quote:Originally posted by euphorbia are you retarded?
seriously, youve got some issues.
did you see the regulatory meeting footage? I hope you were crying when you typed that, your links mean nothing and you didnt look up shit. if you saw the regulatory meeting footage youd keep your mouth shut, unless the dems are lying to make the republicans look better? maybe the republicans infected them with nano bots!
SHENANIGANS.
and keep your racist shit to yourself dumb ass.
CRA loans were secured by Freddy Mac and Fanny Mae.
Freddy Mac and Fanny Mae did not do subprime loans (until 2005-2006 because the government let them. Hey, didn't John McCain's campaign chief get hired round here? Maybe it's a .)
Ergo, THE CRA AND THE FM'S DID NOT CREATE THE CRISIS.
Prove me wrong. (Use numbers or, in your case, fingers.)
This:
Had alot more to do with it than the Evvvvil democrats in 2005, when they didn't run anything and were practically frozen out of government from 2002 to 2006.
Your mess. Clean it up.
quote:Originally posted by Thimbles worth of opinion
[B]CRA loans were secured by Freddy Mac and Fanny Mae.
Freddy Mac and Fanny Mae did not do subprime loans (until 2005-2006 because the government let them. Hey, didn't John McCain's campaign chief get hired round here? Maybe it's a .)
Ergo, THE CRA AND THE FM'S DID NOT CREATE THE CRISIS.
Prove me wrong. (Use numbers or, in your case, fingers.)
the numbers are there thimble, youre just choosing to ignore them....
quote:
This:
lol genius, "ownership society" and affordable housing has nothing to do with the social engineering set in place under carter, it has nothing to do with fed back loans giving to "low income people" who really couldnt afford them. If you werent so fucking eager Id think you were kidding posting that to back up your case.
quote:Originally posted by Thimbles worth of opinion And, actually, you dishonest bitch, I remember you in 2004 bragging how you were clearing a whole bunch of money flipping houses.
Did your clients all have CRA loans?
Were you not part of the fucking problem?
my clients werent "low income" you shining beacon of stupidity, and flipping houses require short term loans, wont you shove a mint in your bitch hole when you start talking out of your ass cause your breath stinks.
As far as I'm concerned if he can start a war against the United Nations recommendations he sure had the power to regulate Fanny and Freddy after Clinton.
When was Carter again? Hmmmmn... Oh yeah, 1977. for those interested in numbers, that's 30 years ago.
A thirty year old policy caused the destruction of the global economy and conservatives are SOOO STUPID they didn't see it coming. LOL!
quote:Originally posted by Thimbles worth of opinion When was Carter again? Hmmmmn... Oh yeah, 1977. for those interested in numbers, that's 30 years ago.
A thirty year old policy caused the destruction of the global economy and conservatives are SOOO STUPID they didn't see it coming. LOL!
some did see it coming, McCain actually sponsored a bill. and clearly you cant challenge the video, and trying to challenge what came out of the democrats own mouths would be just oplain silly...though Im surprised you have enough sense to recogize it so you go into your retarded donkey mode.
*JAZZ JANDS*
and yes LF, it looked like Bush may have tried to take some credit there, almost as shameless as Clinton trying to take credit for the tech bubble right? right, and people are still willing to suck his dick for that one arent they? Affordable housing is also connected to tax incentives of owning property, tax incentives for construction companies and a business friendly environment, people have whined from the start that bush was implementing these things.
And back to you trying to bring up my clients thimble you filthy piece of worthless turd, you truly are shameless, probably the most dishonest, hate mongering and bigoted person on this board and I take solace that you surely have poisoned your environment so much that youre living in your own self made hell. You deserve it.
For those interested in the numbers, that bill was 2005. After the elections in 2002 when the democrats were bludgeoned.
Oh how, how could the poor republican majority stop the ineffectual democrat minority with control over only 3 branches of government?
PPS. That wasn't the only bill. There was a Fanny Mae Freddy Mac bill that made it out of committee, unlike Hagel's bill which you are talking about, through a congress vote, and to the senate where it got killed. You know what killed it? Greenspan and the Bush Administration.
