Cancel 2016.2
The Almighty
hate fail level reached by super duper
you truly are an idiot... that says what I have been saying you retard.
hate fail level reached by super duper
There is very little doubt that the underlying cause of the current credit crisis was a housing bubble. But the collapse of the bubble would not have led to a worldwide recession and credit crisis if almost 40% of all U.S. mortgages–25 million loans–were not of the low quality known as subprime or Alt-A.
These loans were made to borrowers with blemished credit, or involved low or no down payments, negative amortization and limited documentation of income. The loans’ unprecedentedly high rates of default are what is driving down housing prices and weakening the financial system.
The low interest rates of the early 2000s may explain the growth of the housing bubble, but they don’t explain the poor quality of these mortgages. For that we have to look to the government’s distortion of the mortgage finance system through the Community Reinvestment Act and the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac .
In a recent meeting with the Council on Foreign Relations, Barney Frank–the chair of the House Financial Services Committee and a longtime supporter of Fannie and Freddie–admitted that it had been a mistake to force homeownership on people who could not afford it. Renting, he said, would have been preferable. Now he tells us.
Long-term pressure from Frank and his colleagues to expand home ownership connects government housing policies to both the housing bubble and the poor quality of the mortgages on which it is based. In 1992, Congress gave a new affordable housing “mission” to Fannie and Freddie, and authorized the Department of Housing and Urban Development to define its scope through regulations.
Shortly thereafter, Fannie Mae, under Chairman Jim Johnson, made its first “trillion-dollar commitment” to increase financing for affordable housing. What this meant for the quality of the mortgages that Fannie–and later Freddie–would buy has not become clear until now.
On a parallel track was the Community Reinvestment Act. New CRA regulations in 1995 required banks to demonstrate that they were making mortgage loans to underserved communities, which inevitably included borrowers whose credit standing did not qualify them for a conventional mortgage loan.
To meet this new requirement, insured banks–like the GSEs–had to reduce the quality of the mortgages they would make or acquire. As the enforcers of CRA, the regulators themselves were co-opted into this process, approving lending practices that they would otherwise have scorned. The erosion of traditional mortgage standards had begun.
Shortly after these new mandates went into effect, the nation’s homeownership rate–which had remained at about 64% since 1982–began to rise, increasing 3.3% from 64.2% in 1994 to 67.5% in 2000 under President Clinton, and an additional 1.7% during the Bush administration, before declining in 2007 to 67.8%. There is no reasonable explanation for this sudden spurt, other than a major change in the standards for granting a mortgage or a large increase in the amount of low-cost funding available for mortgages. The data suggest that it was both.
As might be expected, the market for subprime and Alt-A loans grew along with the rise in homeownership. Some have argued that unregulated groups such as mortgage brokers and bankers, working with subprime lenders such as Countrywide Financial, supplied both the easier credit and the lower loan standards, but the facts belie this.
From 1995 until 2004, subprime loans by the traditional subprime lenders like Countrywide averaged slightly more than 5% of all mortgages, far too few to account for the growth in either homeownership or the housing bubble. CRA loans, totaling 3% of originations, were also too few. Where, then, did all the low-quality loans come from?
From 1994 to 2003, Fannie and Freddie’s purchases of mortgages, as a percentage of all mortgage originations, increased from 37% to an all-time high of 57%, effectively cornering the conventional conforming market. With leverage ratios that averaged 75-to-1, and funds raised with implicit government backing, the GSEs were pouring money into the housing market. This in itself would have driven the housing bubble.
But it also appears that, perhaps as early as 1993, Fannie Mae began to offer easy financing terms and lowered its loan standards in order to meet congressionally mandated affordable housing goals and fulfill the company’s trillion-dollar commitment. For example, in each of the years 2000 and 2001, the first years for which data are available, 18% of Fannie’s originations–totaling $157 billion–were loans with FICO scores of less than 660 (the federal regulators’ cut-off point for defining subprime loans). There is no equivalent data available for Freddie, but it is likely that its purchases were proportionately the same, amounting to an estimated $120 billion.
These sums would have swamped originations by the traditional subprime lenders, which probably totaled $119 billion in these two years. Data for Alt-A loans before 2005 are unavailable, but the fact that that Fannie and Freddie now hold 60% of all outstanding Alt-A loans provides a strong indication of the purchases they were making for many earlier years.
The GSE’s purchases of all mortgages slowed in 2004, as they worked to overcome their accounting scandals, but in late 2004 they returned to the market with a vengeance. Late that year, their chairmen were telling meetings of mortgage originators that the GSEs were eager to purchase subprime and other nonprime loans.
