I will blame the Community Reinvestment Act of 1994 as it allowed Fannie Mae & Freddie Mac to create an MBS (Mortgage Back Security). So before you run your mouth read the act. Fannie and Freddie would then sell those MBS to the open market to banks, hedge funds and whoever was willing to buy them. By doing this Fannie Mae and Freddie Mac would make the loan but no own Mortgage or they would own them outright. What Fannie and Freddie owned.
Fannie's subprime program.

I never said it's goal was about increasing the leverage. It's goal was about increasing lending to high risk areas. The CRA accomplished this, did it not? If it did not why are you defending it?

When a Bank makes a loan, say like Wachovia, they always have to have a 9 to 1 ratio of leverage (or is suppose to). When Capital shrinks, such as runs on a bank, it increases the leverage. Wachovia had a run on the bank, among other things.

Lehman Brothers in their case could not borrow (as an investment bank) every morning to stay solvent, which all Investment Banks work that way.

Wait a sec.. again where did I mention African-Americans? Nowhere.. so get this ACORN bs out of here. I said "risky loans", that could mean anyone who has BAD CREDIT RATING. Like a White Male at the age of 21 who works a McDonald's who applies for a $120,000 loan making $25,000 a year. Odds of this person making payments on time are slim to none.

By the way. Here are the statistics on home ownership since 1996.

In 1996.. 44% of the African-Americans owned homes. In 2007 47.2% owned homes. It's peak was in 2004 at 49.1 %. Guess your argument has failed again.


You mean the Gramm-Leach-Bliley Act of 1999?

Sucks when you bring up something that was signed by President Bill Clinton right? But go head try and weasel out that one. But before you try lets go over the GLBA. In that Act, Banks could only merge if they met CRA standards, which goes back to giving out even more risky loans so you could merge.

Say like.. Wachovia and First Union did in 2001. Then Wachovia bought Metropolitan West Securities, SouthTrust, Westcorp, Golden West Financial, and finally A.G. Edwards. Each time Wachovia and all those bought up had to meet CRA rating.

Now how is CRA rating determined? This is how.

FFIEC

Now to be able to merge, you would have to increase your risky loans. So if at any point those loans fail, your leverage would increase. As a Bank has to write off those loans as a loss removing Capital from the reserves of the bank. And now you are caught up to how this happened.




You mean just like I did. I don't listen to those folks just like I don't listen to Olbernut and his boyfriend Rachel Maddow. I Ignore all talking heads as much as possible. Just to let you know, I have the tv on right and I am watching Capital Flow, which soon will be Capital Connections, then European Squawk Box on CNBC World. CNBC World, CNBC and Bloomberg are the 3 "news" channels I watch other then WBNS 10tv (which is local).

__________________
Pioneers are walking all around singing songs about Lenin and they should be shot for it.

Handlebars

"If you are looking for the guilty, you need only look into a mirror"- V

It is inaccurate to say that I hate everything. I am strongly in favor of common sense, common honesty, and common decency. This makes me forever ineligible for public office.
H. L. Mencken

come on you know you wanna play football..

Beagán agus a rá go maith.

Economic Left/Right: 3.75
Social Libertarian/Authoritarian: -2.87

Yes, here is where I again ask why these problems didn't occur under Clinton? Why it only happens under clowns like Bush and Reagan?

You keep saying for us to look anywhere but Bush and yet you can't explain this simple question. Since you are incapable of even looking for the answer, here's a little taste:

Print Page - The Bush Administration Turned a blind eye on shady Subprime loans

Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers.

Predatory lending was widely understood to present a looming national crisis. This threat was so clear that as New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York's, enacted laws aimed at curbing such practices.

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). OCC: About the OCC
The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

Throughout our battles with the OCC and the banks, the mantra of the banks and their defenders was that efforts to curb predatory lending would deny access to credit to the very consumers the states were trying to protect. But the curbs we sought on predatory and unfair lending would have in no way jeopardized access to the legitimate credit market for appropriately priced loans. Instead, they would have stopped the scourge of predatory lending practices that have resulted in countless thousands of consumers losing their homes and put our economy in a precarious position.

