Lance, thanks for bringing that up. CRA backed lenders were a very small minority of the housing market. To make matters worse, data I've seen shows that they were better regulated than private (and managed) sub-prime mortgages.
Lance, thanks for bringing that up. CRA backed lenders were a very small minority of the housing market. To make matters worse, data I've seen shows that they were better regulated than private (and managed) sub-prime mortgages.
The sub-prime mortgage crisis was caused by political correctness and social engineering.
Do-gooders had long complained that banks discriminated against minorities and the poor when granting mortgages.
They persuaded Congress to amended the Home Mortgage Disclosure Act so that data could be collected to prove this.
A subsequent study of this data was used to prove discrimination so that bank regulators required banks to lend money to these under privileged groups.
The Democratic Party, led at the time by President Bill Clinton threatened to prosecute banks who didn't comply with the regulators demands.
It seems to have escaped the attention of those regulators that the real reason loans were turned down was the fact that the financial standing of the applicants didn't stand up to scrutiny.
Or if it did then they seemed to have not wanted to incur the wrath of the PC Brigade by sticking to commonsense.
Now that those poor people had their houses repossessed and made homeless, predictably the PC Brigade blame everyone but themselves.
When will these mindless do-gooders realise that things are as they are in the world for a very good reason and stop meddling!!
Incidentally, twice Conservatives tried to get this madness stopped (2003 & 2005) and twice their Bills were outvoted by the Democrats, led by Barak Obama - who incidentally was a young lawyer at ACORN when the original cry of discrimination went up!
The rich! The rich are the cause of all of our problems!
Mr Magoo wrote:
The sub-prime mortgage crisis was caused by political correctness and social engineering.
Do-gooders had long complained that banks discriminated against minorities and the poor when granting mortgages.
They persuaded Congress to amended the Home Mortgage Disclosure Act so that data could be collected to prove this.
... blah blah blah
This is false. FHA loans had only a bit higher default rate than standard loans during the crises:
Prime conforming loans: 6.8%
FHA loans: 8.4%
Subprime loans: 28.3%
Reference:
http://www.americanprogress.org/issues/2011/02/pdf/pinto.pdfCan a person buy an insurance policy on their home that pays off their house if the lose their job or can't pay for some other reason like lying about their income? No.
Can a bank buy an insurance policy if they give a loan to someone who fails to pay even though the bank approved a marginal candidate? Yes.
Will the government back the bank for their loss? Yes.
Will the government back the mortgage holder? No.
Double standard? Yes.
I get all that but there was still falsifying of documents/fraud and no one was ever held accountable...
BS on several levels.1) I have not been discredited at all. Sir Lance wants to continue to harp on wealthy people defaulting more than the poor, but they are doing so ONLY BECAUSE THE CRA HELPED CAUSE THE PROBLEM THAT LED TO THEIR VALUES DROPPING...THEY ARE JUST LOOKING OUT FOR #1 AND MAKING THE CRISIS LAST LONGER, BUT THEY ARE NOT THE CAUSE.2) Damn, you're another one who gives no responsibility to the borrowers of the money. How can that be? I guess many of you are just suckers. I always wondered how so many people were victims of scams...now I know.3) I am NOT a right winger. I am a registered Democrat and consider myself a liberal. I am a Blue Dog Democrat though which means I am more fiscally conservative than many Democrats. Still a Democrat though.4) There's no need to punish borrowers who took out loans they shouldn't have. The punishment is built in...they lose their house, lose money as a result...fine by me. They made their bed...now they can lay in it (if they made the payments on it that is).
Baldy wrote:
Flagpole has been thoroughly discredited by several posters.
The funny thing is that the typical argument from the right is that the "free market" (where free = "unregulated") ALWAYS provides the best possible economic outcomes.
This principal is more likely to hold water where buyers and sellers are equally informed of the risks.
In fact, with the housing market, it is a point of logic that the banks have a much higher level of expertise in loan risks than the average population (excluding the really smart individuals like Flagpole, myself, and a few others).
Given the above facts, I would argue that the lenders ought to bear AT MINIMUM the same amount of blame as borrowers, and a good argument can be made that they are actually more to blame by virtue of their expertise. So, the moral argument against ONLY the borrowers FAILS here in a big way.
Yet for some reason Flagpole (and many other right wingers) think the moral blame MOSTLY lies with the borrowers, and have a strong preference to bail out (provide WELFARE) to the lenders .
Based on these kind of arguments, the right-wing "solution" to these kind of problems amounts to:
- Punish borrowers who take on excessive risk (agreeed, but should they REALLY take MOST of the blame? That is ABSURD! )
- Reward lenders who take excessive risks (disagree! Be consistent and demand PAIN here too.)