In the aftermath of the US Treasury’s decision to seize control of Fannie Mae and Freddie Mac, critics have hit at lax oversight of the mortgage companies.
The dominant theme has been that Congress let the two government-sponsored enterprises morph into a creature that eventually threatened the US financial system. Mike Oxley will have none of it.
Instead, the Ohio Republican who headed the House financial services committee until his retirement after mid-term elections last year, blames the mess on ideologues within the White House as well as Alan Greenspan, former chairman of the Federal Reserve.
The critics have forgotten that the House passed a GSE reform bill in 2005 that could well have prevented the current crisis, says Mr Oxley, now vice-chairman of Nasdaq.
He fumes about the criticism of his House colleagues. “All the handwringing and bedwetting is going on without remembering how the House stepped up on this,” he says. “What did we get from the White House? We got a one-finger salute.”
The House bill, the 2005 Federal Housing Finance Reform Act, would have created a stronger regulator with new powers to increase capital at Fannie and Freddie, to limit their portfolios and to deal with the possibility of receivership.
Mr Oxley reached out to Barney Frank, then the ranking Democrat on the committee and now its chairman, to secure support on the other side of the aisle. But after winning bipartisan support in the House, where the bill passed by 331 to 90 votes, the legislation lacked a champion in the Senate and faced hostility from the Bush administration.
Adamant that the only solution to the problems posed by Fannie and Freddie was their privatisation, the White House attacked the bill. Mr Greenspan also weighed in, saying that the House legislation was worse than no bill at all.
“We missed a golden opportunity that would have avoided a lot of the problems we’re facing now, if we hadn’t had such a firm ideological position at the White House and the Treasury and the Fed,” Mr Oxley says.
When Hank Paulson joined the administration as Treasury secretary in 2006 he sent emissaries to Capitol Hill to explore the possibility of reaching a compromise, but to no avail.
And that still doesn't explain why, if the CRA is to blame and CRA loans are Freddy Mac Fanny Mae loans, why the GSE's lost half their market share in the bubble to investment banks.
*Goldurn full size graph wouldn't load*
Those are Alan Greenspan's numbers. Every economist who has given analysis to your CRA theory thinks you are a joke. You're spreading the modern equivalent of blood libel.
quote: http://seekingalpha.com/article/717...rt-the-meltdown
This far-reaching attempt to link previous government regulation - the Community Reinvestment Act - as the cause of the subprime meltdown doesn't even pass the smell test.
quote: http://en.wikipedia.org/wiki/Sub_prime
Subprime could also refer to a security for which a return above the "prime" rate is received, also known as C-paper. In the United States, mortgage lending specifically, the term "subprime" can be applied to "non conforming" loans, those that do not meet Fannie Mae or Freddie Mac guidelines, generally due to one of a array of factors including the size of the loan, income to mortgage payment ratio or the quality of the documentation provided with the loan. The phrase also refers to bank loans taken on property that cannot be sold on the primary market, including loans on certain types of investment properties and to certain types of self-employed persons. Subprime lending encompasses a variety of credit types, including mortgages, auto loans, and credit cards.
You got fooled by a youtube of somebody googling. Are you really too stupid to check the record yourself? Other people I might understand, but you were in the real estate business at the time. You must have seen somewhat what was going on. You are either being dishonest or stupid.
Stop it.
Your whole "I dress like an office drone and act respectable and then sit on forum where we discuss urethra fucking and public torture" bit still creeps me out. I bet it would creep out your co-workers even more.
quote:Originally posted by Thimbles worth of opinion For those interested in the numbers, that bill was 2005. After the elections in 2002 when the democrats were bludgeoned.
Oh how, how could the poor republican majority stop the ineffectual democrat minority with control over only 3 branches of government?
PPS. That wasn't the only bill. There was a Fanny Mae Freddy Mac bill that made it out of committee, unlike Hagel's bill which you are talking about, through a congress vote, and to the senate where it got killed. You know what killed it? Greenspan and the Bush Administration.
And that still doesn't explain why, if the CRA is to blame and CRA loans are Freddy Mac Fanny Mae loans, why the GSE's lost half their market share in the bubble to investment banks.
