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I have a vested interest in understanding the world as it is not as I want it to be.
The reason I object to solely blaming the GSEs is that it creates the environment in which a bill like this current bill can likely pass. This current bill is attempting to remove the restrictions on financial institutions so enabling them to return to the very behaviors that led to the crash in the first place. Those solely focused on what the GSEs did or didn't do or what the government did or didn't do totally miss what the private investment banks did, what AIG did, what the credit rating agencies did.
those ''behaviors''' are government directed
do you really think a financial institution is going to give a loan to somebody who is not credit worthy, unless they are DIRECTED to
HUD sets the rules...which ALL financial institutions HAVE TO FOLLOW
its like the guy on CNN who was crying (in 07) about losing his house....we all felt sorry...until he admitted it was a 700k house, and he only made 60k/yr (therefore he should have only qualified for a 200k house)
hud MANDATED that institutions give those who HAD BEEN unworthy a loan....
hud/fannie/Freddie all the government nightmare of the housing crash
but apparently you would rather blame the pawn of the institutions, than blame the king of the government.........chess much
do you really think a financial institution is going to give a loan to somebody who is not credit worthy, unless they are DIRECTED to
HUD sets the rules...which ALL financial institutions HAVE TO FOLLOW
its like the guy on CNN who was crying (in 07) about losing his house....we all felt sorry...until he admitted it was a 700k house, and he only made 60k/yr (therefore he should have only qualified for a 200k house)
hud MANDATED that institutions give those who HAD BEEN unworthy a loan....
hud/fannie/Freddie all the government nightmare of the housing crash
i would just like to say that as a general rule, any action that dismantles dodd frank makes me happy.
What would make me far more happy would be the reinstating of Glass Stegal. but i dont think that will happen.
in other news, it would also make me happy to have both dodd and frank (the horrible public leaches not their horrible law) put in stocks on the public square to be pilloried with rotten fruit.
Not irrelevant. Fannie and Freddie were acquiring significant numbers of subprime loans before the crash. I've already posted the percentages they held/guaranteed before the crash in this thread:
I have a vested interest in understanding the world as it is not as I want it to be.
The reason I object to solely blaming the GSEs is that it creates the environment in which a bill like this current bill can likely pass. This current bill is attempting to remove the restrictions on financial institutions so enabling them to return to the very behaviors that led to the crash in the first place. Those solely focused on what the GSEs did or didn't do or what the government did or didn't do totally miss what the private investment banks did, what AIG did, what the credit rating agencies did.
It was a huge quid pro quo. You can bet Boehner has his finger in the pie here.
do you really think a financial institution is going to give a loan to somebody who is not credit worthy, unless they are DIRECTED to
HUD sets the rules...which ALL financial institutions HAVE TO FOLLOW
its like the guy on CNN who was crying (in 07) about losing his house....we all felt sorry...until he admitted it was a 700k house, and he only made 60k/yr (therefore he should have only qualified for a 200k house)
hud MANDATED that institutions give those who HAD BEEN unworthy a loan....
hud/fannie/Freddie all the government nightmare of the housing crash
but apparently you would rather blame the pawn of the institutions, than blame the king of the government.........chess much
I'm sorry, but to you understand the role of the CDO marketplace?
The investment banks, which were not under government mandates for housing, thought they had discovered the holy grail with the CDO. They thought they had found a way to take low grade loans and turn them into triple A investments. Just look at how a CDO cubed is formed, which takes tranches of CDOs that were so bad that they had been passed over twice with no buyers; bundles them again into a new a CDO and viola you have an attractive triple A rated security suitable for risk adverse investors.
This is what many believed at the time. They believed in this alchemy. That is how you get investment banks demanding a supply of low grade loans. Why low grade? Because they come with higher fees and interest rates that can be used by the investment banks to create more attractive CDOs. Merrill Lynch was so interested in a supply of low grade loans to feed their CDO product line that they started buying sub prime lenders.
One of the top executives at AIG believed in the CDO so much that he proclaimed that there was very little risk to AIG insuring the CDOs via credit default swaps. He proclaimed that at the most AIG would see less than .1% of losses; therefore they had no need to set aside reserves to cover potential losses.
BTW, the GSEs never created or sold a CDO.
The investment banks were not only doing this with mortgage loans, but also student loans, auto loans and credit card debt.
It was highly profitable (for all involved) right up until the point that it was discovered that the CDOs didn't entirely mitigate all the risk of investing in low grade loans.
It was a huge quid pro quo. You can bet Boehner has his finger in the pie here.
Unfortunately I think this is truly bi-partisan affair. The financial industry has a lot of money to throw around. I also think their are true believers who think any and all government regulation is bad.
Unfortunately I think this is truly bi-partisan affair. The financial industry has a lot of money to throw around. I also think their are true believers who think any and all government regulation is bad.
Of course it is. That is why all of the bankers that committed fraud were permitted to skate.
Treat the cause not the symptom. Tell Congress to quit interfering with the free market. The mortgage industry used conservative lending practices and made a lot of money. When you lower standards efficiency suffers. Basic economics.
In 1990 1 out of every 240 mortgages was 3 percent down or less. It was too risky a loan. When someone doesn't pay their mortgage they don't keep up their house. Banks loose money during the foreclosure process in that scenario, even in a stable housing market. In 2006 1 in every 3 loans was 3 percent down or less. In 2007, 45 percent of all first time mortgages was no money down. THAT was the cause, everything else is a symptom.
Glass-Steagal couldn't have prevented the following companies from failing (and getting bailed out) because they didn't combine investment with commercial banking -
AIG, Bear Stearns, Lehman Brothers, Merrill Lynch, Goldman Sachs, Wachovia, Wamu, Countrywide Financial.
Glass-Steagal couldn't have prevented the following companies from failing (and getting bailed out) because they didn't combine investment with commercial banking -
AIG, Bear Stearns, Lehman Brothers, Merrill Lynch, Goldman Sachs, Wachovia, Wamu, Countrywide Financial.
Yes they did. Not that their words here were anything but smoke cover.
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