FredHayek wrote: Dog, are your lips red from drinking all that Kool-aid. Didn't have anything to do with Fannie Mae & Freddie Mac lowering standards and pushing for an abnormally high homeowner rate that both the Dem and Republican parties encouraged?
It had very little to do with the Community Reinvestment act, as has been widely studied. The vast majority of the loans that defaulted were not insured with Fannie Mae & Freddie Mac but were from private insurers. Those lenders then sliced and diced and repackaged those risky loans as derivatives and were sold at huge fees. In order to keep making those ridiculous fees, they needed more and more high risk loans and did not follow proper appraisal practices. Here is a fact for you. 84% of the subprime loans were made by private lenders.
On the other hand, very few of the loans by the GSEs or that were made under the CRA defaulted. Simple fact that does not support your allegations. Of course we know that facts are not necessary for the outrages posited by the conservatives.
Here is some background reading for you that might keep you from embarrassing yourself.
Did Fannie and Freddie buy high-risk mortgage-backed securities? Yes. But they did not buy enough of them to be blamed for the mortgage crisis. Highly respected analysts who have looked at these data..including the nonpartisan Government Accountability Office, the Harvard Joint Center for Housing Studies, the Financial Crisis Inquiry Commission majority, the Federal Housing Finance Agency, and virtually all academics, including the University of North Carolina, Glaeser et al at Harvard, and the St. Louis Federal Reserve [also here], have all rejected the Wallison/Pinto argument that federal affordable housing policies were responsible for the proliferation of actual high-risk mortgages over the past decade.
http://www.scribd.com/doc/59874222/Why- ... ing-Crisis
You do realize that the GSEs don't make loans, right? What they do instead is purchase loans initiated by private lenders in a secondary market so that the private institutions which made the loans are recapitalized to make additional loans. After purchasing the loans, they bundle them together and sell them as an asset backed security that has an implicit guarantee issued by the federal government. What caused the meltdown was the financial institutions purchasing these securities which were eligible under federal law to be assets on their books. Other federal laws allow these lenders to then lend out significantly more money than they actually have in assets. What triggered the collapse was another federal regulation which required the GSE issued security to be removed entirely from the books as an asset when a relatively minor percentage of the loans in the security failed. What was it, 5% or 10% of the loans in the security failing that triggered the removal of the entire security from the asset column even though it retained 90% or more of its value?
When the securities had to be removed from the asset column as a result of that federal regulation, than another federal regulation kicked in which required that there must be X dollars in assets for every 20X in loans that those who purchased the GSE securities were now in danger of violating. Violation of that regulation triggers another federal action, declaration of insolvency. So in essence what TARP was intended to do was make good on the implicit guarantee the federal government had issued for the products of the GSEs. It should also be noted that the GSEs received a greater percentage of the TARP funds than any of the private institutions did. What was it again, something on the order of $190 Billion of the $600 Billion that was actually dispersed? To date, none of that money has been paid back, though the US Treasury has received about $65 Billion or so in interest payments, while over $360 Billion of the $420 Billion that went to private companies without federal charters has been returned to the Treasury.
And yet some wish us to believe that the root of the crisis itself isn't laid entirely at the foot of the federal government. Is that amazing or what?
FredHayek wrote: Dog, are your lips red from drinking all that Kool-aid. Didn't have anything to do with Fannie Mae & Freddie Mac lowering standards and pushing for an abnormally high homeowner rate that both the Dem and Republican parties encouraged?
It had very little to do with the Community Reinvestment act, as has been widely studied. The vast majority of the loans that defaulted were not insured with Fannie Mae & Freddie Mac but were from private insurers. Those lenders then sliced and diced and repackaged those risky loans as derivatives and were sold at huge fees. In order to keep making those ridiculous fees, they needed more and more high risk loans and did not follow proper appraisal practices. Here is a fact for you. 84% of the subprime loans were made by private lenders.
On the other hand, very few of the loans by the GSEs or that were made under the CRA defaulted. Simple fact that does not support your allegations. Of course we know that facts are not necessary for the outrages posited by the conservatives.
Here is some background reading for you that might keep you from embarrassing yourself.
Did Fannie and Freddie buy high-risk mortgage-backed securities? Yes. But they did not buy enough of them to be blamed for the mortgage crisis. Highly respected analysts who have looked at these data..including the nonpartisan Government Accountability Office, the Harvard Joint Center for Housing Studies, the Financial Crisis Inquiry Commission majority, the Federal Housing Finance Agency, and virtually all academics, including the University of North Carolina, Glaeser et al at Harvard, and the St. Louis Federal Reserve [also here], have all rejected the Wallison/Pinto argument that federal affordable housing policies were responsible for the proliferation of actual high-risk mortgages over the past decade.
http://www.scribd.com/doc/59874222/Why- ... ing-Crisis
You do realize that the GSEs don't make loans, right? What they do instead is purchase loans initiated by private lenders in a secondary market so that the private institutions which made the loans are recapitalized to make additional loans. After purchasing the loans, they bundle them together and sell them as an asset backed security that has an implicit guarantee issued by the federal government. What caused the meltdown was the financial institutions purchasing these securities which were eligible under federal law to be assets on their books. Other federal laws allow these lenders to then lend out significantly more money than they actually have in assets. What triggered the collapse was another federal regulation which required the GSE issued security to be removed entirely from the books as an asset when a relatively minor percentage of the loans in the security failed. What was it, 5% or 10% of the loans in the security failing that triggered the removal of the entire security from the asset column even though it retained 90% or more of its value?
When the securities had to be removed from the asset column as a result of that federal regulation, than another federal regulation kicked in which required that there must be X dollars in assets for every 20X in loans that those who purchased the GSE securities were now in danger of violating. Violation of that regulation triggers another federal action, declaration of insolvency. So in essence what TARP was intended to do was make good on the implicit guarantee the federal government had issued for the products of the GSEs. It should also be noted that the GSEs received a greater percentage of the TARP funds than any of the private institutions did. What was it again, something on the order of $190 Billion of the $600 Billion that was actually dispersed? To date, none of that money has been paid back, though the US Treasury has received about $65 Billion or so in interest payments, while over $360 Billion of the $420 Billion that went to private companies without federal charters has been returned to the Treasury.
And yet some wish us to believe that the root of the crisis itself isn't laid entirely at the foot of the federal government. Is that amazing or what?
It looks like DOG had to rely on an article by a far left progressive think tank to get his "facts" while PrintSmith knows his/her stuff from actual experience and intellectual insight. DOG will be forthcoming with a response as soon as a response can be found. Google is your friend.
What Obama is wanting to reinstate is the homeloans which were intended to offer first time home ownership to minorities. These loans were made without proof of employment, credit standing, or ability to pay. These extremely risky loans were then bundles and sold. This caused the fall of the house of cards. Why do this again?
Arlen wrote: What Obama is wanting to reinstate is the homeloans which were intended to offer first time home ownership to minorities. These loans were made without proof of employment, credit standing, or ability to pay. These extremely risky loans were then bundles and sold. This caused the fall of the house of cards. Why do this again?
Gotta keep the voter base supplied with goodies so they can say how cruel and greedy the other side is... logic be damned.
The left is angry because they are now being judged by the content of their character and not by the color of their skin.
