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you literally don't even understand the points you make, its sad..my point was losing $$ doesn't equal going under...Wells, GS, and a few others didnt want TARP funds but were forced to accept so as not to poison the reputation of the banks that did....but again besides the point....Why was 08 different- there have been banks going belly up from bad loans forever- why was 08 different? Nobody is saying it's b/c they made too many good loans.....but why was this time different? Hmmn...
You made this all up. You laughingly refuse to address what I said. Your posts are nothing more than deflection.
- I've clearly laid out facts time and time again and you harp on some nonsense that you're clinging to.
You've presented no relevant facts.
Quote:
Originally Posted by Metsfan53
I've tried to engage you on the actual facts.
No you haven't. All you've done is deflect.
Quote:
Originally Posted by Metsfan53
and all you do is tell me I don't get to make the rules- so what are the rules- you get to ape same point over and over again and even when proven wrong you just claim you're right. I've highlighted numerous times on here when you're out of your element yet you claim it's deflection. Deflection is not addressing topics you don't comprehend and just bulldozing on and on with your nonsense.
for S&L- they were indeed losing money- but the deregulation that allowed them to lever up on risky assets that went bust and took the S&L down with them (google Michael Milken fora clue). Again- losing money =/= insolvent...you might do well to remember that. RTC was 1989 so somehow insolvent banks held on for a decade according to you? Were they frozen in time, suspended animation? did they get a "time out"
Again. One more time for everyone to see. Explain how a regulation passed on Mar 31,1980 caused the S and Ls to go under when in fact in 1980 and then in 1982 when the S and Ls overstated assets by 150 BILLION and were 120 billion to the bad side as an industry. 85 percent were losing money. Why of course the S and Ls would have righted that ship. I mean who doesn't come back from being 120 BILLION in debt. Why that's just peanuts.
b-b-b-but deregulation.
Quote:
Originally Posted by Metsfan53
2008- here's a clue - banks make bad loans all the time,
Again. One more time for everyone to see. In 1989 1 in 240 mortgages were 3% down of less. In 2007 it was 1 in 3 or 80 in 240. You're going to sit here and tell everyone thats how the free market works? LMAO.
Quote:
Originally Posted by Metsfan53
many of them not even from banks but from shadow banking sector- but again you don't comprehend this for some reason (you're S&L fantasy is another time bad fans caused an issue- why didn't this threaten to bring down global economy at that time??). The liquidity crunch from short term borrowing and long term lending, derivatives, CDO's and securitization, CDS, leverage, along with role of shadow banking sector all played a part. But again- I know this stuff b/c I was in the room in 08, 09, and afterwards...You keep highlighting to those with a clue you don't have one- no matter how many times you screw - I know you are but what am I....of course I'm sure I'm breaking your "rules' again ,huh?
Again. Lenders were forced by government to make loans they rarely made into common place loans. Anything else is after the fact and can only be considered symptoms.
School is out.
Last edited by Loveshiscountry; 05-26-2018 at 02:09 AM..
Are you related to another member here? ( get a clue: it's never been "about him or you" ~ not now, not here, not ever ... )
It's not about me. Keep trying with your nonsense while you refuse to address what I've posted.
Quote:
Originally Posted by ChiGeekGuest
As for this other incomprehensible nonsense above: for one thing, get your chronology straight.
Nothing wrong with my chronology or you would have posted the EXACT thing I said and refuted it. Instead you post a bunch of garbage that you have absolutely no idea how it applies to what I've said.
Quote:
Originally Posted by ChiGeekGuest
Take a passing glance at something like this as an overview or chronological timeline ( if possible drag yourself away from your own mirror for a change of pace ~ granted you must be quite the handsome one to be so self-absorbed ):
Nothing wrong with my chronology or you would have posted the EXACT thing I said and refuted it. Instead you post a bunch of garbage that you have absolutely no idea how it applies to what I've said.
