...greed, deregulation, and Americans spending air.
Really? What about the REGULATIONS REQUIRING banks to make what were essentially BAD LOANS? What about the REGULATIONS REQUIRING Fannie and Freddy to BUY those bad loans?
DE-regulation my aching ass.
The .gov set up the conditions.
the .gov modified the conditions.
And the result (as it so often is) was not what the utopists expected.
I love it. Whenever something goes wrong with business, its automatically not enough regulation, or "deregulation." This despite all the evidence that it is because of regulation things go screw. This problem, the California power blackouts, the gas shortage in Georgia (and back in the 70s). They never get it.
"What about the REGULATIONS REQUIRING banks to make what were essentially BAD LOANS? What about the REGULATIONS REQUIRING Fannie and Freddy to BUY those bad loans?"
Oy. You guys get your pre-approved information that fits your ideological beliefs and just have OCD about it, don't you?
From Barons.Com:
"Freddie Mac Chairman and CEO Richard Syron recently put it, the GSEs have been hit by a '100-year storm' in the housing market, accentuated by some higher-risk mortgages that they were forced to buy to meet government affordable-housing targets.
The latter contention is more than disingenuous. A substantial portion of Fannie's and Freddie's credit losses comes from $337 billion and $237 billion, respectively, of Alt-A mortgages that the agencies imprudently bought or guaranteed in recent years to boost their market share. These are mortgages for which little or no attempt was made to verify the borrowers' income or net worth. The principal balances were much higher than those of mortgages typically made to low-income borrowers. In short, Alt-A mortgages were a hallmark of real-estate speculation in the ex-urbs of Las Vegas or Los Angeles, not predatory lending to low-income folks in the inner cities."
Couple this with the fact that Rick Davies, McCain's campaign manager, was paid 30K a month by Fannie and Freddie , for five years, to remove government restrictions. Now either he did a terrible job (possible) or they are lying because they don't want everyone to know how much they fucked up (probable).
"the California power blackouts"
In the words of John MaCenroe, you cannot be serious...
In the words of John MaCenroe, you cannot be serious...
I'm surprised to see you in *this* thread.
You've got some 'splaining to do in a previous one.
A substantial portion of Fannie's and Freddie's credit losses comes from $337 billion and $237 billion, respectively, of Alt-A mortgages that the agencies imprudently bought or guaranteed in recent years to boost their market share. These are mortgages for which little or no attempt was made to verify the borrowers' income or net worth
And why were those loans guaranteed by Freddie and Fannie? Why did people buy them from them?
You're also ignoring the snowball effect made possibly by the rapid inflation of credit - as directed by the CRA. As people who weren't qualified bought houses, the people who HAD been qualified sold them the houses, and moved up. Which is the problem you're talking about.
There's not a single cause to this mess. But almost all of them are coming to rest at the feet of regulation attempts to take the risk out of the market. If there weren't government guarantees, there wouldn't be a problem.
You guys get your pre-approved information that fits your ideological beliefs and just have OCD about it, don't you?
This is Kevin's place. So it's not my place to tell you to hold off on the insults to us, while you're lying in 2 separate threads without correcting them, or apologizing for them. The prior link is a prior, direct example. I mentioned several more in the other thread. They're, admittedly, less obvious and more usual for you.
But boyo, I'd hold off on insulting our character while those are still fresh in the silicon.
Mark, I'm convinced that your head is one solid mass of lead.
Yes, Mark, people got loans they couldn't afford, USING THE RULES SET UP TO ALLOW POOR PEOPLE TO GET LOANS.
Can't discriminate by having, you know, two sets of rules after all. You quoted it yourself: "These are mortgages for which little or no attempt was made to verify the borrowers' income or net worth"
CRA set up the initial rules for loaning to people with poor credit. It wasn't successful (enough) for the Social Planners. So they changed the rules to make it easier, and they changed the rules at Fannie and Freddie to remove the risk from the LENDERS.
And the result? Zero Down! Interest-only mortgages! No-docs! 105% loan-to-value! We can refinance you! Get your equity out TODAY!
Government regulation SET THE CONDITIONS, and human beings behaved like human beings. "Flip that House!" Etc., etc., etc.
You want to blame the lenders. They wouldn't have done it had the .gov not set up the conditions - altered the market - to allow it to happen. Sure, they got greedy. But why is it that the Social Planners never take that FACT OF NATURE into account in their planning?