- Fight regulations to protect the consumer and overall economy, with preference to "free markets" (disagree!)
What we have is market failure, with government NOT doing it's job to prevent it from happening again.
I disagree that it is "indisputable, objective data". I think most people (you included) have political ideals and find stuff to support those ideals and swallow it hook, line, and sinker.I'd love to just blame everything on the banks and Republicans, but I'm not blind to my own party's failings when they do fail.BUT, the main thing here is not that Clinton was at fault (because he clearly was partly to blame), but that the MAJORITY of the blame lies with the consumers.Should not matter how hard someone tries to sell you something, you need to do all the research and determine if it's a good idea. The buck stops with the consumer, and over the last decade, the consumer was making bad decisions...matters not what the banks wanted.When I bought my house, my lender looked at my credit rating and basically told me I could go buy just about any house I wanted. That was crazy. I'm sure they would have cut me off somewhere, but I could have gotten a loan at the time for easily over $300,000, and I wasn't making enough then (with the rates then) to justify that. Fortunately I knew better and got a house for under $140,000. As a liberal Sir Lance, you should be for Power to the People. Well, with power comes responsibility.
Sir Lance-alot wrote:
Flagpole wrote:1) SOME WEALTHY people walking away from mortgages is the END RESULT of a housing market already in shambles CAUSED in part by the Clinton change to the Community Reinvestment Act. That started the problem that caused the housing to go down, and because of that, some WEALTHY people decided to let their vacation homes and second homes go.
Flagpole, this is why people sometimes have such animosity towards you. Several people, including me, have presented you with indisputable, objective data and reports showing that the CRA had little to nothing to do with the housing bubble/crash. Yet you 100% ignore this because, well because you are Flagpole, and once you decide on something, you stick to it come hell or high water. How about you try this: dispute the facts we've presented you, tell us exactly HOW the CRA was a prime cause of the crisis, backed with objective data, instead of just stating your opinion. Here's more for you to consider (/ignore) -
"Putting together these facts provides a striking result: Only 6 percent of all the higher-priced loans were extended by CRA-covered lenders to lower-income borrowers or neighborhoods in their CRA assessment areas, the local geographies that are the primary focus for CRA evaluation purposes. This result undermines the assertion by critics of the potential for a substantial role for the CRA in the subprime crisis. In other words, 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."
http://www.federalreserve.gov/newsevents/speech/kroszner20081203a.htm#f6And more:
http://www.jchs.harvard.edu/publications/governmentprograms/n08-2_park.pdf"However, data provided by the Home Mortgage Disclosure Act (HMDA) reveal that loans covered by the CRA accounted for only a fraction of mortgage lending to lower-income borrowers and neighborhoods. This is especially true of higher-priced, or subprime, mortgages. CRA assessment-area lending accounted for only nine percent of higher-priced loans to lower-income borrowers and neighborhoods, while independent mortgage companies accounted for the majority.
The data suggest that far from being forced into risky corners of the market, the institutions under the scrutiny of the CRA were crowded out by unregulated lenders.
And more:
"Talk to conservatives about the financial crisis and you enter an alternative, bizarro universe in which government bureaucrats, not greedy bankers, caused the meltdown. It’s a universe in which government-sponsored lending agencies triggered the crisis, even though private lenders actually made the vast majority of subprime loans. It’s a universe in which regulators coerced bankers into making loans to unqualified borrowers, even though only one of the top 25 subprime lenders was subject to the regulations in question.
Oh, and conservatives simply ignore the catastrophe in commercial real estate: in their universe the only bad loans were those made to poor people and members of minority groups, because bad loans to developers of shopping malls and office towers don’t fit the narrative."
http://www.nytimes.com/2009/12/14/opinion/14krugman.html?emYou may be a democrat, but you are repeating whacko conservative talking points that don't reflect reality. There are OF COURSE things that can be blamed partly on Dems (such as Larry Sumners and Rubin [ along with Greenspan] during Clinton years fighting against regulation of Derivatives market), but your CRA BS and blame the gov't for the housing crash nonsense is just pure worng-headed.
Flagpole wrote:
BS on several levels.
1) I have not been discredited at all. Sir Lance wants to continue to harp on ...
Not "at all" ?? Forget the "rich" angle, let's just look at your claim about the CRA being a major factor in the causing the housing bubble/collapse, and the ensuing financial collapse. Have you read the stats/facts/articles on this thread debunking that claim? If so, please provide alternative facts that dispute them, or facts that back your contention that the CRA is what led to this crisis.
If you can not, then yes, on that point, you have been discredited (not by me, but by several top economists, etc quoted in the links/articles on this thread).
