2012 debates

[cybercoma]

msj, you make my point for me.

Leftists are so reactionary.

Anyone who still talks about Big Bird or "pre-existing conditions" must be a Leftist.

Look out.... kraychik got the keys to August's account.

[msj]

msj, you make my point for me.

Leftists are so reactionary.

Anyone who still talks about Big Bird or "pre-existing conditions" must be a Leftist.

So since you are still talking about it then you are a leftist?

And you say I make your point for you....when I have to point it out to you...

[August1991]

I have lost several posts here, due to forum upgrades/changes. (Complain, complain. The dog ate my homework.... )

Look out.... kraychik got the keys to August's account.

Giggle.

forum

So since you are still talking about it then you are a leftist?

And you say I make your point for you....when I have to point it out to you...

No, Obama supporters are still talking about it.

Indeed, sadly, Obama himself is still talking about it.

Edited October 11, 2012 by August1991

[August1991]

I have lost several posts here, due to forum upgrades/changes. (Complain, complain. The dog ate my homework.... )

Look out.... kraychik got the keys to August's account.

Giggle.

So since you are still talking about it then you are a leftist?

And you say I make your point for you....when I have to point it out to you...

No, Obama supporters are still talking about it. Indeed, sadly, Obama himself is still talking about it.

----

You talk of abortion? You're right wing whacko.

You talk of Big Bird? You're MSM leftist.

Same diff.

Edited October 11, 2012 by August1991

[msj]

No, Obama supporters are still talking about it.

Indeed, sadly, Obama himself is still talking about it.

Oh, I didn't know you were an Obama supporter.

Edited October 11, 2012 by msj

[August1991]

Oh, I didn't know you were an Obama supporter.

Well said.

I have a Canadian passport, and I live in Montreal. I don't have a dog in this US fight. But I reckon that if US Democrats keep talking about Big Bird, they'll lose votes. But what do I know.

[kimmy]

Banks were forced to lend to people with substandard creditworthiness, all justified on the false premise of racist/bigoted lending practises from lenders. This is how leftists (including Obama, who participated in a lawsuit brought against lenders with false accusations of racial discrimination) described "red-lining". Of course, the risk was absorbed by the public who guaranteed the repayment of these loans to the banks via Fannie Mae and Freddie Mac. This is the core of the subprime housing crisis, no matter how many times you and your ilk try to deny it.

I just posted a long message to Shady on this subject here so I'll just repeat it for your benefit:

We're all aware that Fannie Mae was directed by the government to increase loans to poor people.

The point that you've been challenged on, again and again, and that your article doesn't address at all, is that private lenders gave out sub-prime mortgages at a far greater rate than any law or quota required them to.

The reality is that the CRA and Fannie and Freddie didn't cause the housing bubble. The housing bubble occurred when private lenders plunged into the market in a huge way, giving out risky mortgages that Fanny and Freddie weren't allowed to. During 2002 to 2006, Fannie and Freddie's market share shrank dramatically as subprime mortgages from private lenders *exploded*.

from 2002-2005, [GSEs] saw a fairly precipitous drop in market share, going from about 50% to just under 30% of all mortgage originations. Conversely, private label securitization [PLS] shot up from about 10% to about 40% over the same period. This is, to state the obvious, a very radical shift in mortgage originations that overlapped neatly with the origination of the most toxic home loans.

By 2006, 84% of subprime mortgages were lent by private lenders, not Fannie and Freddie.

And it wasn't the CRA that made private lenders do it, either:

half of sub-prime loans came from those mortgage companies beyond the reach of CRA. A further 25 to 30 percent came from bank subsidiaries and affiliates, which come under CRA to varying degrees but not as fully as banks themselves.

24 of the 25 biggest lenders of sub-prime mortgages weren't even *subject* to the requirements of the CRA.

During the housing bubble, Fannie and Freddie were actually *reducing* their subprime mortgages.

Paul Krugman:

But here's the thing: Fannie and Freddie had nothing to do with the explosion of high-risk lending a few years ago, an explosion that dwarfed the S.& L. fiasco. In fact, Fannie and Freddie, after growing rapidly in the 1990s, largely faded from the scene during the height of the housing bubble.

