Posted by Tina
People wanting revenge might be happy to see that J.P.Morgan Chase has agreed to pay the government $5.1 billion in a settlement. Chase had been accused of trying to con Fannie Mae prior to the financial meltdown. But a story in the Wall Street Journal over the weekend further reveals that the government’s heavy forceful hand, along with “reckless gambling” on the part of Fannie and Freddie, created the whole debacle:
The premise of the allegations settled on Friday is that while it may appear that Fan and Fred were recklessly gambling on the housing market for years before the crisis, they were duped by Morgan and other banks into buying risky mortgage-backed securities that they did not understand. This is the Little Orphan Fannie defense.
I have to laugh. This is the standard excuse given by any progressive in any crisis circumstance. They present themselves as the most competent and upstanding people in the world but as soon as their plans turn to bat dung someone else did it or made them do it or caused it in the first place. Nothing they did, even when they have been in charge and signed the legislation or were the CEO of the company, made them responsible. In fact they pitch a story in which they become the victims of some devious right wing conspiracy! It was George Bush’s fault! The Tea Party made it happen. Ted Cruz is an evil destroyer. Ronald Reagan is to blame. The Republicans just won’t cooperate…the dog ate my homework. Please!
It’s time the people stopped falling for these lame excuses and the lies, the cheating, and the milking of the system for personal gain. The Democrat party has been protected, promoted, and held blameless because they are allowed these ridiculous excuses. They have been protected for so long that they believe themselves to be touched by magic, incapable of being brought to account.
At Post Scripts we have presented evidence that steps taken by Democrats in positions of power set this nation up for crisis in a perfect storm. When it finally hit the result was millions of Americans losing their homes, their savings, their jobs and, as we continue in this non-recovery “recovery,” years of earning and wealth building power. It resulted in massive bail outs and failed QE stimulus costing taxpayers trillions taxes and debt. Not once has any Democrat been tainted in the debacle.
In 2009 Nancy Pelosi and a former Democrat Party Chairman formed a commission to look into the financial crisis. The bipartisan Financial Crisis Inquiry Commission hoped to absolve the government and find evidence of gross wrong doing by Wall Street banks. But although there was evidence of irrational exuberance in the private sector the commission found that Fannie Mae, Freddie Mac, and HUD were the more culpable players:
The committee’s report dubbed Fannie and Freddie the “kings of leverage” and described all of the ways they avoided oversight while relaxing underwriting standards and raising their bets on subprime mortgages.
The two companies, which profited from an implicit government guarantee, owned or guaranteed $5 trillion of mortgage assets. Sometimes they bought home loans and bundled them into securities for sale to other investors, and sometimes they bought securities that others had assembled. They were the biggest buyers of subprime bundles during the housing boom, and their lust for those bundles fed the subprime machines at Countrywide (later bought by Bank of America) and Washington Mutual (bought at federal request by J.P. Morgan JPM +0.55% ).
After it all fell apart, the only debate was whether the twin disasters at Fan and Fred were primarily the result of federal “affordable housing goals” or executives’ desire for bigger profits and bonuses. Being Democrats, the commission majority settled on greed as the principal problem at Fan and Fred, but nobody concluded that they were victims.
The commission learned from John Kerr, an examiner with the Federal Housing Finance Agency (FHFA), that Fannie was “the worst-run financial institution” he had seen in 30 years as a bank regulator. Austin Kelly, an official at FHFA’s predecessor agency, said regulators couldn’t trust Fannie’s numbers because their “processes were a bowl of spaghetti.”
This morning I googled to see if I could find evidence that would lend more weight to these revelations and hit pay dirt in of all places, Huffington Post Business :
In the summer of 2008, as the financial crisis gathered steam, Barack Obama, the putative Democratic presidential nominee, began the crucial search for a vice presidential candidate. The man he chose to lead his effort was James A. Johnson, the former chief executive of Fannie Mae and one of the most powerful men in Democratic circles in Washington.
But on June 11, before Johnson had gotten far in the vetting process, he resigned from the committee. News that he had received $7 million in cut-rate mortgage loans from Countrywide Financial prompted the resignation.
It was a rare trip-up for Johnson, a consummate Washington insider who had advised John Kerry in his run for the presidency, run Walter Mondale’s failed presidential bid and enjoyed, as he still does, a prestigious post as a director at Goldman Sachs.