"Never appeal to a man's better nature. He may not have one. Invoking his self-interest gives you more leverage." - R.A. Heinlein.
And, Kevin, greed motivates people at the top of the corporate and gubmint pyramids in the same manner and for the same reasons that it motivates parasites at the welfare office. If the gubmint sets out rules by which people can arrange their lives to qualify for free money therefrom, people will so arrange their lives. This applies to slug's with seven kids by seven fathers and it applies to CEO's of huge corporations.
Markadelphia's tunnel vision, his myopia, which is just dripping with hypocrisy, is that he sees only the expected benefits of gubmint rules, and he ignores or denies the side effects, no matter how real and horrific they are.
"as directed by the CRA"
"If there weren't government guarantees, there wouldn't be a problem."
"CRA set up the initial rules for loaning to people with poor credit. "
Guys, The CRA was signed into law in 1977. How would a law 30 years old cause lending problems now? Yes, Clinton changed the law but that activity that resulted from those changes came to an end in 2001.
The real thing you fail to see is that the CRA only applies to banks and thrifts. It's stated in the law.
The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law that requires banks and thrifts to offer credit throughout their entire market area and prohibits them from targeting only wealthier neighborhoods with their services, a practice known as redlining. The purpose of the CRA is to provide credit, including home ownership opportunities to underserved populations and commercial loans to small businesses.
The vast majority of the sub prime loans in the last 8 years did not originate from banks or thrifts.Half of them came from places beyond the reach of CRA. Another quarter came from subsidiaries. The final quarter of sub prime loans came from CRA and that kind of debt just doesn't seem to be enough to drive our economy off the cliff.
Combine this information with what I put above regarding Fannie and Freddie and I think you really have to look at the fact the government fell asleep on this one, winked and did nothing, or was completely incompetent at enforcing even the most basic of oversight. It was probably all three.
Bank loans were made available to people with poor credit on remarkable (ludicrous) terms.
Can't discriminate against people who don't have bad credit, right? Wouldn't be FAIR! So offer everybody the same terms. Can't have just banks and thrifts offering those loans, that's unfair competition! Nobody will borrow from lender A if they can get a better loan from lender B, by statute. (Go online and get offers from six lenders in under an hour! DiTech.com!)
People with nominally good credit can now buy a home they can't afford because the bank says they can. Hey, home values only go UP! Get an interest-only loan, pay on it for five years, then you can cash out the equity that's grown over the five years you haven't paid any principle.
It's FREE MONEY!
Get rich quick! Learn how to buy property NO MONEY DOWN and flip that property in 30 days! Make $100,000 in three months! My free CD tells you how!
And Fannie and Freddie buy the mortgages that are rated A+.
But the ROOT OF THE PROBLEM goes back to the CRA and Clinton's push to broaden it.
Unintended consequences: It didn't work, so DO IT AGAIN, ONLY HARDER!
Kevin, you are, in effect, asking him to admit that he is wrong and to admit that you are right. You are seeing yet more validation that he cannot do either one and that he is so dishonest that he doesn't care.
Your anvil can survive trying. How about your forehead?
Listen to Karl Rove's astonishment at the machinations of Pelosi on the vote in Congress. Then go here for a more clear explanation of why it happened.
What is it that Reynolds says? "I'd believe we're in a crisis if the people telling us we're in a crisis were acting like we were."
Apparently we're either A) not in a crisis, or B) the Democrats would rather see us sink into a Depression they can (falsely) blame exclusively on Republicans and Capitalism.
From Steve Sailer: http://isteve.blogspot.com/2008/09/what-was-wrong-with-this-picture.html
A couple of years ago, the median sales price of a Los Angeles area home was $580,000. But, as Ed Rubenstein had reported on VDARE.com in 2004: “A new study by the United Way of Los Angeles finds that 53 percent of the city’s adult population—3.8 million people—are functionally illiterate.” (my additional emphasis: 84 percent in heavily Hispanic south L.A.)
http://www.vdare.com/rubenstein/la_literacy.htm
Do you notice a problem, a certain contradiction between very high home prices and very low human capital? If you stop and think, you might wonder how a whole bunch of people who can’t read and write English are ever going to make enough money to pay off these humongous and humongously leveraged mortgages.
But, nobody was supposed to stop and think because that would be racist.