Quote:
Originally Posted by ChiGeekGuest
1966-1979 Market interest rates fluctuate with increasing intensity and S&Ls experience difficulty with each interest rate rise. Interest rate ceilings prevent S&Ls from paying competitive interest rates on deposits. Thus, every time the market interest rates rise, substantial amounts of funds are withdrawn by consumers for placement in instruments with higher rates of return. This process of deposit withdrawal ("disintermediation") and the subsequent deposit influx when rates rise ("reintermediation") leaves S&Ls highly vulnerable. Concurrently, money market funds become a source of competition for S&L deposits. S&Ls are additionally restricted by not being allowed to enter into business other than accepting deposits and granting home mortgage loans.
1967--State of Texas approves major liberalization of S&L powers. Property development loans of up to 50% of net worth are allowed.
1972--Hunt Commission recommendations would have created federal savings banks to replace S&Ls. The banks would have had additional authority to make commercial loans and invest in commercial paper.
1973--FINE Study would have granted same powers for S&Ls as for banks, including checking accounts. Also recommends consolidation of the regulators. Interest rate insurance was recommended if S&Ls are to remain primarily involved in housing finance.
1978--Financial Institutions Regulatory and Interest Rate Control Act of 1978 enacted. Weak version of previous recommendations. Allows S&Ls to invest up 5% of assets in each of land development, construction, and education loans.
1979--Doubling of oil prices. Inflation moves into double digits for second time in five years.
1980-1982 Statutory and regulatory changes give the S&L industry new powers in the hopes of their entering new areas of business and subsequently returning to profitability. For the first time, the government approves measures intended to increase S&L profits as opposed to promoting housing and homeownership.
March, 1980--Depository Institutions Deregulation and Monetary Control Act (DIDMCA) enacted. The law is a Carter Administration initiative aimed at eliminating many of the distinctions among different types of depository institutions and ultimately removing interest rate ceiling on deposit accounts. Authority for federal S&Ls to make ADC (acquisition, development, construction) loans is expanded. Deposit insurance limit raised to $100,000 from $40,000. This last provision is added without debate.
November, 1980--Federal Home Loan Bank Board reduces net worth requirement for insured S&Ls from 5 to 4 percent of total deposits. Bank Board also removes limits on the amounts of brokered deposits an S&L can hold.
August, 1981--Tax Reform Act of 1981 enacted. Provides powerful tax incentives for real-estate investment by individuals. This legislation helps create a "boom" in real estate and contributes to over-building.
September, 1981--Federal Home Loan Bank Board permits troubled S&Ls to issue "income capital certificates" that are purchased by FSLIC and included as capital. Rather than showing that an institution is insolvent, the certificates make it appear solvent.
1982-1985 Reductions in the Bank Board's regulatory and supervisory staff. In 1983, a starting S&L examiner is paid $14,000 a year. The average examiner has only two years on the job. Examiner salaries are paid through OMB, not the Bank Board. During this period of supervisory and examination retraction, industry growth increases. Industry assets increase by 56% between 1982 and 1985. 40 Texas S&Ls triple in size between 1982 and 1986; many of them grow by 100% each year. California S&Ls follow a similar pattern.
January, 1982--Federal Home Loan Bank Board reduces net worth requirement for insured S&Ls from 4 to 3 percent of total deposits. Additionally, S&Ls are allowed to meet the low net worth standard not in terms of generally accepted accounting principles (GAAP), but of even more liberal regulatory accounting principles (RAP).
April, 1982--Bank Board eliminates restrictions on minimum numbers of S&L stock holders. Previously, it required at least 400 stock holders of which at least 125 had to be from "local community", with no individual owning more than 10% of stock and no "controlling group" more than 25%. Bank Board's new ownership regulation would allow a single owner. Purchases of S&Ls were made easier by allowing buyers to put up land and other real estate, as opposed to cash.
December, 1982--Garn - St Germain Depository Institutions Act of 1982 enacted. This Reagan Administration initiative is designed to complete the process of giving expanded powers to federally chartered S&Ls and enables them to diversify their activities with the view of increasing profits. Major provisions include: elimination of deposit interest rate ceilings; elimination of the previous statutory limit on loan to value ratio; and expansion of the asset powers of federal S&Ls by permitting up to 40% of assets in commercial mortgages, up to 30% of assets in consumer loans, up to 10% of assets in commercial loans, and up to 10% of assets in commercial leases.