But for many who knew Johnson and had watched him work his power base over decades in the nation’s capital, it was paradoxical that a raft of sweetheart mortgages from Countrywide had driven him from the Obama A-list. Indeed, Johnson’s ties to the burgeoning financial crisis were far greater than a few Countrywide loans. They arose from his eight years at the head of Fannie Mae, the mortgage finance giant that became taxpayer-owned in September 2008. Presiding over the company from 1991 to 1999 placed him front and center in the nation’s homeownership push, an effort that would bring about the worst financial debacle since the Great Depression.
And yet Johnson has largely escaped scrutiny in the aftermath of the crisis. This is surprising because under his direction, Fannie Mae capitalized on its government ties, building itself into the largest and most powerful financial institution in the world. In 2008, when the colossus fell, it required more than $100 billion in taxpayer backing to keep it afloat. Fannie Mae became the quintessential example of a company whose risk-taking allowed its executives to amass great wealth — but when those gambles went awry, the taxpayers had to foot the bill.(emphasis mine)
Many of you recall the video of Barney Frank insisting that worries over a collapse in the financial market were ridiculous. You may recall the video of Jamie Gorrelick advertising that Fannie Mae was eager to buy bundled loans. You may recall the utter scandal that Chris Dodd, another beneficiary of a special Countrywide loan deal, and Barney Frank, financial crisis denier, were given the power to write new regulations for banks…the were rewarded!!! The foxes were given the keys to the hen house.
The Huffington Post article, an adaptation from the book, “Reckless Endangerment,” examines Johnson’s leadership atop Fannie in the 1990’s. It was Johnson who automated the lending system and it was Johnson who relaxed lending standards to reflect President Clinton’s new lending law, The Community Reinvestment Act:
When Johnson became chief executive of Fannie Mae in 1991 the tone at the top of the company began to change from that of a sleepy utility to a political machine, according to people who worked there at the time. Under Johnson, Fannie’s primary goal changed from buttressing the mortgage market when necessary to protecting — at all costs — the company’s government ties and the riches that sprang from them.
Because the company was perceived to be at least implicitly backed by the government and would be rescued by it if necessary, Fannie Mae found it easier and cheaper to raise money than its competitors. And it routinely claimed that it passed along every penny of its cost savings to homebuyers in the form of lower mortgage rates. This allowed the company to argue that any change in its status would result in higher housing costs for everyday Americans.
It wore the claim like a coat of armor, protecting itself from critics’ slings and arrows. Only later would it emerge that the company kept billions of dollars — at least one-third of the government subsidy — for itself each year. Fannie dispensed this money to its executives, shareholders, and friends in Congress.
Fannie Mae and its sibling Freddie Mac were regulated by the Department of Housing and Urban Development. Not much of a watchdog, its oversight of Fannie and Freddie was a part-time arrangement — only a handful of people at the agency dealt with matters involving the companies, and they juggled other duties as well.
The thing every American should be asking today is why the American press never bothered to investigate and report any of this information and whether it is wise to continue to buy the excuses, the cover ups that keep the Democrat Party Machine alive and creating one crisis after another! (Recall: Never let a crisis go to waste”)
J.P. Morgan Chase was not “too big to fail” in this crisis. J.P.Morgan Chase agreed to buy out Washington Mutual for $1.888 billion, which re-opened the bank the following day. The share holders of Washington Mutual lost their investments and government entities Fannie and Freddie were sheltered from scrutiny…as were the main architects of the crisis, The (Democrat) Community Reinvestment Act, Barney Frank, Chris Dodd, James Johnson, Jamie Gorrelick, Fannie and Freddie, a whole cast of Democrats, and Republicans (friends of Angelo in countrywide loan deals), who benefited financially in the scheme. Yet today the mafia style strong arm tactics remain in place and JP Morgan Chase will pay up without admitting culpability rather than spend years and wasted dollars defending themselves on specious charges in court.
” …as were the main architects of the crisis, The (Democrat) Community Reinvestment Act, ….”
I’m sorry, but there is only one viable response to this: Liar. I mean, really! You ought to be ashamed.