When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.

That's right, the Bush administration not only promoted the predatory lending practices but protected Wall Street and the Banks in doing so...and that's why this didn't happen under Clinton.

__________________
I'm Proud I never Voted For Bush!



PAT PAULSEN FOR PRESIDENT

It didn't happen under Clinton because Housing prices were still RISING (as they did until 2005/2006 under Bush).

Meaning 1: folks could still borrow (get a second mortgage) on their homes to pay their first ones.

2: They saw their homes as investments and saw them worth while paying off as long as home prices were raising knowing once it got to a certain price they would sell it to make a profit (that's called Flipping).

3: At the early stages of a program that was created under the CRA of 1994 the mass amounts of Risky Loans did not exceed Prime Loans (good risk loans).

Once any of these things become breached loans and credit markets would become unstable. Fannie Mae and Freddie Mac were clearly insolvent way back in 1999. Which is one of the reasons why the GLBA was passed (by a margin of 80 or 90, I have to check the numbers on it again, in the Senate).. It allowed Fannie and Freddie to sell its risky loans to the open market making them "Solvent".

So what has happened over the past 2 years is the Housing prices started to decline. So 1 and 2 came true. To save try and fix the problem Fannie and Freddie (which is only under Congressional Oversight and the President is not involved) decided to lend more and more to riskier people. So the 3rd thing happened.

Barney Frank and Chris Dodd protected Fannie and Freddie like there was no tomorrow during the first 6 years of Bush Admin. So look no further then those 2.

I can't lay it out any simpler then that for ya.


So you want me to take Eliot Spitzer's word as gold? Considering he violate NY election laws by claiming to mortgaging his apartments in NYC to fund his campaign, but it turned out his father was actually paying for the campaign. Thus violating election laws due to a cap on what 1 person can contribute to a campaign.

The same Eliot Spitzer who told NY State troopers to follow the NY Senate majority leader Joseph Bruno.

The same Eliot Spitzer who is know as Client no. 9. Who tried to get North Fork Bank officials to remove his name from a wire transfer to his favorite "place" (QAT International) to go when he was out of town. Hmm.. that seems like trying to commit fraud.

Sorry..he the same creditability of Bush.

__________________
Pioneers are walking all around singing songs about Lenin and they should be shot for it.

Handlebars

"If you are looking for the guilty, you need only look into a mirror"- V

It is inaccurate to say that I hate everything. I am strongly in favor of common sense, common honesty, and common decency. This makes me forever ineligible for public office.
H. L. Mencken

come on you know you wanna play football..

Beagán agus a rá go maith.

Economic Left/Right: 3.75
Social Libertarian/Authoritarian: -2.87

Wrong, housing prices were rising under Bush as well. It wasn't until interest rates began to rise that the problems occurred.

Wrong again, this didn't cause people to be unable to pay off their monthly mortgage payments.

Correct, something happened under Bush which caused the mass amounts of risky loans to exceed good loans.

But only the third happened in this scenario the other two are just fluff...

Why? You are arguing coincidence...explain why the Housing prices began to fall?

That's a lie I have already proved.

Hahahahahahahahahaha....all you've done is argue coincidence. You do not establish a cause and affect relationship.

I have given you the cause and affect relationship behind these events. If you can't deal with it then that is your problem, not mine.

Hahahahahahahaha....many of the founding fathers spent their time in whore houses. Are you suggesting we tear up the Constitution because some of the drafters got laid in houses of ill repute? Now you're being terribly silly...

__________________
I'm Proud I never Voted For Bush!



PAT PAULSEN FOR PRESIDENT

Here's how it happened!

