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There wasn’t a single person on the right that spoke out against the housing bubble. And Conservative Republicans were cashing out their houses at the same rate that everyone else was. There was ZERO conservative pushback. The whole country in its entirety went for the ride on that rollercoaster, and they ALL enjoyed the ride while it lasted. Alan Greenspan, who is a lifelong Republican, bathed in the glow and praise of that overheated economic time period. He assured Congress that it was healthy and that there was no reason for the Fed to put the brakes on it. Republicans went wild with celebratory glee. President Bush never once issued a warning to banks. He loved it too, as did the rest of his administration.
After the bubble popped, the finger pointing and blame gaming started. Bush to his credit didn’t get into that, but conservative pundits started claiming that the banks were forced by the government to make the loans...a baldfaced lie. The banks wanted badly to make those loans, and had concocted all types of magical loans to get any and everyone into a house regardless of income. The government did little more than grease the skids and act as enablers. They didn’t force the banks to do anything. The banks were gonna make those loans no matter what.
Conservatives can go kick rocks with these revisionist lies. I remember exactly what happened.
President Bush II sure was smart not to get into it. Let's face it, he was around these issues his whole life. After all, his Father inherited the S&L aftermath from President Reagan. & surely after his brother Neil's involvement in Silverado Savings and Loan:
Quote:
Silverado Savings and Loan collapsed in 1988, costing taxpayers $1.3 billion. Neil Bush, the son of then Vice President of the United States George H. W. Bush, was on the Board of Directors of Silverado at the time. Neil Bush was accused of giving himself a loan from Silverado, but he denied all wrongdoing.[29]
The U.S. Office of Thrift Supervision investigated Silverado's failure and determined that Neil Bush had engaged in numerous "breaches of his fiduciary duties involving multiple conflicts of interest". Although Bush was not indicted on criminal charges, a civil action was brought against him and the other Silverado directors by the Federal Deposit Insurance Corporation; it was eventually settled out of court, with Bush paying $50,000 as part of the settlement, The Washington Post reported.[30]
As a director of a failing thrift, Bush voted to approve $100 million in what were ultimately bad loans to two of his business partners. And in voting for the loans, he failed to inform fellow board members at Silverado Savings & Loan that the loan applicants were his business partners.[31]
Neil Bush paid a $50,000 fine, paid for him by Republican supporters,[32] and was banned from banking activities for his role in taking down Silverado, which cost taxpayers $1.3 billion. An RTC suit against Bush and other Silverado officers was settled in 1991 for $26.5 million.
What else did you think would happen when Fannie and Freddie bought $2.4 trillion worth of high-risk loans as mandated by HUD, and resold them as investments?
If the investment banks had stuck to creating CDOs out of GSE mbs it is very likely we would have avoided the collapse. But they didn't.
To WHOM did they sell the loans they originated? Fannie and Freddie. And WHY did they originate those loans? Explained here on the Clinton Admin's HUD's Issue Brief released on January 1, 2001, specifically on page 7, here :https://www.huduser.gov/portal/Publications/PDF/gse.pdf
There is absolutely zero requirement that loans had to be securitized only by the GSEs. At the height of the bubble the GSEs were not longer the leading securitizers of mortgages. The investment banks had all developed their own streams to obtain mortgages that had zero to do with the GSEs.
I lived in a more conservative part of town (Atlanta suburbs) and the families I know that lost their house, or found themselves with more debt than equity....were all conservative families. They weren't poor families. These were folks who lived in upper middle class neighborhoods and who put fancy theaters in their basements, had new cars and took fancy trips...and then found themselves under water.
I have a family member that was seeking a mortgage for somewhere around $100K at the time, they came back with an offer for half a million. He had a decent salary but not half million dollar home money, 1/3 to 1/2 of his pay would of been going to the bank for the next 30 years. He declined the offer but I would imagine there was a lot of people that fell into this trap.
If subprime loans NOT sold to F&F were the problem, WHY did the Federal Reserve have to create $2 trillion in QE out of thin air to bail out F&F? $1.44 trillion worth of F&F MBS are still on the Federal Reserve's H.4.1.
Those loans in the F&F MBS may never be paid. They'll just roll off the Federal Reserve's H.4.1 as the MBS mature, paid or not. We'll never know as the Federal Reserve doesn't have to state or recognize losses. It's artificial liquidity in the form of US Dollars injected into (in this case, global as Fannie and Freddie MBS were sold to investors, worldwide) the economy which can't be reined back in if the MBS loans default and the MBS lose value, so the US Dollar is devalued by the corresponding amount of the loss. The Federal Reserve actually loses nothing.
