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Democrats destroy everything over time, some things take them longer than others but they're pretty successful in the end at destroying whatever it is they touch.
That's why Glass-Steagall was put in place. But that got repealed..remember ?
There's plenty wrong when the government tells you to count unemployment as money coming in to qualify for a loan. Geeze..that should be obvious to anyone.
It really should be. I understand the desire low income people have to own a home. Trust me, I get it. But you have to be smart about it, realistic and say "Maybe buying home while I'm unemployed isn't the best idea." This just seems like such a basic piece of knowledge to me. Like a "sky is blue" fact.
I posted this in November 2008, a week after the election. Most people have probably forgotten about it by now.
But they shouldn't have. The history it describes, is just as true now as it was then, and just as true as when it happened over the span of the last 30 years or so.
Once we get through the obligatory "Fox News always lies" hysteria from the usual suspects, these events of the past are very much worth discussing.
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Have you seen the Special Report composed by Fox News, on the financial crisis? It's a hour-long show, and been broadcast several times. Someone has put it on YouTube, in six segments. Fox calls it "Saving Our Economy". Go to YouTube and do a search on that title, and you should get all six segments. They vary from 5 to 10 minutes each, about 45 minutes running time total (no commercials).
It's a GREAT explanation of how the crisis started, who did what, what the results were, etc. A real must-see.
Here's a summary:
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Sept. 23, 2008: Treasury Secretary Henry Paulson: "The events leading us here began many years ago, starting with bad lending practices by banks and financial institutions, and by borrowers taking up mortgages they couldn't afford."
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The Federal National Mortgage Association (FNMA, or "Fannie Mae") was created in 1938 during the Great Depression, to create a market for mortgages where they could be bought and sold.
In 1968, Lyndon Johnson and a Democratic Congress spun off Fannie Mae so that it would not show up in the Federal budget. But the Federal govt was always there, ready to bail out Fannie Mae if problems happened. This enables Fannie Mae to offer lower rates for the mortgages it bought, since it was not taking the risks that other banks and institutions had to. In 1970, the Federal Home Loan Mortgage Corporation ("Freddie Mac") was formed, to create competition for Fannie Mae, since ordinary banks could NOT compete with the government-backed rates they offered.
The Community Reinvestment Act (CRA) was passed by a Democrat Congress and signed by Jimmy Carter in 1977. It made sure banks were lending to people of all colors and income levels. But things quickly began going off the rails, as activist groups found a new weapon in the law: The could start suing lenders for discrimination if they didn't lend to enough minority families, regardless of the families' ability to pay the loans back as promised. Banks began making riskier and riskier loans for fear of having to fight expensive lawsuits.
Community groups began bullying the banks, especially one called the Association of Community Organizers for Reform Now ("ACORN"). It hired several specialized lawyers, including a young man named Barack Obama, to teach its employees how to go to the homes of bank CEOs and senior officers, harassing and publicly embarrassing them while remaining within the limits of local law to avoid prosecution. At one point, ACORN brought a lawsuit against a thrift merger in Illinois, insisting that the lending institutions had not made as many loans to minorities as ACORN thought they should. The bank replied that such loans would be financially irresponsible, and would put ALL the bank's customers at unacceptable risk. ACORN prevailed in court, and banks began making more and more risky loans to home buyers who could have never qualified for those loans under ordinary circumstances.
In late 2000, in the last days of the Clinton administration, the government ordered Fannie and Freddie to increase the numbers of these risky ("sub-prime") mortgages they were buying from banks and lending institutions across the country. They did, lowering their rates and buying more and more, until fully half their portfolios consisted of these risky sub-prime mortgages, combined and packaged in various ways.
The Bush administration raised red flags starting in April 2001. Their 2002 Budget Request declared that the size of mortgage giants Freddie Mac and Fannie Mae is "a potential problem" because financial trouble in either one of them "could cause strong repercussions in financial markets".
In 2003, the White House warning about Fannie and Freddie, was upgraded to a "Systemic Risk that could spread beyond just the housing sector".
As Fannie and Freddie continued to lower their rates and buy mortgages, lenders made more and more mortgages to buyers with questionable ability to pay, safe in the knowledge that they could immediately turn around and sell the mortgages to the government-sponsored Fannie and Freddie, thus avoiding any consequences if the loans were later defaulted. They were happy to make more and more such mortgages, collecting fees for each and selling the mortgages to F&F.
Countrywide Financial chairman Angelo Mazzillo literally started screaming at Wall Street Journal editor Paul Gigot, when Gigot asked him about the wisdom of making so many loans to buyers unlikely to pay them back. Mazzillo insisted loudly that Gigot had no idea what he was talking about, did not understand the first thing about mortgage lending, etc., etc. He failed, however, to answer any of Gigot's questions in even the simplest terms or explain why they were "wrong".