You got fooled by a youtube of somebody googling. Are you really too stupid to check the record yourself? Other people I might understand, but you were in the real estate business at the time. You must have seen somewhat what was going on. You are either being dishonest or stupid.
Stop it.
Yes, youre right, I do know what is going on, You are the one being dishonest or stupid like I accused you of else where, get your own material dickhole.
You know there hasn’t been enough of a majority to phillibuster and Barney Frank (I mean serious, who would vote for him?) and the black caucus turn it into a racial argument and those tactics, the ones that make Jessie kjackson and al sharpton rich, the same tactics your friend obama has engaged in shame and scare the opposition into not pushing the issue. Watch the fucking video of the actual meeting, are you saying their voices were voiced over?
Do you deny this:
quote: Franklin Raines was a Chairman and Chief Executive Officer at Fannie Mae. Raines was forced to retire from his position with Fannie Mae when auditing discovered severe irregulaties in Fannie Mae’s accounting activities.
Raines left with a “golden parachute valued at $240 Million in benefits. The Government filed suit against Raines when the depth of the accounting scandal became clear. http://housingdoom.com/2006/12/18/fannie-charges/ .
The Government noted, “The 101 charges reveal how the individuals improperly manipulated earnings to maximize their bonuses, while knowingly neglecting accounting systems and internal controls, misapplying over twenty accounting principles and misleading the regulator and the public.
Tim Howard - Was the Chief Financial Officer of Fannie Mae. Howard “was a strong internal proponent of using accounting strategies that would ensure a “stable pattern of earnings” at Fannie. In everyday English - he was cooking the books. The Government Investigation determined that, “Chief Financial Officer, Tim Howard, failed to provide adequate oversight to key control and reporting functions within Fannie Mae,”
Raines and Howard resigned under pressure in late 2004.
Howard’s Golden Parachute was estimated at $20 Million!
Jim Johnson - A former executive at Lehman Brothers and who was later forced from his position as Fannie Mae CEO.
A look at the Office of Federal Housing Enterprise Oversight’s May 2006 report on mismanagement and corruption inside Fannie Mae, and you’ll see some interesting things about Johnson. Investigators found that Fannie Mae had hidden a substantial amount of Johnson’s 1998 compensation from the public, reporting that it was between $6 million and $7 million when it fact it was $21 million.”
Johnson’s Golden Parachute was estimated at $28 Million.
Do you know who these people are? They are now Obama advisors. Crazy isn’t it? How you like THOSE numbers?
And just a glimpse for shits and grins, since Obamas “advisors has come up, lets just have a look at Obamas other friends, supporters, and the people who have actually been MENTORS is extra fucking fabulous. Lets see there was * Frank Marshall Davis an African American life long Communist, One of Barack Obama’s mentors from baraks days in Hawaii, endorsed Obama.
* Pepe Lozano the leader of the Chicago based Young Communist League and writer for the peoples weekly world, the national communist party’s news paper called Obama, “… the communist party’s best hope.”
Nation of Islam leader * Louis Farrakhan and a hater of America and all Honkeys and Jews, endorsed Barack Obama and received a life time achievement award from obama’s church.
* Hamas, who hate America and Israel, endorsed Obama, saying, “We like Mr. Obama and we hope he will win the election.” Why? “He has a vision to change America.”
*Hugo Chavez another America hating Communist have endorsed Obama.
In May *Fidel Castro endorsed Obama, saying he is “the most advanced candidate.”
In June North Korea’s *Kim Jong II endorsed Barack Obama through Chosun Sinbo, his Japanese Communists mouthpiece.
The same month, *Qadhafi dressed in his soldier’s costume, went on Al Jazeera and endorsed Obama as “a fellow Muslim” to the Islamist world.
*La Raza, an organization devoted to erasing America’s southern borders, retaking the southwestern states and making them part of Mexico endorsed Obama.
*Malik Zulu Shabazz the leader of the New Black Panther Party at one time a full member of the Obama campaign. Shabazz hates while people and jews
The fucking commies recognize that he is a commie and mixing those sorts of policies with capitalism is a failing path…which is what we fucking see. 2 half assed implemented economic philosophies done poorly. TaDa!