December, 1982--In response to the massive defections of state chartered S&Ls to the federal system, Nolan Bill passes in California. Allows California-chartered S&Ls to invest 100% of deposits in any kind of venture. Similar plans adopted in Texas and Florida.
1983--Lower market interest rates return many S&Ls to health. 35% of institutions, however, still sustain losses. 9% of all S&Ls (representing 10% of industry assets) are insolvent by GAAP standards.
March, 1983--Edwin Gray becomes Chairman of the Federal Home Loan Bank Board. Beginning in 1984 and continuing throughout his tenure, regulatory and supervisory measures passed by the Bank Board begin the reversing of deregulation.
November, 1983--Bank Board raises net worth requirement for newly chartered S&Ls to 7%.
March, 1984--Failure of Empire Savings of Mesquite, TX. "Land flips" and other criminal activities are a pattern at Empire. This failure would eventually cost the taxpayers approximately $300 million.
April, 1984--Bank Board moves jointly with the FDIC to attempt to eliminate deposit insurance for brokered deposits. Federal court rejects this attempt in mid-1984 as overstepping statutory limits.
July, 1984--Bank Board requires S&L management to adopt policies and procedures for managing interest rate risk.
January, 1985--Bank Board limits the amount of brokered deposits to 5% of deposits at FSLIC insured institutions failing to meet their net worth requirements. Bank Board also limits direct investment (equity securities, real estate, service corporations, and operating subsidiaries) to the greater of 10% of assets or twice the S&L's net worth, provided the institution meets regulatory net worth.
March, 1985--Ohio bank holiday. Anticipated failure of Home State Savings Bank of Cincinnati, OH and possible depletion of Ohio state deposit insurance fund cause Governor Celeste to close Ohio S&Ls. Eventually, those that can qualify for federal deposit insurance are allowed to reopen.
May, 1985--S&L failures in Maryland eventually cause loss to state deposit insurance fund and Maryland taxpayers of $185 million. Ohio and Maryland S&L failures helped kill state deposit insurance funds.
July, 1985--Chairman Gray begins transfer of federal examiners to the twelve regional Federal Home Loan Banks so that they are no longer overseen by OMB and their salaries are paid directly by the Bank Board system.
August, 1985--Only $4.6 billion in FSLIC insurance fund. Chairman Gray tries to gain support for recapitalizing FSLIC on Capitol Hill. In 1986, GAO estimates the loss to the insurance fund to be around $20 billion.
December, 1985--Bank Board allows S&L examiners to "classify" questionable loans and other assets for the purpose of requiring loan loss reserves.
However the efforts to promote home ownership were swamped by the investment banks you believed they found a great way to make a ton of money. Which they did, well until most of them lost it all. Their method involved promoting subprime mortgages, which were a key element in the structured investments that they were selling. Their new business lines grew so fast that the supply of subprime mortgages started to dry up; so they started buying subprime mortgage originators to guarantee a supply of subprime mortgages.
There is just noway to analyze the growth of subprime mortgages in the mid 2000s without understanding the demand from the top for subprime mortgages. This demand vastly exceeded the growth of subprime due to government policy.
Bolded. Are you talking about consumer demand or government demand? Aren't they related?
Quote:
Originally Posted by WilliamSmyth
This strategy is also why the first large banks that started to fail were heavily involved in bundling subprime mortgages.
Mortgages that the free market rarely made. When was the last time this occured on such a scale? The easy lending to mortgage companies? Someone mentioned New York right before the crash of the Great Depression.
Aka Golden West, Franklin First Financial, etc. been pointed out numerous times to these posters to try educate them on the topic to no avail. Instead they bury their heads in sand and harp on one part of the issue as though it’s the only thing. Thy also don’t get that appetite for subprime paper lead to things like synthetic Cdo or CDS on MBS where you can take exposure numerous times on same bond then lever up 30 to 1 But they don’t understand this aspect at all.