Partly that's because regulators, responding to accounting scandals at the companies, placed temporary restraints on both Fannie and Freddie that curtailed their lending just as housing prices were really taking off. Also, they didn't do any subprime lending, because they can't: the definition of a subprime loan is precisely a loan that doesn't meet the requirement, imposed by law, that Fannie and Freddie buy only mortgages issued to borrowers who made substantial down payments and carefully documented their income.

Private lenders' share of the mortgage market went through the roof:

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.

The Bush administraction actually *reduced* the requirements of the CRA in 2004:

In late 2004, the Bush administration announced plans to sharply weaken CRA regulations, pulling small and mid-sized banks out from under the law's toughest standards. Yet sub-prime lending continued, and even intensified -- at the very time when activity under CRA had slowed and the law had weakened.

The Private Label Securitizers (PLS) also backed far riskier mortgages than the Government Sponsored Enterprices (GSEs... Fannie and Freddie):

Moreover, this point also papers over the fact that PLS loans have defaulted at over 6x the rate of GSE loans, as well as the fact that private label securitization is responsible for 42% of all delinquencies despite accounting for only 13% of all outstanding loans (as compared to the GSEs being responsible for 22% of all delinquencies despite accounting for 57% of all outstanding loans).

To summarize:

both the subprime mortgage boom and the subsequent crash are very much concentrated in the private market, especially the private label securitization channel (PLS) market. The Government-Sponsored Entities (GSEs, or Fannie and Freddie) were not behind them. The fly-by-night lending boom, slicing and dicing mortgage bonds, derivatives and CDOs, and all the other shadiness of the mortgage market in the 2000s were Wall Street creations, and they drove all those risky mortgages.

Private lenders were the ones who had the lowest standards.

Private lenders were the ones who put the subprime mortgage market into high gear between 2002 and 2006.

Mortages required to meet CRA quotas constitute a tiny fraction of the subprime mortgages given out during that time.

The idea that you can blame it on the CRA or Fannie and Freddie is laughable. Private institutions jumped on subprime mortgages with both feet.

So why?

The only explanation you've offered as to why the private lenders dove so heavily into sub-prime mortgages was this:

In particular, it was government institutions like Freddie Mac and Fannie Mae that were the chief architects of these new loans. Private banks had a choice to either compete with Freddie and Fannie, or lose business. That can't be debunked because it's fact. No matter how many times you wanna bury your head in your ass and refuse to accept the truth.

Which is hilarious! Because up until yesterday, your story has been that banks never wanted to lend to these people at all! Congress made them do it! Congress made the banks give mortgages to people who shouldn't have had mortgages! Barack Hussein Obama and the courts made them do it! The banks had no choice!

You've gone from telling us that the banks didn't want to be in that business at all, to telling us that banks *needed* to compete for this business. It's a fascinating 180-degree reversal that really illustrate your credibility.

You're right about this much, though: the banks didn't want to compete with Fannie and Freddie for sub-prime loans... they wanted that business for themselves.

Here is an interesting read on that subject: somebody compiled speeches and testimony from the American Enterprise Institute from the early 2000s on the subject, all of them pushing the argument that the GSEs weren't needed because private securitization was doing way more to help minorities and poor-people get mortgages.

-k

Edited October 11, 2012 by kimmy

[kimmy]

You keep giving the government a pass for lowering mortgage standards as to initiate more home ownership to lower income individuals. Why do you give them a pass? That was the biggest contributor to the housing crisis. Government meddling in the market. Luckily in Canada, we don't have any do-gooder type politiicians trying to pass on similar policy. In fact, in Canada we strengthened mortgage standards, which make it more difficult for qualifying.

The large majority of sub-prime mortgages were given *voluntarily*, not as a requirement of the CRA or any other "do-gooder" requirements. Many of the largest lenders of sub-prime mortgages were not evey subject to CRA. The large majority of sub-prime mortgages were given because the lender saw an opportunity to make money.

But you're blaming the US government for not having standards in place to prevent the avalanche of sub-prime mortgages.

And you're praising the Canadian government for applying tougher standards to CMHC-insured mortgages.

It sounds as if you're saying the government ought to have regulations in place to keep the banks from acting recklessly. Is that what you're trying to say? If so, then congratulations! You've joined the side of sanity.

-k

[bleeding heart]

msj, you make my point for me.

Leftists are so reactionary.

Anyone who still talks about Big Bird or "pre-existing conditions" must be a Leftist.

Anyone who thinks Democrat-partisanship is largely about "the left" must be a right-winger.

