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Interesting information. I have a few comments though. There was a practice of redlining that needed to be addressed, so this act was in fact a good thing, as communities of color were explicitly discriminated against. Secondly, it was not the Act that was in and of itself that was bad, as the purpose was to provide the same credit and financing that white america enjoyed to everyone else. Thirdly, it was the fundamental abuse of the act that created the problem, and the subsequent greed that ensued that promoted further abuses, which ALL politicians, including republicans, turned a blind eye too....everyone was making lots of money..so who wants to spoil the party. If Bush WANTED to reverse this act, or reign in the abuse, he could have, but for whatever reason CHOSE not too. Clearly if you look at the foreclosure crisis, it is in fact NOT centered in communities of color, it is being played out in white middle class communities, which proved to be the most profitable, and easiest route to closing transactions and subsequent abuse..which demonstrates the Act was not serving its purpose but instead being abused by corporations and a plethora of fraudulent transaction based businesses (appraisers, brokers, banks, etc).
Interesting information. I have a few comments though. There was a practice of redlining that needed to be addressed, so this act was in fact a good thing, as communities of color were explicitly discriminated against. Secondly, it was not the Act that was in and of itself that was bad, as the purpose was to provide the same credit and financing that white america enjoyed to everyone else. Thirdly, it was the fundamental abuse of the act that created the problem, and the subsequent greed that ensued that promoted further abuses, which ALL politicians, including republicans, turned a blind eye too....everyone was making lots of money..so who wants to spoil the party. If Bush WANTED to reverse this act, or reign in the abuse, he could have, but for whatever reason CHOSE not too. Clearly if you look at the foreclosure crisis, it is in fact NOT centered in communities of color, it is being played out in white middle class communities, which proved to be the most profitable, and easiest route to closing transactions and subsequent abuse..which demonstrates the Act was not serving its purpose but instead being abused by corporations and a plethora of fraudulent transaction based businesses (appraisers, brokers, banks, etc).
Oh, sure that is why McCain and Bush tried to stop it, but couldnt
And yes it was the ACT, it was not of blacks but for poor(including blacks) and middle class. This act created subprime lending, made the banks to bend rules. Then he(Clinton) created the 50-50% even worst.
The plan was a bad idea, if you dont have money you dont have a house.
No way around it, their is just no spin.
Interesting information. I have a few comments though. There was a practice of redlining that needed to be addressed, so this act was in fact a good thing, as communities of color were explicitly discriminated against.
Proof? In capitalism, senseless racism hurts a company's bottom line. If it was profitable to lend to poor blacks and hispanics, who have poor credit and no assets, banks would be happy to do that. Institutionalized racism is a government phenomenon, not a capitalist one... governments are the ones who have nothing to lose by being inefficient -- they have an unlimited source of cash to waste (taxpayer money). For instance, back when blacks were barred from teaching at universities, the private sector was happy to hire them.
Banks were forced by government to alter their lending practices, which is more of a communist rather than a capitalist action, and as a result, poor people are in massive debt. The CRA is basically part of a plan, intentional or not, to turn poor people into serfs -- property rather than people --- owned by the banks. A lot of liberal policies that are supposedly to help the poor, show no evidence of helping, and in many cases show a lot of evidence of hurting the people they're supposed to help. Rent control, minimum wage, and affirmative action are good examples of this... all of these hurt the poor / minorities that they're supposed to help.
Government organizations like Freddie Mac / Fannie Mae played a big part. These are socialist organizations, not capitalist. They in part caused this financial crisis.
Almost all famines in the world are the result of government. In an openly capitalist market, famines rarely if ever happen. The Great Depression was caused by government -- the Federal Reserve --- this was even admitted by the current chairman of the Reserve. Over and over again, the Federal Reserve has created and made worse recessions and depressions -- they're a government organization, artificially altering the financial system -- basically ripping off most of the country for the benefit of a few elite.
Redlining had been illegal long before this crisis started. It's the battle cry as to why the lending institutions were not making loans, but it's not accurate to depict it as racist banking policy. It was based upon economics and credit worthiness, which is why loans were not made in some cases, not because of the color of one's skin because the only color that matters is green. It was not profitable to take the risk on the loan as it could not be easily repackaged, before the subprime mess started, which was social policy and not based upon any sound financial principles.