You REALLY need to get a clue instead of mindlessly parroting left-wing talking points.
Just too funny. You do realize that very little of the MBS on the Fed Balance sheet is from the mid-2000s. The Fed is constantly refreshing the portfolio of MBS they own. We are now roughly 15 years out. Many if not most mortgages don't last the full term of the mortgage for reasons hopefully don't have to be listed.
I have a family member that was seeking a mortgage for somewhere around $100K at the time, they came back with an offer for half a million. He had a decent salary but not half million dollar home money, 1/3 to 1/2 of his pay would of been going to the bank for the next 30 years. He declined the offer but I would imagine there was a lot of people that fell into this trap.
Predatory lending.
The 2008 Housing Crisis
Don’t Blame Federal Housing Programs for Wall Street’s Recklessness
Quote:
The real causes of the housing and financial crisis were predatory private mortgage lending and unregulated markets.
Sounds to me that the Democrats were really pushing these lenders to give out loans to low-income people, what with their "affordable" and "low-income" goals. What really struck me was the pressure for these lenders to give out loans to "underserved" areas - 31% requirement - which of course are areas with uneducated, low-income people who really can't afford to buy a home.
As a (former) business owner, the only way I would sell my service to customers unlikely to be able to pay me back (I ran credit checks on companies before taking them on as clients) would indeed be if a) the government pushed me to work for customers unlikely to pay me, and b) guaranteed that if the unqualified purchaser did not pay up, the government would make me whole. And THAT is exactly what happened with the Clinton's Administration push for lenders to hand out loans to unqualified borrowers.
The root of all this? The liberal pipedream of "equality," with the coinciding belief that everybody, even if low-income, is entitled to own a house. Our first step to avoiding a repeat of this is for liberals to acknowledge that being able to buy your own home is a privilege, not a right, and that waitresses, retail clerks, and other low-paid people have to choose between a) renting their entire lives,* or b) enrolling in a vocationally-oriented educational program to better their income prospects.
*Renting one's entire life is not necessarily bad. I know people in their 60s who never bought a house because they couldn't afford it, and the apartments (or townhouses) they live in are warm and welcoming, nicely furnished, and feel just like home.
The problem with your analysis is that at the height of the bubble the demand for mortgage loans was coming from the top (investment banks) not from the bottom (would be home owners). The banks needed the loans to create highly profitable investment products. There weren't enough loans to meet the demand.
As a business owner if you had a product you knew you could sell but your suppliers were not providing enough raw material would you not go out and seek new or additional suppliers. This is exactly what the investment banks did. They wanted the raw loans and they were very particular about the quality.
The problem with your analysis is that at the height of the bubble the demand for mortgage loans was coming from the top (investment banks) not from the bottom (would be home owners). The banks needed the loans to create highly profitable investment products. There weren't enough loans to meet the demand.
As a business owner if you had a product you knew you could sell but your suppliers were not providing enough raw material would you not go out and seek new or additional suppliers. This is exactly what the investment banks did. They wanted the raw loans and they were very particular about the quality.
Don't get me started with the multiple problems with her analyses! Suffice it to say, she appears to be following the "ban"; she is not even allowed to utter the words "Wall Street," "shadow banking," "interconnection," and "deregulation" for fear of ... ?
I agree with your post here, here is another in support:
Quote:
The rise of subprime lending was fueled in large part by seemingly inexhaustible Wall Street demand for these higher yielding assets for securitizations. Especially in a long-term, low interest rate environment, these loans, with their higher rates, were in tremendous demand with investors—a demand that Wall Street was eager to meet. The private label securities market, or PLS, Wall Street’s alternative to the government-backed secondary mortgage markets, grew significantly in the lead-up to the crisis. The expansion of an unregulated PLS market and the development of the ever more complicated financial instruments tied to it are what transformed a housing bubble into the largest financial crisis since the Great Depression. PLS volumes increased from $148 billion in 1999 to $1.2 trillion by 2006, increasing the PLS market’s share of total mortgage securitizations from 18 percent to 56 percent.40
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Suffice it to say, she appears to be following the "ban"; she is not even allowed to utter the words "Wall Street," "shadow banking," "interconnection," and "deregulation" for fear of ... ?