"But the ROOT OF THE PROBLEM goes back to the CRA and Clinton's push to broaden it."
I disagree. Again, three quarters of the loans made in the last eight years were not made by banks or thrifts. Who made them? And how could they? Lack of oversight in the free market. If you don't want the government to do it, fine by me..but someone has to clearly because the free market doesn't just "take care of itself." Re-read the story of Bill Macguire.
Look the question is simple...did lenders approve bad loans to comply with CRA, or to make money?
CRA was enacted in 1977. The sub-prime lending at the heart of the current crisis exploded a full quarter century later. In the mid-1990s, new CRA regulations and a wave of mergers led to a flurry of CRA activity, but, as noted by the New America Foundation's Ellen Seidman (and by Harvard's Joint Center), that activity "largely came to an end by 2001."
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.
How does all of this jibe with your thought process on CRA?
I disagree.
Yet for some reason, this seems to impact us almost not at all. (It might even tell us we're right.)
It might be due to the prior 2 threads, which you might want to forget. But they're effective in demonstrating to anyone else that you're incapable of logically thinking or dealing with issues.
As well as demonstrably not reliably honest in your intellectual dealings.
Again, three quarters of the loans made in the last eight years were not made by banks or thrifts.
Even if you were right, this doesn't prove your conclusion correct.
How would a law 30 years old cause lending problems now?
That might - maybe - be the absolute silliest thing you've ever said.
Lack of oversight in the free market. THERE IS AND WAS NO FREE MARKET IN ANY MORTGAGE LOAN UNDER DISCUSSION.
Period. You're a liar if you keep promulgating that line (oh, wait; we knew that.) Unless you negotiated a private note with someone, (which risks running afoul of other laws, every mortgage was highly, tightly regulated.
If they had not been regulated, and guaranteed, the loans would not have been made. There were safer, higher-return investments available.
This is how far you're going with your insanity: Claiming that people would have made huge risks for little rewards, without a government imbalance. But that government imbalance was why those people were willing to loan the money - they were certain the government would pay the debt.
If you want to call the mortgage industry indicative of "free market", the word is meaningless in discussions with you. (oh, wait; we knew that.)
the free market doesn't just "take care of itself."
Yes, it does. Risk balances reward. That balance was totally mangled - on purpose! - by the government. The repercussions and results are not due to a failure in the unrestricted free market.
Re-read the story of Bill Macguire.
I would if you would deal with your previous 2 threads you've run away from, leaving a raft of proven illogical linkings, uncritical thinking, and outright lies and disinformation. I won't even point out you've already said enough to prove that you citing it disproves your case.
You Shall Not Order Me Around. You do not have the honor, or the standing to order me to do your bidding, liar.
Especially when you call the "Mortgage Industry" "free market", and use that to bash on capitalism more.
How does all of this jibe with your thought process on CRA?
Perfectly. It was a bubble. And like all bubbles, people try to maximize their take, and when it collapses, it collapses hard. Most failures take 5-7 years from origination to failure.
Most notably, these failures started when the original 5-year "fixed" term expired, and the much higher floating rates started to kick in.
And as the bubble imploded, the exponential effect increased. Many people - bubbling up from the CRA - were buying houses on interest-only loans, as they thought there was free money to be had. I even know of people with loans where they don't even pay ALL OF THE INTEREST - raising the principal amount owed monthly!
And all this started with the CRA. There were other contributors. But the CRA, and the government involvement in the mortgage business were the biggest driving factors.
To keep up with Wall Street expectations, Fannie Mae held onto more mortgages and mortgage-backed securities for investment purposes. The same practice nearly drove the company into bankruptcy in the early 1980s. Once again it was spared in 2008.
nomedals.blogspot.com
And the result? Zero Down! Interest-only mortgages! No-docs! 105% loan-to-value! We can refinance you! Get your equity out TODAY!
Pardon me, but that was not a result of the CRA.
It was a result of the creation of a secondary market for mortgages (i.e. what F&F were set up to do). Interesting that the institutions that initiated those loans weren't interested in servicing and collecting the interest income over the life of the loan.
Juris, F&F bought up high risk mortgages, no? And those high risk mortgages were, initially, due to the CRA, no?
The lending institutions were not interested in servicing and collecting the interest income because they could sell the mortgages and make money up front. It's a cash cow. A Federally guaranteed cash cow.
