Figgered that wouldn't take long

[Boxlicker101]

Originally Posted by WoundedKneegros View Post

Barney Frank saved us from those people who wanted to reform Freddie and Fannie and keep minorities from enjoying the "right" to home ownership even in the face of whistleblowers trying to tell him that a collapse was coming and we had to head it off. He was more worried about the elections than he was the economy because the warning was coming from the Bush Administration and they were just a bunch of stupid racists who did not understand the economic multipliers of minority home ownership (even if the could nat afford it). Mark Zandi deserves a lot of blame for his faulty model of for housing loan derivatives based on a model from the 50s which had little to do with packaging loans to people who could not afford them which were quickly sold to Freddie and Fannie.

Awww....look at the Chief try and gaslight derivatives...and a shout out to his old "but...but...Fannie and Freddie" buddies as well!

#HeTriesSooooHard
#Gaslight

But he's right, though. If the bankers had turned down loan requests, even by those who could not afford them, they would have run afoul of the anti-redlining laws. That kind of thing is always a problem when gov. tries to micro-manage Business and Industry.

 

[jaF0]

Two years in the four branches or Coast Guard.

I would never support forcing anyone into any military service.

 

[RobDownSouth]

But he's right, though. If the bankers had turned down loan requests, even by those who could not afford them, they would have run afoul of the anti-redlining laws. That kind of thing is always a problem when gov. tries to micro-manage Business and Industry.

Not true. Banks are absolved from redlining statutes by applying credit score standards to all applicants.

What happened during the Bush administration was that banks continually lowered minimum credit scores required to get a loan. Then Freddie Mac, which had HIGHER credit standards than most banks, was forced by it's board of directors (it's a private for-profit entity, y'know) to LOWER their standards in the name of "being competitive" (and MOAR profits!). That worsened the Bush recession.

It wasn't the PRIME cause of the Bush Real Estate Collapse. The primary cause was credit derivatives, where toxic assets were collateralized into packages sold to investors, effectively "gilding the turd". Repealing Glass-Steagall set this disaster in motion.

Reforms were enacted to prevent this from happening again. Sadly, they were repealed by Congress last week.

Nice gaslight attempt though.

 

[HisArpy]

Not true. Banks are absolved from redlining statutes by applying credit score standards to all applicants.

What happened during the Bush administration was that banks continually lowered minimum credit scores required to get a loan. Then Freddie Mac, which had HIGHER credit standards than most banks, was forced by it's board of directors (it's a private for-profit entity, y'know) to LOWER their standards in the name of "being competitive" (and MOAR profits!). That worsened the Bush recession.

It wasn't the PRIME cause of the Bush Real Estate Collapse. The primary cause was credit derivatives, where toxic assets were collateralized into packages sold to investors, effectively "gilding the turd". Repealing Glass-Steagall set this disaster in motion.

Reforms were enacted to prevent this from happening again. Sadly, they were repealed by Congress last week.

Nice gaslight attempt though.

Quoted for truth. Carter was a huge supporter of deregulation of the money markets but it was Reagan who actually began this in the 80's. It was Clinton who finally inked the destruction of financial America when he signed the Gramm-Leach-Bliley Act in 1999.

interesting article on the subject

 

[Boxlicker101]

Not true. Banks are absolved from redlining statutes by applying credit score standards to all applicants.

What happened during the Bush administration was that banks continually lowered minimum credit scores required to get a loan. Then Freddie Mac, which had HIGHER credit standards than most banks, was forced by it's board of directors (it's a private for-profit entity, y'know) to LOWER their standards in the name of "being competitive" (and MOAR profits!). That worsened the Bush recession.

It wasn't the PRIME cause of the Bush Real Estate Collapse. The primary cause was credit derivatives, where toxic assets were collateralized into packages sold to investors, effectively "gilding the turd". Repealing Glass-Steagall set this disaster in motion.

Reforms were enacted to prevent this from happening again. Sadly, they were repealed by Congress last week.

Nice gaslight attempt though.

Ideally, there would be no redlining laws and no need for them.

I hope you are aware the redlining involved areas, not individual loan applicants. It used to be that people, even those who were credit-worthy, would sometimes apply for loans to buy homes in rundown neighborhoods. The banks would inspect the property that was intended to secure the loan and see it was worth less than the loan amount and they would turn down the applicant. In order to save time and effort and to avoid defaults, loan officers were instructed to avoid considering loans in certain areas of cities, with the bank managers sometimes even drawing red lines around those areas.

Of course, a disproportionate number of the unsuccessful applicants were members of minorities. When SJW's or the equivalent became aware of the practice, they passed laws or caused them to be passed, that made redlining illegal. Technically, the banks could defend themselves against charges of breaking such laws, but doing so was expensive and dubious and could give them negative reputations, so they invented "creative financing" such as ARM's and balloon payments and other things. Once a loan closed, they sold it to somebody in the secondary market, frequently to Fannie or Freddie.

However, these mortgages became the toxic assets you mentioned. Many of them were used as security for other transactions and, when they were foreclosed, the whole system went down the toilet. The foreclosures happened because the borrowers were unable to make the payments that included the increases in interest or the balloon payments or whatever else they had been saddled with.

None of this should have happened. The banks should have been left alone to conduct business in ways that were profitable, which would have meant few or no bad mortgages. The problem was that gov. agencies tried to do things they knew nothing about, which resulted in the debacle.

 

[RobDownSouth]

I know what redlining is. I also know it's not germane to this discussion. It's a deflection.

 

[Rightguide]

No bank should be forced by the government to loan money to people that cannot pay it back, period.

 

[HisArpy]

INone of this should have happened. The banks should have been left alone to conduct business in ways that were profitable, which would have meant few or no bad mortgages. The problem was that gov. agencies tried to do things they knew nothing about, which resulted in the debacle.

After the stock market crash in 1929, Glass-Stegal was implemented to keep it from ever happening again. Through the markets' ups and downs for the next 70 years, the banks and financial institutions still made huge profits and the economy didn't tank again.

Then, in 1999 President Clinton signed Gramm-Leach-Bilily repealing Glass-Stegal and deregulated the financial industry. Within 7-8 years the banks and financial institutions had once again caused a major stock market implosion and crash. This happened BECAUSE those businesses will NEVER conduct business in ways that limit their profits UNLESS there are legal limitations placed upon them to protect the public from their greed. Glass-Stegal created those limits and once those chains were broken, the banking/finance industry did what it will always do without those type of restrictions.

Thinking otherwise is what led us to the position we found ourselves in back in 2006. 2006 was the new 1929.

Frontline on PBS did a series on this. "Inside the Meltdown". It's a pretty decent documentary that everyone should watch. I suspect you'll be as pissed as I was if you do. The whole mess was nothing but greed gone wild.

Frontline Documentary

 

[Sean]

None of this should have happened. The banks should have been left alone to conduct business in ways that were profitable, which would have meant few or no bad mortgages. The problem was that gov. agencies tried to do things they knew nothing about, which resulted in the debacle.

No, the problem was that cdc's and other derivatives were monetized at about three times the gdp of the entire planet.