But lets get back to the main point, though that side street was highly satisfying for me: From Wikipedia:
In the 1996 and 1998 elections, Republicans lost Congressional seats but still retained control of the House and, more narrowly, the Senate. After the 2000 election, the Senate was divided evenly between the parties, with Republicans retaining the right to organize the Senate due to the election of Dick Cheney as Vice President and ex officio presiding officer of the Senate. The Senate shifted to control by the Democrats (though they technically were the pluraity party as they were one short of a majority) after GOP senator Jim Jeffords changed party registration to "Independent" in June 2001, but later returned to Republican control after the November 2002 elections. In the 2006 elections, Democrats won both the House of Representatives (233 Democrats, 202 Republicans) and the Senate (49 Democrats, 49 Republicans, and 2 Independents caucusing with the Democrats) as well as the majority of state governorships (28-22).
Are THOSE numbers good enough for you?
You enjoy those, have a quiet moment, maybe do some spooning with em.
and just to highlight your stupidity...cause it is fun.
quote:Originally posted by Thimbles worth of opinion For those interested in the numbers, that bill was 2005. After the elections in 2002 when the democrats were bludgeoned.
Oh how, how could the poor republican majority stop the ineffectual democrat minority with control over only 3 branches of government?
Majority Party (November 12, 2002 - January 3, 2003): Republican (50 seats)
Minority Party: Democrat (48 seats)
Other Parties: 2
Total Seats: 100
Note: From January 3 to January 20, 2001, with the Senate divided evenly between the two parties, the Democrats held the majority due to the deciding vote of outgoing Democratic Vice President Al Gore. Senator Thomas A. Daschle served as majority leader at that time. Beginning on January 20, 2001, Republican Vice President Richard Cheney held the deciding vote, giving the majority to the Republicans. Senator Trent Lott resumed his position as majority leader on that date. On May 24, 2001, Senator James Jeffords of Vermont announced his switch from Republican to Independent status, effective June 6, 2001. Jeffords announced that he would caucus with the Democrats, giving the Democrats a one-seat advantage, changing control of the Senate from the Republicans back to the Democrats. Senator Thomas A. Daschle again became majority leader on June 6, 2001. Senator Paul D. Wellstone (D-MN) died on October 25, 2002, and Independent Dean Barkley was appointed to fill the vacancy. The November 5, 2002 election brought to office elected Senator James Talent (R-MO), replacing appointed Senator Jean Carnahan (D-MO), shifting balance once again to the Republicans — but no reorganization was completed at that time since the Senate was out of session.
108th Congress (2003-2005)
Majority Party: Republican (51 seats)
Minority Party: Democrat (48 seats)
Other Parties: Independent (1 seat)
Total Seats: 100
________________________________________
109th Congress (2005-2007)
Majority Party: Republican (55 seats)
Minority Party: Democrat (44 seats)
Other Parties: Independent (1 seat)
Total Seats: 100
________________________________________
110th Congress (2007-2009)
Majority Party: Democrat (49 seats)
Minority Party: Republican (49 seats)
Other Parties: 1Independent; 1 Independent Democrat
Total Seats: 100
quote:Originally posted by euphorbia thimble you filthy piece of worthless turd, you truly are shameless, probably the most dishonest, hate mongering and bigoted person on this board and I take solace that you surely have poisoned your environment so much that youre living in your own self made hell. You deserve it.
Well normally I'd say "WTF, look at who I'm dealing with here.", but I just spent a half hour rocking my kid to sleep watching the cartoon network.
A half hour of this:
Sucks all the hostility out of ya.
So yeah, in the spirit of Barney Frank I'll talk uncharacteristically nice.
Does anyone disagree that it was the explosion of the subprime mortgage industry that inflated the real estate bubble?
So what caused the explosion of lending in 2003-2004. Was it a law that was 25 years old, 10 years old in the Clinton incarnation? Or was it the fact that interest rates were reduced to 1%, by Alan Greenspan, making credit cents on the dollar cheap?
At the same time, while interest rates were low, investors (pensions and the like) were making nothing off of traditional safe investments.
