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I love how everyone wants to move the discussion to mortgages, while ignoring the fact that it would not have been the problem it was if investment and banking was held separate.
Its like saying "well yeah the baby died, but thats because someone turned on the washing machine with him inside of it by accident". Ignoring the whole conversation about not putting the baby in the washing machine!
On December 1, 2014, the House of Representatives passed H.R. 5421, the Financial Institution Bankruptcy Act ("FIBA"); which, if enacted into law, would create a new subsection V to Chapter 11 of the Bankruptcy Code for insolvent bank holding companies. This legislation mirrors S. 1861 that would amend the Bankruptcy Code to add a separate Chapter 14 proceeding for banks and large financial entities. (Currently, banks are ineligible for bankruptcy reorganization under 11 U.S.C. § 109(b)(3)(B), and an insolvent bank is put into federal receivership administered by the FDIC that insures deposit accounts.) What FIBA and S.1861 are really about is the repeal of title II of Dodd-Frank restrictions on proprietary trading by bank entities and their holding companies and its "orderly liquidation authority" provisions. Not surprisingly, both pieces of legislation are backed by the powerful banking lobby that has promoted the proposed amendments to the Bankruptcy Code on the rather speculative (if not outright specious) assertion that bankruptcy would avoid future taxpayer bailouts as occurred following the economic crash in 2008. However, this is hardly likely, as both FIBA and S.1861 would leave in place - with but brief respite - the "safe harbor" provisions for financial derivative contracts in the Bankruptcy Code, while repealing the restrictions on trading in such high-risk securities under Dodd-Frank, as well as its provisions for enforcing the accountability of highly compensated bank executives. Whichever is enacted, it will be back to business as usual; and what happened in 2008 will surely happen again; and you and I (and everyone not responsible) will end up paying for it.
One of the basic rules of our economic system is that individuals and families can fail but big industrial companies and financial concerns cannot be allowed to loose value and hurt the investors. These investors are happy to take the profits of speculation and adept at passing on the losses to everyone else.
When the bank wins, it reaps all the gold. When the bank loses, it charges it's depositors.
Yeah, but the ones in the financial industry were "suicided"- Like the guy that shot himself in the face with the nail gun a dozen times.
Nail gun guy owned 40% of a title company He embezzled about $2 million of customer funds from escrow accounts. He and his firm were being investigated.
No ties to Wall Street. Just another white collar criminal that was being investigated.
Wifey owned 60% of the firm. Maybe she took the nail gun to him. Seems reasonable Denver LE would have considered the possibility. It was determined the guy used a nail gun to shoot himself in the chest 7x before firing a fatal nail into his head.
Media that pays writers by the click know readers love the prospect of massive conspiracy theories and so they link unrelated events.
On December 1, 2014, the House of Representatives passed H.R. 5421, the Financial Institution Bankruptcy Act ("FIBA"); which, if enacted into law, would create a new subsection V to Chapter 11 of the Bankruptcy Code for insolvent bank holding companies. This legislation mirrors S. 1861 that would amend the Bankruptcy Code to add a separate Chapter 14 proceeding for banks and large financial entities. (Currently, banks are ineligible for bankruptcy reorganization under 11 U.S.C. § 109(b)(3)(B), and an insolvent bank is put into federal receivership administered by the FDIC that insures deposit accounts.) What FIBA and S.1861 are really about is the repeal of title II of Dodd-Frank restrictions on proprietary trading by bank entities and their holding companies and its "orderly liquidation authority" provisions. Not surprisingly, both pieces of legislation are backed by the powerful banking lobby that has promoted the proposed amendments to the Bankruptcy Code on the rather speculative (if not outright specious) assertion that bankruptcy would avoid future taxpayer bailouts as occurred following the economic crash in 2008. However, this is hardly likely, as both FIBA and S.1861 would leave in place - with but brief respite - the "safe harbor" provisions for financial derivative contracts in the Bankruptcy Code, while repealing the restrictions on trading in such high-risk securities under Dodd-Frank, as well as its provisions for enforcing the accountability of highly compensated bank executives. Whichever is enacted, it will be back to business as usual; and what happened in 2008 will surely happen again; and you and I (and everyone not responsible) will end up paying for it.
And the pros on this site will try to make that smell like roses. Me I will be looking to retrench to safer areas out of equities.
" Sort of " privatizing FNMA was nothing more than a federal balance sheet maneuver. It still had to dance to the HUD tune. While the guarantee was not explicit, it was implied all along.
Creating FHLMC to compete with FNMA was a tad redundant and serves no purpose in the current environment.
I work one zip code, about 100 square miles in 4 counties. I have tracked every single short sale/ foreclosure since 2007. In every instance, there was more than one mortgage and/ or a refinance with a cash out. Homeowners were using their paper equity to live beyond their means.
Most continued to live in these properties for years without paying their mortgage or property taxes. Strategic defaults were common when it became inconvenient to own an asset that was worth less than they owed or the equity was used to buy a property elsewhere, plan B
The U.S.has a long history of regional real estate bubbles and busts. What made this one so different is that so many had no skin in the game, not even an amount consistent with a security deposit on a typical rental.
It's convenient for the masses to blame government and banks for what happened. I am unaware that a gun was held to anyone's head that forced them to speculate that property values would appreciate at compounded double digits, indefinitely and so " what the heck, I work hard for my money and therefore I am entitled to livie beyond my means".
Many want to see the bankers in prison but turn a blind eye on the dad who got to play the big man for one day by giving-his daughter her dream $80,000 wedding or whatever. Somehow, we are supposed to feel bad for him when after not paying his mortgage or taxes for 3 years, the bank finally takes back his house.
