How did Democrats taking control of Congress in 2006 cause the Great Recession? (NAFTA, crime)

[workingclasshero]

Originally Posted by bawac34618

I am seeing this argument more and more from the right; that Democrats taking control of Congress after the 2006 midterm election caused the Great Recession and it wasn't until the GOP took control again in 2010 that things started to improve. To me, this looks like blind partisanship and willful ignorance of reality.

My assumption was that the Great Recession was caused by the bursting of a massive real estate bubble that had been building since the 1990s or maybe even before that. No single party or President can be blamed for it, though Bush bears a large part of the responsibility due to deregulation. Clinton had his hands in it as well, as did Greenspan and Bernanke.

So for those on the right who are pushing the narrative that the Great Recession was caused by the 2006 Democratic takeover of Congress, what exact policy was enacted in 2007 that caused it?

the recession came form a few areas

1. the liberal housing bubble which started in 1995 with Clinton making mortgages easier for minorities

2. globalization... which enhanced outsourcing of jobs....the liberals pushed this since the 80's, and it exploded in the 90's and early 00'

3. but the final piece, was the liberals (democrat control of congress) pushing raising the min wage in 2007,

so a liberal housing bubble, combined with loss of American jobs to afford that housing, and then you break the economies back with raising the min wage

the recession was a completely liberal issue...and btw bush was/is a liberal who did not help one bit, with making the government biggest(medicare part d), and then you add the socialist FED making the interest rates historically low

[workingclasshero]

Originally Posted by Loveshiscountry

Where are seeing the right blame the left on this? That's not something one hears. Especially nowadays with more people educated on the subject and the crash happening over 10 years ago.

Bipartisanship caused the crash. Violating a basic economic principle when you lower standards, quality and efficiency suffer. We made a ton of loans to people who didnt normally qualify. Those loans should never, ever have been made. The free market didn't do that in the past. The managed market did it. Don't play with the free market.

Deregulation had nothing to do with the cause of the crash. Tons of companies that didn't combine investment with commercial banking failed.

Violating a basic economic principle when you lower standards, quality and efficiency suffer. We made a ton of loans to people who didnt normally qualify. Those loans should never, ever have been made. The free market didn't do that in the past. The managed market did it. Don't play with the free market.

bill Clinton and his chiefs of HUB, Henry Cisneros and Andrew Cuomo are the idiots to blame on that

[le roi]

Originally Posted by workingclasshero

the recession came form a few areas

1. the liberal housing bubble which started in 1995 with Clinton making mortgages easier for minorities

2. globalization... which enhanced outsourcing of jobs....the liberals pushed this since the 80's, and it exploded in the 90's and early 00'

3. but the final piece, was the liberals (democrat control of congress) pushing raising the min wage in 2007,

so a liberal housing bubble, combined with loss of American jobs to afford that housing, and then you break the economies back with raising the min wage

the recession was a completely liberal issue...and btw bush was/is a liberal who did not help one bit, with making the government biggest(medicare part d), and then you add the socialist FED making the interest rates historically low

You heard it here first, folks. Minimum wage caused the mortgage crisis. Somehow.

[WilliamSmyth]

Originally Posted by InformedConsent

Of course, they're not going to say it's a "bail out." They did an end run around Congress and did it without the consent of Congress. Why? Because FOREIGN governments, financial institutions, and investors owned a large percentage of the $6 trillion worth of outstanding GSE MBS.

Remember when there was a huge debate surrounding the $700 billion bail out Bill in 2008, and Representative Brad Sherman came out with this gem?


https://www.youtube.com/watch?v=h9gtf6nT3zg

Congress wouldn't go for that, so the Federal Reserve had to do a $2 trillion bail out end run of foreign government, financial institutions, etc., GSE MBS-investors sans Congressional approval.

ALWAYS follow the money.

I am following the money. The GSEs in the end needed 180 billion. The $2 trillion was not part of a bailout.

[workingclasshero]

Originally Posted by beb0p

Wrong. The Bush administration actively silenced investigation into the fraudulent lending practices and kept the fraud, er, gravy train going.

Read the following from the NY State Attorney General who tried to bring down the fraud but was sued by the Bush Administration to force NY to drop the investigation.

they tried to reign in fanny/ Freddie...and the liberals balked at it lock step

Hearing from September 2003 on an administration proposal to alter the regulation of GSEs like Fannie Mae and Freddie Mac. See Congressman Barney Frank's opening statement, which begins at 4:40. It's rather amusing. Here's an excerpt of his opening statement:

I want to begin by saying that I am glad to consider the legislation, but I do not think we are facing any kind of a crisis. That is, in my view, the two government sponsored enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis. We have recently had an accounting problem with Freddie Mac that has led to people being dismissed, as appears to be appropriate. I do not think at this point there is a problem with a threat to the Treasury.

