Stimulus 'an absolute success,' says Biden

Thank you for answering a question with maturity.

 

Translation: You don't know. Tell you what.............piss off.

 

Yep, and now they don't want to take the blame. If the banks were proactive in doing some of these loan modifications they would be admitting that they themselves were the reason the housing market plummeted. With their inflated housing values, their predatory lending practices, allowing unqualified buyers to either purchase homes they can't afford or cash out equity. Equity that was manufactured in the 1st place. The banks were doing their damndest to get money flowing. Well they got fake money flowing and now don't want to face the music. Whether the gov't had anything to do with it or not is irrelevant. The banking system may have been encouraged to loosen their lending guidelines, in order to get money flowing in the economy, but the banking execs made the decision to throw the guidelines out the window. Helping to create a false housing market value, where in some areas houses were increasing up to and over 100% almost over nite. Which in turn allowed and encouraged people to cash out the false equity in their homes, encouraged the people to spend, spend, spend. Creating a false economy for much of the last decade. Well, now that market has hit rock bottom, and the banks and the gov’t don’t know or don’t really want to fix the problem. People, in general are ignorant to the consequences that they possibly faced cashing out on their mortgages, signing BS ARM, Interest only 5 yr mortgage contracts, not realizing that eventually they were going to have to face the higher mortgage payments. Money can make people do stupid things, and did in many cases. These people and the people who were purchasing homes, at inflated values, at this time are the real victims. Whether they are victims of their own stupidity or victims of circumstance is really not of any concern, because what caused it is the same. The banks and gov’t had the avg person believe that this is the American way, and now the price is being paid.

This is not to say that everyone did this, or that this is everyone’s story, but it is a big contributor to the current housing crisis.

 

Translation: MLU is right about me.

 

DJM,

You can't believe everything you read in a blog, particularly a partisan blog. The one you cite, it's incomplete and telling a story from the point of view of the right.

Right here in FSA, we had a good discussion of the mortgage crisis a year ago, and it was only two pages long. Mainly DRC and me, but you get a fairly balanced picture.

Link to Mortgage Crisis Discussion, start on post #11

The mortgage crisis really spun out of control in 2004 - 2006, when republicans held the white house and majorities in both the house and senate. Why does anyone think Barney Frank was driving the bus? I posted a speech from President Bush in 2002 in this thread (see post #52 on page 3 of this thread) about how he was going to goose housing up, tell me how his position differed from Barney Frank's? The repubs could have reformed Fannie and Freddie while they had all the control, but they failed to do it, why?

I say the dems didn't help prevent the mortgage crisis and shame on them for that, but the republicans were in control of all the institutions that could have prevented it and they failed to get the job done, so bigger shame on them.

The right wants to talk about the Community Reinvestment Act as a cause of the mortgage crisis, but most of the bad loans came from shyster loan companies like New Century and Countrywide, and CRA did not regulate their activity or make them do anything. CRA only pertained to 'depositories', or banks, not loan companies like Countrywide. CRA said if you are a bank and do business in a predominately minority area, then most of your loans have to stay in that area. This was to correct the practice called "red lining" where some banks rejected all loans from particular zip codes without looking at the rest of the loan application. CRA did not make the companies that only originated loans do anything, it did not apply to them. The loan originators made the bad loans because they could sell them to Fannie and Freddie (there was a congressional oversight problem with that) or to the big Wall St. banks, and they got turned into agency backed Collateralized Mortgage Obligations (ABCMO) or non-agency backed CMO's (those where Wall St. bought the paper straight from the loan originator like Countrywide with no Fannie or Freddie involvement). The Wall St. banks took the CMO's they created to the rating agencies (Moody's, S&P, Fitch), and they paid for and got AAA ratings on the CMO's, magically turning bundles of junk mortgages into the highest rated debt instruments (critical part of the fraud), which they sold to everyone on earth so they got high yielding "safe bonds" at a fair price, until the system collapsed and folks could not pay on the mortgages after the two year teaser rates started to reset to much higher rates.

 

You're absolutely correct, and thanks for the adult reply. Yes I know and read the thread here about the mortgage crisis, I learned a lot. My initial comment in this thread was merely to say that part of the article I linked about failures in the Obama mortgage plan "sounded like" "one of the causes" of the mortgage crisis. I preceded that by saying "I'm no financial whiz", which meant that I know the mortgage crisis topic was already discussed, and I didn't want to get back into all the details. Note before my link where I said "just one example" which was meant to show that some think that Govt. pressure helped cause the crisis. I used that link to show why I said "sounded like" and "one of the causes". It was not meant to restart the details of the discussion. MLU took off with personal attacks, but could have easily posted a few sentences as you and others have.

I feel like there was some Govt pressure to make "bad" loans, and it was "one of the causes" of the mortgage crisis. Some agree. You and others disagree and have made good points as to why. I fully respect your opinion and would never attack you personally or try to analyze you. I expect the same, which you and others have shown. When MLU grows up, maybe he will also.

 

You are correct in a sense. If you boil this down and say the cause of the original crisis was making loans to people who did not have the ability to repay the loan, and in the Obama attempt to keep people in their homes they tried to modify loans and make them more affordable by dropping the principle amount and then many people still could not afford them, then yes, I see the point and they are similar.

Due to the timing, the Bush era loans got us into the problem, and after the crash keeping people in the homes and some payment coming in can help hold up home values by not putting too many foreclosures on the market at one time. Slightly different in intent.

 

Nonsense. Nowhere in that speech does it say Bush encouraged relaxing credit requirements. To the contrary, he specifically said "qualified" borrowers. Barney Frank was the one blocking higher credit score requirements.

We went through all this over 18 months ago but this speech is taken out of context for the point of discussion. Barney Frank lead the charge in blocking legislation to have FANNIE and FREDDIE buy loans from more qualified buyers. Now FANNIE and FREDDIE are in ruins and both just de-listed on the NYSE.

 

Barney Frank was a member of the minority in the house of representatives. As a member of the minority he was not a committee chairman. Just how do you think he could accomplish blocking legislation to have Fannie and Freddie improve credit quality, and just where the heck were the republican majority holders. What legislation are you talking about?

 

That would be right here:

From my original post on page 3 of this thread. The republicans held the majority in the house and senate and the presidency, and the president favored expansion of home ownership to "consumers with poor credit".