This set off a frenzy of subprime and Alt-A mortgage origination, in which–as incredible as it seems–Fannie and Freddie were competing with Wall Street and one another for low-quality loans. Even when they were not the purchasers, the GSEs were Wall Street’s biggest customers, often buying the AAA tranches of subprime and Alt-A pools that Wall Street put together. By 2007 they held $227 billion (one in six loans) in these nonprime pools, and approximately $1.6 trillion in low-quality loans altogether.
From 2005 through 2007, the GSEs purchased over $1 trillion in subprime and Alt-A loans, driving up the housing bubble and driving down mortgage quality. During these years, HUD’s regulations required that 55% of all GSE purchases be affordable, including 25% made to low- and very low-income borrowers. Housing bubbles are nothing new. We and other countries have had them before. The reason that the most recent bubble created a worldwide financial crisis is that it was inflated with low-quality loans required by government mandate. The fact that the same government must now come to the rescue is no reason for gratitude.
http://www.forbes.com/2009/02/13/housing-bubble-subprime-opinions-contributors_0216_peter_wallison_edward_pinto.html
Super does this shit all the time
he flat out just fucking lies right into the face of facts.
Reality check: the Community Reinvestment Act NEVER FORCED BANKS TO MAKE BAD LOANS TO MINORITIES. That is a LIE that the right wing has been telling for years....YET TO DATE THEY CANNOT PRODUCE THE QUOTE FROM THE ACT THAT STATES WHAT THEY CLAIM IN NO UNCERTAIN TERMS.
Bottom line: CRA told the banks that the SAME loans they made to low income white folk had to be made to low income black & hispanic folk. So unless someone can PROVE that the banks were making bad loans to low income white folk all along, the lie of blaming the CRA for the financial crisis brought on by the corrupt banksters is laid to rest.
Yes, Clinton had no business signing away Glass - Stegall....but the obstructionist GOP sure as hell did their number to gut whatever effectiveness it had left.
A matter of fact and history, as Evince has pointed out numerous times.
You're a liar! No You're a liar! Everyone knows you're the liar! You have it wrong everyone knows you're the liar! Liar! Liar! LIAR LIAR LIAR!
Contrary to my initial conclusion, the evidence is overwhelming that the CRA played a significant role in creating lax lending standards that fueled the housing bubble. Once I realized this, I had to abandon my suspicion that the anti-CRA case was a figment of the rhetoric of Republicans attempting to distract attention from their own role in the mortgage mess.
Reality check: the Community Reinvestment Act NEVER FORCED BANKS TO MAKE BAD LOANS TO MINORITIES. That is a LIE that the right wing has been telling for years....YET TO DATE THEY CANNOT PRODUCE THE QUOTE FROM THE ACT THAT STATES WHAT THEY CLAIM IN NO UNCERTAIN TERMS.
Bottom line: CRA told the banks that the SAME loans they made to low income white folk had to be made to low income black & hispanic folk. So unless someone can PROVE that the banks were making bad loans to low income white folk all along, the lie of blaming the CRA for the financial crisis brought on by the corrupt banksters is laid to rest.
Yes, Clinton had no business signing away Glass - Stegall....but the obstructionist GOP sure as hell did their number to gut whatever effectiveness it had left.
A matter of fact and history, as Evince has pointed out numerous times.
Quote Originally Posted by Taichiliberal View Post
Reality check: the Community Reinvestment Act NEVER FORCED BANKS TO MAKE BAD LOANS TO MINORITIES. That is a LIE that the right wing has been telling for years....YET TO DATE THEY CANNOT PRODUCE THE QUOTE FROM THE ACT THAT STATES WHAT THEY CLAIM IN NO UNCERTAIN TERMS.
Bottom line: CRA told the banks that the SAME loans they made to low income white folk had to be made to low income black & hispanic folk. So unless someone can PROVE that the banks were making bad loans to low income white folk all along, the lie of blaming the CRA for the financial crisis brought on by the corrupt banksters is laid to rest.
Yes, Clinton had no business signing away Glass - Stegall....but the obstructionist GOP sure as hell did their number to gut whatever effectiveness it had left.
A matter of fact and history, as Evince has pointed out numerous times.
Fascinating; you claim your post is a reality check while containing very little reality. CRA's were not the cause, they were the effect that contributed to the cause; read the above post and become informed.
Your problem is that you again and again substitute your supposition and conjecture for reality. NOTHING in your post above points to the actual language in the Act itself that "forced" bankers to perform the chicanery they did. All they had to do was make the SAME low income loans available to minorities that they were doing so for whites. Period.
