hello fromWarsaw
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Post by hello fromWarsaw on Jun 10, 2011 13:57:54 GMT -5
By David Goldstein and Kevin G. Hall | McClatchy Newspapers 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. ;D Sorry about facts
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hello fromWarsaw
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Post by hello fromWarsaw on Jun 10, 2011 14:29:28 GMT -5
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hello fromWarsaw
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Post by hello fromWarsaw on Jun 10, 2011 15:07:54 GMT -5
The point is, 80%+ of Pub voters believe it's all the gay guy's fault, and they're 80%+ WRONG, just like RUSH, FOX Noise, etc. Same thing with global warming, health reform, (ACORN, the mosque, Saddam, you name it) etc. etc etc. The power of the Pub/bad corporate BS machine is frightening...the world is aghast
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Deleted
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Post by Deleted on Jun 10, 2011 15:11:23 GMT -5
Oh looky.....another 'The only thing I can discuss is how evil evil bad bad blah blah the Pubs are' post from Warsaw. Who didn't see that coming from a universe away?
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Post by Deleted on Jun 10, 2011 15:17:22 GMT -5
I never know if he's trying to be humorous or not with those numbers like, 80+% republicans believe it's the gay guys fault.
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Post by Deleted on Jun 10, 2011 15:24:52 GMT -5
I never know if he's trying to be humorous or not with those numbers like, 80+% republicans believe it's the gay guys fault. If this were the random nonsensical post by Warsaw about "repubs that....Repubs this" then I would say it's his attempt at humor. Since this a nonstop constant for his posting history, then I'll say he really believes his own tripe.
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EVT1
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Post by EVT1 on Jun 10, 2011 15:26:19 GMT -5
Old news- they have been trying to blame the CRA/Acorn/F&F for this since it happened. I see PBP was quick to post a topic today repeating the same line of BS so it must be circulating the echo chamber again. You have to give the GOP credit- they have the best BS slinger in the world and it works. What do the democrats have to battle it? A few facts? The conservatives are dropping crap by the truck load and the people calling them on it are working with a teaspoon.
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Post by Deleted on Jun 10, 2011 15:31:50 GMT -5
Old news- they have been trying to blame the CRA/Acorn/F&F for this since it happened. I see PBP was quick to post a topic today repeating the same line of BS so it must be circulating the echo chamber again. You have to give the GOP credit- they have the best BS slinger in the world and it works. What do the democrats have to battle it? A few facts? The conservatives are dropping crap by the truck load and the people calling them on it are working with a teaspoon. So Fannie & Freddie had nothing to do with the housing meltdown? Obviously they are not the ONLY cause, but they certainly contributed their fair share to it.
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EVT1
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Post by EVT1 on Jun 10, 2011 15:32:52 GMT -5
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jkapp
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Post by jkapp on Jun 10, 2011 15:34:52 GMT -5
I love how libs still like throwing other people's opinions and analyses on subjects out as pure facts...as long as these opinions agree with their propaganda, that is.
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hello fromWarsaw
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Post by hello fromWarsaw on Jun 10, 2011 15:35:23 GMT -5
The truth is SO repetitive. The elitist mega rich pubs did it. I don't blame the misled, except for believing them.
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jkapp
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Post by jkapp on Jun 10, 2011 15:36:29 GMT -5
And as long as you are taxing them, then they should be able to have that ability. Or do you believe in taxation without representation?
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jkapp
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Post by jkapp on Jun 10, 2011 15:37:21 GMT -5
The truth is SO repetitive. The elitist mega rich pubs did it. I don't blame the misled, except for believing them. \ Of course you don't...liberals don't feel people should have any repsonsibility over themselves or their actions - that's government's job.
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Post by Deleted on Jun 10, 2011 15:38:13 GMT -5
The truth is SO repetitive. The elitist mega rich pubs did it. I don't blame the misled, except for believing them. So you include Soros, Buffet, Gates, Jobs, Zuckerberg, etc. in the list of people that ruined the country or is it just the 'perceived' Republican elitist mega rich that did it? *Note: This is a rhetorical question. We all know what your overly regurgitated answer will be.
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hello fromWarsaw
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Post by hello fromWarsaw on Jun 10, 2011 15:38:29 GMT -5
Those are facts fcs
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hello fromWarsaw
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Post by hello fromWarsaw on Jun 10, 2011 17:52:07 GMT -5
QED: The misled can only change the subject and can't tell the difference between facts and opinion...