Investors were looking for a way of getting decent interest in a no interest economy.
Mortgage companies like Countrywide said, "When people buy houses, people make contracts to pay interest at predictable rates for 30 years. People aren't going to just leave their house, so its a safe investment, safe as houses. There's a whole pile of investors wanting to invest who are afraid of corporate investment because of the Enrons/Worldcoms. Let's get em to invest here, because the mortgage market is as safe as Houses."
Investors bought Asset Backed Securities which were pools of mortgages, each paying interest. Goldman Sachs, Bear
Sterns, and other such investment banks bought and traded these securities. Safe as houses.
Problem was, even though they were making prime, prime wasreally low. Investors wanted higher rates of interest. Here's where the subprime comes in. A person who is a higher credit risk pays a higher interest rate. A person who is too high a credit risk can't get fanny / freddy / standard commercial bank loans, they go subprime.
Now a subprime loan carries a higher risk for an investor (with a high rate of return) and it carries a lower requirements to qualify for the borrower (with a higher rate of interest and a high prepayment penalty as a way of guaranteeing one can't leave the debt pool).
Now if it was one loan, an investor might get anxious about the qualifications of a low qualifying borrower to pay a high rate of interest, but they had the perception there was saftey in numbers. You were buying a security which say 300 loans. People thought maybe 30 might foreclose, leaving the investor taking in the interest of 290 high interest loans. People pretended the odds were low that everyone would fail.
There was a market for subprime borrowers now. Investors demanded them. Places like countrywide aggressively marketed to them. read about it here:
quote: http://www.nytimes.com/2007/08/26/b.../26country.html
But few companies benefited more from the mortgage mania than Countrywide, among the most aggressive home lenders in the nation. As such, the company is Exhibit A for the lax and, until recently, highly lucrative lending that has turned a once-hot business ice cold and has touched off a housing crisis of historic proportions.
“In terms of being unresponsive to what was happening, to sticking it out the longest, and continuing to justify the garbage they were selling, Countrywide was the worst lender,” said Ira Rheingold, executive director of the National Association of Consumer Advocates. “And anytime states tried to pass responsible lending laws, Countrywide was fighting it tooth and nail.”...
Last year, Countrywide had revenue of $11.4 billion and pretax income of $4.3 billion. Mortgage banking contributed mightily in 2006, generating $2.06 billion before taxes. In the last 12 months, Countrywide financed almost $500 billion in loans, or around $41 billion a month. It financed 177,000 to 240,000 loans a month during the last 12 months.
Countrywide lends to both prime borrowers — those with sterling credit — and so-called subprime, or riskier, borrowers. Among the $470 billion in loans that Countrywide made last year, 45 percent were conventional nonconforming loans, those that are too big to be sold to government-sponsored enterprises like Fannie Mae or Freddie Mac. Home equity lines of credit given to prime borrowers accounted for 10.2 percent of the total, while subprime loans were 8.7 percent.
Regulatory filings show that, as of last year, 45 percent of Countrywide’s loans carried adjustable rates — the kind of loans that are set to reprice this fall and later, and which are causing so much anxiety among borrowers and investors alike. Countrywide has a huge presence in California: 46 percent of the loans it holds on its books were made there, and 28 percent of the loans it services are there. Countrywide packages most of its loans into securities pools that it sells to investors.
Another big business for Countrywide is loan servicing, the collection of monthly principal and interest payments from borrowers and the disbursement of them to investors. Countrywide serviced 8.2 million loans as of the end of the year; in June the portfolio totaled $1.4 trillion. In addition to the enormous profits this business generates — $660 million in 2006, or 25 percent of its overall earnings — customers of the Countrywide servicing unit are a huge source of leads for its mortgage sales staff, say former employees.
In a mid-March interview on CNBC, Mr. Mozilo said Countrywide was poised to benefit from the spreading crisis in the mortgage lending industry. “This will be great for Countrywide,” he said, “because at the end of the day, all of the irrational competitors will be gone.”