Also, you are likely confusing "reactionary" with "reactive." It's true that part of the definition is merely about "reacting," but the word generally refers to reacting (and harshly) to major social change, and it tends to apply to ultraconservatism.

Unless the dictionaries are biased lefty organs, of course; hypothetically possible, but I remain agnostic on that subject.

Edited October 11, 2012 by bleeding heart

[bleeding heart]

But you're blaming the US government for not having standards in place to prevent the avalanche of sub-prime mortgages.

And you're praising the Canadian government for applying tougher standards to CMHC-insured mortgages.

It sounds as if you're saying the government ought to have regulations in place to keep the banks from acting recklessly. Is that what you're trying to say? If so, then congratulations! You've joined the side of sanity.

-k

Well done.

Who said girls can't catch?

[jbg]

Romney's so rich and disconnected from reality that he probably thinks $500,000/year is minimum wage.

Personally I think both candidates are seriously out of touch with the middle and working class people. Romney has a better handle on it but only slightly.

[Shady]

The large majority of sub-prime mortgages were given *voluntarily*, not as a requirement of the CRA or any other "do-gooder" requirements. Many of the largest lenders of sub-prime mortgages were not evey subject to CRA. The large majority of sub-prime mortgages were given because the lender saw an opportunity to make money.

But you're blaming the US government for not having standards in place to prevent the avalanche of sub-prime mortgages.

And you're praising the Canadian government for applying tougher standards to CMHC-insured mortgages.

It sounds as if you're saying the government ought to have regulations in place to keep the banks from acting recklessly. Is that what you're trying to say? If so, then congratulations! You've joined the side of sanity.

-k

No, I'm blaming the government, in particular democrats for LOWERING standards. There were standards in place, they lowered them in an effort to promote motgages to people that wouldn't otherwise qualify. I see that you're still pretending to be abuse.

[jbg]

I just finally finished watching all of the 1st debate. In the first part of the debate, about the economy, Romney definitely whooped Obama.

I actually thought Romney's best moment was the last 2 1/2 minute closing remark. Romney spelled out a vision for America and the future; Obama didn't.

[cybercoma]

But you're blaming the US government for not having standards in place to prevent the avalanche of sub-prime mortgages.

And you're praising the Canadian government for applying tougher standards to CMHC-insured mortgages.

It sounds as if you're saying the government ought to have regulations in place to keep the banks from acting recklessly. Is that what you're trying to say? If so, then congratulations! You've joined the side of sanity.

-k

Not just the side of sanity, but the exact opposite of what Romney proposes.

[cybercoma]

No, I'm blaming the government, in particular democrats for LOWERING standards. There were standards in place, they lowered them in an effort to promote motgages to people that wouldn't otherwise qualify. I see that you're still pretending to be abuse.

Where's the criticism for Romney's proposal to lower the standards again? Oh right. You don't care what he says, as long as he's batting for your team.

[Shady]

Where's the criticism for Romney's proposal to lower the standards again? Oh right. You don't care what he says, as long as he's batting for your team.

He hasn't proposed lowering motgages standards. However, Barack Obama was certainly responsible for pushing that policy.

[cybercoma]

He hasn't proposed lowering motgages standards. However, Barack Obama was certainly responsible for pushing that policy.

I guess you weren't watching the debates when he said he would get rid of Dodd-Frank. You propose stricter regulations for banks, but celebrate the guy that wants to get rid of them.

[kimmy]

No, I'm blaming the government, in particular democrats for LOWERING standards. There were standards in place, they lowered them in an effort to promote motgages to people that wouldn't otherwise qualify. I see that you're still pretending to be abuse.

You're the one being obtuse-- not sure if it's pretend or not.

Look, dude, the argument you're making-- that the government is to blame because they lowered the standards-- depends on the idea that lenders needed the government to tell them that some mortgages were too risky. The rest of Team Free Enterprise would take you out behind the woodshed for making that argument, because it's the exact opposite of the principles you guys believe in. "The government knows better than private lenders what loans are too risky? Preposterous! Remove those regulations and let private industry decide what risks to take!"

(As for whether any standards were actually lowered, you ought to take that up with dre, who has challenged you on that issue.)

Once again, the large majority of sub-prime mortgages were not issued to comply with CRA regulations, they were issued voluntarily by companies who viewed them as a great way to make money. Maybe instead of running around calling people "economic illiterates", you should do a bit of reading on why private lenders were so excited about sub-prime mortgages.

