Frosty Loc: Minnesota

It is refreshing to see that someone else recognizes that Diirt can write properly, few do.

dirtpusher Loc: tulsa oklahoma

But bubble didn't bust till bush fired all 50 mortage regulators . That lit the fuse for the bust. When investors back all an any loans. An we're not inspecting loans. They just needed 200 at a time to dump on the HMO's. Till they we're left with disater.

They we're accepting loans from people that couldn't buy dog food

https://www.pbs.org/wgbh/frontline/article/a-housing-affordability-crisis-thats-worse-for-the-lowest-income-americans/

mwalsh Loc: Houston

Why did you add "boy" to the Wilson quote?

Blurryeyed Loc: NC Mountains.

The fact is that Wilson was correct in his assessment, the contempt was about Obama's lies regarding the ACA. If you are going to discount the pressure placed on lending institutions to make loans to people who in previous years would not qualify for them then you are being less than fully honest. I do believe that in the end the collapse was driven by Wall Street greed, but it all started with liberal policies and governmental force, once the ball got rolling and home prices began to skyrocket then corporate greed took over, but to infer that it was Bush and republican policies that caused the crash is disingenuous, in fact I recall republicans holding hearings looking into Freddy and Fanny and its exposure as the administrator was taking 10's of millions in bonuses and the democrats in congress calling it a r****t witch hunt.

dirtpusher Loc: tulsa oklahoma

Yeah right libers policies worked fine for how many years. BUT bush having three judges fire the mortage regulators in 2005 it lasted one year before things collapsed. Now why would they fire the regulators. It was totally planned by the right. Even giving 350 billion to banks by bush . Which no person of the public for who it was intended ever saw . Get off your lsd. Blurr.your hulicicinating.

Frosty Loc: Minnesota

I was going by memory and I remembered the event wrong.

The point is was trying to illustrate was that Obama had to deal with senators and representatives that absolutely h**ed him and would not cooperate with him in any way.

mwalsh Loc: Houston

OK. I thought maybe you were trying to add a fictitious r****t element to the vitriol.

Twardlow Loc: Arkansas

He may or may not have been trying to do that. He admits his error. However, there’s no doubt there was a severe racial element in Republican practice.

They have admitted the instructions from Mitch were to be against anything Obama approved, even at the expense of the nation.


“TIME just published “The Party of No,” an article adapted from my new book, The New New Deal: The Hidden Story of Change in the Obama Era. It reveals some of my reporting on the Republican plot to obstruct President Obama before he even took office, including secret meetings led by House GOP whip Cantor (in December 2008) and Senate minority leader Mitch McConnell (in early January 2009) in which they laid out their daring (though cynical and political) no-honeymoon strategy of all-out resistance to a popular President-elect during an economic emergency. “If he was for it,” former Ohio Senator George Voinovich explained, “we had to be against it.”


http://swampland.time.com/2012/08/23/the-party-of-no-new-details-on-the-gop-plot-to-obstruct-obama/

Frosty Loc: Minnesota

I think you are being less tthan honest. There was no pressure to make loans to people that didn't qualify. It was noticed by regulators that banks were not making loans to people that lived in areas with a high concentration of minorities. The pressure was to make loans to qualified people that lived in these neighborhoods and to quit red lineing portions of cities by race.

The answer from banks was to make loans and then put a bunch of them together and sell the bundle to someone else. They called them securities. Soon they didn't care if the people qualified or not since they weren't keeping the loans. In fact the people that didnt qualify were charged higher interest rates which meant that they could get more for a bundle high interest loans. Loan originators didn't care because they were paid by the number of loans they made and
the banks didn't care because they were selling the loans. Banks realized the loans they sold were likely to fail so they took out insurance on then which was legal even if they no longer owned the loans. AIG insured most of these loans.

Brooksely Born warned Greenspan and others of this scheme and was ignored so it continued throughout Bush's two terms.

Twardlow Loc: Arkansas

This is the way I understand it. Republicans will deny.

mwalsh Loc: Houston

This is pretty accurate. The surge in popularity of the Collateralized Mortgage Obligations resulted in a frenzy of banks and mortgage underwriters slamming together pools of mortgages for the investment markets. Underwriting got sloppy and the securities buyers lost sight of the quality of the underlying loans, resulting in significantly higher than expected defaults. The mortgage originators knew the loans would be off their books as soon as they assembled a mortgage pool of $200million or more and they sold them in the securities markets. The security buyers assumed the underwriting standards were being upheld. They were not.