Because the .gov set up the system, and that system was set up in the interest of social engineering. The unintended consequences were never considered, and then deliberately ignored when they were made apparent.
Juris, F&F bought up high risk mortgages, no? And those high risk mortgages were, initially, due to the CRA, no?
Not really. Give the financial institutions credit where it's due - they saw the opportunity to dump bad paper onto the secondary market and they did. Of course that is an unintended consequence of the CRA - but not an inevitable one. The CRA did not require no-proof of income loans. I'm saying the govt-created secondary market was the prime culprit all on it's own, because it afforded the chance to unload any marginal loan.
And as far as the 'social engineering' goes - it was fully bipartisan (not that I doubt you realize that - but I say so for the benefit of the Mark's of the world). Pushing homeownership (and the tax-breaks associated therewith) is part and parcel of the American Dream (tm).
"No wonder Obama doesn't seem to want to discuss the pesky details. "The main thing is to just move away from this hyper-political environment and recognize the house is on fire," he recently said.
"That's the main thing? "Let's put out the fire first," he added, "and we can figure out what caused it."
"Later, he means. A lot later. Like after Election Day when it's too late to vote for the other guy. Because what voters in their right minds would expect the man who likes to set the fires to put them out?"
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Ah, the glory and power of tunnel vision.
Bubba did give us a going away present though...his sig on the repeal of Glass Stegal.
So, you agree it's not all the fault of the Republicans then? ;)
I mean, the NYT is straight down the middle according to you.
Yes. There is a ton of blame to go around. It was a perfect storm of greed, deregulation, and Americans spending air.
...greed, deregulation, and Americans spending air.
Really? What about the REGULATIONS REQUIRING banks to make what were essentially BAD LOANS? What about the REGULATIONS REQUIRING Fannie and Freddy to BUY those bad loans?
DE-regulation my aching ass.
The .gov set up the conditions.
the .gov modified the conditions.
And the result (as it so often is) was not what the utopists expected.
So it must be someone else's fault.
Greed! Republicans! Stupid Americans!
I love it. Whenever something goes wrong with business, its automatically not enough regulation, or "deregulation." This despite all the evidence that it is because of regulation things go screw. This problem, the California power blackouts, the gas shortage in Georgia (and back in the 70s). They never get it.
"What about the REGULATIONS REQUIRING banks to make what were essentially BAD LOANS? What about the REGULATIONS REQUIRING Fannie and Freddy to BUY those bad loans?"
Oy. You guys get your pre-approved information that fits your ideological beliefs and just have OCD about it, don't you?
From Barons.Com:
"Freddie Mac Chairman and CEO Richard Syron recently put it, the GSEs have been hit by a '100-year storm' in the housing market, accentuated by some higher-risk mortgages that they were forced to buy to meet government affordable-housing targets.
The latter contention is more than disingenuous. A substantial portion of Fannie's and Freddie's credit losses comes from $337 billion and $237 billion, respectively, of Alt-A mortgages that the agencies imprudently bought or guaranteed in recent years to boost their market share. These are mortgages for which little or no attempt was made to verify the borrowers' income or net worth. The principal balances were much higher than those of mortgages typically made to low-income borrowers. In short, Alt-A mortgages were a hallmark of real-estate speculation in the ex-urbs of Las Vegas or Los Angeles, not predatory lending to low-income folks in the inner cities."
Couple this with the fact that Rick Davies, McCain's campaign manager, was paid 30K a month by Fannie and Freddie , for five years, to remove government restrictions. Now either he did a terrible job (possible) or they are lying because they don't want everyone to know how much they fucked up (probable).
"the California power blackouts"
In the words of John MaCenroe, you cannot be serious...
In the words of John MaCenroe, you cannot be serious...
I'm surprised to see you in *this* thread.
You've got some 'splaining to do in a previous one.
A substantial portion of Fannie's and Freddie's credit losses comes from $337 billion and $237 billion, respectively, of Alt-A mortgages that the agencies imprudently bought or guaranteed in recent years to boost their market share. These are mortgages for which little or no attempt was made to verify the borrowers' income or net worth
And why were those loans guaranteed by Freddie and Fannie? Why did people buy them from them?