-k

[GostHacked]

You're the one being obtuse-- not sure if it's pretend or not.

Look, dude, the argument you're making-- that the government is to blame because they lowered the standards-- depends on the idea that lenders needed the government to tell them that some mortgages were too risky. The rest of Team Free Enterprise would take you out behind the woodshed for making that argument, because it's the exact opposite of the principles you guys believe in. "The government knows better than private lenders what loans are too risky? Preposterous! Remove those regulations and let private industry decide what risks to take!"

(As for whether any standards were actually lowered, you ought to take that up with dre, who has challenged you on that issue.)

Once again, the large majority of sub-prime mortgages were not issued to comply with CRA regulations, they were issued voluntarily by companies who viewed them as a great way to make money. Maybe instead of running around calling people "economic illiterates", you should do a bit of reading on why private lenders were so excited about sub-prime mortgages.

-k

Also to note that articles like the Glass-Steagle act were struck down under Clinton, and Bush had the chance to reinstate them, but did not. That alone was big part of the cause of the problems.

if you left it all up to the financiers/bankers we'd all be in huge debt collectively. Oh right ,, that already happened.

[Shady]

You're the one being obtuse-- not sure if it's pretend or not.

Look, dude, the argument you're making-- that the government is to blame because they lowered the standards-- depends on the idea that lenders needed the government to tell them that some mortgages were too risky. The rest of Team Free Enterprise would take you out behind the woodshed for making that argument, because it's the exact opposite of the principles you guys believe in. "The government knows better than private lenders what loans are too risky? Preposterous! Remove those regulations and let private industry decide what risks to take!"

(As for whether any standards were actually lowered, you ought to take that up with dre, who has challenged you on that issue.)

Once again, the large majority of sub-prime mortgages were not issued to comply with CRA regulations, they were issued voluntarily by companies who viewed them as a great way to make money. Maybe instead of running around calling people "economic illiterates", you should do a bit of reading on why private lenders were so excited about sub-prime mortgages.

-k

But the government enabled the whole thing. Including prosecuting banks that practiced discriminatory lending, ie, not giving mortgages to people that wouldn't otherwise qualify. You can keep spinning like a top though.

[Shady]

Also to note that articles like the Glass-Steagle act were struck down under Clinton, and Bush had the chance to reinstate them, but did not. That alone was big part of the cause of the problems.

if you left it all up to the financiers/bankers we'd all be in huge debt collectively. Oh right ,, that already happened.

Republicans tried to address the housing crisis but blocked by democrats in congress. They were called racist and against poor people for trying to correct the mortgage problem. You people are so ignorant of facts that it's ridiculous.

[cybercoma]

But the government enabled the whole thing. Including prosecuting banks that practiced discriminatory lending, ie, not giving mortgages to people that wouldn't otherwise qualify. You can keep spinning like a top though.

This is a really poor response to what kimmy wrote.

[dre]

But the government enabled the whole thing. Including prosecuting banks that practiced discriminatory lending, ie, not giving mortgages to people that wouldn't otherwise qualify. You can keep spinning like a top though.

Are you joking? THAT is your response? "The government enabled the whole thing?" Why do you ignore the fact that the vast majority of these loans were made by people (mostly non bank lenders not even subject to the FDIC/CRA) simply because they were profitable for a while, and these companies could use investment banks to move risky loans off their balance sheets?

There IS a lot of blame to go around, the government DID set the macro-economic stage for this to happen... But your lack of knowledge about this subject, who the players were, what motivated them, and what the regulations are is pathetic considering you scream such bold proclamations from the rooftop.

And after having all your nonsense so soundly and surgically jammed back down your throat in this thread by kimmy, myself, and others the crazy thing is in a few weeks you resurrect your whole "Fanny and freddy and the CRA caused the financial crisis" BS again.

Edited October 11, 2012 by dre

[bleeding heart]

This is a really poor response to what kimmy wrote.

Well yeah, especially since she already responded, explicitly, to this very charge.

You'd think she didn't even respond at all, if Shady's answer is any indication.

[dre]

Well yeah, especially since she already responded, explicitly, to this very charge.

You'd think she didn't even respond at all, if Shady's answer is any indication.

Maybe we are all just naive and stupid for even trying...