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The policies of Bill Clinton and Barney Frank started the "housing for everyone" bubble, giving 500k mortgages to people on welfare. What will be the next democrat scheme to blow up? My guess is "student loans for everybody."
Wall Street, with the blessing of both political parties created the housing bubble. Lots of irresponsible folks got loans they couldn't afford, but anyone who thinks welfare people got half a million dollar loans is a freakin idiot to the 10th degree.
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But to understand how the conditions that led to the housing bubble occurred you have to understand the thinking of the day. Which is the only point I was making. All efforts to place any kind of regulations on the derivatives marketplace were resisted by people across the political spectrum.
I understand that. I understand that is what both sides wanted BUT it wasn't Greenspans job to give it to them. If he was unable to see the coming damage he had no business being in the position he was in.
So its the governments fault if they do something and its the governments fault if they do nothing. Under those standards I can see why all things are blamed on the government.
They need to do the right thing at right times. There are things the government is responsible for, but if they choose to do the wrong thing, then they deserve to get the blame for it. Greenspan and Bush admin did the exact wrong thing when they threw more fuel in the fire at a time when they should have cooled things down.
The Fed deserves the most blame because regulating banking and making decisions to either throw in more fuel, or cool things down is one of their primary duties. They blew it big time, and yet both the Bush and Obama admits allowed them to "fix" the damage. The Fed serves their true masters, the bankers, and when presidents behave like this, they are basically letting the banks run the country.
Wall Street, with the blessing of both political parties created the housing bubble. Lots of irresponsible folks got loans they couldn't afford, but anyone who thinks welfare people got half a million dollar loans is a freakin idiot to the 10th degree.
In this area many did. I'm trying to find the articles in the Washington Post archives and I'm still wading through them. They did a whole series on people on TANF or making only $15K-$20K/year being qualified by brokers for $500K houses. Which they lived in for 3 months and then were evicted. There was one right down the steet from me, as a matter of fact.
Allowing investment banks to self regulate is just another government failure among many other failures. Even Greenspan ans SEC admitted as much. Greenspan went on TV during the peak of the book (election year) to promote sub-prime mortgages. He told people to take advantage of them while the rates were still low. He KNEW the adjustable rate mortgage rates had nowhere to go but up, and he promoted them anyway. There was a lot of stuff going on, and the blame needs to be assignes to many different parties, not just one. It was the fiasco of the century, and the government and the Fed was in position to stop it, but they did nothing but add more fuel to the fire.
When I bought my house 18 years ago, in the middle of Clintons first term, they were really pushing the adjustable rate mortgage on us. It is affordable and you can buy a bigger house.
Glad I took the fixed mortgage!
The housing bubble didn't cause the recession and financial crisis. It was the deregulation of the financial services industry that allowed those bad mortgages to get wrapped up as CDS and stamped as AAA. Clinton did sign the financial deregulation bill and should share the blame, but it was pushed hard by conservative Republicans, Wall Street, and their allies.
Right.............................. no toxic mortgage assets.......................no bubble.
Who created those "toxic mortgages"? Throwing financial assets to Wall Street is like putting bloody chickens in a tank of sharks. Of course they will "eat the chickens". Good policy would be to keep the chickens away from the sharks in the first place.
When I bought my house 18 years ago, in the middle of Clintons first term, they were really pushing the adjustable rate mortgage on us. It is affordable and you can buy a bigger house.
Glad I took the fixed mortgage!
Reagan pushed for housing initiatives too, but at that time it was the right thing at the right time. As for adjustable rates, if the rates were high today, and likely to go down in the future, then taking an ARM mortgage would make sense, because the future rates will be lower. Greenspan in 2004 promoted ARMs when rates were extremely low, and could only go up in the future. It's like handing out hand grenades with the pin pulled out. It was the worst possible time to take such mortgages.
There was one guy everyone called an old nutjob and a kook.
Yes, I voted for that "kook" in 2008 and 2012. He was the only person out of all candidates from both parties who had identified the root causes and had solutions for them. He was not allowed to speak in 2008, and when he did speak the cameras zoomed in on McCain and Romney who skickered as Paul spoke.
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