In Fall 2003, the Bush Admin was pushing Congress hard to create a new Federal agency to regulate and supervise Fannie and Freddie, both Government Sponsored Entities, or GSEs.
At a Congressional hearing on Sept 10, 2003, John Snow, Secretary of the Treasury stated: "We need a strong, world-class regulatory agency to oversee the prudential operations of the GSE's, and the safety and soundness of their financial activities."
At that same hearing, ranking member of the House Financial Services Committee Barney Frank (D-MA) defended his practices with regard to Fannie Mae and Freddie Mac: "Fannie Mae and Freddie Mac, are not in a crisis."
Frank said the Fed Govt should be encouraging F&F to do more to get low-income families into homes:
"The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up a possibility of serious financial losses to the treasury - which I do not see, I think we see entities which are fundamentally sound financially and can withstand some of the disaster scenarios - the more pressure there is there, then the less I think we see in terms of 'affordable housing' ".
The top executives at Fannie and Freddie began cooking their books, exaggerating their sales in their quarterly reports, so that the company officials could claim they had met their companies' sales targets, and thus collect huge salary bonuses. They were finally caught in 2004. Several of them stepped down, but none was ever punished, or even charged. One of them, Franklin Raines, CEO of Fannie Mae, later gave financial and housing advice to the campaign of Presidential contender Barack Obama.
At a House Financial Services Committee Hearing on Feb. 17, 2005, Alan Greenspan warned against one of the fundamental ideas of modern liberalism, the idea of putting all our eggs in one basket by concentrating financial activity into just a few big agencies in central government: "... Enabling these institutions to increase in size - and they will once the crisis in their judgment passes - we are placing the total financial system of the future at a substantial risk."
He later added at another hearing on on April 6, 2005: "If we fail to strengthen GSE regulation, we increase the possibility of insolvency and crisis."
Senator Charles Schumer (D-NY) ignored any possibility the F&F might be in trouble at that hearing, and simply pointed to the advantages some people had gotten from the government's activities: "I think Fannie and Freddie ... are an intrinsic part of making America the best-housed people in the world... if you look over the last 20 or whatever years, they have done a very, very good job."
Schumer also complained, "Things are good in the housing market. Why are people entertaining radical change?"
On April 7, 2005, Treasury Secretary John Snow warned again: "These large portfolios, unchecked in their growth over the last decade or so, pose a real problem." The Senate Banking Committee adopted strong regulation that would have prevented Fannie and Freddie from acquiring these bad mortgages. All of the Republicans on the committee voted for it, and all the Democrats voted against it, and it passed out of the committee on a straight party-line vote. But Democrats then filibustered the bill on the Senate floor, preventing it from being brought to a vote.
Freddie Mac and Fannie Mae was active in making campaign contributions to politicians, from money that ostensibly was for low-income mortgages. The top two recipients were:
Christopher Dodd (D-CT): $165,000
Barack Obama (D-IL): $126,000
The highest-receiving Republican was Bob Bennett (R-UT), who got $108,000. Further down the list was John McCain (R-AZ), who accepted $25,000.
On May 25, 2006 in the Senate, John McCain (R-AZ) sounded more warnings over the huge size and lack of discipline in the government companies, and sponsored a bill to regulate the companies more firmly: "For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac... and the sheer magnitude of these companies and the role they play in the housing market... the GSEs need to be reformed without delay."
McCain's bill was voted out of committee on a straight party-line vote: All Republicans voted for it, and all Democrats voted against. Democrats then announced they would filibuster the bill in the Senate, as they had the previous year's regulatory legislation. Republicans knew they did not have enough votes to achieve the 60% needed, and so never brought the bill to the Senate floor.
By the beginning of 2008, Fannie Mae and Freddie Mac had bought up over $4 trillion in mortgages, roughly one-quarter of which was risky sub-prime mortgage paper. With interest rates rising, these rickety homeowners started defaulting on their loans. Only about 2% of them defaulted by January 2008, but the effect was disastrous. Banks began to get leery of lending money to each other, knowing that their fellow banks held substantial assets that might default and become worthless, thus making the banks unable to pay back their loans to each other.
Banks and lending institutions began collapsing or seeking emergency help: Countrywide Financial, Lehman Brothers, insurer AIG, Bear Stearns, IndyMac bank, etc. buckled to their knees as paralysis spread. The huge numbers of risky subprime mortgages, had become like a "poison pill" that choked the institutions that had swallowed them. The Fed finally took over Freddie Mac and Fannie Mae, but the damage had long been done.
Congress appropriated nearly $1 trillion in emergency funds (as of Nov. 2008 - LA) to loan to, or otherwise prop up, failing financial institutions. But none of the original legislation that had spurred decades of risky lending, has been repealed in all the "bailout" frenzy, and there are no bills pending to do so.
As of this writing (Feb. 2013), there are still no plans to repeal any of the legislation that triggered the risky lending and, eventually, the crash and recession we are still suffering from.
Crazy idea:EVERYBODY, Republicans and Democrats, are responsible for the current mess. Both were more than happy to write and pass legislation over the last 20 years that led to this mess, taking credit during the boom years, and now both are pointing fingers at each other trying to pass the blame. To quote JFK: "Success has many fathers, while failure is an orphan"
Over the last two decades, we've had every possible combination of party control between the President and the two chambers of Congress, it is foolish to believe a single party is completely to blame.
It really should be. I understand the desire low income people have to own a home. Trust me, I get it. But you have to be smart about it, realistic and say "Maybe buying home while I'm unemployed isn't the best idea." This just seems like such a basic piece of knowledge to me. Like a "sky is blue" fact.
I wonder if Obama got into too much debt personally would he spend more money to get out of debt? Obamas and Dems reasoning is azz backwards.
Why don't people admit the damn truth. Both party's have failed us miserably, and both party's share in the guilt of delivering to us bad economys.
Some of us can actually admit our side, is far from perfect, guilty, and liars, just as the other side is. Stop making excuses that one side is better then the next, one side is more brainwashed, more then the other, you have it backwards.
And stop with the damn excuses Bush has been gone how long now, what did Obama do in his 4 years, that he promised us he would do, unify the Country and all it's people, Bull, lessen our Debt Bull, not spend as past Presidents without first talkint to both sides, that is real Bull. And give to us a more prosperous Country, and that is the biggest bull of all.
BentBow has it right.
One side is so gosh dang guallable, it is so laughable beyond any words. One side sells you by throwing the bull, and bull they give out. Both sides have failed this Nation, and Obama in his past 4 years, never lived up to his Promise of bringing to us a Prosperous more Unified Nation.
If anything the Country has gone down hill, is more divisive then ever in my lifetime. And people who never ever were on food stamps or welfare, for the first time in their life under this administration, they now found themselves, in that situation.
Middle class won't admit it, but under this administration, they suffer deeply, and sorry to say, their suffering ain't going to end anytime soon.
To sit here and post it is one side over the other, is beyond sutpdiity, beyond words, and beyond having a brain in one's head. Both sides, soon as you admit the damn truth to yourself, better the rest of us will be. Or continue with your ignorance, and it will be that ignorance that will give most of us grief.
Democrats destroy everything over time, some things take them longer than others but they're pretty successful in the end at destroying whatever it is they touch.
When's the last time a republican president balanced the budget, or did anything besides implement more huge government and spending ourselves into oblivion?
There is nothing wrong with subprime loans per se. Virtually every VA and FHA loan is subprime. The same is true with most commercial loans guaranteed by the SBA. These loans are not a problem provided that they are serviced "in house" by the bank. The problem was the unregulated "wholesale marketing" of them as debt securities. The question is whether banks should be allowed to do this. The answer is no because of the risk exposure. Allowing banks to deal in these high-risk, secret transactions is against all rules of bank accountability. (Even to this day the government does not know where all the TARP money was spent; nor has JP Morgan Chase accounted for how many billions were lost in its unauthorized trading.) There has to be a clear dividing line between banking transactions, such as mortgage loans, that are insured, and market trading, such as the sale of mortgage-backed securities, that are not; otherwise the risk of loss is placed on the government, and ultimately the taxpayer. Banks should be in the business of lending money and not speculating with depositor funds on the stock market. It's as simple as that.
Actually Wendell, it's not nearly as simple as that ... it's one of the many cover stories or narratives floating about that has one purpose to serve .. that is, support the notion, regardless of the details, that the whole mess was reckless gambling by financial institutions that went south. As long as you believe that, they don't give a rat's behind what else you believe, or what details you think are true.
The reality is, this was a deliberately planned financial heist, eclipsing all mass criminal heists in the entire history of mankind, which is truly a mouthful, given the plentiful examples of the past. Greater than the Great Depression, with massive wealth stolen that exceeds the total of every dollar ever created since the establishment of the United States of America ... and still, few realize or understand what has happened, because the full impact of it has yet to be realized. In fact, we're on the extreme outer edge of the symptoms that are going to become dramatically worse ... that light at the end of the tunnel is actually a locomotive bearing down on us, which will make the financial crisis of 2008 look like the good old days.