You're also ignoring the snowball effect made possibly by the rapid inflation of credit - as directed by the CRA. As people who weren't qualified bought houses, the people who HAD been qualified sold them the houses, and moved up. Which is the problem you're talking about.
There's not a single cause to this mess. But almost all of them are coming to rest at the feet of regulation attempts to take the risk out of the market. If there weren't government guarantees, there wouldn't be a problem.
You guys get your pre-approved information that fits your ideological beliefs and just have OCD about it, don't you?
This is Kevin's place. So it's not my place to tell you to hold off on the insults to us, while you're lying in 2 separate threads without correcting them, or apologizing for them. The prior link is a prior, direct example. I mentioned several more in the other thread. They're, admittedly, less obvious and more usual for you.
But boyo, I'd hold off on insulting our character while those are still fresh in the silicon.
Mark, I'm convinced that your head is one solid mass of lead.
Yes, Mark, people got loans they couldn't afford, USING THE RULES SET UP TO ALLOW POOR PEOPLE TO GET LOANS.
Can't discriminate by having, you know, two sets of rules after all. You quoted it yourself: "These are mortgages for which little or no attempt was made to verify the borrowers' income or net worth"
CRA set up the initial rules for loaning to people with poor credit. It wasn't successful (enough) for the Social Planners. So they changed the rules to make it easier, and they changed the rules at Fannie and Freddie to remove the risk from the LENDERS.
And the result? Zero Down! Interest-only mortgages! No-docs! 105% loan-to-value! We can refinance you! Get your equity out TODAY!
Government regulation SET THE CONDITIONS, and human beings behaved like human beings. "Flip that House!" Etc., etc., etc.
You want to blame the lenders. They wouldn't have done it had the .gov not set up the conditions - altered the market - to allow it to happen. Sure, they got greedy. But why is it that the Social Planners never take that FACT OF NATURE into account in their planning?
"Never appeal to a man's better nature. He may not have one. Invoking his self-interest gives you more leverage." - R.A. Heinlein.
And, Kevin, greed motivates people at the top of the corporate and gubmint pyramids in the same manner and for the same reasons that it motivates parasites at the welfare office. If the gubmint sets out rules by which people can arrange their lives to qualify for free money therefrom, people will so arrange their lives. This applies to slug's with seven kids by seven fathers and it applies to CEO's of huge corporations.
Markadelphia's tunnel vision, his myopia, which is just dripping with hypocrisy, is that he sees only the expected benefits of gubmint rules, and he ignores or denies the side effects, no matter how real and horrific they are.
"as directed by the CRA"
"If there weren't government guarantees, there wouldn't be a problem."
"CRA set up the initial rules for loaning to people with poor credit. "
Guys, The CRA was signed into law in 1977. How would a law 30 years old cause lending problems now? Yes, Clinton changed the law but that activity that resulted from those changes came to an end in 2001.
The real thing you fail to see is that the CRA only applies to banks and thrifts. It's stated in the law.
The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law that requires banks and thrifts to offer credit throughout their entire market area and prohibits them from targeting only wealthier neighborhoods with their services, a practice known as redlining. The purpose of the CRA is to provide credit, including home ownership opportunities to underserved populations and commercial loans to small businesses.
The vast majority of the sub prime loans in the last 8 years did not originate from banks or thrifts.Half of them came from places beyond the reach of CRA. Another quarter came from subsidiaries. The final quarter of sub prime loans came from CRA and that kind of debt just doesn't seem to be enough to drive our economy off the cliff.
Combine this information with what I put above regarding Fannie and Freddie and I think you really have to look at the fact the government fell asleep on this one, winked and did nothing, or was completely incompetent at enforcing even the most basic of oversight. It was probably all three.
Mark, would you please THINK?
Bank loans were made available to people with poor credit on remarkable (ludicrous) terms.
Can't discriminate against people who don't have bad credit, right? Wouldn't be FAIR! So offer everybody the same terms. Can't have just banks and thrifts offering those loans, that's unfair competition! Nobody will borrow from lender A if they can get a better loan from lender B, by statute. (Go online and get offers from six lenders in under an hour! DiTech.com!)
People with nominally good credit can now buy a home they can't afford because the bank says they can. Hey, home values only go UP! Get an interest-only loan, pay on it for five years, then you can cash out the equity that's grown over the five years you haven't paid any principle.
It's FREE MONEY!
