Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
You do realize that Fannie and Freddie were not the only ones bundling mortgages? That Fannie and Freddie lost 20% of market share as non-GSE mortgage players expanded their sub-prime portfolios independent of what the GSE's were doing.
Do you understand that the reason rating agencies rated of these junk securities A and above was because of the implied backing of the US gov't through Fannie and Freddie. No Fannie and Freddie, no market for the crap, no reason to give crap loans, no housing meltdown.
Do you understand that the reason rating agencies rated of these junk securities A and above was because of the implied backing of the US gov't through Fannie and Freddie. No Fannie and Freddie, no market for the crap, no reason to give crap loans, no housing meltdown.
You made a similar "if not for Freddie and Fannie" argument in post# 85 that I undercut in post# 100.
Fannie and Freddie had no role in the credit agencies rating the way they did.
The Financial Crisis Inquiry Commission reported in January 2011 that: "The three credit rating agencies were key enablers of the financial meltdown. The mortgage-related securities at the heart of the crisis could not have been marketed and sold without their seal of approval. Investors relied on them, often blindly. In some cases, they were obligated to use them, or regulatory capital standards were hinged on them. This crisis could not have happened without the rating agencies. Their ratings helped the market soar and their downgrades through 2007 and 2008 wreaked havoc across markets and firms."
Economist Joseph Stiglitz stated: "I view the rating agencies as one of the key culprits...They were the party that performed the alchemy that converted the securities from F-rated to A-rated. The banks could not have done what they did without the complicity of the rating agencies."
What really did happen was there was conflict of interest between the rating agencies and the banks.
Why would the banksters, like those on Wall Street, and those in DC, admit any wrong doing when they have both parties in their pocket, and were responsible all the way through on repealing or creating new laws to further they and their chums wallets?
Do you understand that the reason rating agencies rated of these junk securities A and above was because of the implied backing of the US gov't through Fannie and Freddie. No Fannie and Freddie, no market for the crap, no reason to give crap loans, no housing meltdown.
As the following linked report notes a huge market developed in non-GSE backed MBS.
While the conforming markets peaked in 2003, the non-agency markets continued rapid growth through 2005, eventually eclipsing activity in the conforming market. In 2006, non-agency production of $1.480 trillion was more than 45 percent larger than agency production, and non-agency issuance of $1.033 trillion was larger than agency issuance of $905 billion [Agency being a reference to GSEs]
The report provides extensive information on the factors involved in rating a MBS.
To further show that there was a difference, the following is their analysis of the Ohio Police & Fire Pension Fund.
Further, note that this increase in exposure to risky MBS was at the expense of exposure to MBS backed by full faith and credit of the United States government, or an agency or instrumentality thereof, which dropped from $489.6 million to $58.9 million.
A huge market in non-GSE mortgage securities developed and led to the the collapse of investment banks like Lehman Brothers.
The CRA was passed in 1977, fully four years before Barney Frank made it to Congress.
What the righties try to make everyone believe is that Barney Frank was the all powerful force that had full reign of policy when the Republicans held tight control of the House of Representatives. Yes, the notion is ludicrous.
Quote:
After all, the way to understand the “Barney Frank did it” school of thought about the crisis is that it’s an attempt to turn a huge defeat for conservative ideas into a win. The reality of the financial crisis was that deregulation — which was part of a broader rightward shift in policies that played a large role in creating rapid growth in income inequality — led to an economic catastrophe of the kind that just didn’t happen during the 50 years or so when we had effective bank regulation.
So the right’s answer is to claim not just that the government did it, but that it caused the crisis by its attempts to reduce inequality! It’s kind of a masterstroke, in an evil way.
And I think it’s important to recognize the motives here. By all means let’s debunk the claims on substantive grounds, which Mike Konczal does very well. But they’ll just keep spouting these claims, and make up new ones, so you need to understand the fundamental bad faith that is driving the whole debate. link
1. The first thing to point out is that the both the subprime mortgage boom and the subsequent crash are very much concentrated in the private market, especially the private label securitization channel (PLS) market. The GSEs were not behind them. That whole fly-by-night lending boom, slicing and dicing mortgage bonds, derivatives and CDOs, and all the other shadiness of the 2000s mortgage market was a Wall Street creation, and that is what drove all those risky mortgages.
For some data, start here: ”More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions….Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.”
2. The next thing to mention is that the “affordability goals” of the GSEs, as well as the Community Reinvestment Act (CRA), didn’t cause the problems. Randy Krozner summarized one of the better studies on this so far, finding that “the very small share of all higher-priced loan originations that can reasonably be attributed to the CRA makes it hard to imagine how this law could have contributed in any meaningful way to the current subprime crisis.” The CRA wasn’t big enough to remotely cause these problems.
Quote:
As economist Robert Gordon has written, the lenders that made the bulk of subprime loans weren’t even covered by government laws to encourage homeownership. In fact, 94 percent of high-cost loans were totally unconnected from government homeownership laws. link
August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying “first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options.” (President George W. Bush, Press Conference, The White House, 8/9/07).
Why didn't Bush do any thing in the 6 years that the republicans controlled congress?
Glad you asked this most excellent question, Donna! HE DID....his administration fought with the Democrats. I'm about to post a short video that obviously and clearly proves my claim that "he did try!"
The Dems said no, there was no problem forthcoming with Fannie and Freddie's loose loaning that Obama had fought for, and the Dems even played the race card!! One of them actually called the very hearings about it, a "lynching!"
Now, the GOP as you will see..patiently in the face of these absurdities, pressed-on. The GOP, lieingly called the "party of the rich" even wanted to discuss the CEO bonuses that needed reigning-in, but the DEMOCRATS would not have any part in it.
Clips from this video, too should be used in the Campaign Commercials for the upcoming election and Unseat the whole, dang liberal establishment.
Obama is 100% correct. Not to mention on top of that, Bush gave the banks that destroyed countless people's lives billions of dollars in bailouts paid for by the taxpayer.
The housing disaster is a perfect example of what happens when those hard right "less government!" "less regulations!" cries come true.
That is a real laugher. The Gov has so many policies in place that cause/caused housing prices to skyrocket....that is a fact.
Fan/Fred injected TRILLIONS into the mortgage markets........causing a chain reaction of events. This huge injection of capital is partially responsible....along with other government programs........for the last huge bubble. BOTH parties are responsible for government meddling in the housing market.
That is a real laugher. The Gov has so many policies in place that cause/caused housing prices to skyrocket....that is a fact.
Fan/Fred injected TRILLIONS into the mortgage markets........causing a chain reaction of events. This huge injection of capital is partially responsible....along with other government programs........for the last huge bubble. BOTH parties are responsible for government meddling in the housing market.
The sooner the government gets out of the real estate business the better. Every administration for the last several decades has been supporting home ownership,the real estate lobby is one of the top 5. Does anyone see an issue with an economy that is based in large part on growth of new housing construction.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