"The $200 billion bail-out for predator banks and Spitzer charges are intimately linked"

Here’s what happened. Since the Bush regime came to power, a new species of loan became the norm, the ‘sub-prime’ mortgage and its variants including loans with teeny “introductory” interest rates. From out of nowhere, a company called ‘Countrywide’ became America’s top mortgage lender, accounting for one in five home loans, a large chunk of these ‘sub-prime.’

Here’s how it worked: The Grinning Family, with US average household income, gets a $200,000 mortgage at 4% for two years. Their $955 monthly payment is 25% of their income. No problem. Their banker promises them a new mortgage, again at the cheap rate, in two years. But in two years, the promise ain’t worth a can of spam and the Grinnings are told to scram - because their house is now worth less than the mortgage. Now, the mortgage hits 9% or $1,609 plus fees to recover the “discount” they had for two years. Suddenly, payments equal 42% to 50% of pre-tax income. The Grinnings move into their Toyota.

Now, what kind of American is ‘sub-prime.’ Guess. No peeking. Here’s a hint: 73% of HIGH INCOME Black and Hispanic borrowers were given sub-prime loans versus 17% of similar-income Whites. Dark-skinned borrowers aren’t stupid – they had no choice. They were ‘steered’ as it’s called in the mortgage sharking business.

‘Steering,’ sub-prime loans with usurious kickers, fake inducements to over-borrow, called ‘fraudulent conveyance’ or ‘predatory lending’ under US law, were almost completely forbidden in the olden days (Clinton Administration and earlier) by federal regulators and state laws as nothing more than fancy loan-sharking.

But when the Bush regime took over, Countrywide and its banking brethren were told to party hearty – it was OK now to steer’m, fake’m, charge’m and take’m.

But there was this annoying party-pooper. The Attorney General of New York, Eliot Spitzer, who sued these guys to a fare-thee-well. Or tried to.

Instead of regulating the banks that had run amok, Bush’s regulators went on the warpath against Spitzer and states attempting to stop predatory practices. Making an unprecedented use of the legal power of “federal pre-emption,” Bush-bots ordered the states to NOT enforce their consumer protection laws.

Indeed, the feds actually filed a lawsuit to block Spitzer’s investigation of ugly racial mortgage steering. Bush’s banking buddies were especially steamed that Spitzer hammered bank practices across the nation using New York State laws.

Spitzer not only took on Countrywide, he took on their predatory enablers in the investment banking community. Behind Countrywide was the Mother Shark, its funder and now owner, Bank of America. Others joined the sharkfest: Goldman Sachs, Merrill Lynch and Citigroup’s Citibank made mortgage usury their major profit centers. They did this through a bit of financial legerdemain called “securitization.”

What that means is that they took a bunch of junk mortgages, like the Grinning's, loans about to go down the toilet and re-packaged them into “tranches” of bonds which were stamped “AAA” - top grade - by bond rating agencies. These gold-painted turds were sold as sparkling safe investments to US school district pension funds and town governments in Finland (really).

When the housing bubble burst and the paint flaked off, investors were left with the poop and the bankers were left with bonuses. Countrywide’s top man, Angelo Mozilo, will ‘earn’ a $77 million buy-out bonus this year on top of the $656 million - over half a billion dollars – he pulled in from 1998 through 2007.

But there were rumblings that the party would soon be over. Angry regulators, burned investors and the weight of millions of homes about to be boarded up were causing the sharks to sink. Countrywide’s stock was down 50%, and Citigroup was off 38%, not pleasing to the Gulf sheiks who now control its biggest share blocks.

Then, on Wednesday of this week, the unthinkable happened. Carlyle Capital went bankrupt. Who? That’s Carlyle as in Carlyle Group. James Baker, Senior Counsel. Notable partners, former and past: George Bush, the Bin Laden family and more dictators, potentates, pirates and presidents than you can count.