Get rich quick! Learn how to buy property NO MONEY DOWN and flip that property in 30 days! Make $100,000 in three months! My free CD tells you how!
And Fannie and Freddie buy the mortgages that are rated A+.
But the ROOT OF THE PROBLEM goes back to the CRA and Clinton's push to broaden it.
Unintended consequences: It didn't work, so DO IT AGAIN, ONLY HARDER!
And the end result isn't our FAULT!
As Madeline Notsobright answered when asked if Kim Jong Il hadn't built a nuclear weapon on Bill Clinton's watch after signing a treaty saying he wouldn't, "No. What they were doing, as it turns out, they were cheating."
And yet, there was a bomb. Built on Clinton's watch.
Treaty failed? No, Kim cheated.
Mortgage meltdown due to CRA and modifications to it? No, people are greedy.
Nothing to be done about either one, either way.
And besides, it's the Republican's fault. Ask Nancy Pelosi.
"Yes. There is a ton of blame to go around. It was a perfect storm of greed, deregulation, and Americans spending air."
Someone has a serious reading disability here. Again, it's willful.
Some men, you just can't reach.
"Mark, I'm convinced that your head is one solid mass of lead."
But Kevin, are you sure? I mean, if Mark's head is indeed lead, it might be able to render something, ya know, useful.
Not sure that's the case here.
"Someone has a serious reading disability here. Again, it's willful."
Or it's pathological.
"Mark, would you please THINK?"
Kevin, you are, in effect, asking him to admit that he is wrong and to admit that you are right. You are seeing yet more validation that he cannot do either one and that he is so dishonest that he doesn't care.
Your anvil can survive trying. How about your forehead?
Listen to Karl Rove's astonishment at the machinations of Pelosi on the vote in Congress. Then go here for a more clear explanation of why it happened.
What is it that Reynolds says? "I'd believe we're in a crisis if the people telling us we're in a crisis were acting like we were."
Apparently we're either A) not in a crisis, or B) the Democrats would rather see us sink into a Depression they can (falsely) blame exclusively on Republicans and Capitalism.
I'm voting B).
From Steve Sailer: http://isteve.blogspot.com/2008/09/what-was-wrong-with-this-picture.html
A couple of years ago, the median sales price of a Los Angeles area home was $580,000. But, as Ed Rubenstein had reported on VDARE.com in 2004:
“A new study by the United Way of Los Angeles finds that 53 percent of the city’s adult population—3.8 million people—are functionally illiterate.” (my additional emphasis: 84 percent in heavily Hispanic south L.A.)
http://www.vdare.com/rubenstein/la_literacy.htm
Do you notice a problem, a certain contradiction between very high home prices and very low human capital? If you stop and think, you might wonder how a whole bunch of people who can’t read and write English are ever going to make enough money to pay off these humongous and humongously leveraged mortgages.
But, nobody was supposed to stop and think because that would be racist.
HTH
"But the ROOT OF THE PROBLEM goes back to the CRA and Clinton's push to broaden it."
I disagree. Again, three quarters of the loans made in the last eight years were not made by banks or thrifts. Who made them? And how could they? Lack of oversight in the free market. If you don't want the government to do it, fine by me..but someone has to clearly because the free market doesn't just "take care of itself." Re-read the story of Bill Macguire.
Look the question is simple...did lenders approve bad loans to comply with CRA, or to make money?
CRA was enacted in 1977. The sub-prime lending at the heart of the current crisis exploded a full quarter century later. In the mid-1990s, new CRA regulations and a wave of mergers led to a flurry of CRA activity, but, as noted by the New America Foundation's Ellen Seidman (and by Harvard's Joint Center), that activity "largely came to an end by 2001."
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.
How does all of this jibe with your thought process on CRA?
I disagree.
Yet for some reason, this seems to impact us almost not at all. (It might even tell us we're right.)
It might be due to the prior 2 threads, which you might want to forget. But they're effective in demonstrating to anyone else that you're incapable of logically thinking or dealing with issues.
As well as demonstrably not reliably honest in your intellectual dealings.
Again, three quarters of the loans made in the last eight years were not made by banks or thrifts.
Even if you were right, this doesn't prove your conclusion correct.
How would a law 30 years old cause lending problems now?
That might - maybe - be the absolute silliest thing you've ever said.
Lack of oversight in the free market.