Qualifying people for mortgages they could not afford was not responsible banking because the loans were ARMs at historically low levels. There was no way any responsible person who looked at the terms would have counted on payments never adjusting, which led to the land rush mentality that drove up prices since the money was free flowing.
Now, we have a mess to deal with, and municipalities have financial shortfalls. Those that have income taxes are raising them, and can real estate taxes be far behind? Either that or it's budget cuts, but those areas without local income taxes have to face deficit spending, a reduction in services, and higher tax rates.
Is anyone better off who benefited from such lending practices? People who bought a property and can still pay for it may not be able to sell it for what they owe, due to the transaction costs and 100-125% LTV ratios that were used to get them into the houses in the first place. Home ownership used to be based upon sound financial priciples, where one had to be disciplined to purchase and maintain a home, not show up at the corner mortgage office and get a loan for hundreds of thousands more than they could ever posisbly afford and never give a thought to interest rates.
Never trust a mortage broker to determine your finances, since the person who is signing the documents knows what they can afford. I know several people who did the responsible thing and actually bought well under their qualification since that was what they were comfortable paying. It was not a situation where they could not afford to make the payments on the higher amount, but it would have conflicted with their lifestyle since they like to travel, eat out nearly all the time, etc., factors that mortgage brokers overlook sicne they are looking at raw numbers.
The income tax increase may be a drop in the bucket, since it remains to be seen how far off the real estate taxes will be compared to the municipal budgets.
Yes, I am.
First the US is not 100% Capitalist.
But I am sorry, and you should know what is causing this financial crisis.
The root of this crisis is the housing and subprime lending.
And subprime lending started with a socialist plan by Clinton.
again incorrect.
This started in 1979 when they switched to the F.I.R.E. economy we have today. Actually i would take this further back to America's inception and its implementation of a individualistic based system/society. Anyway, 1979 is when the birth of the Financial, Insurance and Real Estate based economy here in the states was given birth. Better yet, we can take this back to when Bretton Woods was repealed and the gold standard was abolished. Once that happened money as debt became king of the day. This is a systemic problem, but I can't really argue these points because you need to fully understand the system to have a discussion on the topic. Read wealth of nations by Adam Smith. Then read John Maynard Keynes's work, The General Theory of Employment, Interest and Money. After that look into Bretton Woods, its abolishment and then Bretton Woods II. Next look into what is a F.I.R.E. economy and then look at the undoing of The Glass-Steagall Act. Then look into how bubbles work (we have/had a bubble based economy). Then you will get the big picture.
This started WAY before Clinton, as I said, this is systemic. You should also research what capitalism is. There is no one size fits all. There are different forms of capitalism, and the United States has one particular brand of it, and guess what? It doesnt work and never has. Basing economies on faux wealth and growing the monetary base via debt is absurd and unsustainable.
I see what you are trying to say about the whole supposed socialist home owenrship theory but it doesnt hold water. If you understand the fact we have had asset inflations or bubbles as it were to spur our economy on since 1979 with sever boom bust cycles as a result, you would then understnad this has NOTHING to do with socialism and everything to do with the system. The housing asset inflation was a last ditch effort to prolongue what was supposed to happen in 2001 after 9/11 and the bust of the telecomm and tech bubble took place.
I could go on even further but I think you should research what I have brought up, you would get a clearer understanding of the issues.
P.S.
Clinton's role in this was circumvension of Glass-Steagall Act. That is what helped to pave the way. Greenspan was the mistro of this housing problem though but again this is one domino in a entire line of dominos that currently is falling.
Proof? In capitalism, senseless racism hurts a company's bottom line. If it was profitable to lend to poor blacks and hispanics, who have poor credit and no assets, banks would be happy to do that. Institutionalized racism is a government phenomenon, not a capitalist one... governments are the ones who have nothing to lose by being inefficient -- they have an unlimited source of cash to waste (taxpayer money). For instance, back when blacks were barred from teaching at universities, the private sector was happy to hire them.
Banks were forced by government to alter their lending practices, which is more of a communist rather than a capitalist action, and as a result, poor people are in massive debt. The CRA is basically part of a plan, intentional or not, to turn poor people into serfs -- property rather than people --- owned by the banks. A lot of liberal policies that are supposedly to help the poor, show no evidence of helping, and in many cases show a lot of evidence of hurting the people they're supposed to help. Rent control, minimum wage, and affirmative action are good examples of this... all of these hurt the poor / minorities that they're supposed to help.