But I did feel, briefly, for the poor mega-bank. After all, our government really was rather insistent that one of the mega-banks take over WaMu and BS. Chase did get them at fire-sale prices though. And we have to be reimbursed for at least some of this fiscal carnage, yes we do. Apparently, some of the really big losers, mostly pension funds, will be able to put in claims for some of the fine.
The government created the situation, strong armed it, and the environment for failure was set. It now it has its scapegoat.
The government was “duped”. HA! The sad thing is that there are many ignorant fools willing and wanting to believe that nonsense. Despite the facts.
Correct Jack, Clinton’s Community Reinvestment Act cleared the way for high risk loans that would not have otherwise been made. Lenders had their directive from the Democrats which was, effectively, “We want you to make high risk loans and we will back you up if they go bad.” So lenders — who are in the business of selling loans and making money — said, “OK, we will go along with that.”
Lenders also package and resell loans to make more money. Voila’, packages upon packages of BAD LOANS ORDERED (OK, encouraged, what is the difference?)BY THE GOVERNMENT!
Meanwhile the ostrich insists upon burying her head in the sand.
Libby I am not a liar. You are.
Every time you open your mouth you lie or provide cover for the liars you support.
You aught to be ashamed but I am convinced that every damn one of you has no shame. You lack the capability!
The phony bunch of opportunistic leeches that are leading your party bleed the average American dry under the pretense of helping poor people…that has to be the the lie of the last century.
Your party doesn’t help people to become productive happy contributing citizens; you help them to become permanent wards of the state…and permanent Democrat voters.
There isn’t a word in our lexicon to describe the depths to which your party will go for power and personal gain at the expense of the people, including the poor.
Leading Democrat players used Fannie Mae as their personal piggy bank and made millions in bonuses for at least two decades. They used the poor, promising homes they knew they probably wouldn’t be able to keep. They dropped sensible banking standards and intimidated the banks to push the loans put through under those standards.
This entire housing debacle is a product of Democrat opportunism and greed.
Yes, banks participated but they did so under regulations that Democrats (Clinton) negotiated for in a “bipartisan” budget reform and tax cut deal with Newt Gingrich. The SEIU did their part by picketing banks and under the guidance of Saul Alinsky scholar Barack Obama, learned to threaten law suit. The banks complied on threat of loosing their rating and being sued.
Fannie and Freddie meanwhile told investors that they had plenty of cash to buy those questionable loans. They told investors that the risk was low because they were backed by the government! And the CEO’s made millions every year in bonuses.
Barney Frank kept reformers at bay in the House and got his roomy a lucrative job at Fannie.
When everything came crashing down the banks were hauled in to “cooperate” once again and they did, taking on the debt of the banks they absorbed.
Now JP Morgan gets intimidated again and are told to pay for the bad loans made by Washington Mutual or be hauled to court.
These people are slime…worse than slime.
J.P. Morgan Chase got the shaft. But America got the shaft too.
And you sit there like a crazed loon…smiling and patting yourself on the back. Despicable.
Oh jeez. Pardon me if I’m not going to jump on the poor JP Morgan Chase bandwagon. All of those banks are corrupt and the people involved should all be in jail. For them to cry foul and blame the government is just ridiculous. This banking collapse is the first, and biggest failure of the Obama Department of Justice. Their failure to prosecute even one person for fraud is just jaw dropping. That and their prosecution of whistleblowers draws a perfect picture of Obama’s corrupt DOJ. I never thought anyone would make Bush’s idiotic DOJ with his Alberto Gonzales “I don’t recall” stupidity look less corrupt, but Eric Holder has managed to do it.
“Their failure to prosecute even one person for fraud is just jaw dropping.”
Now, come on. That’s not strictly true. There are little fish (relatively speaking) who have indeed been jailed.
And wasn’t it also Chase that spawned the “London Whale”. The bank has actually admitted to fraud, something these institutions generally will not do. Guys have been indicted even! … but I wouldn’t make odds on whether the bright boys ever see the inside of a jail.
Ain’t none of this enough, but it is something. So, you can’t say “nothing” is being done. That is not true.
“Lenders also package and resell loans to make more money. Voila’, packages upon packages of BAD LOANS ORDERED (OK, encouraged, what is the difference?)BY THE GOVERNMENT!”