THERE IS AND WAS NO FREE MARKET IN ANY MORTGAGE LOAN UNDER DISCUSSION.
Period. You're a liar if you keep promulgating that line (oh, wait; we knew that.) Unless you negotiated a private note with someone, (which risks running afoul of other laws, every mortgage was highly, tightly regulated.
If they had not been regulated, and guaranteed, the loans would not have been made. There were safer, higher-return investments available.
This is how far you're going with your insanity: Claiming that people would have made huge risks for little rewards, without a government imbalance. But that government imbalance was why those people were willing to loan the money - they were certain the government would pay the debt.
If you want to call the mortgage industry indicative of "free market", the word is meaningless in discussions with you. (oh, wait; we knew that.)
the free market doesn't just "take care of itself."
Yes, it does. Risk balances reward. That balance was totally mangled - on purpose! - by the government. The repercussions and results are not due to a failure in the unrestricted free market.
Re-read the story of Bill Macguire.
I would if you would deal with your previous 2 threads you've run away from, leaving a raft of proven illogical linkings, uncritical thinking, and outright lies and disinformation. I won't even point out you've already said enough to prove that you citing it disproves your case.
You Shall Not Order Me Around. You do not have the honor, or the standing to order me to do your bidding, liar.
Especially when you call the "Mortgage Industry" "free market", and use that to bash on capitalism more.
How does all of this jibe with your thought process on CRA?
Perfectly. It was a bubble. And like all bubbles, people try to maximize their take, and when it collapses, it collapses hard. Most failures take 5-7 years from origination to failure.
Most notably, these failures started when the original 5-year "fixed" term expired, and the much higher floating rates started to kick in.
And as the bubble imploded, the exponential effect increased. Many people - bubbling up from the CRA - were buying houses on interest-only loans, as they thought there was free money to be had. I even know of people with loans where they don't even pay ALL OF THE INTEREST - raising the principal amount owed monthly!
And all this started with the CRA. There were other contributors. But the CRA, and the government involvement in the mortgage business were the biggest driving factors.
THIS ought to chill you to the marrow of your bones.
His final line:
"You have to force United States government to stop aiding communism.
Now, what "useful idiots" do his words make you think of? What "crisis" is pending?
To keep up with Wall Street expectations, Fannie Mae held onto more mortgages and mortgage-backed securities for investment purposes. The same practice nearly drove the company into bankruptcy in the early 1980s. Once again it was spared in 2008.
nomedals.blogspot.com
And the result? Zero Down! Interest-only mortgages! No-docs! 105% loan-to-value! We can refinance you! Get your equity out TODAY!
Pardon me, but that was not a result of the CRA.
It was a result of the creation of a secondary market for mortgages (i.e. what F&F were set up to do). Interesting that the institutions that initiated those loans weren't interested in servicing and collecting the interest income over the life of the loan.
Juris, F&F bought up high risk mortgages, no? And those high risk mortgages were, initially, due to the CRA, no?
The lending institutions were not interested in servicing and collecting the interest income because they could sell the mortgages and make money up front. It's a cash cow. A Federally guaranteed cash cow.
Because the .gov set up the system, and that system was set up in the interest of social engineering. The unintended consequences were never considered, and then deliberately ignored when they were made apparent.
Juris, F&F bought up high risk mortgages, no? And those high risk mortgages were, initially, due to the CRA, no?
Not really. Give the financial institutions credit where it's due - they saw the opportunity to dump bad paper onto the secondary market and they did. Of course that is an unintended consequence of the CRA - but not an inevitable one. The CRA did not require no-proof of income loans. I'm saying the govt-created secondary market was the prime culprit all on it's own, because it afforded the chance to unload any marginal loan.
And as far as the 'social engineering' goes - it was fully bipartisan (not that I doubt you realize that - but I say so for the benefit of the Mark's of the world). Pushing homeownership (and the tax-breaks associated therewith) is part and parcel of the American Dream (tm).
Diana West weighs in. The red meat at the end is:
"No wonder Obama doesn't seem to want to discuss the pesky details. "The main thing is to just move away from this hyper-political environment and recognize the house is on fire," he recently said.
"That's the main thing? "Let's put out the fire first," he added, "and we can figure out what caused it."
"Later, he means. A lot later. Like after Election Day when it's too late to vote for the other guy. Because what voters in their right minds would expect the man who likes to set the fires to put them out?"
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