Government organizations like Freddie Mac / Fannie Mae played a big part. These are socialist organizations, not capitalist. They in part caused this financial crisis.
Almost all famines in the world are the result of government. In an openly capitalist market, famines rarely if ever happen. The Great Depression was caused by government -- the Federal Reserve --- this was even admitted by the current chairman of the Reserve. Over and over again, the Federal Reserve has created and made worse recessions and depressions -- they're a government organization, artificially altering the financial system -- basically ripping off most of the country for the benefit of a few elite.
Oh, I am happy to bring light in the subject.
Is a little thing called The Community Reinvestment Act or CRA.
This created subprime lending..
Let me give you a timeline...
Before this act(in the 80's) had you ever heard of subprime lending before?
Let me ask you this other question. Before this ACT do you know anybody that mortage their house 100% of value? Or was it minimum of 15%(and sometimes 20%) down payment?
I am going to tell you everything... Lets see, before Clinton
1. You didnt have credit, you dont get a loan,
2. Even if you had good credit, you have to pay 15-20% down(NEVER IN OUR HISTORY WAS 100% FINANCING UNTIL CLINTON). After Clinton 3. The subprime lending started the housing started to jump. Everybody could buy a house without anything, not even income. Banks didnt care, if they didnt pay, the Bank just resell the house and get the money back.
4. Also a lot of banks didnt care because Fannie and Freddy was buying all of this loans. Giving more money to the banks to lend and creating more loans. Pushing all of this money in the housing market,
5. Fannie and Freddie sold much of this loans in the stock markets, affecting wallstreet who thought they were save and backed by the federal gov insurance.
6. Democrats pushed Fannie And Freddie to have a balanced 50-50, 50% good loans, and 50 subprime. Now you have Fannie putting billions of dollars in subprime loans and the requirements for loans went even lower. How? here you go.
7. Republicans including Bush and McCain tryied to stop it.
9. The Housing market crashed.
10. Housing prices started going down, making all subprime loans in danger(remember a lot of them are 100% or 95%).
11. Payments on the loans went up.
12. People couldnt pay the payments.
13. Forecloser everywhere.
14. Most subprime loans where 100% to 95% of house value. Meaning if the house went down 5% of it value the banks would lose money.
15. Before, this wouldnt matter, unless a house lost 20% of value, Now just losing 5% of price the banks are in trouble.
16. FINANCIAL CRISIS.
Again you are missing the mark here. Sub Prime is not the problem. there are more Prime Adjustable Rate mortgages than sub prime adjustable rate mortgages. Sub Prime was just the prelude to the actual ball game. Sub Prime was more susceptible to faltering because of the economic situation of the borrowers, hence they were the first to go. However with or without subprime, prime borrows with these "exotic loans" were going to fail as soon as rates increased. I should also mention the bulk of exotic loans (Interest Only/ARMS) were given out to prime and near prim borrowers. The ones who are faltering now are these folks (Prime and Near Prime) and they will be resetting all the way to 2012. I should also add that these exotic loan types did NOT start with Clinton, they have been around since the 1920s. I have not researched before the 20s but they may date back further than that.
I should add that this article quotes someone as saying why these sorts of loans died off after the 1920s. The person is not being honest. They died off because of what is happening right now. Rates increase as is the way these loans work. Once the rates increased people were unable to keep up with payments and tons of people lost their homes.
This started in 1979 when they switched to the F.I.R.E. economy we have today. Actually i would take this further back to America's inception and its implementation of a individualistic based system/society. Anyway, 1979 is when the birth of the Financial, Insurance and Real Estate based economy here in the states was given birth. Better yet, we can take this back to when Bretton Woods was repealed and the gold standard was abolished.
No, you can take this back since the great depresion, when Fannie Mae was created(socialism). This is why is socialism fault, and the government created subprime.
Quote:
Once that happened money as debt became king of the day. This is a systemic problem, but I can't really argue these points because you need to fully understand the system to have a discussion on the topic. Read wealth of nations by Adam Smith. Then read John Maynard Keynes's work, The General Theory of Employment, Interest and Money. After that look into Bretton Woods, its abolishment and then Bretton Woods II. Next look into what is a F.I.R.E. economy and then look at the undoing of The Glass-Steagall Act. Then look into how bubbles work (we have/had a bubble based economy). Then you will get the big picture.
Again, all financial expert have said this problem is mainly because of housing. I guess they are all wrong...
Quote:
This started WAY before Clinton, as I said, this is systemic. You should also research what capitalism is. There is no one size fits all. There are different forms of capitalism, and the United States has one particular brand of it, and guess what? It doesnt work and never has. Basing economies on faux wealth and growing the monetary base via debt is absurd and unsustainable.
I am sorry to say but I do know what capitalism is and what socialism is, and since this financial crisis is 100% socialism then how can you blame capitalism?
Quote:
I see what you are trying to say about the whole supposed socialist home owenrship theory but it doesnt hold water.
Is funny, do a youtube search and you will see many many videos in CNN, FOX, and universities saying it...
Quote:
If you understand the fact we have had asset inflations or bubbles as it were to spur our economy on since 1979 with sever boom bust cycles as a result, you would then understnad this has NOTHING to do with socialism and everything to do with the system.
Yes, we have bubbles, like the internet bubble, but is socialism when is the government created this bubble, by pushing BILLIONS OF DOLLARS in Fannie and Freddie money in the system. Socialism created a system that everybody could get a loan, creating a huge buyers market and creating a huge bubble. Everybody could get a house, then the values started going up. Dont you understand, if Fannie or Freddie wouldnt buy all of this loans we wouldnt have this crissis, but since they did, and government(socialism) told it to buy 50% of subprime, then banks continue creating them. If Fannie wouldnt buy them then the banks would never created them in the first place.
Quote:
The housing asset inflation was a last ditch effort to prolongue what was supposed to happen in 2001 after 9/11 and the bust of the telecomm and tech bubble took place.
You are trying to mix 2 things that dont mix but clever.
Quote:
I could go on even further but I think you should research what I have brought up, you would get a clearer understanding of the issues.
Trust me, about economics i know a lot.
Quote:
P.S.
Clinton's role in this was circumvension of Glass-Steagall Act. That is what helped to pave the way. Greenspan was the mistro of this housing problem though but again this is one domino in a entire line of dominos that currently is falling.
Again, Clinton created almost all of it. He changed the way Fannie and Freddie worked, and created this whole mess,
Bush and McCain tried to stop it...
Again you are missing the mark here. Sub Prime is not the problem. there are more Prime Adjustable Rate mortgages than sub prime adjustable rate mortgages. Sub Prime was just the prelude to the actual ball game. Sub Prime was more susceptible to faltering because of the economic situation of the borrowers, hence they were the first to go. However with or without subprime, prime borrows with these "exotic loans" were going to fail as soon as rates increased. I should also mention the bulk of exotic loans (Interest Only/ARMS) were given out to prime and near prim borrowers. The ones who are faltering now are these folks (Prime and Near Prime) and they will be resetting all the way to 2012. I should also add that these exotic loan types did NOT start with Clinton, they have been around since the 1920s. I have not researched before the 20s but they may date back further than that.
I should add that this article quotes someone as saying why these sorts of loans died off after the 1920s. The person is not being honest. They died off because of what is happening right now. Rates increase as is the way these loans work. Once the rates increased people were unable to keep up with payments and tons of people lost their homes.
Yes, but again, this bubble was created by creating everybody a potential buyer. Creating a huge "fake" buyers market.
And the creating of 100% lending.
If you only took 80%(before Clinton) the house has to drop 20% of value in order for the banks to lose money. Now if only drops 5% the banks are in trouble. Again Clinton program was not only subprime but everybody,
Everybody could get a bigger house with less down.
A rich person that could get a 2 million dollar house before Clinton, now could get a 2.5 or 3 million dollar house, and with less down.
Housing was a symptom; the underlying sickness at the core of the current financial crisis was the massive and unregulated trade in credit derivatives and derivatives of derivatives which entangled many of the world's largest financial institutions in webs of bad debt, or debt that cannot even be properly valued.
The credit default swap market, for example, didn't really exist before 1995. By 2007, it had become a multitrillion-dollar market, at least nominally.
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