Flagpole wrote:
I disagree that it is "indisputable, objective data". I think most people (you included) have political ideals and find stuff to support those ideals and swallow it hook, line, and sinker.
This, this, and this! You can find data to back up just about any ideal that you have. People tend to believe the studies that back up their ideals, and discredit the ones that don't.
Also, thank you Flagpole for attempting to make us liberals look sane. It gets tough with the Sir Lance-alots of the world.
You got it brother! I'm proudly a liberal Democrat, but I will tell them when they screwed up, and I will accept a good idea from the right side of the aisle when they offer one. TOO MANY people will not do that...their side is just correct and the other side is evil...in all decisions.
asdasd wrote:
Flagpole wrote:I disagree that it is "indisputable, objective data". I think most people (you included) have political ideals and find stuff to support those ideals and swallow it hook, line, and sinker.
This, this, and this! You can find data to back up just about any ideal that you have. People tend to believe the studies that back up their ideals, and discredit the ones that don't.
Also, thank you Flagpole for attempting to make us liberals look sane. It gets tough with the Sir Lance-alots of the world.
I said the CRA was A factor. I didn't call it a "major" factor, for I said that government and the banks together only totaled 10% of the blame...90% of the blame goes to the consumer.I have already pointed out to you how your "facts" are skewed. You just have a different view of it brother, and you are looking for ways to blame the evil banks and not a liberal government and not the people. I'm not mad at you for that brother, but you are wrong. You're allowed to be.Just to clarify further, no I don't think banks are evil (but they aren't the opposite of that either). Yes I do think they will do just about ANYTHING for money including unscrupulous things. When a government sets a tone with something like the CRA that in their minds allows them to be that liberal with standards, then you're just unleashing the hounds. This is why I blame the government more than the banks...the government sets the tone in this case. Banks will do whatever the government will allow them to, and they have NO morals...they only want to make money. I accept that about banks, so to blame them is like blaming a bear for attacking a tourist when the tourist wandered into it's living area.This all becomes moot though if you take the position that people are responsible for their own actions. People need to do their own research before they buy anything. If you take the advice of the "expert" who tends to gain from you, then you are a fool.Doesn't matter how these loans were pushed or sold or packaged. Doesn't matter to whom these loans were sold or how happy any local bank or Wall Street bank was to sell them. If the people didn't buy them, the problem would have been there. Want to guess how many bad loans I took out that were then sold to a Wall Street bank and repackaged? ZERO!
Sir Lance-alot wrote:
Flagpole wrote:BS on several levels.
1) I have not been discredited at all. Sir Lance wants to continue to harp on ...
Not "at all" ?? Forget the "rich" angle, let's just look at your claim about the CRA being a major factor in the causing the housing bubble/collapse, and the ensuing financial collapse. Have you read the stats/facts/articles on this thread debunking that claim? If so, please provide alternative facts that dispute them, or facts that back your contention that the CRA is what led to this crisis.
If you can not, then yes, on that point, you have been discredited (not by me, but by several top economists, etc quoted in the links/articles on this thread).
That's "If the people didn't buy them, the problem would NOT have been there."
Flagpole wrote:
I said the CRA was A factor. I didn't call it a "major" factor, for I said that government and the banks together only totaled 10% of the blame...90% of the blame goes to the consumer.
I have already pointed out to you how your "facts" are skewed. You just have a different view of it brother, and you are looking for ways to blame the evil banks and not a liberal government and not the people. I'm not mad at you for that brother, but you are wrong. You're allowed to be.
Just to clarify further, no I don't think banks are evil (but they aren't the opposite of that either). Yes I do think they will do just about ANYTHING for money including unscrupulous things. When a government sets a tone with something like the CRA that in their minds allows them to be that liberal with standards, then you're just unleashing the hounds. This is why I blame the government more than the banks...the government sets the tone in this case. Banks will do whatever the government will allow them to, and they have NO morals...they only want to make money. I accept that about banks, so to blame them is like blaming a bear for attacking a tourist when the tourist wandered into it's living area.
This all becomes moot though if you take the position that people are responsible for their own actions. People need to do their own research before they buy anything. If you take the advice of the "expert" who tends to gain from you, then you are a fool.
Doesn't matter how these loans were pushed or sold or packaged. Doesn't matter to whom these loans were sold or how happy any local bank or Wall Street bank was to sell them. If the people didn't buy them, the problem would have been there. Want to guess how many bad loans I took out that were then sold to a Wall Street bank and repackaged? ZERO!
Sir Lance-alot wrote:Not "at all" ?? Forget the "rich" angle, let's just look at your claim about the CRA being a major factor in the causing the housing bubble/collapse, and the ensuing financial collapse. Have you read the stats/facts/articles on this thread debunking that claim? If so, please provide alternative facts that dispute them, or facts that back your contention that the CRA is what led to this crisis.
