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They didn't have the audacity to put Barney, Bubba Clinton, Kerosene Maxine (thank you Larry Elder) or Greenspan on the hot seat after the housing bubble exploded a few years ago despite SEVERALYEARS of warnings, but will gladly trot out a Wall Street titan to unload on.
You left off Bernanke. Bernanke worked directly under Greenspan and then continued his policies.
It's funny the way this is worded. "Primarily". Who cares who is "primarily" at fault. Both were at fault. Trying to argue who was the most at fault is an absolute waste of time.
I'll ask again. Why were none of these bankers ever charged with anything?
Yes, there were plenty of reckless and immoral borrowers taking out mortgages they knew (or should have known) they couldn't afford. And yes, you can make a case that the federal government's zeal to increase homeownership levels was partly responsible for lowering lending standards. But the idea that the government is primarily to blame for this whole mess is delusional. It was the private market -- not government programs -- that made, packaged, and sold most of these wretched loans without regard to their quality. The packaging, combined with credit default swaps and other esoteric derivatives, spread the contagion throughout the world. That's why what initially seemed to be a large but containable U.S. mortgage problem touched off a worldwide financial crisis.
This whole concept is misrepresented. There is no "public" and "private". They are completely integrated. This is a global model. Govt deliberately made changes in regs, using derivatives to pump up their profits in the "private" corps they own controlling shares of through their investment funds. Same reason they actually increased derivatives rather than make "corrections" after the bubble popped.
What would be the point of Dimon going in front of Obama????? Didn't the bankers do that before and they got a slap on the wrist,
Congress can't do a worse job, so I say go in front of congress
I personally have no opinion on this subject. But I think what alpha originally meant was, why did Dimon have to go in front of congress and why did Obama not have to go in front of congress.
Yes, there were plenty of reckless and immoral borrowers taking out mortgages they knew (or should have known) they couldn't afford. And yes, you can make a case that the federal government's zeal to increase homeownership levels was partly responsible for lowering lending standards. But the idea that the government is primarily to blame for this whole mess is delusional. It was the private market -- not government programs -- that made, packaged, and sold most of these wretched loans without regard to their quality. The packaging, combined with credit default swaps and other esoteric derivatives, spread the contagion throughout the world. That's why what initially seemed to be a large but containable U.S. mortgage problem touched off a worldwide financial crisis.
Quote:
Working together, progress has been made over the past few years since patterns of racial disparity in mortgage lending were first documented. While few people believe that purposeful discrimination is prevalent, ending those patterns has become a top priority of both public and private sector participants in the home mortgage market. But clearly,
more needs to be done.
The Federal Reserve Bank of Boston wants to be helpful to lenders as they work to close the mortgage gap. For this publication, we have gathered recommendations on “best practice” from lending institutions and consumer groups. With their help, we have developed a comprehensive program for lenders who seek to ensure that all loan applicants are treated fairly and to expand their markets to reach a more diverse customer base.
Underwriting Standards
Property Standards and Minimum Loan Amounts:
These standards should be checked for arbitrary rules as to the age, location, condition, or size of the property. Such standards could negatively affect applicants who wish to purchase two– to four–family homes, older properties, or homes in less expensive areas.
Obligation Ratios:
Special consideration could be given to applicants with relatively high obligation ratios who have demonstrated an ability to cover high housing expenses in the past. Many lower–income households are accustomed to allocating a large percentage of their income toward rent. While it is important to ensure that the borrower is not assuming an unreasonable level of debt, it should be noted that the secondary market is willing to consider ratios above the standard 28/36.
Down Payment and Closing Costs:
Accumulating enough savings to cover the various costs associated with a mortgage loan is often a significant barrier to homeownership by lower–income applicants. Lenders may wish to allow gifts, grants, or loans from relatives, nonprofit organizations, or municipal agencies to cover part of these costs. Cash–on–hand could also be an acceptable means of payment if borrowers can document its source and demonstrate that they normally pay their bills in cash.
Credit History:
Policies regarding applicants with no credit history or problem credit history should be reviewed. Lack of credit history should not be seen as a negative factor. Certain cultures encourage people to “pay as you go” and avoid debt. Willingness to pay debt promptly can be determined through review of utility, rent, telephone, insurance, and medical bill payments. In reviewing past credit problems, lenders should be willing to consider extenuating circumstances. For lower–income applicants in particular, unforeseen expenses can have a disproportionate effect on an otherwise positive credit record. In these instances, paying off past bad debts or establishing a regular repayment schedule with creditors may demonstrate a willingness and ability to resolve debts. Successful participation in credit counseling or buyer education programs is another way that applicants can demonstrate an ability to manage their debts responsibly. (See the section on Buyer Education.)