The government had little to do with this ill fated phenomena. It was due to irratinal markets.

Loans were made to unqualified borrowers.n But, Wall Street and naively trusting securities buyers bore the responsibility

Blurryeyed Loc: NC Mountains.

I don't doubt what you are saying about the derivatives, and in the end what you are saying is true about the loan originators as I have already stated when I said that at some point corporate greed took over, but federal regulators did pressure the banks, they levied heavy fines and sanctions solely based on minority quotas, I am looking for information on it, 6 years ago it was easy to find, now you have to dig a bit deeper. What I am saying is that the federal government involved itself in the lending industry by trying to regulate social justice, this was started by Clinton and then embraced by Bush, do you not recall Bush's promoting home ownership for minorities as a way to create wealth in minority communities? The government got involved, pushed the lending industry to make loans that they would not otherwise make, with time greed overtook prudence and we all know how it ended.

Here is something that I just found..... Remember when I pointed to the republicans trying to look into Freddy and Fanny and the dems shut them down saying that it was nothing more than a r****t witch hunt.... there is plenty of YouTube video on those hearings.... From the LATimes.

"Under Clinton, bank regulators have breathed the first real life into enforcement of the Community Reinvestment Act, a 20-year-old statute meant to combat "redlining" by requiring banks to serve their low-income communities. The administration also has sent a clear message by stiffening enforcement of the fair housing and fair lending laws. The bottom line: Between 1993 and 1997, home loans grew by 72% to b****s and by 45% to Latinos, far faster than the total growth rate.

Lenders also have opened the door wider to minorities because of new initiatives at Fannie Mae and Freddie Mac--the giant federally chartered corporations that play critical, if obscure, roles in the home finance system. Fannie Mae and Freddie Mac buy mortgages from lenders and bundle them into securities; that provides lenders the funds to lend more.

In 1992, Congress mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains. It has aimed extensive advertising campaigns at minorities that explain how to buy a home and opened three dozen local offices to encourage lenders to serve these markets. Most importantly, Fannie Mae has agreed to buy more loans with very low down payments--or with mortgage payments that represent an unusually high percentage of a buyer's income. That's made banks willing to lend to lower-income families they once might have rejected."

http://articles.latimes.com/1999/may/31/news/mn-42807

Here is an excerpt from another article.

"The crisis has its roots in the Community Reinvestment Act of 1977, a Carter-era law that purported to prevent "redlining" - denying mortgages to black borrowers - by pressuring banks to make home loans in "low- and moderate-income neighborhoods." Under the act, banks were to be graded on their attentiveness to the "credit needs" of "predominantly minority neighborhoods." The higher a bank's rating, the more likely that regulators would say yes when the bank sought to open a new branch or undertake a merger or acquisition.

But to earn high ratings, banks were forced to make increasingly risky loans to borrowers who wouldn't qualify for a mortgage under normal standards of creditworthiness. The Community Reinvestment Act, made even more stringent during the Clinton administration, trapped lenders in a Catch-22.
"If they comply," wrote Loyola College economist Thomas DiLorenzo, "they know they will have to suffer from more loan defaults. If they don't comply, they face financial penalties . . . which can cost a large corporation like Bank of America billions of dollars."

Banks nationwide thus ended up making more and more subprime loans and agreeing to dangerously lax underwriting standards - no down payment, no verification of income, interest-only payment plans, weak credit history. If they tried to compensate for the higher risks they were taking by charging higher interest rates, they were accused of unfairly steering borrowers into "predatory" loans they couldn't afford.

Trapped in a no-win situation entirely of the government's making, lenders could only hope that home prices would continue to rise, staving off the inevitable collapse. But once the housing bubble burst, there was no escape. Mortgage lenders have been bankrupted, thousands of subprime homeowners have been foreclosed on, and countless would-be borrowers can no longer get credit. The financial fallout has hurt investors around the world. And all of it thanks to the government, which was sure it understood the credit industry better than the free market did, and confidently created the conditions that made disaster unavoidable.

archive.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/03/09/how_government_makes_things_worse/

Frosty Loc: Minnesota

Another opinion.

http://fortune.com/2015/06/17/subprime-mortgage-recession/

".....if journalism is the first-draft of history, then it’s about time for a second draft. In a new working paper by Wharton economists Fernando Ferreira and Joseph Gyourko, the authors argue that the idea that subprime lending triggered the crisis is misguided. The paper looks at foreclosure data from 1997 through 2012 and finds that while foreclosure activity started first in the subprime market, the foreclosure activity in the prime market quickly outnumbered the number of subprime foreclosures.