That the bankers CHOSE to make bad loans to easily get off the hook, then bundle those bad loans with good ones and put them on the national/international market to sell has NOTHING to do with the CRA...but EVERYTHING to do with the dishonesty and prejudice of the bankers.
What's fascinating is how YOU keep repeating mantras that IGNORE key facts, and how when pressed you cannot meet a simple burden of proof to support your claim. So now you'll just ignore what I say here, repeat your flawed litany, and remain a proud parrot for the very people that screw YOU over time and again. Carry on.
Reality check: the Community Reinvestment Act NEVER FORCED BANKS TO MAKE BAD LOANS TO MINORITIES. That is a LIE that the right wing has been telling for years....YET TO DATE THEY CANNOT PRODUCE THE QUOTE FROM THE ACT THAT STATES WHAT THEY CLAIM IN NO UNCERTAIN TERMS.
Bottom line: CRA told the banks that the SAME loans they made to low income white folk had to be made to low income black & hispanic folk. So unless someone can PROVE that the banks were making bad loans to low income white folk all along, the lie of blaming the CRA for the financial crisis brought on by the corrupt banksters is laid to rest.
Yes, Clinton had no business signing away Glass - Stegall....but the obstructionist GOP sure as hell did their number to gut whatever effectiveness it had left.
A matter of fact and history, as Evince has pointed out numerous times.
Guess these guys don't have a problem with redlining, no surprise there.
Originally Posted by Taichiliberal View Post
Reality check: the Community Reinvestment Act NEVER FORCED BANKS TO MAKE BAD LOANS TO MINORITIES. That is a LIE that the right wing has been telling for years....YET TO DATE THEY CANNOT PRODUCE THE QUOTE FROM THE ACT THAT STATES WHAT THEY CLAIM IN NO UNCERTAIN TERMS.
Bottom line: CRA told the banks that the SAME loans they made to low income white folk had to be made to low income black & hispanic folk. So unless someone can PROVE that the banks were making bad loans to low income white folk all along, the lie of blaming the CRA for the financial crisis brought on by the corrupt banksters is laid to rest.
Yes, Clinton had no business signing away Glass - Stegall....but the obstructionist GOP sure as hell did their number to gut whatever effectiveness it had left.
A matter of fact and history, as Evince has pointed out numerous times.
http://www.businessinsider.com/the-cra-debate-a-users-guide-2009-6
The above is a good discussion of the CRA impact.
Quote Originally Posted by christiefan915 View Post
Guess these guys don't have a problem with redlining, no surprise there.
It wasn't their red line....![]()
Quote Originally Posted by Taichiliberal View Post
Your problem is that you again and again substitute your supposition and conjecture for reality. NOTHING in your post above points to the actual language in the Act itself that "forced" bankers to perform the chicanery they did. All they had to do was make the SAME low income loans available to minorities that they were doing so for whites. Period.
That the bankers CHOSE to make bad loans to easily get off the hook, then bundle those bad loans with good ones and put them on the national/international market to sell has NOTHING to do with the CRA...but EVERYTHING to do with the dishonesty and prejudice of the bankers.
What's fascinating is how YOU keep repeating mantras that IGNORE key facts, and how when pressed you cannot meet a simple burden of proof to support your claim. So now you'll just ignore what I say here, repeat your flawed litany, and remain a proud parrot for the very people that screw YOU over time and again. Carry on.
I see reading and comprehending are not your forte'. You'd rather continue your empty headed parroting of laughably stupid DNC talking points.
Like I said; read the document I posted above and become informed; or don't read and continue bleating like an uninformed dipshit.
YOU don't even understand the history behind what YOU are reading, do ya bunky?
Here's your homework assignment. READ the CRA of 1977 and then grace us all with the paragraph that states in no uncertain terms that banks MUST make loans to minorities REGARDLESS OF THE RISK OF DEFAULT.
We'll be waiting. In the meantime, here's a primer for you:
The Community Reinvestment Act, passed in 1977, requires banks to lend in the low-income neighborhoods where they take deposits. Just the idea that a lending crisis created from 2004 to 2007 was caused by a 1977 law is silly. But it’s even more ridiculous when you consider that most subprime loans were made by firms that aren’t subject to the CRA. University of Michigan law professor Michael Barr testified back in February before the House Committee on Financial Services that 50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision and another 30% were made by affiliates of banks or thrifts which are not subject to routine supervision or examinations. As former Fed Governor Ned Gramlich said in an August, 2007, speech shortly before he passed away: “In the subprime market where we badly need supervision, a majority of loans are made with very little supervision. It is like a city with a murder law, but no cops on the beat.”
http://www.businessweek.com/investing/insights/blog/archives/2008/09/community_reinv.html