This has to be the most paranoid, prejudiced nonsense ever written. I mean, you’d have to be very nearly psychotic to actually believe that our government is 1) that clever and/or 2) that stupid.
The government forces private lenders to make loans that will not be repaid? Does that really make any sense? … at all? … even a little bit? Ga Ga. That’s what it is.
And completely ignores the fact that it wasn’t the bad loans, per se, that sunk the economy, but the churning of securities “derived” (lord help us all) from the bad loans.
Once thousands of bad loans had been “packaged” into these securities, it would have taken some real in-depth due diligence on the buyers’ part to discovery that the securities were probably worthless.
And F&F did not do their due diligence. Nobody is arguing that.
But all this high-flown, fantastical government malevolence exists nowhere but in you sadly paranoid minds.
Re #4 Princess : “All of those banks are corrupt and the people involved should all be in jail.”
Unbelievable. There ya go. It is all “those banks” and their personnel — they should all be in jail!
Thank you for sharing, Princess. The government that instigated and precipitated the situation with its stupid lending laws and the resulting stupid policies has no culpability.
On a separate note: Funny how the insufferably snotty progressive chumps who love to call others liars in these pages shut their big fat spittle flecked yaps when it comes to #ObamaLies.
Keep your health care policy under ObamaDebacleCare?
Obama admin. knew millions could not keep their health insurance.
http://tinyurl.com/llqw5sv
Four sources deeply involved in the Affordable Care Act tell NBC NEWS that 50 to 75 percent of the 14 million consumers who buy their insurance individually can expect to receive a “cancellation” letter or the equivalent over the next year because their existing policies don’t meet the standards mandated by the new health care law. One expert predicts that number could reach as high as 80 percent. And all say that many of those forced to buy pricier new policies will experience “sticker shock.”
Sheesh, those folks at F̶o̶x̶ ̶N̶e̶w̶s̶ , er NBC News, have no shame!
Aw, the Wall Street Journal has a sad because a Wall Street bank has to pay a relatively-small-considering-their-profits fine for the global economic crash that Wall Street caused. Poor Wall Street!
Fannie and Freddie are not blameless in this mess, but their share of the blame is smaller than that of the private banks because their share of the market was smaller, and had been shrinking relative to the size of the private sector’s market share for years.
According to McClatchy, “Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.”
http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html
The CRA is also not to blame; the vast majority of subprime loans came from banks that did not have to comply with the CRA, as you can see by following the same link.
Tina, this morning or last night you posted evidence showing that the Gramm-Leach-Biley Act, which loosened regulations and helped create “too-big-to-fail” banks, was not responsible for the crash. You quoted CATO as saying that “after GLB passed, most investment banks did not merge with depository commercial banks, and that in fact, the few banks that did merge weathered the crisis better than those that did not.”
While I would have to go more in depth into this issue, my research so far seems to indicate that you are correct on this point and I was wrong to attribute so much of the blame to GLB. My own googling led to a New York Times article in which the interviewer asked Elizabeth Warren if she thought the crash could have been prevented if GLB hadn’t passed, and even she said no, it couldn’t have. I still think GLB is bad law and creates too many risks, as did the author of the NYT piece, but if banks that took advantage of GLB had less subprime loans than those that did not, then it makes no sense to say they were a primary cause of the crash.
But by the same token, it makes no sense to name the CRA as one of the primary causes either, since CRA loans did so much better than non-CRA loans.
So can we compromise here? You were right that GLB should not be blamed for the financial crisis, and I am right that the CRA shouldn’t be either. And we’re right for the exact same reason: the data shows that loans originating from banks which followed those laws did better than those that didn’t.
Pie Guevara: “Correct Jack, Clinton’s Community Reinvestment Act cleared the way for high risk loans that would not have otherwise been made. Lenders had their directive from the Democrats which was, effectively, “We want you to make high risk loans and we will back you up if they go bad.” So lenders — who are in the business of selling loans and making money — said, “OK, we will go along with that.””
But CRA loans were not high risk, and the record proves that. Again, CRA loans defaulted at a much lower rate than non-CRA loans. That is a fact. It was actually much riskier to get loans from banks that were not fully covered by the CRA.
Princess: “All of those banks are corrupt and the people involved should all be in jail.”
