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I am no defending the investment bankers...their job is to make money for the shareholders...that is their ONLY job
the fact is that had the government not eased the standards... that made for bad paper (bad mortgages) ...then there would not have been bad packages in the MBS's
the bankers (private, commercial, and even the scary shadow) invest/trade money or securities to do what?..... make money..... the government forced bad loans...those bad loans were packaged as 'sweet deals' and that is the rest of the story
the MBS problem was due to bad paper packages, of loans directed by the government
This is complete nonsense most of the loans that caused the downfall were in private hands, almost none of them were required to meet any standards but go on believing that this was due to government standards. This was greed pure and simple and anyone that in real estate knew exactly what these banks and mortgage companies were doing. This was greed pure and simple, they were in love with subprime mortgages until the downward spiral.
Quote:
It is clear to anyone who has studied the financial crisis of 2008 that the private sector’s drive for short-term profit was behind it. More than 84 percent of the sub-prime mortgages in 2006 were issued by private lending. These private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year. Out of the top 25 subprime lenders in 2006, only one was subject to the usual mortgage laws and regulations. The nonbank underwriters made more than 12 million subprime mortgages with a value of nearly $2 trillion. The lenders who made these were exempt from federal regulations
Again you have no proof, none whatsoever to back up your claim to this 96 percent garbage when I have already proved that silly statement false. You just made it up and haven't countered any facts that I've brought up. None.
Keep deflecting.
Choose your number, 86%, 96% but I think you get the point, a large majority were in private hands that were unregulated and that's a fact, go read Forbes or the WSJ if you don't believe it, Nothing to do with government standards.
Choose your number, 86%, 96% but I think you get the point, a large majority were in private hands that were unregulated and that's a fact, go read Forbes or the WSJ if you don't believe it, Nothing to do with government standards.
Incorrect
From 2001-2007, Fannie and Freddie bought roughly half of all CRA home loans, most carrying subprime features
Many of these companies are middlemen who arrange mortgage loans for borrowers — including "subprime" borrowers — with banks, including CRA-regulated banks.
A huge driver of the demand for subprime loans was the demand for CRA bonds. Banks operating under the CRA could meet their obligations by buying up CRA loans or MBS built from CRA loans. The CRA created a demand that the mortgage servicers were meeting.
From the very same link you provided
Following the dot-com bust in 2000, the Federal Reserve dropped rates to 1 percent and kept them there for an extended period. This caused a spiral in anything priced in dollars (i.e., oil, gold) or credit (i.e., housing) or liquidity driven (i.e., stocks).
You don't think government is responsible? The drop was the incentive.
You missed this earlier.
In the early 1990s, Congress gave HUD the authority to set and enforce (through fines) CRA-grade loan quotas at Fannie and Freddie.
"We want your CRA loans because they help us meet our housing goals," Fannie Vice Chair Jamie Gorelick ** beseeched lenders gathered at a banking conference in 2000, just after HUD hiked the mortgage giant's affordable housing quotas to 50% and pressed it to buy more CRA-eligible loans to help meet those new targets. "We will buy them from your portfolios or package them into securities."
She described "CRA-friendly products" as mortgages with less than "3% down" and "flexible underwriting." Not just that they were CRA but that they were little to no down payment. Something that was rarely done in the past that became common place.
Government - "We need more mortgages"
People - "The biggest obstacle is a sizeable down payment"
Government - "We'll pass rules that ignore the free market and force lenders to make little to no down payment loans"
"The government pushed for greater mortgage securitization in an effort to increase CRA lending. At the behest of HUD Secretary Andrew Cuomo, Fannie and Freddie promised to buy $2 trillion of "affordable" mortgages. The government was intentionally decreasing the risks to the original lenders in order to increase loans to low-income borrowers, and minorities in particular."
>>>>>> TWO TRILLION!!!!!! <<<<<<<
**Just words right? No incentives or proof of incentives?
Jamie Gorelick Clinton Administration lawyer whom he appointed in 1997 to be Fannie Mae vice chairman despite having no formal financial experience – received over $26 million. Just by way of reference, in 2002, 21 senior Fannie Mae executives received over $1 million each.