Property Appraisal/Neighborhood Analysis:
Terms like “desirable area,” “homogeneous neighborhood,” and “remaining economic life” are highly subjective and allow room for racial bias and bias against urban areas. The same holds true when lenders evaluate properties based on their market appeal or compatibility with the rest of the neighborhood. (See the section on Third Party Involvement in the Loan Process.) It should be noted that the Federal Home Loan Mortgage Corporation (Freddie Mac) has stated that neighborhoods undergoing revitalization should be assessed on their potential as well as their existing condition. Also, the Federal National Mortgage Association (Fannie Mae) will accept block–by–block underwriting analyses in urban neighborhoods being rehabilitated.
Employment History:
It is important to distinguish between length of employment and employment stability. Many lower–income people work in sectors of the economy where job changes are frequent. Lenders should focus on the applicant’s ability to maintain or increase his or her income level, and not solely on the length of stay in a particular job.
Sources of Income:
In addition to primary employment income, Fannie Mae and Freddie Mac will accept the following as valid income sources: overtime and part–time work, second jobs (including seasonal work), retirement and Social Security income, alimony, child support, Veterans Administration (VA) benefits, welfare payments, and unemployment benefits.
The folks like you called them racist if they didn't adhere to those methods of granting loans and threatened to expose them to the public via your propaganda arm known as the media and you want to act like it wasn't top down government intervention that caused sub-prime loans to originate?
On one hand you'll look to the government as the all-seeing all-knowing entity that grants people the right to use their money and on the other you absolve that government of any liability it has when things go terribly wrong because you just are loath to admit that you were wrong, they were wrong and the government is everything but an omnipotent all-seeing all-knowing good-will provider.
In his opening statement before the Financial Institutions Subcommittee of the Senate Committee on Banking, Housing and Urban Affairs, FDIC Director last May, Thomas M. Hoenig recommended that the bankruptcy law be amended to change the automatic stay exemption for mortgage-related repurchase agreements. See FDIC News Events at: FDIC: Speeches & Testimony - 5/09/2012
That’s not enough. All the "safe harbor" provisions for financial derivative contracts in the Bankruptcy Code should be repealed. (I would add to the list the like provisions that immunize leveraged buyouts - the "Mitt Romney Special" - as these transactions have a high potential for fraud and abuse and consequential damage to the economy.) Specifically, derivative contracts (viz. forward contracts, repurchase agreements, credit default swaps, future contracts and options) are currently exempt from the automatic stay provisions under section 362(a); the rule against enforcement of ipso facto clauses under section 365(e)(1); and also protected from trustee avoidance actions for transfers that would otherwise be deemed as voidable preferences or fraudulent transfers under the Bankruptcy Code. See 11 U.S.C. §§ 546(e)-(g) and (j). To put it simply: the bankruptcy laws do not apply to derivatives. The question is whether this is a good thing. It is not, as the current financial crisis and bailout attest. There needs to be a clear dividing line between banking that is federally insured, and market trading that is not. (This was the purpose of the Volcker Rule against proprietary trading by banking institutions highlighted by the recent losses sustained by JP Morgan Chase.) This will place the risk of loss where it belongs. The alternative is more heavy-handed, government-imposed regulation (i.e., Dodd-Frank), which will have a stifling effect on business and economic growth.
Update--Fraud amount is up to 5 BILLION dollars now. Are you folks on board with more strict banking regulations yet? I hope so.
Again, the problem is not that we need more regulations, we need someone that will enforce the regulations we have. We could enact 5000 new regulations and if no one will enforce them they are worthless.
It would not be that difficult to prosecute many of the big players under Sarbanes/Oxley but how many have been?
His company lost $2 BILLION DOLLARS of THEIR OWN MONEY.
Obama lost much more than that on green companies and GM (about $50 BILLION DOLLARS) of OUR MONEY.
Good question. JP Morgan lost much more than this during the 2008 crash and during the recession which followed. IIRC, the total would have been approx. $50 billion combined (as reported on a business news network this am).
Frankly, the focus now should be on "what did Tim Geithner know about Libor manipulation as NY FED Head and why didn't he disclose it"? http://www.cnbc.com/id/48174343
The focus is always on the private corporations instead of the corruption of the members of our own governement be they elected or appointed to head bureaucracies.
Quote:
Originally Posted by PullMyFinger
Update--Fraud amount is up to 5 BILLION dollars now. Are you folks on board with more strict banking regulations yet? I hope so.
Where has their been a fraud charge or conviction on this JP Morgan loss? The Clinton administration made the trading of derivatives legal. I'd be suprised if you have any idea what you are ranting about really. Your outrage is misplaced unless you are a stockholder; which, in that case, the loses cost you about $0.69/share on earnings.
His company lost $2 BILLION DOLLARS of THEIR OWN MONEY.
Obama lost much more than that on green companies and GM (about $50 BILLION DOLLARS) of OUR MONEY.
So, let me get this straight. You think that the money that banks gamble with is THEIR money??????
Maybe and just maybe it's more like 2 cents out of every dollar is "Their money". That's the problem, them betting with other people's money that is "Federally insured" money. They should not get a pass for losing billions on bad bets and the system should be changed so that any bets they make be made with their OWN $$$$$.
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