money AND... who by the way have yet to trickle on all the fucking idiots that believe in that failed economic model.

[mnealtx 0]

Quote

The problem is your term trickle up is WAY OFF the mark. What we just witnessed is a FLOOD of Main Street wealth up to a very very few people who control Wall Street They are the ones who made vast amounts of money AND... who by the way have yet to trickle on all the fucking idiots that believe in that failed economic model.

Yes, of course, because Berkshire Hathaway is only Warren and his secretary (who pays more taxes than he does).

Remind me again - who where those poor guys that you were working for, again? Gates and McNerney?

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

[Amazon 7]

Quote

Quote

The problem is your term trickle up is WAY OFF the mark. What we just witnessed is a FLOOD of Main Street wealth up to a very very few people who control Wall Street They are the ones who made vast amounts of money AND... who by the way have yet to trickle on all the fucking idiots that believe in that failed economic model.

Yes, of course, because Berkshire Hathaway is only Warren and his secretary (who pays more taxes than he does).

Remind me again - who where those poor guys that you were working for, again? Gates and McNerney?

And then Mikee steps up to the plate with his rendition.....of the Golden shower oldie but goodie


Just Singin in the trickle

Just Singin in the trickle

What a glorius Feelin

Hes Happy again....

[mnealtx 0]

Quote

Quote

Quote

The problem is your term trickle up is WAY OFF the mark. What we just witnessed is a FLOOD of Main Street wealth up to a very very few people who control Wall Street They are the ones who made vast amounts of money AND... who by the way have yet to trickle on all the fucking idiots that believe in that failed economic model.

Yes, of course, because Berkshire Hathaway is only Warren and his secretary (who pays more taxes than he does).

Remind me again - who where those poor guys that you were working for, again? Gates and McNerney?

And then Mikee steps up to the plate with his rendition.....of the Golden shower oldie but goodie


Just Singin in the trickle

Just Singin in the trickle

What a glorius Feelin

Hes Happy again....

I'm always happy to piss on keynesianism...glad you noticed.

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

[rushmc 18]

Quote

Quote

Quote

Quote

The problem is your term trickle up is WAY OFF the mark. What we just witnessed is a FLOOD of Main Street wealth up to a very very few people who control Wall Street They are the ones who made vast amounts of money AND... who by the way have yet to trickle on all the fucking idiots that believe in that failed economic model.

Yes, of course, because Berkshire Hathaway is only Warren and his secretary (who pays more taxes than he does).

Remind me again - who where those poor guys that you were working for, again? Gates and McNerney?

And then Mikee steps up to the plate with his rendition.....of the Golden shower oldie but goodie


Just Singin in the trickle

Just Singin in the trickle

What a glorius Feelin

Hes Happy again....

I'm always happy to piss on keynesianism...glad you noticed.

No Dammit

Obama is NOT from there

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[mnealtx 0]

Quote

Quote

I'm always happy to piss on keynesianism...glad you noticed.

No Dammit

Obama is NOT from there

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

[rushmc 18]

Quote

That's a damn dirty lie. Barney Frank himself promised that everything was fine. He wouldn't lie, would he?

A BIG lie

More money this mess will cost us

From Thomson/Reuters.
Found on NewMax

Quote

Geithner Urges Fannie, Freddie to Do Loan Write-downs
Thursday, 16 Dec 2010 02:12 PM Article Font Size


WASHINGTON (Reuters) - Fannie Mae and Freddie Mac should make use of Obama administration programs to help borrowers who owe more than their home is worth by writing down principal, U.S. Treasury Secretary Timothy Geithner said Thursday.

"We think there is a pretty good economic case for Fannie Mae and Freddie Mac to participate in those programs, and we are in the process of talking to the [the Federal Housing Finance Agency] about those, about the merits of those programs, about their concerns," Geithner said, in response to a question from the Congressional Oversight Panel.

Earlier this year, the Federal Housing Administration announced a program that would provide government incentives to lenders who reduce principal for borrowers who are current on a mortgage whose balance exceeds the home's worth. The Treasury Department has a similar program.

But the FHA's "short refi" program has won little participation -- just three modifications of 61 applications.

So far, finance giants Fannie Mae and Freddie Mac have been reluctant to do principal write-downs because doing so would increase their losses and require them to get more taxpayer funding. Fannie Mae and Freddie Mac have taken more than $150 billion in funding directly from the Treasury since they were taken over by the government during the financial crisis in late 2008.

The independent regulator of Fannie Mae and Freddie Mac, which is called the Federal Housing Finance Agency, has not required Fannie and Freddie to do principal write-downs.

"I can't say at this point whether I think they are likely to adopt them or not," Geithner said. "We are trying to make sure we understand their concerns and they've got a different set of objectives, in some ways, different constraints. But I am hopeful that they are going to find a way to participate in many of these programs." (Reporting by Corbett B. Daly; Editing by Jan Paschal)


© 2010 Thomson/Reuters. All rights reserved

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln