14
   

The Real Culprits In This Meltdown, no McCain aides listed...

 
 
cicerone imposter
 
  1  
Reply Thu 18 Sep, 2008 04:22 pm
@McGentrix,
Yeah, all liberals are whiners, and if you wait long enough, you're going to find more conservatives become whiners as their stock portfolios shrink.

The stock market lost seven percent in the most recent week. Yeah, whiners all.
0 Replies
 
FreeDuck
 
  2  
Reply Fri 19 Sep, 2008 08:36 am
@McGentrix,
McGentrix wrote:
None of you can refute the truth in the article, it's sad to watch you guys try to muster up the vile that you are.

Can just one of refute the facts posted in the OP?

I'll not hold my breath.


Which facts? I see a lot of conclusions drawn but no real direct connection. The best he does is to say that Clinton era changes to the CRA "helped create the market" for subprime loans. There has always and will always be a market for subprime loans, that's why payday lenders and pawnshops have been around for so long. He doesn't say which changes were key or how that led to the unbridled greed and unprecedented assumption of risk among mortgage lenders and companies who bought mortgage backed securities, many of whom are not affected at all by the CRA. He also accuses the Clinton admin of mismanaging "quasi-government agencies" of which he doesn't name. Is he talking about Fannie and Freddie? If so then he is right about them being quasi-governmental in the sense that the government backed them, but not in the sense that the government was running them. They were private companies run by CEOs, not the president or his appointees.

I will agree that the government's fingerprints are all over this though. Just not in the sense that he thinks.
McGentrix
 
  2  
Reply Fri 19 Sep, 2008 08:39 am
@FreeDuck,
Actually, there wasn't always a market for subprime loans. No bank in their right mind would have made those loans before the CRA. I mean really, loan large amounts of money to people that obviously can't pay it back?

The article discusses when the subprime market was created.
FreeDuck
 
  1  
Reply Fri 19 Sep, 2008 08:56 am
@McGentrix,
Not really, it doesn't. It says the changes to the CRA "helped create" the market for subprimes. It doesn't say how it helped or what the other factors were.

Meanwhile, how did we get these gigantic "too big to fail" institutions?
0 Replies
 
FreeDuck
 
  1  
Reply Fri 19 Sep, 2008 08:58 am
@McGentrix,
McGentrix wrote:
No bank in their right mind would have made those loans before the CRA. I mean really, loan large amounts of money to people that obviously can't pay it back?


Sorry, I read this too quickly. You are right that banks who would have kept these loans would never have made them. But it wasn't banks who made them, it was "mortgage lenders" and other institutions who then packaged them up and sold them.
0 Replies
 
McGentrix
 
  3  
Reply Fri 19 Sep, 2008 09:02 am
Maybe this will help.

Quote:
The Rest of the Meltdown Story
By Neal Boortz

What in the world is going on here?

You’ve seen the headlines, and you heard of the failures and buyouts. Lehman Brothers, Bear Stearns, Merrill Lynch, AIG; all big names and all in big trouble. Then those mysterious quasi-government agencies with names like Freddie and Fannie become wards of the state and you learn that you and your fellow taxpayers are potentially on the hook for tens of billions of dollars. At the end of the week Washington Mutual is looking for a buyer, and you start to wonder about the security of your own bank and your own savings account. Let’s change that ad copy to WaMu -- boo hoo.

Somewhere in the back of your mind you understand that this is all tied somehow to bad mortgages. If you start reading a bit further to enhance your understanding you run into terms like Mortgage Backed Securities (MBS) and credit-default swaps, whatever in the world those are. Read further and you find out that a combination of falling home prices and mortgage defaults have put many investment banks and other financial institutions in deep puddin’. All this reading, all this watching the talking heads on TV, and you still don’t really know what in the world is going on here.

Fear not. I’m here to help. I know … I’m just another talk show host; but the fact is that when the stage was being set for the problems we’re seeing today I was making most of my money as a real estate lawyer .. closing loans for some of the very institutions that are the tank today. This rather unique combination " closing lawyer and radio talk show host " gave me a front row seat to the politicization of mortgage loans that led us to today’s headlines.

OK .. so we all know that a lot of really bad real estate loans were made. The political class would sure love for us to believe that the blame here rests squarely on “greedy” (try to define that word) mortgage brokers and lenders. The truth is that most of the blame rests on political meddling in the credit decisions of these mortgage lenders.

Twenty years ago the buzz-word in the media was “redlining.” Newspapers across the country were filled with hard-hitting investigative reports about evil and racist mortgage lenders refusing to make real estate loans to various minorities and to applicants who lived in lower-income neighborhoods. There I was closing these loans in the afternoons, and in the mornings offering a counter-argument on the radio to these absurd “redlining” claims. Frankly, the claims that evil mortgage lenders were systematically denying loans to blacks and other minorities were a lot sexier on the radio than my claims that when credit histories, job stability, loan-to-value ratios and income levels were considered there was no evident racial discrimination.

Political correctness won the day. Washington made it clear to banks and other lending institutions that if they did not do something .. and fast .. to bring more minorities and low-income Americans into the world of home ownership there would be a heavy price to pay. Congress set up processes (Research the Community Redevelopment Act) whereby community activist groups and organizers could effectively stop a bank’s efforts to grow if that bank didn’t make loans to unqualified borrowers. Enter, stage left, the “subprime” mortgage. These lenders knew that a very high percentage of these loans would turn to garbage " but it was a price that had to be paid if the bank was to expand and grow. We should note that among the community groups browbeating banks into making these bad loans was an outfit called ACORN. There is one certain presidential candidate that did a lot of community organizing for ACORN. I won’t mention his name so as to avoid politicizing this column.

These garbage loans to unqualified borrowers were then bundled up and sold. The expectation was that the loans would be eventually paid off when rising home values led some borrowers to access their equity through re-financing and others to sell and move on up the ladder. Oops.

Right now this crisis is being sold to the American public by the left as evidence the failure of the free market and capitalism. Not so. What we’re seeing is the inevitable result of political interference in free market economics. Acme bank didn’t want to loan money to Joe Homebuyer because Joe had a spotty job history, owed too much money on his credit cards, and wasn’t all that good at making payments on time. The politicians told Acme Bank to figure out a way to make that loan, because, after all, Joe is a bona-fide minority-American, or forget about opening that new branch office on the Southside. The loan was made under politicial pressure; the loan, with millions like it, failed " and now we are left to enjoy today’s headlines.

So … why aren’t you reading the whole story in the mainstream media? Come on, are you kidding me? Do you really expect the media to blame this mess on deadbeat borrowers and political interference in the free market when it is so easy to put the blame on greedy lenders and evil capitalists? Remember … there’s an election going on. One candidate is decidedly anti-capitalist. Do the math.

FreeDuck
 
  2  
Reply Fri 19 Sep, 2008 09:12 am
@McGentrix,
I am having trouble understanding him. He says this started 20 years ago... in 1988? But the CRA was passed originally in '77, I think, and modified in '99. He also seems to be saying that all of these loans were made to minorities and low-income Americans. Does that seem plausible to you? Do you think that all of these subprime loans were made to low-income and minority Americans? Further, do you really believe that banks were forced to make loans to unqualified borrowers? I would like to see what, specifically, in the CRA mandates that banks lend to unqualified borrowers.
McGentrix
 
  3  
Reply Fri 19 Sep, 2008 09:19 am
@FreeDuck,
He's saying that 20 years ago, the PC people started getting involved and lobbying for the governemnt to step in and force lending institutions to start making sub prime loans which resulted in the 99 make over.

A subprime loan (IMO) is one that is made to people with a cloudy credit record. Unfortunately, these people do tend to be minorities and low income Americans. I do believe that a lot of speculators also added to this whole fiasco. People buying houses with interest only loans in hopes of turning them around for a profit.

I did find this on the internet:
Quote:
What does "subprime" mean when it comes to mortgages?
The term subprime refers to any loan which would not fall into the category of an A or A- ("prime" mortgages). A and A- (A- refers to just outside the scope of the best credit situation) loans are basically for those people who have good or excellent credit, no judgments or liens, and gainful employment for the past two years (not in all situations, but usually). The loans that are pruchased on the secondary market by mortgage giants Fannie Mae & Freddie Mac are generally referred to as A paper. These are usually the best rates available and most often the ones you will see advertised online, in print, and on tv.

However, not everyone fits into the neat little credit situation that A paper requires. These loan are referred to as subprime or B, C, & D paper. This is where people with bruised or bad credit will likely find themselves getting a loan. The terms are generally a little worse and many of the loans do contain prepayment penalties. That doesn't mean that these loans can't be beneficial. For someone who has had extenuating circumstances, a subprime loan can offer them a period of time to stay in their home and repair their credit. This is also the main reason most subprime loans contain short terms. Most subprime loans will be a 2 year ARM with the thinking that a borrower will use those two years to clean up the issues that forced them to obtain a subprime mortgage. Life can really throw some unfortunate situations at people, so sometimes these loans are really necessary after bankruptcy, job loss or medical problems. Certain banks specialize in this type of lending and most reputable brokers or bankers will have a wide range of programs to suit any credit situation and help any borrower that walks through the door.
FreeDuck
 
  1  
Reply Fri 19 Sep, 2008 10:03 am
@McGentrix,
That jibes with my understanding as well.

I guess what I'm saying is that I don't know, but I'm not convinced by right-wing arguments that blame it solely on Clinton and, by proxy, minorities and low-income Americans. I think it is significantly more complicated than that. I don't rule out that the CRA might have had a role to play, I just can't imagine that it alone caused this crisis, or that the deregulation we have been seeing over the last 20 years or more has no role. That's not to argue with you, just telling you where I am coming from. I do appreciate you posting the opinions, though, as it makes me want to investigate and find out more.
0 Replies
 
Cycloptichorn
 
  2  
Reply Fri 19 Sep, 2008 10:06 am
@McGentrix,
McGentrix wrote:

He's saying that 20 years ago, the PC people started getting involved and lobbying for the governemnt to step in and force lending institutions to start making sub prime loans which resulted in the 99 make over.

A subprime loan (IMO) is one that is made to people with a cloudy credit record. Unfortunately, these people do tend to be minorities and low income Americans. I do believe that a lot of speculators also added to this whole fiasco. People buying houses with interest only loans in hopes of turning them around for a profit.

I did find this on the internet:
Quote:
What does "subprime" mean when it comes to mortgages?
The term subprime refers to any loan which would not fall into the category of an A or A- ("prime" mortgages). A and A- (A- refers to just outside the scope of the best credit situation) loans are basically for those people who have good or excellent credit, no judgments or liens, and gainful employment for the past two years (not in all situations, but usually). The loans that are pruchased on the secondary market by mortgage giants Fannie Mae & Freddie Mac are generally referred to as A paper. These are usually the best rates available and most often the ones you will see advertised online, in print, and on tv.

However, not everyone fits into the neat little credit situation that A paper requires. These loan are referred to as subprime or B, C, & D paper. This is where people with bruised or bad credit will likely find themselves getting a loan. The terms are generally a little worse and many of the loans do contain prepayment penalties. That doesn't mean that these loans can't be beneficial. For someone who has had extenuating circumstances, a subprime loan can offer them a period of time to stay in their home and repair their credit. This is also the main reason most subprime loans contain short terms. Most subprime loans will be a 2 year ARM with the thinking that a borrower will use those two years to clean up the issues that forced them to obtain a subprime mortgage. Life can really throw some unfortunate situations at people, so sometimes these loans are really necessary after bankruptcy, job loss or medical problems. Certain banks specialize in this type of lending and most reputable brokers or bankers will have a wide range of programs to suit any credit situation and help any borrower that walks through the door.



But McG, the sub-prime loans themselves are not inherently the problem. The problem was the laws that allowed these loans to repackaged and sold as securities. This financial gimmick allowed for billions in earnings, when you shuffle the paper around right; and this is why what started as a mortgage problem became a banking industry problem. And for that, you can blame Mr. Phil Gramm, and a bunch of greedy Wall-street types.

Cycloptichorn
BumbleBeeBoogie
 
  -2  
Reply Fri 19 Sep, 2008 10:16 am
http://able2know.org/topic/122739-1
revel
 
  1  
Reply Sat 20 Sep, 2008 07:33 am
This problems is not restricted to just the poor but also the very wealthiest among us, busting McG assertions that the practice of giving out loans to the poor is the only contributing factor this credit crises.



Quote:
Foreclosures are not only a problem of poor or middle class homeowners. The foreclosure crisis has become so widespread that it is affecting the wealthy population of the United States.

As a rule, expensive houses do not go into foreclosure unless there has been a serious illness or death in the family and this has affected the finances of the family. However, this is no longer the reality.

Homes in wealthy areas that had been purchased for eight hundred thousand dollars or more are now in foreclosure and are being sold for about six hundred thousand dollars. The fact that homes in wealthy areas are going into foreclosure is a clear indication that the housing market is worse than anyone had anticipated. It is clear that foreclosures are affecting the value of homes at a level that not many had thought possible.

It is evident that the credit problem that is reaching all sectors of finance is beginning to affect individuals of all income levels and it will continue doing this unless some solution is found and the housing market improves.


http://www.foreclosuredataonline.com/blog/foreclosure-crisis/foreclosures-hitting-wealthy-areas/

Quote:
GREENWICH, Conn. " This wooded town of roughly 60,000 on Long Island Sound " home to dozens of hedge funds, many millionaires and more than a few billionaires " is one of the wealthiest enclaves in the country. But even Greenwich is not immune to the wave of home foreclosures sweeping the nation.

On Stanwich Road, for example, a house worth $2.6 million is close to going on the block. On Hettiefred Road, the owner of a 2,720-square-foot, four-bedroom colonial featuring a luxury kitchen, swimming pool and tennis court, has been threatened with foreclosure for months. Several dozen other owners in Greenwich have received foreclosure notices this year.


http://www.nytimes.com/2008/04/25/business/25foreclose.html?ex=1366776000&en=814b9aa4be382f2f&ei=5088&partner=rssnyt

Does anyone think the banks handed out loans to fast food workers for homes costing millions of dollars? If not then blaming the poor for this crises is just making them and the never ending clinton administration scapegoats for something which has happened under this administration.
0 Replies
 
barackman28
 
  2  
Reply Sun 21 Sep, 2008 12:15 am
@McGentrix,
Neal Boortz--a notorious right winger--will never admit that many agents systematically barred minorities from "white" neighborhoods by implying that they would have difficulties meeting their mortgage payments while they encouraged white applicants. Anybody who has knowledge of the real estate industry during the eighties knows this. Why can't black and hispanics live in neighborhoods that are predominantly white? I am sure that the large majority have met their mortgage payments on time.

Redlining was racist and everybody knows it!!!
McGentrix
 
  1  
Reply Mon 22 Sep, 2008 09:48 am
@barackman28,
barackman28 wrote:

Neal Boortz--a notorious right winger--will never admit that many agents systematically barred minorities from "white" neighborhoods by implying that they would have difficulties meeting their mortgage payments while they encouraged white applicants. Anybody who has knowledge of the real estate industry during the eighties knows this. Why can't black and hispanics live in neighborhoods that are predominantly white? I am sure that the large majority have met their mortgage payments on time.

Redlining was racist and everybody knows it!!!


So this is your schtick? Everyone is a racist?

0 Replies
 
Cycloptichorn
 
  1  
Reply Mon 22 Sep, 2008 09:54 am
@BumbleBeeBoogie,
Too long to paste here; but this is absolutely the best rundown of the current crisis I've seen yet.

http://www.dailykos.com/storyonly/2008/9/21/9322/74248/245/602838

Thanks, Mr. Phil Gramm, for doing your damndest to create this problem. Asshole.

Cycloptichorn
0 Replies
 
McGentrix
 
  3  
Reply Mon 22 Sep, 2008 09:58 am
@Cycloptichorn,
Yes, the sub-prime loans are inherently the problem.

More people suddenly became able to acquire a loan to buy a house they could not afford. Now, I don't know if the laws of economics work in liberal land, but in America, when more people are looking for homes, suddenly prices go up! Imagine that...

Now, housing prices go up, more and larger sub-prime loans are made and now you have people that couldn't afford a $50k house buying a $75k house. You also have people looking at the low interest rates and moving up from their $100k houses to $200k houses which were only really worth $100k before the housing bubble.

So, now you have people owing more on their homes then the home is actually worth and the stupid government is allowing people to just walk away from them. So yes, the housing bubble popped and bot the rich and the poor are getting foreclosed on, but the reason that is happening is that the bubble existed to begin with. Which was started by the sub-prime mortgages.

Who really gives a **** what banks and mortgage resellers did with the mortgage after it was made. That doesn't make the borrower any less culpapble for the loan they took. That banks are losing money hand over fist is their own damn fault and it sucks that we have to bail their stupid asses out for it.
cicerone imposter
 
  1  
Reply Mon 22 Sep, 2008 10:05 am
@McGentrix,
McG, You're being too harsh on the buyer; many were lied to and hoodwinked into buying those homes without understanding what they were getting into. It's an easy sell if you look at it from the standpoint of the buyer who "really" wants to own their own home. Most people do not understand finance management, because it's not taught in school or the home.

Give them some break!
Cycloptichorn
 
  2  
Reply Mon 22 Sep, 2008 10:14 am
@McGentrix,
McGentrix wrote:

Yes, the sub-prime loans are inherently the problem.