The Fed had to act. Bernanke opened the vault and dumped $200 billion on the poor little suffering bankers. They got the public treasure – and got to keep the Grinning’s house. There was no ‘quid’ of a foreclosure moratorium for the ‘pro quo’ of public bailout. Not one family was saved – but not one banker was left behind.

Every mortgage sharking operation shot up in value. Mozilo’s Countrywide stock rose 17% in one day. The Citi sheiks saw their company’s stock rise $10 billion in an afternoon.

And that very same day the bail-out was decided – what a coinkydink! – the man called, ‘The Sheriff of Wall Street’ was cuffed. Spitzer was silenced.

So say what you want about Spitzer, the facts show he was right! They also show that it was the Bush administration that enabled the banks to create the subprime mess! They also show that it was really about bailing out the Carlyle Group.

__________________
I'm Proud I never Voted For Bush!



PAT PAULSEN FOR PRESIDENT

Eliot Spitzer - Predatory Lenders' Partner in Crime - washingtonpost.com

Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive "teaser" rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.

Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers.

This is why it didn't happen under Clinton and it happened under Bush. Spitzer was right!

__________________
I'm Proud I never Voted For Bush!



PAT PAULSEN FOR PRESIDENT

The Senate is supposed to vote on a bailout bill today but it's interesting that the bill includes things entirely unrelated to the bailout!

Congress leaders optimistic on revived bailout - Yahoo! News

From the article:

Scrambling to revive a package that met with bitter derision among constituents who viewed it as a giveaway to Wall Street, the Senate added a number of sweeteners designed to please rural lawmakers, including disaster aid for hurricane-battered states and money for rural schools. The package was hitching a ride on a popular measure to require health plans for 51 or more employees to give equal treatment to mental health or addiction if they cover such illnesses.

Hoyer, though, said on NBC's "Today" show he was concerned that the tax additions could complicate the chances of final congressional passage when the legislation comes back to the House floor for a vote.

"There's no doubt the tax package is very controversial," he said, adding that "there's no doubt in my mind that the Senate added this because they thought that's the only way they could get it passed." He said he wasn't pleased the tax provisions were attached to the bill.

__________________
A panda walks into a cafe. He orders a sandwich, eats it, then draws a gun and fires two shots in the air.

"Why?" asks the confused waiter, as the panda makes toward the exit. The panda produces a badly punctuated wildlife manual and tosses it over his shoulder.

"I'm a panda," he says at the door. "Look it up."

The waiter turns to the relevant entry and, sure enough, finds an explanation.

"Panda. Large black-and-white bear-like mammal, native to China. Eats, shoots and leaves."

Guess you can't read.. I already mentioned they kept rising.



If you buy a home in the hopes of selling it for a higher price but the price of the home goes down, you get rid of the home as quick as possible. Once that investment is worth less then what you paid for it, you stop paying for it. As its eating into your own personal finances. So you don't pay for it, the Bank takes it from you. End result an increase of unsold homes on the market. Which drives down home values even more.

This is basic stuff Affrayer. I can tell you've never dealt with the housing business. This has been done many times.. in 1926 it was done.



Every been to Miami? Ask those folks who were flipping Condos and Houses what happened to them when the Housing Market in Miami burst in 2006. Read Here.

__________________
Pioneers are walking all around singing songs about Lenin and they should be shot for it.

Handlebars

"If you are looking for the guilty, you need only look into a mirror"- V

It is inaccurate to say that I hate everything. I am strongly in favor of common sense, common honesty, and common decency. This makes me forever ineligible for public office.
H. L. Mencken

come on you know you wanna play football..

Beagán agus a rá go maith.

Economic Left/Right: 3.75
Social Libertarian/Authoritarian: -2.87

What!!

The problem is that those who had the oversight responsibility failed to do anything and those same individuals are now given the opportunity to do it again?

The problem was that they gave loans out to people who could not pay them back.. They were bad loans forced by Government on the banks...

THis is an issue of a FAILURE of Government.. from a failed socialist program to a failure to admit the problem.