But Countrywide documents show that it, too, was a lax lender. For example, it wasn’t until March 16 that Countrywide eliminated so-called piggyback loans from its product list, loans that permitted borrowers to buy a house without putting down any of their own money. And Countrywide waited until Feb. 23 to stop peddling another risky product, loans that were worth more than 95 percent of a home’s appraised value and required no documentation of a borrower’s income.
As recently as July 27, Countrywide’s product list showed that it would lend $500,000 to a borrower rated C-minus, the second-riskiest grade. As long as the loan represented no more than 70 percent of the underlying property’s value, Countrywide would lend to a borrower even if the person had a credit score as low as 500. (The top score is 850.)
The company would lend even if the borrower had been 90 days late on a current mortgage payment twice in the last 12 months, if the borrower had filed for personal bankruptcy protection, or if the borrower had faced foreclosure or default notices on his or her property.
Such loans were made, former employees say, because they were so lucrative — to Countrywide. The company harvested a steady stream of fees or payments on such loans and busily repackaged them as securities to sell to investors. As long as housing prices kept rising, everyone — borrowers, lenders and investors — appeared to be winners.
One former employee provided documents indicating Countrywide’s minimum profit margins on subprime loans of different sizes. These ranged from 5 percent on small loans of $100,000 to $200,000 to 3 percent on loans of $350,000 to $500,000. But on subprime loans that imposed heavy burdens on borrowers, like high prepayment penalties that persisted for three years, Countrywide’s margins could reach 15 percent of the loan, the former employee said.
Regulatory filings show how much more profitable subprime loans are for Countrywide than higher-quality prime loans. Last year, for example, the profit margins Countrywide generated on subprime loans that it sold to investors were 1.84 percent, versus 1.07 percent on prime loans. A year earlier, when the subprime machine was really cranking, sales of these mortgages produced profits of 2 percent, versus 0.82 percent from prime mortgages. And in 2004, subprime loans produced gains of 3.64 percent, versus 0.93 percent for prime loans.
One reason these loans were so lucrative for Countrywide is that investors who bought securities backed by the mortgages were willing to pay more for loans with prepayment penalties and those whose interest rates were going to reset at higher levels. Investors ponied up because pools of subprime loans were likely to generate a larger cash flow than prime loans that carried lower fixed rates.
As a result, former employees said, the company’s commission structure rewarded sales representatives for making risky, high-cost loans.
The sales staff was rewarded more for making risky, high interest loans than it was for doing a good sustainable job. For the companies doing this, it made sense because the investors wanted the mortgages and wanted the risk. The company didn't care about the risk because the investors were paying for the privilege of owning it.
So the sales staff is being rewarded for making bad loans to risky people. Actually, it doesn't matter if the people are risky, they get rewarded as long as they sell the bad loans. Which leads to:
quote:
The company’s incentive system also encouraged brokers and sales representatives to move borrowers into the subprime category, even if their financial position meant that they belonged higher up the loan spectrum. Brokers who peddled subprime loans received commissions of 0.50 percent of the loan’s value, versus 0.20 percent on loans one step up the quality ladder, known as Alternate-A, former brokers said. For years, a software system in Countrywide’s subprime unit that sales representatives used to calculate the loan type that a borrower qualified for did not allow the input of a borrower’s cash reserves, a former employee said.
A borrower who has more assets poses less risk to a lender, and will typically get a better rate on a loan as a result. But, this sales representative said, Countrywide’s software prevented the input of cash reserves so borrowers would have to be pitched on pricier loans...
According to the former sales representative, Countrywide’s big subprime unit also avoided offering borrowers , which are backed by the United States government and are less risky. But these loans, well suited to low-income or first-time home buyers, do not generate the high fees that Countrywide encouraged its sales force to pursue...
The monthly payment on the F.H.A. loan would have been $1,829, while Countrywide’s subprime loan generated a $2,387 monthly payment. That amounts to a difference of $558 a month, or $6,696 a year — no small sum for a low-income homeowner.
“F.H.A. loans are the best source of financing for low-income borrowers,” the former sales representative said. So Countrywide’s subprime lending program “is not living up to the promise of providing the best loan programs to its clients,” he said.
Mr. Simon of Countrywide said that Federal Housing Administration loans were becoming a bigger part of the company’s business.
