Their Words – And a very good point! – This puts a whole new perspective on The Mess we’re in and exactly who created it and who is making us aware of it. Thanks Mike – Thanks 99%!
I’ve studied the collapse at length and found that the government and the Fed set up conditions for the low life of finance to come out of the woodwork. If capitolism had been left alone, banks would never have started making loans they didn’t want to make. Progressive thought said that the poor should be able to buy homes. The problem was that banks would not lend them money because they wouldn’t be able to make the payments so Clinton told the banks they are violating discrimination laws and had better start making those loans or face severe penalties. At the same time, Fannie announced it wanted to buy sub prime….also because of congress which required Fannie and Freddie to have 30% of its portfolio in sub prime and another 30% in inner city loans. That is what started got the decline in lending standards and the rising of predator lenders. Yes, finance does need regulation, but not the kind we’ve seen.
Wow, the willful ignorance on display among the right-wingers here. Everyone who works pays taxes. Only if you ignore the taxes that hit the poor most heavily — payroll taxes, sales taxes, and state taxes — can you argue that they don’t pay taxes.
To VHAMMOBNIt was not the Community Reinvestment act that passed the requirement of 30%/30% that I wrote about earlier. It was the Federal Enterprises Financial Safety and Soundness Act of 1992. My source is not some right wing wacko. It is Gretchen Madsen who writes for the NY Times and Joshua Rosen. Not only were these requirements initially made, but when Mario Cuomo took over HUD in 97 he ordered Fannie and Freddie to increase their portfolios of sub prime or face fines of up to $10,000 per day. True and from the same source.
“..275 …liberal groups saying…raised taxes needed to balance the budget when the economy is slow “would risk tipping a faltering economy into recession…” …LIKE NOW???… We have 40 Million people paying ZERO Income Taxes and earn over $50K.
I appreciate the effort you put into your response and agree with it.
A few clarifications on my part. Lending to low and moderate income people IS generally sub prime. The bill did also demand another 30% go to inner city mortgages.
You are correct. The bill did not require or mention no down payment mortgages etc. Relaxed lending standards came first (to my knowlege) in a 1993 publicaton from the Boston Fed entitled, “Closing The Gap, A Guide To Equal Opportunity Lending.” It told banks to ease lending standards and do away with tried and true lending principles or be called upon to “explain” to the fed why their minority lending is sub par. The basis for this threat was the Boston Fed’s own study from the previous year called, “Mortgage Lending In Boston: Inerpreting HMDA Data”. That study, claimed to be the final word on the question of discrimination in lending. It concluded that discrimination was rampant. This is the study that Clinton and Reno used to threaten banks into making the kind of loans they had never made before. The study was later discredited and the person in charge of it later admitted that all it found was that banks were “nicer” to non minorities.
It was not until the years passed that the relaxing of lending standards really took hold. The mortgage firms had to continually loosen lending standards more and more in order to attract more borrowers.
My son has a friend who was a mortgage officer back then and he told me that a homeless guy living under a bridge; if he could have someone in a bar sign a paper saying he earns $30,000 a year, could get a $200,000 mortgage. It got that bad. He may have been exaggerating a bit but he is no fool. He is now a stock broker and his wife is a very high paid researcher in a field of economics.
Finally, I totally agree with you that Republicans and Democrats both share responsibility. Jim Johnson of Fannie Mae had much of Congress in his pocket. He was a genius of manipulation. He now sits on the Target board.
Anyone who was anyone in the mortgage business had their hands in the mess. That even includes the rating agencies which were making so much money evaluating mortgage security packages (that they often didn’t even understand) that they did all they could to perpetuate the immoral activity.
It was probably the Wall Street bankers that were the biggest culprits because they gave almost unlimited lines of credit to private mortgage firms and bought the resulting mortgages for bundling and sale. They saw the quallity of the loans deteriorating over time but continued to sell them to unsuspection investors without warning.
The bulk of my knowlege on the subject comes from Morgensen and Rosner’s book, “Reckless Endangerment”. Other sources include documents on Walter Williams web site, an editorial from the Wall St Journal and a couple minor sources.
Dtroutma over 12 years ago
Very accurate depiction. Good one, Mike.
tcolkett over 12 years ago
No misleading right-wing talking points today?
MaeRiot over 12 years ago
Their Words – And a very good point! – This puts a whole new perspective on The Mess we’re in and exactly who created it and who is making us aware of it. Thanks Mike – Thanks 99%!