GSEs were “regulated” by the Office of Federal Housing Enterprise Oversight (OFHEO), which was a part of HUD
I want you to think about this and respond. Do you actually think government is going to go through all the trouble of passing bills and not act on it? Is that what happens?
Prohibition was probably the most controversial and broken bill, yet it was also enforced quite a bit.
Last edited by Loveshiscountry; 05-29-2018 at 09:11 PM..
This is complete nonsense most of the loans that caused the downfall were in private hands, almost none of them were required to meet any standards but go on believing that this was due to government standards. This was greed pure and simple and anyone that in real estate knew exactly what these banks and mortgage companies were doing. This was greed pure and simple, they were in love with subprime mortgages until the downward spiral.
the greed was from the buyers
the greed from buyers who wanted mcmansions will all the bells for nothing down, interest only, no-doc
the greed from the realtors who knew if we sell this so high, more commission for us
I saw my basic Longisland house go from 140k in 95 to over 460k in 05....tripling in a 10 year span.....
had nothing to do with packaging of mortgages...had to do with the ACTUAL MORTGAGE, and mortgages being GIVEN to people who NEVER WOULD HAVE QUALIFIED under the free market... but they sure qualified under the government mandates
Loans that were rarely made previously. Keep ignoring that
Keep making things up
Keep making things up
Keep making things up and deflecting.
Fact - The government's Fannie Mae Foundation singled out one bank in particular as the role model for all other banks in America in terms of its commitment to CRA lending: Countrywide, the nation's largest mortgage lender, had committed to $600 billion in low-income or "subprime" loans as of 2003. Today, Countrywide is essentially bankrupted and has been merged with Bank of America.
A role model? hahahaha Anyone who was paying attention and had an IQ over 10 would know they would go under. History has taught us that. Well it has taught some of us. The rest deflect and ignore.
Keep ignoring that
Fact - In 1989 1 out of every 240 mortgages was little to no money down while in 2007 it was 80 in 240. Explain how the free market does that. Keep ignoring that.
Keep babbling while deflecting, it's really laughable how you don't have the courage to address what I said. Granted it would expose you as someone who isnt good at understanding the cause of the crash.
You literally have no clue he depths of your ignorance on the topic. Here’s a hint, just bc a fact or figure doesn’t feed into your biased narrative doesn’t mean it’s made up. It’s comical. Google dunning Kruger effect, you’ll learn about yourself while you flail about questioning my intellect!
I don’t need anymore courage as I have time after time shredded your weak arguments based on your preconceived narrative. Try learning what really happened if you ever want to step forth from the conformation bias you seem to bake yourself in.
Btw as for my numbers, take it up with the Minneapolis fed if you think it’s wrong. But again , facts. Learn something here, I have a feeling you might get used to it.
Choose your number, 86%, 96% but I think you get the point, a large majority were in private hands that were unregulated and that's a fact, go read Forbes or the WSJ if you don't believe it, Nothing to do with government standards.
Thanks for saving me the few minutes of pasting the link.
It must suck to see these made up facts in such liberal government cheerleader publications as forbers and the wsj, just in case poster wants to try the fake news crap.
Nice to see actual facts support an argument instead of trying to shoehorn things to fit a preconceived political narrative and working backwards to wallow in a stew of confirmation bias.
You literally have no clue he depths of your ignorance on the topic. Here’s a hint, just bc a fact or figure doesn’t feed into your biased narrative doesn’t mean it’s made up. It’s comical. Google dunning Kruger effect, you’ll learn about yourself while you flail about questioning my intellect!
I don’t need anymore courage as I have time after time shredded your weak arguments based on your preconceived narrative. Try learning what really happened if you ever want to step forth from the conformation bias you seem to bake yourself in.
Btw as for my numbers, take it up with the Minneapolis fed if you think it’s wrong. But again , facts. Learn something here, I have a feeling you might get used to it.
Keep ignoring the fact that government put rules in place and forced lenders to make a plethora of bad loans they rarely made in the past. Keep deflecting and don't respond to that statement. Why would you respond to my statement since it would out your nonsense as nothing more than a symptom.
Fact - In 1989 1 out of every 240 mortgages was little to no money down while in 2007 it was 80 in 240. Explain how the free market does that. Keep ignoring that.