I must say we have an interesting example of self-fulfilling prophecy. Some of the critics of Fannie Mae and Freddie Mac say that the problem is that the Federal Government is obligated to bail out people who might lose money in connection with them. I do not believe that we have any such obligation. And as I said, it is a self-fulfilling prophecy by some people.

So let me make it clear, I am a strong supporter of the role that Fannie Mae and Freddie Mac play in housing, but nobody who invests in them should come looking to me for a nickel--nor anybody else in the Federal Government. And if investors take some comfort and want to lend them a little money and less interest rates, because they like this set of affiliations, good, because housing will benefit. But there is no guarantee, there is no explicit guarantee, there is no implicit guarantee, there is no wink-and-nod guarantee. Invest, and you are on your own.

Now, we have got a system that I think has worked very well to help housing. The high cost of housing is one of the great social bombs of this country. I would rank it second to the inadequacy of our health delivery system as a problem that afflicts many, many Americans. We have gotten recent reports about the difficulty here.

Fannie Mae and Freddie Mac have played a very useful role in helping make housing more affordable, both in general through leveraging the mortgage market, and in particular, they have a mission that this Congress has given them in return for some of the arrangements which are of some benefit to them to focus on affordable housing, and that is what I am concerned about here. I believe that we, as the Federal Government, have probably done too little rather than too much to push them to meet the goals of affordable housing and to set reasonable goals. I worry frankly that there is a tension here.

The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disastrous scenarios. And even if there were a problem, the Federal Government doesn't bail them out. But the more pressure there is there, then the less I think we see in terms of affordable housing.




btw the scoldee was Franklin D. Raines

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

from the NEW YORK TIMES thursday September 11 2003

New Agency Proposed to Oversee Freddie Mac and Fannie Mae - The New York Times


here are more

House Financial Services Committee hearing, Sept. 10, 2003:

Rep. Barney Frank (D., Mass.): I worry, frankly, that there's a tension here. The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios. .


House Financial Services Committee hearing, Sept. 25, 2003:

Rep. Frank: I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing. .


Rep. Maxine Waters (D., Calif.), speaking to Housing and Urban Development Secretary Mel Martinez:

Secretary Martinez, if it ain't broke, why do you want to fix it? Have the GSEs [government-sponsored enterprises] ever missed their housing goals?

Mr. Chairman, we do not have a crisis at Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Frank Raines. Everything in the 1992 act has worked just fine. In fact, the GSEs have exceeded their housing goals. . .


Senate Banking Committee, Oct. 16, 2003:

Sen. Charles Schumer (D., N.Y.): And my worry is that we're using the recent safety and soundness concerns, particularly with Freddie, and with a poor regulator, as a straw man to curtail Fannie and Freddie's mission. And I don't think there is any doubt that there are some in the administration who don't believe in Fannie and Freddie altogether, say let the private sector do it. That would be sort of an ideological position.


Senate Banking Committee, Feb. 24-25, 2004
Sen. Christopher Dodd (D., Conn.): I, just briefly will say, Mr. Chairman, obviously, like most of us here, this is one of the great success stories of all time. And we don't want to lose sight of that and [what] has been pointed out by all of our witnesses here, obviously, the 70% of Americans who own their own homes today, in no small measure, due because of the work that's been done here. And that shouldn't be lost in this debate and discussion. . .


AS PRINTED HERE
What They Said About Fan and Fred - WSJ.com

THE WALL STREET JOURNAL

===========

September 11, 2003

New Agency Proposed to Oversee Freddie Mac and Fannie Mae
By STEPHEN LABATON
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

~~ snip ~~

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.





==================
------------------

so the democrats which were only down by 1 seat in the senate STOPPED IT


the measure was voted down, with the biggest critics being Dodd and Barney Frank

the dems stopped it , all they cared about was giving mortgages to the poor that couldnt afford the mortgages to begin with,,, it falls squarely on the liberals


House Financial Services Committee hearing, Sept. 10, 2003:

Rep. Barney Frank (D., Mass.): I worry, frankly, that there's a tension here. The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios

Rep. Maxine Waters (D., Calif.), speaking to Housing and Urban Development Secretary Mel Martinez:

Secretary Martinez, if it ain't broke, why do you want to fix it? Have the GSEs [government-sponsored enterprises] ever missed their housing goals?

