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.
The Conference Board Consumer Confidence Index®, which had declined in September, deteriorated further in October. The Index now stands at 47.7 (1985=100), down from 53.4 in September. The Present Situation Index decreased to 20.7 from 23.0 last month. The Expectations Index declined to 65.7 from 73.7 in September.
Just for context, why don't you post those January and February numbers for us again. They certainly were popular among your crowd back in February and March.
Oh, and by the way...
"With the sixth consecutive increase, the LEI's six-month growth rate has improved to its highest pace since 1983," says Ataman Ozyildirim, Economist at The Conference Board. "Except for average workweek and building permits, all the leading indicators contributed positively to the index this month. At the same time, the contraction in the coincident economic index has halted in recent months, but the continued downtrend in employment is keeping this index of current economic conditions from rising faster."
Housing in the New Millennium: A Home Without Equity is Just a Rental with Debt
Joshua Rosner
Graham Fisher & Co.
November 29, 2000
Abstract:
This report assesses the prospects of the U.S. housing/mortgage sector over the next several years. Based on our analysis, we believe there are elements in place for the housing sector to continue to experience growth well above GDP. However, we believe there are risks that can materially distort the growth prospects of the sector. Specifically, it appears that a large portion of the housing sector's growth in the 1990's came from the easing of the credit underwriting process. Such easing includes:
* The drastic reduction of minimum down payment levels from 20% to 0%
* A focused effort to target the "low income" borrower
* The reduction in private mortgage insurance requirements on high loan to value mortgages
* The increasing use of software to streamline the origination process and modify/recast delinquent loans in order to keep them classified as "current"
* Changes in the appraisal process which has led to widespread overappraisal/over-valuation problems
If these trends remain in place, it is likely that the home purchase boom of the past decade will continue unabated. Despite the increasingly more difficult economic environment, it may be possible for lenders to further ease credit standards and more fully exploit less penetrated markets. Recently targeted populations that have historically been denied homeownership opportunities have offered the mortgage industry novel hurdles to overcome. Industry participants in combination with eased regulatory standards and the support of the GSEs (Government Sponsored Enterprises) have overcome many of them. If there is an economic disruption that causes a marked rise in unemployment, the negative impact on the housing market could be quite large. These impacts come in several forms. They include a reduction in the demand for homeownership, a decline in real estate prices and increased foreclosure expenses.
These impacts would be exacerbated by the increasing debt burden of the U.S. consumer and the reduction of home equity available in the home. Although we have yet to see any materially negative consequences of the relaxation of credit standards, we believe the risk of credit relaxation and leverage can't be ignored. Importantly, a relatively new method of loan forgiveness can temporarily alter the perception of credit health in the housing sector. In an effort to keep homeowners in the home and reduce foreclosure expenses, holders of mortgage assets are currently recasting or modifying troubled loans. Such policy initiatives may for a time distort the relevancy of delinquency and foreclosure statistics. However, a protracted housing slowdown could eventually cause modifications to become uneconomic and, thus, credit quality statistics would likely become relevant once again. The virtuous circle of increasing homeownership due to greater leverage has the potential to become a vicious cycle of lower home prices due to an accelerating rate of foreclosures.
-----------------------------
so I guess you think Bush did this....funny how people were talking about it BEFORE bush even was elected.
The New York Times
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: Thursday, September 30, 1999
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.
Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.Home ownership has, in fact, exploded among minorities during the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.
In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.
----------------------
notice the date of the NYT article...1999...BEFORE bush
I think it was hard to find a spot in the parking lot after about 7:30, but there was certainly no financial crisis at any of the GSE's in 2003.
Quote:
Originally Posted by workingclasshero
here is some thing from late 2000
Yes, it says that the housing industry had experienced strong growth, that hurdles posed by traditional prime lenders moving in to serve the low- and moderate-income communities that they had for decades simply ignored were being effectively resolved, and that the successful introduction of traditional mortgage financing into these broader markets had set the stage for continued strong results across the industry.
It also said that in the event of a global economic collapse, market conditions would be expected to deteriorate. I don't think that news came as any actual surprise to anyone.