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hello fromWarsaw
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Post by hello fromWarsaw on Jun 10, 2011 18:03:22 GMT -5
Today at 3:35pm, hello fromWarsaw wrote:The truth is SO repetitive. The elitist mega rich pubs did it. I don't blame the misled, except for believing them. \ "Of course you don't...liberals don't feel people should have any repsonsibility over themselves or their actions - that's government's job." You would prefer I blame you for being hateful liars who've ruined the country? Fortunately I know pub voters to be good people who have been horribly misled by greedy conmen and the bought off. (Patriotism and Religion are the last refuge of scoundrels)...See: over 80% of subprime mortgages, and the worst, have nothing to do with Barney Frank
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vonnie6200
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Post by vonnie6200 on Jun 10, 2011 18:39:38 GMT -5
QED: The misled can only change the subject and can't tell the difference between facts and opinion... [/b] And apparently neither can you
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EVT1
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Post by EVT1 on Jun 10, 2011 19:40:25 GMT -5
So Fannie & Freddie had nothing to do with the housing meltdown? Obviously they are not the ONLY cause, but they certainly contributed their fair share to it. Of course they have some blame- but the GOP line leaves out the main cause of why the housing crises turned into an economy wrecking monster- themselves (looking mainly at Phil Gramm) and their deregulation. Much easier to point to poor and minority homeowners and blame them for it all. The fact that so many people buy it is a testament to the BS slinger's effectiveness.
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jkapp
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Post by jkapp on Jun 10, 2011 20:22:19 GMT -5
So Fannie & Freddie had nothing to do with the housing meltdown? Obviously they are not the ONLY cause, but they certainly contributed their fair share to it. Of course they have some blame- but the GOP line leaves out the main cause of why the housing crises turned into an economy wrecking monster- themselves (looking mainly at Phil Gramm) and their deregulation. Much easier to point to poor and minority homeowners and blame them for it all. The fact that so many people buy it is a testament to the BS slinger's effectiveness. See, I blame the people that got duped into buying into these mortgages...they were falling for the oldest trick in the book: if it sounds too good to be true, then it is. If people didn't understand what they were signing, then why the hell did they sign it? And it's amazing how many people took out a mortgage and couldn't BELIEVE they actually had to make the payments! You mean they actually foreclose on you? ?
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jkapp
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Post by jkapp on Jun 10, 2011 20:28:28 GMT -5
Today at 3:35pm, hello fromWarsaw wrote:The truth is SO repetitive. The elitist mega rich pubs did it. I don't blame the misled, except for believing them. \ "Of course you don't...liberals don't feel people should have any repsonsibility over themselves or their actions - that's government's job." You would prefer I blame you for being hateful liars who've ruined the country? Fortunately I know pub voters to be good people who have been horribly misled by greedy conmen and the bought off. (Patriotism and Religion are the last refuge of scoundrels)...See: over 80% of subprime mortgages, and the worst, have nothing to do with Barney Frank Blah blah blah blah blah...people should have no responsibility for what they sign into...blah blah blah...people shouldn't have to actually understand the mortgage they buy...blah blah blah...government should reguate business more and let people continue to be ignorant... Yep, same old, same old from the left...people need to be cradled; businesses need to be controlled. Have a good night, comrade...keep dreaming the utopia
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hello fromWarsaw
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Post by hello fromWarsaw on Jun 10, 2011 20:57:01 GMT -5
Point is, you repeat Pub lies about what destroyed the US financial world and started a world wide depression. Then ;Dyou repeat the Pub mytholgy blah blah. What a pile of pubcrappe.
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hello fromWarsaw
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Post by hello fromWarsaw on Jun 10, 2011 21:03:08 GMT -5
And they're ruining the recovery. 48% believe we'll have a depression in the next year. Thanks, Pub fear mongerers...
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hello fromWarsaw
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Post by hello fromWarsaw on Jun 10, 2011 21:09:11 GMT -5
FACTS: 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.
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EVT1
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Post by EVT1 on Jun 10, 2011 21:12:45 GMT -5
See, I blame the people that got duped into buying into these mortgages...they were falling for the oldest trick in the book: if it sounds too good to be true, then it is. If people didn't understand what they were signing, then why the hell did they sign it? And it's amazing how many people took out a mortgage and couldn't BELIEVE they actually had to make the payments! You mean they actually foreclose on you? ? So how does that relate to the economic collapse? Why did that cause AIG to fail, Lehman, Citi? If the regulations were not gutted it couldn't have happened regardless if people paid their mortgages or not. Idiot purchasers that got screwed by predatory lenders are not at fault here. I'm with Warsaw on this- if you think the CRA or the sub-prime borrowers are responsible for the collapse you are sorely misled.