If you can not, then yes, on that point, you have been discredited (not by me, but by several top economists, etc quoted in the links/articles on this thread).
Old Banker wrote:
Flagpole wrote:1) People - No matter WHAT banks or governments ALLOW you to do, YOU are still ultimately responsible for the decisions you make. The people who took out these bad loans get the bulk of the blame...at least 90% of it, and really, I want to be hard core enough to say 100%, except that the government can't come off scot-free here.
You are usually a pretty sharp guy, but you are glowing with ignorance here. I worked in mortgages from 2000 - 2003. We pushed bad loans like a mother. We had bad loan GOALS. I was at a big bank. We made money off of bad loans. We sold them off, lumped with other bad loans and book-ended with good loans to spit-shine the offer.
Honestly, you are way out of your element here, Flagpole. You sound like an idiot.
You are either a troll or a morally bankrupt dude. Either way, I do not like you.
If, right now, you mandated that every new loan must have 20% down or even 10% down then the market would instantly collapse.
You would take at least one third of potential buyers right off of the market.
With a great deal of less buyers, these investors would be making much lower offers.
The new loans would be safer, but all of the current loans on the books would insantly become much riskier.
So in an effort to have safer loans you would wind up with more riskier loans than ever.
And on top that, you would permanantly take away an equity building opportunity from millions of Americans and hand it over to to people with more means, creating an even larger chasm form the haves and the have nots.
And there would be a higher percent of seniors retiring without home equity to fall back on as a source of income.
Let's not confuse the problem of handing out bad loans to unqualified borrowers to the benefit of providing potential equity building loans to credit worthy people that do not have a pile of cash.
Steve Martin wrote:
You are either a troll or a morally bankrupt dude. Either way, I do not like you.
Neither, actually. If you read the rest of my posts, you'll see that I got out of banking as soon as I could.
It wasn't like I worked for "Shady's Bank & Trust," it was a major bank that you have definitely heard of and might use yourself.
Listen, man, it was/is something that goes on every single day. It wasn't a cover-up. I wasn't a part of something illegal. This is lending. I would love to say "was" lending, but I know it is going on right now at the Wells Fargo branch down the street from your office.
Flagpole wrote:I said the CRA was A factor. I didn't call it a "major" factor, for I said that government and the banks together only totaled 10% of the blame...90% of the blame goes to the consumer.
I'm cool with this, but the comparison of the subprime mortgage default rates vs. CRA morgtage default rates should indicate the issue is a red herring. If anything, the high default rates in the private sphere show that the banks perpeturated the bubble. Mind you, these are the same institutions that are supposedly able to regulate themselves.
I should add that it was people working at these banks, just like people who took out the loans, at the root of the problem. The question here is, who was best able to avoid the bubble. In this case it was the banks.
"A smart person accepts, and an idiot insists."
I consider myself a smart person, but I'm not immune from the collateral damage of idiots or the corrupt. I was pushed to take an ARM loan and was approved for financing that greatly exceeded what I was able to afford. I stayed within my means and got a long term fixed loan. The only mistake I made was buying a house during a housing bubble (2005)...knew it was going on, but wasn't purchasing as an investment.
What did I get for being a prudent buyer. Nothing. My real estate and investments have experienced deflation, while the commodities I rely on have seen heavy inflation, and the bailouts and quantitative easements have caused my portion of the national debt to rise.
The idiots are everywhere, they are loud, and they love to puppet back what the media (propagandists) spews at them.
I want to blame the people for being idiots, but many of them have never been exposed to rational thinking. I have to throw some blame at the feet of the group that owns and controls the media, buys the politicians, and controls the money supply.
Nope, it was the Federal Reserve (mainly), the GSE's, and the SEC, all of who fell down on the job and enabled the banks. The banks don't get exonerated, but it's Washington's fault the fox was guarding the henhouse and then got bailed out (and continue to be). Do you think Fannie and Freddie are anything but federal banks? They're stil bleeding money, asking for more bailouts, and paying exorbitant bonuses. Can you say double standard? Where's Occupy DC?
http://news.investors.com/Article/588856/201110201854/Wall-Street-Did-It-.htm
I've got to agree with Flagpole that all but a minority of really stupid people who were duped by lenders should've been a lot more responsible. Common sense tells you you shouldn't be buying a $600,000 house off of a $60,000 income and then doing a 125% cashout. It's bs to say otherwise. Now, many of these same people are eating out, buying tvs and video games, and otherwise consuming instead of paying their mortgages while it's tied up in litigation.