Quote:
Originally Posted by workingclasshero
so I guess you think Bush did this....funny how people were talking about it BEFORE bush even was elected.
None of the conditions that eventually combined to produce the credit crisis was in place yet before Bush was elected. As of mid-2000, the federal funds rate was at 6.5% and a 30-year fixed rate mortgage was still above 8%. While the predatory finance companies that had previously monopolized credit markets in low- and moderate-income communities had already been dealt a major blow by the Russsian financal crisis of 1998, the slew of unregulated private brokers that would later provide the fuel for the credit crisis fire had not yet fully established themselves in the vacuum that resulted. And of course there hadn't yet been the tax cuts for the rich or the sluggish economic growth that would cause the Fed to cut interest rates to zero and pledge to leave them there until economic activity picked up. All of that is a horse of quite a different color from anything that had existed pre-2000.
The New York Times
Fannie Mae Eases Credit To Aid Mortgage Lending, By STEVEN A. HOLMES
Published: Thursday, September 30, 1999
notice the date of the NYT article...1999...BEFORE bush
Notice that the article isn't relevant to anything other than the expansion of traditional credit into non-traditional communities. Laws to prohibit the long-standing practice of red-lining entire neighborhoods had been on the books since the 1970's, but it was not until Clinton that actual lending to qualified borrowers in such communities was made an affirmative responsibility. That was inherent in CRA, where covered banks and S&L's were surprised to find almost half of new applicants qualifying at existing prime terms, and it was implied in later HUD directives to ease the requirements for conforming loans. These programs were in essence experiments in skimming the top off of what had been an exclusively subprime market and adding that to the prime market, and they worked very well, clearly flashing a green light to take the programs further. However, the change in administration and subsequent non-enforcement of CRA were not the only changes that were going on in 2001. Also establishing themselves were the unregulated private brokers such as Countrywide, Ameriquest, and New Century Financial, who had found a niche based on the empty space created by the demise of the finance companies and quickly built outward from there. They would go on to become giants, wielding (and abusing) their growing power in various ways. But all of that story was written post-2000.
The credit crisis did not arise because loans were extended to qualified low- and moderate income borrowers. It arose because loans were ultimately extended to qualified and unqualified borrowers at many income levels that deliberately exploited those borrowers by imposing unnecessarily high-cost terms that while highly profitable to the loan originator left the borrower on shaky ground going forward. All this went on as part of a process of mass-producing mortgage deals, stripping off the profit, and then selling off the risk into the secondary markets. The link below provides a ten-minute peek into how all that ultimately went down...
On what basis is that judgment made? Hindsight? There is even in that case no reason to believe that the imposition of a Treasury czar to rule over the GSE's would have in any way improved or made more secure any of their operations. There is every reason to believe that the czar's role would have been to harm stockholders by reining the GSE's in out of lucrative secondary mortgage markets in order to create more room for Wall Street.
Yeah... the 'lucrative' secondary mortgage market that imploded Fannie and Freddie, which precipitated the entire financial crisis, per Bernanke.
"BEN BERNANKE: Oh, the worst moments were back in September. The financial crisis began with Fannie Mae and Freddie Mac, the large housing companies that were taken over by the government, and subsequent to that a number of very large financial firms came under enormous pressure. One of them, Lehman Brothers, an investment bank, failed. Others came close to failure, needed government support, not just in the United States, but around the world. And those were some very long nights I spent on the sofa in my office as we worked to try to keep the financial system running." At Forum, Bernanke Defends Fed's Aggressive Moves | Online NewsHour | July 27, 2009 | PBS
Quote:
It would be prudent to note also that the GSE's did not precipitate the credit crisis, and that they did not "implode".
You can debate that with Bernanke. He knows more about it than you do, unless you're Paulson or Geithner posting here as saganista.
Yeah... the 'lucrative' secondary mortgage market that imploded Fannie and Freddie, which precipitated the entire financial crisis, per Bernanke.
"BEN BERNANKE: Oh, the worst moments were back in September. The financial crisis began with Fannie Mae and Freddie Mac, the large housing companies that were taken over by the government...
