@Cycloptichorn,
I wrote:
Quote: Leaving aside that this crisis was a result of government intervention into housing markets going, at least, back to Carter area legislation like the CRA and the Clinton admin doubling down on ACORN like community 'activism', while seeing Frank/Dodd legislation being passed that forced the two FMs ( Fannie, Freddie) to significantly increase their exposure to subprimes, we must ask why did citizens elect Obama if not to clean up the 'Bush/GOP Mess'?
Cycloptichorn wrote:
Quote:This is 100% bullshit and you are a fool if you believe it's true. The financial crash had nothing to do with the CRA or ACORN - at all. And you're deeply confused about the rest of it as well.
I'd ask you to substantiate any of this with actual evidence, but you've never done so in the past, so why would I expect it now? I would be shocked if you could produce anything even resembling a cohesive narrative as to how a housing market crash sunk every one of our largest banks and investment houses, and then explain to us what the CRA had to do with that.
You've bought into the narrative of lies deeper and more completely than just about anyone on this site, other than maybe Okie or Ican. Which is a little sad, because you just don't seem as dumb as them.
Hi Cyclops. I think the sources that you have been accessing to inform your opinion are doing you a disservice, but that is just my opinion. What is
not just my opinion but that of others also, is that government intervention produces price signal distortions in otherwise healthy markets leading to unintended consequences with, sometimes, dire results like the financial meltdown. We further assert that, despite the USA's housing market's rather small portion of the overall global economy, that small sector's decline, precipitated by government meddling, triggered the financial crisis. Contrary to your claims, I have produced and cited many sources to support that claim. So, I see little harm in producing, again, one more. This is just the latest in a long line of commentary and facts regarding the subject. Some background:
Quote:"On May 20, 2009, Public Law No. 111-21, the Fraud Enforcement and Recovery Act of 2009, was enacted into law, creating the Financial Crisis Inquiry Commission (FCIC). According to the Act, the FCIC was established to “examine the causes, domestic and global, of the current financial and economic crisis in the United States.” The law requires that today, December 15, 2010, the FCIC submit “to the President and to the Congress a report containing the findings and conclusions of the Commission on the causes of the current financial and economic crisis in the United States.”
This primer contains preliminary findings and conclusions released by Vice Chairman Bill Thomas, Commissioner Keith Hennessey, Commissioner Douglas Holtz-Eakin, and Commissioner Peter J. Wallison, and represents a portion of the findings and conclusions resulting from our work on the FCIC. As the transmission of the report of the FCIC to the President and Congress requires a majority vote of the Commission, these findings and conclusions do not constitute the Commission’s report. Rather, this document is an effort to reflect the clear intention of our enabling legislation."
Simply stated the above members of the commission felt compelled to fulfill the law and produce some report on the date required and inform the President as to the causes of the financial crisis. The
PDF version of their document is here and a brief and relevant paragraph follows [note GSEs here are Fannie Mae and Freddie Mac]:
Quote:"The GSEs invested in high-risk mortgages in two ways. The first was by doing exactly what the GSEs had done for decades: guaranteeing loans. The GSEs would provide a credit guarantee on mortgage pools that were sold to them by originators and then issued back to the lender as a GSE-guaranteed MBS, or “agency MBS.” The GSEs would charge a guarantee fee in exchange for taking on the credit risk of the pool of mortgages. But in an effort to meet their affordable housing goals, the GSEs began guaranteeing ever-riskier loans.
The second way the GSEs invested in high-risk mortgages was through MBS backed by subprime and Alt-A mortgages, which they held on balance sheet. Although some of these loans qualified for affordable housing goals, these investments were also, to a large extent, pure interest-rate arbitrage, given the low cost of funding for the GSEs.
The GSEs were not the only means by which the government supported the financing of high-risk mortgages. Through the GSEs, FHA loans, VA loans, the Federal Home Loan Banks, and the Community Reinvestment Act [CRA], among other programs, the government subsidized and, in some cases, mandated the extension of credit to high-risk borrowers, propagating risks for financial firms, the mortgage market, taxpayers, and ultimately the financial system.
Emphasis mine. The document is only 13 pages and, for anyone interested in the cause of the financial crisis, a must read.
JM