---------------------

House Financial Services Committee hearing, Sept. 25, 2003:

Rep. Frank: I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing.

Rep. Waters: However, I have sat through nearly a dozen hearings where, frankly, we were trying to fix something that wasn't broke. Housing is the economic engine of our economy, and in no community does this engine need to work more than in mine. Mr. Chairman, we do not have a crisis at Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Frank Raines. Everything in the 1992 act has worked just fine. In fact, the GSEs have exceeded their housing goals.
------------------------------
Rep. Frank: Let me ask [George] Gould and [Franklin] Raines on behalf of Freddie Mac and Fannie Mae, do you feel that over the past years you have been substantially under-regulated?

Mr. Raines?

Mr. Raines: No, sir.

Mr. Frank: Mr. Gould?

Mr. Gould: No, sir. . . .

Mr. Frank: OK. Then I am not entirely sure why we are here. . . .

Rep. Frank: I believe there has been more alarm raised about potential unsafety and unsoundness than, in fact, exists.

----------------------------

Senate Banking Committee, Oct. 16, 2003:

Sen. Charles Schumer (D., N.Y.): And my worry is that we're using the recent safety and soundness concerns, particularly with Freddie, and with a poor regulator, as a straw man to curtail Fannie and Freddie's mission.

-----------------------
Senate Banking Committee, Feb. 24-25, 2004:

Sen. Thomas Carper (D., Del.): What is the wrong that we're trying to right here? What is the potential harm that we're trying to avert?

Federal Reserve Chairman Alan Greenspan: Well, I think that that is a very good question, senator.

What we're trying to avert is we have in our financial system right now two very large and growing financial institutions which are very effective and are essentially capable of gaining market shares in a very major market to a large extent as a consequence of what is perceived to be a subsidy that prevents the markets from adjusting appropriately, prevents competition and the normal adjustment processes that we see on a day-by-day basis from functioning in a way that creates stability. . . . And so what we have is a structure here in which a very rapidly growing organization, holding assets and financing them by subsidized debt, is growing in a manner which really does not in and of itself contribute to either home ownership or necessarily liquidity or other aspects of the financial markets.

Sen. Christopher Dodd (D., Conn.): I, just briefly will say, Mr. Chairman, obviously, like most of us here, this is one of the great success stories of all time. And we don't want to lose sight of that and [what] has been pointed out by all of our witnesses here, obviously, the 70% of Americans who own their own homes today, in no small measure, due because of the work that's been done here. And that shouldn't be lost in this debate and discussion.
-------------------------

Senate Banking Committee, April 6, 2005:

Sen. Schumer: I'll lay my marker down right now, Mr. Chairman. I don't think Fannie and Freddie need dramatic restructuring in terms of their mission, in terms of their role in the secondary mortgage market, et cetera. Don't undo Fannie and Freddie.

---------------------------

Senate Banking Committee, June 15, 2006:

Sen. Robert Bennett (R., Utah): I think we do need a strong regulator. I think we do need a piece of legislation. But I think we do need also to be careful that we don't overreact.

I know the press, particularly, keeps saying this is another Enron, which it clearly is not. Fannie Mae has taken its lumps. Fannie Mae is paying a very large fine. Fannie Mae is under a very, very strong microscope, which it needs to be. . . . So let's not do nothing... we need to fix this before its too late.

Sen. Charles Schumer (D., N.Y.): I think a lot of people are being opportunistic, . . . throwing out the baby with the bathwater, saying, "Let's dramatically restructure Fannie and Freddie," when that is not what's called for as a result of what's happened here. . . .

Sen. Chuck Hagel (R., Neb.): Mr. Chairman, what we're dealing with is an astounding failure of management and board responsibility, driven clearly by self interest and greed. And when we reference this issue in the context of -- the best we can say is, "It's no Enron." Now, that's a hell of a high standard.






NOTICE SOMETHING?????? its the liberals that are saying F and F are fine

[beb0p]

Originally Posted by Loveshiscountry

I believe YOU "think" you've seen it. Doesn't make it true. And if you make a statement it isn't up to me to "look it up". Either show proof or don't say anything.