I've addressed all the symptoms you posted and not once, not once have you responded to what I've posted which is the cause.
the greed from buyers who wanted mcmansions will all the bells for nothing down, interest only, no-doc
the greed from the realtors who knew if we sell this so high, more commission for us
I saw my basic Longisland house go from 140k in 95 to over 460k in 05....tripling in a 10 year span.....
had nothing to do with packaging of mortgages...had to do with the ACTUAL MORTGAGE, and mortgages being GIVEN to people who NEVER WOULD HAVE QUALIFIED under the free market... but they sure qualified under the government mandates
Yes you are mostly correct but I thought you were saying these private banks and mortgage firms were being forced into signing up bad loans, nothing could be further from the truth. Banks offering no credit checks, under qualified buyers, realtors and then repackaging these bad loans into investment devices.
Incorrect
From 2001-2007, Fannie and Freddie bought roughly half of all CRA home loans, most carrying subprime features
Many of these companies are middlemen who arrange mortgage loans for borrowers — including "subprime" borrowers — with banks, including CRA-regulated banks.
A huge driver of the demand for subprime loans was the demand for CRA bonds. Banks operating under the CRA could meet their obligations by buying up CRA loans or MBS built from CRA loans. The CRA created a demand that the mortgage servicers were meeting.
From the very same link you provided
Following the dot-com bust in 2000, the Federal Reserve dropped rates to 1 percent and kept them there for an extended period. This caused a spiral in anything priced in dollars (i.e., oil, gold) or credit (i.e., housing) or liquidity driven (i.e., stocks).
You don't think government is responsible? The drop was the incentive.
You missed this earlier.
In the early 1990s, Congress gave HUD the authority to set and enforce (through fines) CRA-grade loan quotas at Fannie and Freddie.
"We want your CRA loans because they help us meet our housing goals," Fannie Vice Chair Jamie Gorelick ** beseeched lenders gathered at a banking conference in 2000, just after HUD hiked the mortgage giant's affordable housing quotas to 50% and pressed it to buy more CRA-eligible loans to help meet those new targets. "We will buy them from your portfolios or package them into securities."
She described "CRA-friendly products" as mortgages with less than "3% down" and "flexible underwriting." Not just that they were CRA but that they were little to no down payment. Something that was rarely done in the past that became common place.
Government - "We need more mortgages"
People - "The biggest obstacle is a sizeable down payment"
Government - "We'll pass rules that ignore the free market and force lenders to make little to no down payment loans"
"The government pushed for greater mortgage securitization in an effort to increase CRA lending. At the behest of HUD Secretary Andrew Cuomo, Fannie and Freddie promised to buy $2 trillion of "affordable" mortgages. The government was intentionally decreasing the risks to the original lenders in order to increase loans to low-income borrowers, and minorities in particular."
>>>>>> TWO TRILLION!!!!!! <<<<<<<
**Just words right? No incentives or proof of incentives?
Jamie Gorelick Clinton Administration lawyer whom he appointed in 1997 to be Fannie Mae vice chairman despite having no formal financial experience – received over $26 million. Just by way of reference, in 2002, 21 senior Fannie Mae executives received over $1 million each.
GSEs were “regulated” by the Office of Federal Housing Enterprise Oversight (OFHEO), which was a part of HUD
I want you to think about this and respond. Do you actually think government is going to go through all the trouble of passing bills and not act on it? Is that what happens?
Prohibition was probably the most controversial and broken bill, yet it was also enforced quite a bit.
You still have not addressed the fact that only 10 percent of GSE's were in private hands. Yes F&F was part of the problem but to just blame the CRA which has been around for over 30 years doesn't add up. Private equity firms loved subprime loans and companies like Country Wide and Citibank loved them, as long as home prices went up they couldn't lose. No background checks, front end loaded mortgages and they got their commissions and then it all caved in.
Dodd-Frank was put in place to avoid these problems and the GOP seems to want to roll back to 2006. This current action is not that big an impact and it did address the problem with compliance with small community banks but it did go too far.
FWIW here is a short documentary with a European angle on what occurred. The part addressing the subprime market starts in part III. Note it says "there were truly frantic attempts to lend to them". "Them" being subprime borrowers.
Clearly the lenders were not be forced by government mandates.
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