Those who think this financial mess was created by defaults in the public mortgage sector have absolutely no clue as to what has actually transpired. These defaults were not just a foregone conclusion, they were an integral part of the whole scheme, necessary to keep the fraud going. The issuance of these wholesale high risk mortgages simply provided the required vehicle for the planned scam, which only needed warm bodies to sign for loans that would be used to create 10, 20 and 50 times the starting mortgage loan value in derivatives, sold over and over again, creating (by some estimates) upward of 200 Trillion dollars in illusory assets, sold worldwide, which has brought the world economy on the brink of total collapse. Heck, people can't seem to do simple math anymore ... if it were just these defaulted loans that were the source of the problem, that could have been dealt with EASILY, and much cheaper than the massive amounts of money doled out to the financial institutions in alleged bail outs, that were actually used to keep the fraud going.
One aspect of this worked something like this .... a mortgage is issued for say $200,000 ... inbuilt into the contract unbeknown to the home buyer, mortgage insurance is taken out, payable to the lender (80% of the total mortgage value) should the buyer default. The bank then packages bunches of these mortgages, and resells them several times to several different investors, collecting several times the amount of the original loans in up front payments ... that's how you turn $200,000 into $5 Million virtually overnight (now you know why the banks were so willing to lend this money to people they knew were guaranteed to default, and especially those on adjustable rates). But why was the default of these loans such a necessary part of this? Because if you sell a mortgage to someone, they expect to get the freaking payments!!! Now what if you sell that same mortgage to 10 different investors? All 10 want the mortgage payment .... so the bank has to pay it ... and they use that huge pile of money they received up front in the sale of that mortgage to pay all of the investors. But as soon as that mortgage defaults, they're off the hook, and they get a lump sum of 80% from the insurance company that they took oyt the mortgage insurance with!! Now multiply that one mortgage by Thousands and Thousands of mortgages over a few years .... now you're talking about some serious money being generated in cash. But that's only the appetizer ... we haven't even gotten to the main course, let alone desert and after dinner cognac.
During all of these mortgage shenanigans, what happens to real estate values? They go up, up, up ... not just residential either .. if residential goes up, so too does commercial real estate ... property, buildings, etc. And what happens when those held assets inflate? Speculative expansion, speculative investment also starts cooking hot, and loans are taken in the commercial side also. Everybody is getting drunk on asset inflation and stock market gains, which continues to provide the fuel for the creation of more and more of those mortgage backed securities and derivatives, sold to investors, pension fund managers, local municipalities and county and state governments all investing assets. This "bubble" is literally tapping every source of investment money that exists ... and what is being sold to them is a pure illusion .. totally worthless (that oft used term "toxic debt" which is code for Ocean front property in Arizona). These banker gangsters devised this scheme to do exactly what was done, right from the very beginning. They're scheme drove real estate values sky high (which is always what happens when interest rates are set low, and lots of that cheap money is allowed to flow in). And the higher those values are driven up, the more money that can be lent, and the bigger the quick return as those mortgages are packaged and sold to multiple investors. Now are you getting the idea of what is going to be served for the main course? That's right .... the bubble is popped. The liquidity dries up, the artificial boom in the economy comes to a screeching halt, business begins to fall off, jobs are lost, mortgages are defaulted on, and and the good old "Market Correction" is now underway. The property values plummet, preventing people and businesses from selling to break even .. so they're stuck like chuck, just as they were supposed to be. Banks foreclose, mortgage insurance money is collected in mass, driving the insurance companies under water like everyone else ... except, the bankers that is. Remember that they already collected way more than they lent out by packaging and selling those mortgages ... now they collect the insurance too . and all they have left are a bunch of angry, broke investors who are SOL, because all the bank has to show them is dead property that is worth only a fraction of what the investors paid for.
Now can you guess what's for desert? Yes ... BAIL OUTS .... we've got to bail out the "Too Big To Fail" financial institutions, else the planet will stop spinning. So, instead of putting them all behind bars where they belong for committing such massive, deliberate fraud ... we shower them with more Billions and Trillions. And while all of this is going on .. and has captured everyone's attention ... the Federal Reserve Gangsters transfer off the books and unaccounted for .. 16 Trillion Dollars to foreign owned financial institutions and banks (this was discovered by he limited audit done by the GAO).
Now this is just part of the scam ... there is much more to it, and some of it I really don't understand at all, but isn't this already enough? 100 to 200 Trillion created in phony illusory derivatives ... 16-20 Trillion in hard assets stolen ... property foreclosed, businesses bankrupted, and the "federal government" now says it needs to buy up all of those bad loans ... meaning the Government is now the numero uno massive land lord who owns all of that residential and commercial real estate. And they will buy it with money that they intend on making your children, and their children pay for, because you'll be long dead while that debt will never go away.
How do you like them Apples?
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