Hello? He is speaking in chronological, not causal, terms.
The loans that failed and ultimately triggered the credit crisis were primarily written between 2002 and 2006 by private unregulated brokers and so-called bank affiliates into low- and moderate-income and other communities with unnecessarily high-cost terms and increasingly sloppy underwriting standards in order to feed original mortgage paper to the Wall Street investment banks who were making a fortune in profits and bonuses by turning those around in various forms into the secondary markets.
The GSE's themselves played barely a walk-on role in this tragedy, but they were among the first hauled into the lifeboats as preserving their assets and function were important goals, given what was coming down the pipe re Lehman Brothers and the rest.
Hello? He is speaking in chronological, not causal, terms.
The rest of Bernanke's statement... "and subsequent to that a number of very large financial firms came under enormous pressure. One of them, Lehman Brothers, an investment bank, failed. Others came close to failure, needed government support, not just in the United States, but around the world. And those were some very long nights I spent on the sofa in my office as we worked to try to keep the financial system running." At Forum, Bernanke Defends Fed's Aggressive Moves | Online NewsHour | July 27, 2009 | PBS
"Together they (Fannie and Freddie) owned or guaranteed half the mortgages in the United States - a staggering $5 trillion in home loans. Fannie and Freddie were then responsible for financing 80% of all new mortgages in the US... The condition of Fannie Mae and Freddie Mac posed a "systemic risk" to the entire financial edifice, he (Paulson) told the nation. They could not continue in the present state, so the government was taking them into "conservatorship"... It was the first in a series of crisis Sundays, as the US government grappled with a cascade of financial disasters in the hope of resolving them before the markets re-opened for business at the start of another fraught week. The nationalisation of Fannie Mae and Freddie Mac was supposed to draw a line under the financial crisis. Instead, it merely acted as a prelude to the far more shocking events that were soon to unfold before an astonished world." BBC NEWS | Business | The US couple behind the housing crisis
Not the least of which was Lehman's collapse:
"There's this argument out there -- and it's impossible to know whether it's true -- that basically says if the government hadn't forced Fannie and Freddie to get taken over, … that Lehman would have been able to strike a deal and get enough capital to survive and avoid bankruptcy because there would have been enough confidence that whatever they've got on their books could be managed through. But that when the government took over Fannie and Freddie, it sent a signal that these loans are just too toxic that are out there. And that's why nobody would touch Lehman without a government guarantee." - Charles Duhigg, NYT FRONTLINE: inside the meltdown: analysis: the fannie & freddie takeover | PBS
But we DO know it's true, because Barclays AND Bank of America indicated so:
"Urgent efforts to forge a takeover of Lehman Brothers Inc. hit a major stumbling block Sunday afternoon as Barclays plc, which emerged as the leading suitor for Lehman over the weekend, decided to walk away from the deal, according to a bank spokesman... Barclays, which reportedly had been interested in buying all of Lehman Brothers in a bid to bolster its Wall Street presence, did not receive guarantees from either the U.S. Government or other Wall Street institutions, which would have backstopped the London-based bank's acquisition of Lehman's assets, including a large portfolio of troubled mortgage-backed securities. Without the guarantee, the risk of the deal was too great... Press reports Sunday indicated that another rumored bidder, Bank of America Corp., also said that it wasn't interested in bidding for Lehman without a government guarantee." Barclays walks from Lehman talks (Dealscape - Industries)
Everyone knows it got worse from there. Did the government having to take over Fannie and Freddie because of their huge losses on toxic loans precipitate the crisis? Absolutely!
You wouldn't know that, sag, because you have such incredibly myopic tunnel vision on this issue.
The pace of layoffs look like they are continuing to drop - and I stand by my prediction that they will be done (and hiring returning) by the spring.
Pace of Layoffs, Planned Job Cuts Both Show Decline - Economy * US * News * Story - CNBC.com (http://www.cnbc.com/id/33616813 - broken link)
Ken
Care to rebut this NOW? I had hoped you were right, btw.
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.