Fuzzy Thinker Premium Member over 12 years ago
All I want from the Super Committee is:
Those that Paid ZERO Income Tax get a 10% Surtax- The 35 Million Deadbeats with more than $75,000 Income ($4 Trillion over 10 years).
gbrucewilson over 12 years ago
I am one of the 50% who PAY taxes. I want the other 50% to also pay. No free rides!
Hurst5809 over 12 years ago
I’ve studied the collapse at length and found that the government and the Fed set up conditions for the low life of finance to come out of the woodwork. If capitolism had been left alone, banks would never have started making loans they didn’t want to make. Progressive thought said that the poor should be able to buy homes. The problem was that banks would not lend them money because they wouldn’t be able to make the payments so Clinton told the banks they are violating discrimination laws and had better start making those loans or face severe penalties. At the same time, Fannie announced it wanted to buy sub prime….also because of congress which required Fannie and Freddie to have 30% of its portfolio in sub prime and another 30% in inner city loans. That is what started got the decline in lending standards and the rising of predator lenders. Yes, finance does need regulation, but not the kind we’ve seen.
Hurst5809 over 12 years ago
I do however, agree with Lukovice here.
ARodney over 12 years ago
Wow, the willful ignorance on display among the right-wingers here. Everyone who works pays taxes. Only if you ignore the taxes that hit the poor most heavily — payroll taxes, sales taxes, and state taxes — can you argue that they don’t pay taxes.
babka Premium Member over 12 years ago
oh, yes, ML!
Hurst5809 over 12 years ago
To VHAMMOBNIt was not the Community Reinvestment act that passed the requirement of 30%/30% that I wrote about earlier. It was the Federal Enterprises Financial Safety and Soundness Act of 1992. My source is not some right wing wacko. It is Gretchen Madsen who writes for the NY Times and Joshua Rosen. Not only were these requirements initially made, but when Mario Cuomo took over HUD in 97 he ordered Fannie and Freddie to increase their portfolios of sub prime or face fines of up to $10,000 per day. True and from the same source.
Fuzzy Thinker Premium Member over 12 years ago
“..275 …liberal groups saying…raised taxes needed to balance the budget when the economy is slow “would risk tipping a faltering economy into recession…” …LIKE NOW???… We have 40 Million people paying ZERO Income Taxes and earn over $50K.
Hurst5809 over 12 years ago
Hello VHAMMON
I appreciate the effort you put into your response and agree with it.
A few clarifications on my part. Lending to low and moderate income people IS generally sub prime. The bill did also demand another 30% go to inner city mortgages.
You are correct. The bill did not require or mention no down payment mortgages etc. Relaxed lending standards came first (to my knowlege) in a 1993 publicaton from the Boston Fed entitled, “Closing The Gap, A Guide To Equal Opportunity Lending.” It told banks to ease lending standards and do away with tried and true lending principles or be called upon to “explain” to the fed why their minority lending is sub par. The basis for this threat was the Boston Fed’s own study from the previous year called, “Mortgage Lending In Boston: Inerpreting HMDA Data”. That study, claimed to be the final word on the question of discrimination in lending. It concluded that discrimination was rampant. This is the study that Clinton and Reno used to threaten banks into making the kind of loans they had never made before. The study was later discredited and the person in charge of it later admitted that all it found was that banks were “nicer” to non minorities.
It was not until the years passed that the relaxing of lending standards really took hold. The mortgage firms had to continually loosen lending standards more and more in order to attract more borrowers.
My son has a friend who was a mortgage officer back then and he told me that a homeless guy living under a bridge; if he could have someone in a bar sign a paper saying he earns $30,000 a year, could get a $200,000 mortgage. It got that bad. He may have been exaggerating a bit but he is no fool. He is now a stock broker and his wife is a very high paid researcher in a field of economics.
Finally, I totally agree with you that Republicans and Democrats both share responsibility. Jim Johnson of Fannie Mae had much of Congress in his pocket. He was a genius of manipulation. He now sits on the Target board.
Anyone who was anyone in the mortgage business had their hands in the mess. That even includes the rating agencies which were making so much money evaluating mortgage security packages (that they often didn’t even understand) that they did all they could to perpetuate the immoral activity.
It was probably the Wall Street bankers that were the biggest culprits because they gave almost unlimited lines of credit to private mortgage firms and bought the resulting mortgages for bundling and sale. They saw the quallity of the loans deteriorating over time but continued to sell them to unsuspection investors without warning.
The bulk of my knowlege on the subject comes from Morgensen and Rosner’s book, “Reckless Endangerment”. Other sources include documents on Walter Williams web site, an editorial from the Wall St Journal and a couple minor sources.
Hurst5809 over 12 years ago
Hello tmaguire. Thank you for the kind words.