For what? Making loans that people wanted under terms the government demanded?
For being in the position to make a lot of money?
For devising a system (bundling) to make the bad loans salable in the market so that banks ratings are not destroyed by the forced bad loans on their books?
I really don’t get the blanket resentment and hatred.
“Their failure to prosecute even one person for fraud is just jaw dropping.”
Agreed. That Mozila character got off to easy for sure.
But the government was hoisted on it’s own petard! The government made the dumb rules in the first place and the current administration was complicit in forcing bad loans.
I hate to be the person to defend this justice department because believe me they are not doing America any favors. However, because the regulations had been changed and standards lowered, it is very difficult to prove a case beyond a reasonable doubt. In the case of Countrywide, for instance, the charges were dropped against Angelo Mozilo even though there were whistle blowers who testified that fraud was being committed.
Mozillo did end up paying in a civil suit brought against him by the SEC. He coughed up $67.5 million to settle the case. Countrywide itself paid $20 million of Mozilo’s payment as part of an indemnification agreement he had with the company.
I read somewhere there are other cases still in the pipeline. The problem is, for the most part, they banks were not doing anything that was illegal. They were following the rules and adjusting to the pressure placed on them by government.
A good article in Forbes shows that the big banks have paid, and paid, and paid for this mess the government made in addition to absorbing bankrupt banks:
This is why we need sensible clear easy to read regulations that protect the consumer and the banks. Social engineering and government manipulation should have no place.
This crisis wasn’t a result of a couple of carefully selected years during the Bush years.
It’s also incredible to me, Pie, that not one lefty has expressed outrage at the politicians, mostly Democrats and Democrat cronies, that made huge sums of money or won favors and votes because of these ridiculous laws…they don’t even have the good sense to be offended by the law or the intimidation and pressure (mafia style strong arming treatment) that the ACORN brought against these banks.
No, actually, and Clinton will not be pleased to hear this, but if he goes down in history for anything, it will be for the repeal of Glass-Steagal. Because … you take lid off there, then you pass the
the Community Reinvestment Act … and you’ve given all the bright boys some really bright ideas.
Once upon a time … if you made a bad loan, you lost the loan money, and that was that. So, of course, you did not make bad loans.
But the repeal of Glass-Steagal made it possible for the makers of bad loans to insulate themselves from the consequences by selling these loans down the road … once, twice … and seven times seven. Hence the latest implosion.
Neither Obama nor your House of Representatives will put a stop to this … and this, people, is the problem.
But you are all to partisan-poisoned … and racist … to see it.
Selling bundled loans is only a problem if those bundled loans are chock full of bad loans. The CRA, passed under Bill Clinton, lowered the standards to make loans and within a few years as money, as the availability of easy money became common knowledge “irrational exuberance” took hold. The flippers investors discovered they could invest in homes,l hold them for a few months and resell them for profit. Fannie Mae put out the word that they wanted those bundled loans and it was “safe” because it was backed by the government.
Glass-Steagal made it possible for banking and investing companies to exist under the same roof. It had nothing to do with the regulations that allowed easy money and bad loans.
The fact that organizations like ACORN, trained by Barack Obama, put pressure on banks to make loans to after CRA indicates that was the intention of the Democrats in changing the law to lower lending standards…DEREGULATING!
You can’t (won’t) admit the truth, that Democrats are snakes that legislate for power and personal gain…using people in the process…so you resort to the Democrat standby, name calling.
After your partisan performance over the last thirteen years, you have a lot of cheek accusing me of partisanship. And if anything is poisoned it is the Democrat Party, poisoned by Marxist influence of radical like you!
I am blown away at the defense of the banking industry here. They looted the country, then sat back and took a giant bailout. Give me a break. And if that wasn’t bad enough, they set about just plain stealing people’s homes and refusing to do their jobs correctly. I know so many people who had to deal with the nightmare of BofA and Wells Fargo. The robosigners and the people involved in incorrectly foreclosing on homes and just plain ignoring people trying to pay their bills is just crazy. And we are supposed to sit here and defend them? No way. Their incompetence has ruined the lives of many people.
The defense of the banking industry is a defense of a system that, had it not been manipulated and forced to make loans they knew would not be paid back through lax standards of lending, threat of lawsuits, and threat of lowering bank rates, would still be serving the people well.