If someone robs a bank of $80k they go to prison. If someone sucks their equity out and walks away, they get a free pass and a temporary ding to their credit score.
I rarely get to do this with you, but you deserve this:
It's convenient for the masses to blame government and banks for what happened. I am unaware that a gun was held to anyone's head that forced them to speculate that property values would appreciate at compounded double digits, indefinitely and so " what the heck, I work hard for my money and therefore I am entitled to livie beyond my means".
And what about the Banks having skin in the game like they did in the past?
Is bundling up worthless securities with good ones and then selling it to someone else having skin in the game?
Banks should be required to own the loan until it is paid off.
It was not the masses that lobbied government for increased home ownership.
It was the banks because they wanted houses to sell to anyone that could fog a mirror to keep their game going.
We see what happened in 1994 well before the financial crisis when an attempt was made by Brooksleyt Born to regulate derivatives. The bankers stormed DC and demanded Summers put a stop to it and the rest is history.
Pushing Home ownership and easy loans would never have happened if the Banksters did not approve.
They stood to make a lot of money and did and when it blew up demanded the tax payers to pay again for their losses.
The problem is lobbyists have no skin in the game.
Corporations lobby for "Free Trade" and want everyone else to pay for it
Banks lobby to to create more CDS and want everyone else to pay for it
Pharma and Insurance Lobby and want everyone else to pay for it.
When are they going to have skin in the game?
Lobbying with money is not "Freedom of Speech" but legalized bribery and has killed many business in this country, even more than the few violent protesters that destroyed business.
I am not saying that it is right. And we should not have to be placed again with so few options with TGTF concerns like in 2008. However, most of the bail money was not taken from tax payers. The vast majority of money was Fed created and existed short term within the Fed/banking system
Well by golly lets turn on the printing press for everyone then.
It is quite a crooked scheme when banks can get free money from the fed, lend it out to us at exorbitant interest rates and then using our money, "pay it back"
Banks employ (arguably more) people just like the automakers do. Without banks, the nation grinds to a complete stop. A bank disappears, that's a bad thing. Conversely, there are millions of already-available cars for people to drive. Why is an automaker too big to fail and but not a bank? Are liberals seeking cars they can't finance? That's just odd.
GS had nothing to due with the housing bubble...the bubble/bust was GOVERNMENT CAUSED... banks are NOT going to lend to people that cant pay UNLESS they are DIRECTED to from the GOVERNMENT..in 1995 clinton/cisneros changed the rules for mortgages through hud/fannie/freddie\
Exactly. I posted the same thing in another thread...
Quote:
Originally Posted by InformedConsent
False. Clinton-era liberals caused the 2008 financial crisis. The Clinton-era HUD imposed Affordable Lending Goal Mandates on the 2 biggest sources of mortgage financing in the U.S., Fannie and Freddie. Mortgage lenders HAD to make those little to no down payment and subprime loans because HUD mandates stipulated that more than 50% of the loans Fannie and Freddie bought and resold as MBS HAD to be made to low-income earners, exactly those who had little to no money for a down payment, and as it turned out, not enough income to make their mortgage payments.
The HUD low-income loan mandates forced Fannie and Freddie to loosen their "conforming loan" lending standards, thereby negatively impacting the entire mortgage industry.
Quote:
"Fannie Mae and Freddie Mac, government-sponsored enterprises (GSEs) in the secondary mortgage market, arethe two largest sources of housing finance in the United States. They fund these mortgages by purchasing loans directly from primary market mortgage originators, such as mortgage bankers and depository institutions, and holding these loans in portfolio, or by acting as a conduit and issuing mortgage-backed securities (MBS), which are then sold in the capital markets to a wide variety of investors.
HUD is the mission regulator for Fannie Mae and Freddie Mac, and a major aspect of this regulation involves setting minimum percentage-of-business goals for the GSEs’ mortgage purchases. These housing (or lending) goals deal with the enterprises’ support for low-income lending and lending in underserved geographic areas. Given the dominant role of the GSEs in the mortgage market, the housing goals play an important role in encouraging mortgage originators to undertake more affordable lending. The Department recently updated these goals, significantly increasing them for the years 2001-03.
In March 2000, HUD issued a proposed rule, significantly increasing the GSEs’ affordable housing goals for the post-2000 period, and this rule was finalized in October."
Countrywide was one of Fannie Mae's best loan originator partners:
Quote:
"...Countrywide tends to follow the most flexible underwriting criteria permitted under GSE and FHA guidelines. Because Fannie Mae and Freddie Mac tend to give their best lenders access to the most flexible underwriting criteria, Countrywide benefits from its status as one of the largest originators of mortgage loans and one of the largest participants in the GSE programs. When necessary—in cases where applicants have no established credit history, for example—Countrywide uses nontraditional credit, a practice accepted by the GSEs."
Now you know why Mozilo never went to jail. He and Countrywide were only following Clinton-era HUDfederal government mandates.
Had those increasing amounts of increasingly higher-risk mortgages not started defaulting en masse (which was bound to happen as HUD mandates forced a dramatic loosening of lending standards, i.e., no/low down payment, no doc loans, so-called "alternative credit," etc.), the 2008 financial crisis wouldn't have happened. Financial institutions know how to manage risk appropriately. That's what they do. Clinton-era HUD mandates pulled the rug out from under normal risk management and made everything extremely high risk, though that was not disclosed by Fannie and Freddie when they sold their MBS to financial institutions and investors worldwide. That came back to bite the U.S. and the rest of the world in the @ss when increasing amounts of those HUD-mandated higher risk loans began defaulting.
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