The following chart shows the total number of foreclosures and short sales per quarter in various classes of mortgages:

(Sorry I could not get the chart to copy on my phone)


While subprime borrowers default at a higher rate than prime borrowers, Fierra said in an interview with Fortune that the data shown above suggest that the foreclosure crisis would have happened even in the absence of such risky lending. “People have this idea that subprime took over, but that’s far from the t***h,” says Ferreira. The vast majority of mortgages in the U.S. were still given to prime borrowers, which means that the real estate bubble was a phenomenon fueled mostly by creditworthy borrowers buying and selling homes they simply thought wouldn’t ever decrease in value."

***
Bottom line is that the government's enforcement of CRA did not cause the global financial crisis. It was not the sub-prime loan default that caused it but the prime loans made to people by banks who didn't verify income. There was no governmental pressure to make these loans. The problem was there was not enough government regulation and oversight of the loans made to prime lenders

*******

More from: .....

https://www.cbsnews.com/news/loans-to-low-income-households-did-not-cause-the-financial-crisis/" rel="nofollow" target="_blank">https://www.google.com/amp/s/www.cbsnews.com/amp/news/loans-to-low-income-households-did-not-cause-the-financial-crisis/#ampshare=https://www.cbsnews.com/news/loans-to-low-income-households-did-not-cause-the-financial-crisis/


"......The typical narrative is that government, through the Community Reinvestment Act (CRA) and Fannie Mae/Freddie Mac, caused lenders to reduce standards in order to make these loans. That in turn led to an abundance of loans to people who could not afford to repay them. These loans went into default in large numbers, and that fueled the financial crisis.


For instance, Rep. Scott Garrett, R-N.J., claimed in early 2007 that "The recklessness of government is the primary culprit here. For years Congress has been pushing banks to make risky subprime loans. ...Congress passed laws that said we're going to fine you and we're going to file lawsuits against you lenders if you don't make risky loans."

He was far from alone, many other Republican politicians made similar claims. Fox News also supported this argument, "Look... You go all the way back to the Community Reinvestment Act, under Jimmy Carter, expanded under Bill and Hillary Clinton -- they put the guns to the banks' heads, and said, "You have got to do these subprime loans. ...That's what caused this mess."

This is, in essence, a debate between those who claim lack of financial sector regulation caused the crisis and those who claim overregulation -- forcing banks to make loans to risky low-income borrowers -- is the culprit.

However, the new evidence from Manuel Adelino of the Fuqua School of Business at Duke University, Antoinette Schoar of the MIT Sloan School of Management and Felipe Severino of the Tuck School of Business at Dartmouth undermines this story. In their paper, "Changes in Buyer Composition and theExpansion of Credit During the Boom," the researchers found:

"While there was a rapid expansion in overall mortgage origination during this time period, the fraction of new mortgage dollars going to each income group was stable. In other words, the poor did not represent a higher fraction of the mortgage loans originated over the period. In addition, borrowers in the middle and top of the distribution are the ones that contributed most significantly to the increase in mortgages in default after 2007. Taken together, the evidence in the paper suggests that there was no dec**pling of mortgage growth from income growth where unsustainable credit was flowing disproportionally to poor people."
Lots of previous evidence supports this conclusion. For example, the Financial Crisis Inquiry Commission established by Congress concluded:

"...the CRA was not a significant factor in subprime lending or the crisis. Many subprime lenders were not subject to the CRA. Research indicates only 6% of high-cost loans -- a proxy for subprime loans -- had any connection to the law. Loans made by CRA-regulated lenders in the neighborhoods in which they were required to lend were half as likely to default as similar loans made in the same neighborhoods by independent mortgage originators not subject to the law."
Thus, in the battle over whether too much or too little regulation of the financial sector played a role in causing and exacerbating the crisis, the evidence points away from those who claim overzealous government regulation was at fault.


That's something to keep in mind as Congress does its best to dismantle the Dodd-Frank law's new financial regulation."

thom w Loc: San Jose, CA

I'm pretty sure you aren't trying to make a case that Wilson wasn't r****t. I'm not complaining about you correcting a less than perfect quote.

thom w Loc: San Jose, CA

I am not a minority and I received several solicitations from companies that wanted to find me a home, and not one I could afford at the time, and find me a loan. How was that to fill minority quotas?