Banks did not loot the country.
Government scr*#ed the banks and the people by making laws for social engineering that undermined the entire banking and housing industry. Then they managed the recovery poorly and exacerbated the problems.
Robosigning and incorrect foreclosures problems should be addressed but since the government made the stupid rules, successful prosecution by guilty parties was made very difficult.
The money the banks received in the “bail out” is being paid back with interest. See a complete listing here.
The banking industry was not incompetent …it was hamstrung!
Now that same government is strong arming the big banks to get even more cash from them while at the same time creating economic conditions that make it difficult to make loans. They are sitting on their cash because current policy is hostile.
Princess I don’t blame you for being angry. I think we are all angry and for good reasons. It is a shame, though, that you can’t see that this entire scenario, the reality that ruined peoples lives, was set in motion and encouraged by our government and in particular those who wished to redistribute wealth in the form of easy money to engineer society.
It can’t be done without creating chaos and opening the system to fraud and abuse.
And by the way Princess, the number of banks that were ruined because of this colossal government screw up is pretty extensive. Those banks represent ruined lives too. See that list here.
It would have been good had we elected someone who actually had the skills necessary to create a strong recovery. Had we done that, a lot of the losses in homes could have been avoided. The recession ended in the Spring of 2009 and the economy was starting to recover…then the Democrats in absolute control in DC did all of the wrong things and the uptick died. We’ve been slogging along the bottom, just barely hanging in there, ever since.
“Glass-Steagal made it possible for banking and investing companies to exist under the same roof.”
Yes, to make the bad loans (the banking) and then sell them down the river (the investment). Under G-S, they had to eat the bad loans. G-S was the regulation that kept the little beggars in line, and its repeal made it possible for the little beggars to really go to town under the provisions of the CRA.
You can’t put the cart before the horse … won’t trot.
Oh brother! You also can’t educate a horses “other end!”
No banker, left to his own devices, would create such low standards and high risk! He would only do so under extreme duress.
There is nothing wrong with bundling loans as long as there are few bad loans in the bundle. The forced lower standards poisoned that pool. And there was no mechanism to let anyone know how badly the pool was poisoned!
Before the CRA banks did indeed make an occasional bad loan that they had to eat. There is always a certain amount of risk in all business. Maybe the farmers crop is wiped out by weather two years in a row, he gets behind in his payments and then he breaks his legs under the combine and he can’t work the farm…he defaults. That is reasonable risk taken with reasonable standards for lending. Banks don’t like it but they have the capacity to eat it.
That is very different from government changing the lending laws and forcing the banks to make loans with zero down and no evidence of employment so that homes can be purchased by poor people. The bank is not allowed to discriminate so must lend to anyone who meets the now ridiculously low standards. The public learns of the easy money and realizes that there is money to be made in the housing market flipping houses. The risk for the bank now is extremely high. These changes were made by people who knew the loans would be bundled and sold again and again…they didn’t give a rip. They wanted to buy votes and power.
The government, and ignorant folk like you, want the banks to pay for the mistakes of those Democrats who pushed for this lowered standard…some of which made millions at Fannie Mae. (I can’t prove it but I would bet that some of that money was laundered back to the democrat party!!!!!!)
Squirm all you want, twist the reality of the situation all you want, the absolute truth is that bankers would not have such insane lending practices except that they were forced to by those power hungry socialist Democrats’ dumb idea.
Re #14 Libby : “But you are all to partisan-poisoned … and racist … to see it.”
The only thing as ugly, evil, and mean as racism is the false charge of racism.
Libby, drop dead.
Pie…hope I pulled the right post? It was #21.
e #14 Libby : “But you are all to partisan-poisoned … and racist … to see it.”
Libby’s “partisan-poisoned” slur aside, the only thing as ugly and evil as racism is the false charge of racism.
I am all for free speech, but why should the rest of us who frequent this forum be subjected to the daily stream of hate speech from this vile and malicious woman? Libby’s only purpose here is to use these pages to vent her diseased spleen. This constitutes free speech? She more appropriately belongs atop a soap box on a filty street corner barking at the moon. Would you invite this horrid person into your home and let her spew her vicious rants? Those who come across her posts are forced to just that. Frankly, I tire of her ugliness.