“While they are very useful to some borrowers, F.H.A./V.A. mortgages are extremely difficult to originate in markets with above-average home prices, because the maximum loan amount is so low,” he said.
So now we got a whole bunch of bad loans without government protection and a whole bunch of fraud inflating the house market. Luckily, it's only 2005 and this can go on forever.
In 2004 the borrowing rules were changed for investment banks with 5 billion in assets. They could leverage their assets 40 to 1.
In 2005, President Bush lifts much of the requirements of the CRA off of the commercial banks and "thrifts" (S&L's) with less than 250 million.
Also in 2005, Bush directs his man at the HUD: a fascinating character (Heck of a job, Alphonse) to increase loans in low income and high minority areas (for the "Ownership Society", ideology. At this time he was also pushing to remake Social Security into a personal investment account for Wall Street). Shareholders in the Fanny and Freddy wanted some of those juicy ABS's. This had a double effect of making the GSE's offer low credit requirement loans (to compete with Countrywide and the investment banks but were still better than the popular "No Income, No Asset" "Adjustable Rate Mortgage" subprimes) to make the HUD happy, and pushing the GSE's to buy shitty securities from Countrywide to make shareholders happy.
quote: http://www.bloomberg.com/apps/news?...id=a.6kKtOoO72k
The companies said they were urged to increase purchases of subprime debt by the Bush administration. The Department of Housing and Urban Development said in 2005 that Fannie and Freddie should increase financing for low-income areas or moderate-income regions with high minority populations to 37 percent of new business from 34 percent in 2001 through 2004. That rose to 39 percent last year.
The updated goals ``were significant enough to force them to go down the credit curve to meet them, which meant participating in some way or form in the higher-risk areas of the mortgage market,'' said David Stevens, a former head of Freddie's single- family mortgage business who now runs lenders affiliated with Long & Foster Real Estate Inc. in Fairfax, Virginia. That included ``the subprime business.''
Shareholder Pressure
At the same time, Fannie and Freddie were under pressure from shareholders to generate profits to bolster their stock price. Fannie dropped 17 percent from 2004 through 2006 and Freddie declined 7.9 percent. The Standard & Poor's 500 Index, by contrast, gained 7.4 percent.
Fannie and Freddie gravitated to the securities as yields on agency mortgage bonds often fell below the cost of selling their debt. In 2006, AAA rated securities backed by subprime or second mortgages averaged 0.57 percentage points more than U.S. Treasuries, according to Lehman Brothers Holdings Inc. index data. That compares with 0.48 percentage points for fixed-rate agency mortgage securities.
The public and private demands on Fannie and Freddie led to their demise, Paulson said on Sept. 7, when he announced the government was assuming control after their shares plunged more than 90 percent.
Note, this is 2005-2006, the bubble is about to pop, Fanny Mae and Freddy Mac are just trying to recapture market share. They missed the boom. Investors went around the CRA. Countrywide and companies like it were throwing money at low income people.
And Greenspan started raising the interest rates.
Who was keeping an eye on these lenders? Who's the best candidate for the hero tag in this affair?
You aren't going to like the answer. Eliot Spitzer
quote:
Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive "teaser" rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.
Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers.
Predatory lending was widely understood to present a looming national crisis. This threat was so clear that as New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York's, enacted laws aimed at curbing such practices...
Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.
Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.
In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks.
Eliot did manage to get some back from Countrywide:
quote: http://www.nytimes.com/2007/08/26/b...ml?pagewanted=5
Last December, Countrywide struck an agreement with Eliot Spitzer, then the state attorney general, to compensate black and Latino borrowers to whom it had improperly given high-cost loans in 2004. Under the agreement, Countrywide, which cooperated with the attorney general, agreed to improve its fair-lending monitoring activities and set up a $3 million consumer education program.
But he spent it on hookers, the dumass.
Anyways. That, in a nutshell, is the real subprime story. It's not as pretty as a youtube of someone using google, but it's accurate. The numbers show it.
The Freddy Fanny CRA theory is CRAP. I'm sorry, but that is that. The fancy youtubes are just lipstick on a pig.
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10-02-2008 03:26 AM