You don't get that government should never have forced lenders to make low quality loans. Treat the cause don't react to symptoms.
I never said ""a writer in the 90s would have known about what was about occur in the mid 2000s. ""
what I and the NYT, and the FED have said is that the problems of the mid00's...were caused by the mid 90's
they all thought this is cool, look we are doing a good thing for those that have been locked out of home ownership.....but like most of the stuff out of Washington..... great idea, lousy plan
I think I remember you when this was brought up a while back. I thought you or whomever had a little too much emphasis on the Clinton Admistration. I went with, the problem began under the Carter Administration, one could even say Ike, grew legs under the Clinton Administration, then was put on steroids under the Bush administration.
Then I read this
"Previously, the CRA directed government to monitor banks’ lending practices to make sure they did not violate fair lending rules in poor neighborhoods. With the 1995 change, the government published each bank’s lending activity and started giving bank ratings based primarily upon the amount of lending it performed in poor neighborhoods. These changes empowered community organizations, such as ACORN, to pressure banks to increase lending activities in poorer neighborhoods — which involved reducing mortgage loan standards — or face backlash from those organizations’ private and political associates."
and this
"From 1993-1999, the Clinton Administration replaced many of Fannie Mae’s key executives, including the CEO, the CEO’s number two, and nearly half the board of directiors. As a government sponsored enterprise (GSE), the President had the authority to make those appointments. The board, which increasingly consisted of Presidential appointments, then worked with the new CEO to change Fannie Mae executives’ salary structures in order to incentivize them to reach higher mortgage targets."
the bolded led to
"Between 1994 and 2004, Fannie executives improperly reported $10.6 billion of earnings. Franklin Raines, the Clinton-appointed CEO, received over $90 million. Jamie Gorelick — a top 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."
CHA - CHING!!!
"Almost immediately, Fannie began to loosen its standards, requiring people to show lower wealth amounts in order to qualify for mortgages. By 1997, Fannie Mae was offering to buy 97% loan-to-value (LTV) mortgages. If a mortgage is $300,000 on a house worth $500,000, the LTV is 60% (3/5). The higher the mortgage relative to the house value, the higher the LTV. In other words, in 1997, Fannie started offering to buy mortgages that required recipients to put barely any money down. Fannie’s subprime backing caused the percentage of all new US mortgages that were of subprime quality to rise to 13% by 1999, versus 5% in 1994 when the Clinton Administration changed the CRA. According to a 2002 Housing Department report, “From 1993 to 1998, the number of subprime refinance increased tenfold.”
However the efforts to promote home ownership were swamped by the investment banks you believed they found a great way to make a ton of money. Which they did, well until most of them lost it all. Their method involved promoting subprime mortgages, which were a key element in the structured investments that they were selling. Their new business lines grew so fast that the supply of subprime mortgages started to dry up; so they started buying subprime mortgage originators to guarantee a supply of subprime mortgages.
There is just noway to analyze the growth of subprime mortgages in the mid 2000s without understanding the demand from the top for subprime mortgages. This demand vastly exceeded the growth of subprime due to government policy.
This strategy is also why the first large banks that started to fail were heavily involved in bundling subprime mortgages.
Re: bold: Agree.
To take this one step further (or to 'look back' several steps) from the Great Depression until present day ~ would look like this:
Neither the American people nor economists nor US politicians (ostensibly acting on fiduciary responsibilities on behalf of American people) knew beforehand that financial deregulation was bound to produce a general looting environment.
Present day, we should know better now.
Fr'instance, it took over 12 attempts in the timespan of 25 years for Congress to finally 'drive in the last nail on the coffin' of the "Depression-era relic", Glass-Steagall. This rewarded the FIRE sector's decades of lobbying efforts & boatloads of $ bribing US Congress.
Present day, we should know better now.
We should know by now what creates the criminogenic environments that drive our financial debacles. Some refer to the 'shorthand' of the 3 Ds ~ deregulation, desupervision, & de facto decriminalization.
If Corporations are people, they are the 'immortals'.