From the right-wing site TheGatewaypundit:
New Study Finds Democrats Fully to Blame for Subprime Mortgage Crisis that Caused 2008 Financial Disaster


Here is another one, from the infamous Breitbart:
Blame Barney Frank for the Recession, Not George Bush


And then there is Rush Limbaugh, who somehow managed to blame... Bill Clinton.
Bill Clinton Caused the Housing Crisis


Finally, there is this piece of fake news nugget:
Democratic Coverup for Fannie and Freddie Led to 2008 Meltdown


And there are many, many more out there in the crazy right-wing world. Alternative facts, people.

.

[workingclasshero]

Originally Posted by WilliamSmyth

I am following the money. The GSEs in the end needed 180 billion. The $2 trillion was not part of a bailout.

fannie is STILL asking for MORE bailouts


Feb 14, 2018 - Fannie Mae incurred a net loss of $6.5 billion in the final quarter of 2017 and announced Wednesday it is in desperate need of a taxpayer bailout. The Federal National Mortgage Association, a government-sponsored enterprise (GSE) commonly referred to as Fannie Mae, is asking the U.S. Treasury Department for $7.7 billion in taxpayer money


============================

Nov 10, 2011 - Fannie Mae wants $7.8 billion from the federal government to cover loses. Fannie Mae has already received bailout money to the tune of $112.6 billion.


====================================

2014 Fannie Mae wants $50 billion more from the federal government to cover loses






and yet the liberals said fannie/Freddie was PERFECT...nada problemo

[jman0war]

Originally Posted by InformedConsent

The cause was the Fed Gov forcing lenders to give mortgages to people who never should have qualified, and then forcing Fannie and Freddie to buy the mortgages, securitize them, and sell them as investments (MBS) to foreign governments and worldwide financial institutions and investors.

Utter nonsense.
Are you referring to the Community Reinvestment Act of 1977?
No banks were forced to give out bad loans.

Banks are creative and they devised unregulated new financial products by which it became profittable to sell mortgages to low income people via Securitization.

[le roi]

Originally Posted by jman0war

Utter nonsense.
Are you referring to the Community Reinvestment Act of 1977?
No banks were forced to give out bad loans.

Banks are creative and they devised unregulated new financial products by which it became profittable to sell mortgages to low income people via Securitization.

This is typically the point in the argument where InformedConsent posts an obscure PDF from Countrywide, and insists that it somehow explains her argument.

[middle-aged mom]

Originally Posted by Mircea

The so-called Real Estate Bubble was a product of the recession, not the cause.

The Bubble burst only because of massive numbers of defaults on mortgages.

The reason for the massive numbers of defaults on mortgages was a decline in household income.

The cause of the decline in household income was massive job losses. Even when those who lost jobs were able to find new employment, it was often at a lower wage/salary.

The cause of the massive job losses was a shift of Capital from the US to Southeast Asia, and in particular, to China. Manufacturing plants in the US were closing, and reopening elsewhere outside of the US.

The job losses were accelerated by the increase in the federal minimum wage as a result of the Fair Minimum Wage Act of 2007, enacted by Congress and signed into law by President Bush.

If Capital is not shifted to Southeast Asia, then no jobs are lost and household income does not decline, which results in people keeping up with their mortgage payments and the so-called Real Estate Bubble never bursts.

A shift in capital to China causing massive job loss causing massive defaults? I don't think so.

Tightening of monetary policies at the tail of 2005 resulted in higher interest rates in 2006.

Higher interest rates caused adjustable rate mortgages to reset.

The initial wave of defaults began in 2006-7. The speculative markets in Florida and Arizona were hit the hardest and then it expanded. Job losses in the housing sector led the charge.

The newer the mortgage the more likely it was to default. At the same time new money mortgages substantially declined- almost 40%.

Congress passed legislation in 2007 to gradually raise the Federal Minimum Wage from $5.50 to $7.25 over a 3 year period. This bill was tacked on to Katrina and other appropriation bills.

Did the $1.75 increase in the Federal Minimum Wage over a 3 year period, contribute to the Great Recession?
It certainly did not help.

The housing bubble was fueled by sub prime lending, fuel by private securitization of MBS dervivitives, fueled by independent credit rating agencies assigning AAA credit rating, fueled the Big $ to jump in.

Something is seriously out of whack when the most conservative institutional investors ( like public and private pension plans) are the primary source of funding the darkest sub prime loans while every entity in between takes a cut.

Thinking that a double- digit compounded rate of appreciation is sustainable for anything beyond a blip in time is goofy stuff because most real estate is a trickle up market.