Post Scripts?
“No banker, left to his own devices, would create such low standards and high risk!”
Tina, you’re not listening. He would, if he did not have to suffer the consequences.
The repeal of G-S made it possible for banks to develop bogus financial products, pocket the fees for the sales, and leave some other poor schmuck to suffer the losses. The CRA provided them an opportunity, a framework, within which to do this, but was not the cause.
No banker, “left to his own devices”…would create low standards and high risk…that would be financial suicide. Left to his own devices means the banker creates the standards for making loans.
Once again…the financial products you call bogus, the bundled loans, have value and growth potential just like stocks or commodities. Before the CRA poisoned the pool the investments were sound and the potential to make money held minimal risk.
The ability to bundle actually helped lessen risk. (I just discovered that bundling was an idea that originated under Franklin Raines at Fannie Mae-see article below).
The CRA threw a wrench in the mix. The massive number of defaults made it crumble. That’s why it is really dumb to make ridiculous regulations like the CRA.
People buy and sell gold over and over again. Some investors win and some investors lose as the price of gold rises and falls. But the continuous buying and selling doesn’t cause an overall problem. The buying and selling of bundled securities didn’t cause the bubble…the easy money did…and as the bad loans failed the housing market froze up and housing prices crashed…the flippers were trapped and couldn’t flip the homes…they probably couldn’t rent them either…more bad loans…
The ACA gave politicians the ability to put pressure on banks to create easy financing and poisoned the pool in two ways. One was the forced bad loans to people who could not really afford to buy and the other was the fact that that easy money created irrational exuberance in investors. It didn’t help that Fannie and Freddie were dialing for bundles either. that lowered the risk…another stupid incentive.
Byron York looked into the scandal that never got reported back in 2008:
It didn’t of course. We do not have an honest press.
So it was the guys at Fannie Mae that came up with bundling loans into securities.
A timeline for this horrible mess is here.
Bush was right when he said…”There is plenty of blame to go around.”
Oh, I’m all a-flutter. Whatever have I missed, in the way of incoherent vitriol?
Libby knowing that you probably wouldn’t read it I highlighted the significant fact for you. I’ll do it again just to be clear:
So it was Fannie Mae that created bundled loans in the form of mortgage-backed securities!
You’ve been blaming the “evil banks” and the “evil Glass-Steagal”…WRONG…and filled with vitriol!
Mirror?
If you were not so bitterly prejudiced and partisan you would have the decency to be embarrassed.
Instead you make a snide remark and accuse me of using vitriol when I am simply stating the truth.
The problem is not that simple. Spin is failing these days. I think it is time this region had a debate on these issues.
We need a modern Glass Stegal period.
Get ready they are spinning out of control, no one can monitor the high speed trades and congress sells inside information for campaign money.
Mark my words we will crash by 2016 and they will cut our throats the next time to a corporate dictatorship, Other countries will have had enough of our banksters, AND ATTACK WITHOUT EVER FIRING A SHOT!
There is no such thing as a free market. Markets are created by rules. Wall street has rules or the money would not flow.
Now how about all those mortgages that were traded without being recorded and the foreclosures where no one even knew who held the paper? Military people were foreclosed on after thinking they refinanced while they were oversea?
Education does not come from a political party spin
Re #27 Libby :
Oh, I’m all a-flutter. Whatever have I missed, in the way of incoherent vitriol?
Libby, please feel free to drop dead at your earliest possible convenience.
Dewey the people that speak of free markets don’t expect or believe in no rules. Our nation was founded with the rule of law firmly in place.
What we are against is stupid rules, complex rules that allow lawyers to create loopholes out of whole cloth, rules that pick winners and losers, rules that are used to punish and control.
Education does not come from complaints and criticism that is void of information or alternative ideas. You might try listening to yourself occasionally.
Pie did I make an error and let you down?
Not that I completely disagree in fantasy.
LOL theory that is not practiced by their elected. Wall street is running 1/2 the gov and the billionaires the other.
The central banks have funded both sides of an war for century’s.
How about we just audit the Fed and the Pentagon and fix things.
The ugly truth’s and the facts of who is actually in charge will not be fun.
P.S> The banks are the problem. Man where does this stuff come from? Gaines? Who is the Puppet master?