This is part of the 'evolution' leading up to present day. Crimes are still being committed, as was the case back in the daze of the S & L scandals & semi-organized debacles ... however now, very few take the 'perp walk'.
How can a 'legal however fictive person' go to prison for their crimes?
Now 'they' just pay the fines & move on. Further 'adding insult to injury' they are often enabled to do so without even the admission of any wrongdoing. After all, 'business as usual' & all that.
Re: underlined: this 'strategy' has turned the real economy into a Las Vegas styled casino.
It's not about me. Keep trying with your nonsense while you refuse to address what I've posted.
Nothing wrong with my chronology or you would have posted the EXACT thing I said and refuted it. Instead you post a bunch of garbage that you have absolutely no idea how it applies to what I've said.
Nothing wrong with my chronology or you would have posted the EXACT thing I said and refuted it. Instead you post a bunch of garbage that you have absolutely no idea how it applies to what I've said.
The highlighted in red section is to out the garbage and deflection. But keep copying and pasting while not addressing what I said.
Your entire post is deflection. It's a joke. Either address what I said or stay out of the conversation.
I really don't know where you're coming from. Are you saying you can just block out anything that doesn't fit your ideology-based narrative?
The Libertarian Alan Greenspan when questioned after the more recent global financial imbroglio:
Quote:
“You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others,” said Representative Henry A. Waxman of California, chairman of the committee. “Do you feel that your ideology pushed you to make decisions that you wish you had not made?”
Mr. Greenspan conceded: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”
Bolded. Are you talking about consumer demand or government demand? Aren't they related?
Mortgages that the free market rarely made. When was the last time this occured on such a scale? The easy lending to mortgage companies? Someone mentioned New York right before the crash of the Great Depression.
Here I will provide a much shorter quote from the FCIC (which I had previously provided). As documented by the FCIC and elsewhere the demand for subprime (tranche BBB) was coming from the investment banks.
By 2004, creators of CDOs were the dominant buyers of the BBB-rated tranches
of mortgage-backed securities, and their bids significantly influenced prices in the
market for these securities. By 2005, they were buying “virtually all” of the BBB
tranches. Just as mortgage-backed securities provided the cash to originate mort-
gages, now CDOs would provide the cash to fund mortgage-backed securities. Also
by 2004, mortgage-backed securities accounted for more than half of the collateral in
CDOs, up from 35% in 2002. Sales of these CDOs more than doubled every year,
jumping from $30 billion in 2003 to $225 billion in 2006. Filling this pipeline would require hundreds of billions of dollars of subprime and Alt-A mortgages.
Its my impression that this type of demand for subprime had never occurred before. But then the belief in structured credit investments which could turn BBB securities into AAA had never occurred before.
Again quoting from the FCIC.
Still, it was not obvious that a pool of mortgage-backed securities rated BBB could be transformed into a new security that is mostly rated triple-A. But math made it so.
The securities firms argued—and the rating agencies agreed—that if they pooled
many BBB-rated mortgage-backed securities, they would create additional diversifi-
cation benefits. The rating agencies believed that those diversification benefits were
significant—that if one security went bad, the second had only a very small chance of
going bad at the same time.
...
Relying on that logic, the CDO machinegobbled up the BBB and other lower-rated
tranches of mortgage-backed securities, growing from a bit player to a multi-hundred-
billion-dollar industry. Between 2003 and 2007, as house prices rose 27% nationally
and $4 trillion in mortgage-backed securities were created, Wall Street issued nearly
$700 billion in CDOs that included mortgage-backed securities as collateral.
With ready buyers for their own product, mortgage securitizers continued to demand loans
for their pools, and hundreds of billions of dollars flooded the mortgage world. In ef-
fect, the CDO became the engine that powered the mortgage supply chain.“There is a
machine going,” Scott Eichel, a senior managing director at Bear Stearns, told a finan-
cial journalist in May 2005. “There is a lot of brain power to keep this going.”
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):
I really don't know where you're coming from. Are you saying you can just block out anything that doesn't fit your ideology-based narrative?