More people suddenly became able to acquire a loan to buy a house they could not afford. Now, I don't know if the laws of economics work in liberal land, but in America, when more people are looking for homes, suddenly prices go up! Imagine that...

Now, housing prices go up, more and larger sub-prime loans are made and now you have people that couldn't afford a $50k house buying a $75k house. You also have people looking at the low interest rates and moving up from their $100k houses to $200k houses which were only really worth $100k before the housing bubble.

So, now you have people owing more on their homes then the home is actually worth and the stupid government is allowing people to just walk away from them. So yes, the housing bubble popped and bot the rich and the poor are getting foreclosed on, but the reason that is happening is that the bubble existed to begin with. Which was started by the sub-prime mortgages.

Who really gives a **** what banks and mortgage resellers did with the mortgage after it was made. That doesn't make the borrower any less culpapble for the loan they took. That banks are losing money hand over fist is their own damn fault and it sucks that we have to bail their stupid asses out for it.


Wow, good thing I had you around to explain the basics of the subprime mortgage market, McG; I've only been discussing it here and elsewhere for two years now, long before any of you Republicans thought it would be a problem at all. What a stroke of luck on my part, that someone could explain the perfectly obvious. Rolling Eyes

Quote:

Who really gives a **** what banks and mortgage resellers did with the mortgage after it was made


America gives a ****, because this is why we are having the problems now, ya maroon. You truly don't understand what is going on, do you?

If the rules were still intact preventing the bundling of sub-prime mortgages into securities - thanks Phil Gramm! Good work! - then the losses from sub-prime mortgages would be limited to those businesses who typically deal with mortgages. Instead, a financial shell game was created out of them, and ALL the banks and trading houses got into it. 'what was done after the mortgage was made' is what has lead to our financial crisis. The actual failing mortgages themselves are a pittance compared to the liquidity problems that are facing our markets today. How can you not understand this basic point, McG?

Cycloptichorn
cicerone imposter
 
  1  
Reply Mon 22 Sep, 2008 10:23 am
@cicerone imposter,
Also, those selling those "instruments" are better educated and know the consequences of what they are doing. The management of those finance companies have failed everybody, and the stab in the back is that those same people are receiving millions in bonuses now from those same failed companies.
0 Replies
 
McGentrix
 
  3  
Reply Mon 22 Sep, 2008 12:03 pm
@Cycloptichorn,
Cycloptichorn wrote:

Wow, good thing I had you around to explain the basics of the subprime mortgage market, McG; I've only been discussing it here and elsewhere for two years now, long before any of you Republicans thought it would be a problem at all. What a stroke of luck on my part, that someone could explain the perfectly obvious. Rolling Eyes


I guess it is a good thing because you obviously have no idea what you are talking about or are completely unable to read anything I have posted.

Quote:
Quote:

Who really gives a **** what banks and mortgage resellers did with the mortgage after it was made


America gives a ****, because this is why we are having the problems now, ya maroon. You truly don't understand what is going on, do you?

If the rules were still intact preventing the bundling of sub-prime mortgages into securities - thanks Phil Gramm! Good work! - then the losses from sub-prime mortgages would be limited to those businesses who typically deal with mortgages. Instead, a financial shell game was created out of them, and ALL the banks and trading houses got into it. 'what was done after the mortgage was made' is what has lead to our financial crisis. The actual failing mortgages themselves are a pittance compared to the liquidity problems that are facing our markets today. How can you not understand this basic point, McG?

Cycloptichorn


Ok, let me make this simpler for you...

Sub-prime loan is made to sub-prime buyer. (Still with me here? Am I going too fast?)
Sub-prime buyer promises to repay lender.
Lender sells sub-prime mortgage to larger company based on promise from sub-prime buyer.
Larger company collects lots of sub-prime loans from various sources and uses the promises from sub-prime buyers as liquidity. (Have I lost you? Still with me?)
Sub-prime borrower defaults on loan because he should never have been given a loan but because the liberals decided that wasn't politically correct they forced lending institutions to make sub-prime loans.
Now large institution has a piece of paper with no promise behind it but the debt remains and must be repaid.
Large institution goes belly up because they can't afford empty promises...

and you blame this on de-regulation of the finance community and Phil Gramm? Last I knew, he hadn't defaulted on his mortgage.

At least have the integrity to place the blame where it belongs instead of the political hackery that you are attempting now. Oh, wait, you're a liberal. Integrity means nothing more to you then a punchline.
 

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