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formerexpat
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Post by formerexpat on Jun 10, 2011 21:48:37 GMT -5
Regulations of these types of transactions [credit derivative swaps] were never there to be deregulated. Do you have specific regulations in mind that were relaxed that you believe caused the financial crisis?
Sub-prime borrowers are very much at fault, as are Alt-A loans. They're the ones largely defaulting on their mortgages, causing many companies with MBS bonds to take losses on these securities.
However, government is more at fault and it extends from Clinton through Bush. Both administrations and policy implemented during that time pushed and enforced decreased lending standards, not only to less credit worthy people but through the increased usage of no doc / liar loans. Both the CRA and GSEs were used to accomplish this through the 90's and into 00's.
Government, or rather the Fed is also at fault from the money perspective. Without the printing of money and pushing it through the system, none of the money would have been available to make all these loans to drive up the prices, refinance homes for people using them as ATMs, etc, etc, etc.
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EVT1
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Post by EVT1 on Jun 10, 2011 22:10:46 GMT -5
The commodity futures act mainly (CFMA), and Gramm's signature act allowing companies like Citigroup to form and leverage the shit out of depositors' money. Also absent of blame are the ratings agencies that backed these turds. They are to blame for the massive size of the failures and the to big to fail/too wealthy to indict corporations and corporate leaders. Pretty sad state of affairs when they are allowed to gamble with other people's money and when they lose they come to us to be reimbursed. All of these would have been bankrupt companies and out of work bonus grabbing thieves make me sick-we should have let them all implode and started over.
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hello fromWarsaw
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Post by hello fromWarsaw on Jun 10, 2011 22:19:28 GMT -5
After 2003, nobody was enforcing the laws. Toxic mortgages were called good, insured, and sold around the world. Brilliant!! Greedy pubs, bankers, and corporates are in the same bed (now ruining the recovery...)...and Freddy Mac did it is pure BS!! Snap out of it! tyvm
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formerexpat
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Post by formerexpat on Jun 10, 2011 22:56:14 GMT -5
Credit derivative swaps were not regulated by futures regulation [unless it was tied to a security - like a monoline wrap on a security that insured losses]. OTC's are largely used in the insurance industry and are regulated by the insurance industry. OTCs offered through the NASD [national association of securities dealers] and companies that list on the exchange are required to file financial statements with the SEC, banking & insurance regulators.
CDS's are not sold via this exchange and were not under the insurance regulated umbrella; which is why it was the non-insurance entity of AIG that was trading these derivatives.
Are you talking about the Gramm - Leech act of 99 here? What you're explaining here didn't and wouldn't have occurred. Fractional reserving has been in place for years; the banking system has been able to exist because of leverage. But the formation of these groups didn't mean that Citigroup was leveraging the shit out of depositors money.
I'm not sure how things would have turned out for the country if BOA & ML weren't able to consolidate so easily during everything. It was the firms that had the ability to access banking capital that survived [i.e. JPM Chase, for example] during the crisis best. Notice that Bear & Lehman didn't have this investment house / banking intertwined relationship and that left them in a position of being less liquid, or unable to access liquidity as easily as JPM and other companies that were intertwined with banks.
These emergency loans have pretty much all been paid back [and the interest rate on these loans was very high]. That's more than we can say for the billions we've lost to the auto industry. We could have let a structured bankruptcy take place but to believe that these bonuses wouldn't have been paid isn't necessarily true.
Then again, perhaps we should have let the auto industry go bankrupt too so they could renegotiate the noose around their neck; the post employment benefits to union workers.
Again, I'm not entirely sure what deregulation you're saying caused this mess because your not coming across clear in your posts and it seems what your referencing isn't even regulation, or deregulation that makes sense in the way the actual businesses or CDSs work.
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hello fromWarsaw
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Post by hello fromWarsaw on Jun 10, 2011 23:11:22 GMT -5
Auto guys have paid back their loans with interest and are all profitable. And they didn't screw the WORLD! And they are HIRING and not sitting on record cash like the Pub scum bankers and CEOs....
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