You really need to get information on what Freddy and Fannie actually do. While they do back SubPrime, they also back Prime loans as well. They are the glue that, for the past decade allowed banks to loan so much money with so little concern for risk. [and I am not suggesting that is a great thing]
If banking examiners and federal regulators had ENFORCED the rules as were in place many of the FM/FM problems would not exist. They accepted everything, not just SubPrime.
Now, CRA. I love it when that is brought up. A couple of facts regarding the financial sector and CRA.
CRA ONLY applies to Depository Institutions (1).
Only 20% of SubPrime mortgages were issued by depository institutions under the CRA (1).
More than half of SubPrime loans were made by independent mortgage companies not subject to comprehensive federal supervision; another 30 percent of such originations were made by affiliates of banks or thrifts, which are not subject to routine examination or supervision, and the remaining 20 percent were made by banks and thrifts. (1) (2)
Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans, and studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households. (3)
To simplify, CRA is merely a blip on the radar of the entire Financial Sector FAILURE. You have to look at lack of supervision in the markets regarding derivative financial products, CBOs, CDOs, Hedge Funds and extreme leveraging. Financially CRA is a fart in a tornado in comparison, but the only one that many on the right have been willing to use as an example because, for some reason it seems to only affect a certain segment of the population and the talking heads have spun hate and lies into the reality of its contribution.
And again this is where you CONVENIENTLY leave out the fact of Fanny and Freddie bought the High Risk loans from everyone thus providing the incentive for these institutions to make the loans.
Congress was warned many times by the Administration of President Bush that this was a problem. What you also fail to mention is that Congress ignored the Administrations warnings about the GSE's. It is my understanding that HUD & OFHEO could not do anything with regards to the regulation because of the Congressional Charter and the fact that they were MANDATED by congress to buy these High Risk loans.
Now let's talk about Bush's lack of regulation:
Quote:
On September 11, 2003, the Bush Administration recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis. Under the plan, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae. The new agency would have the authority, which now rests with Congress, to set capital-reserve requirements for the company and to determine whether the company is adequately managing the risks of its ballooning portfolios. The New York Times reported that the plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac is broken.The Times also reported Democratic opposition to Bush's plan: "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."
LABATON, STEPHEN (September 31, 2003). "New Agency Proposed to Oversee Freddie Mac and Fannie Mae". The New York Times (The New York Times Company).
From that bastion of political support for GW Bush.
So please continue to lecture us on how Bush failed to regulate when it was the Congress whose job it was to deal with issues of stupid regulations. Fannie Mae and Freddie Mac were FOLLOWING the regulations!
__________________ Who's John Galt.
"Timeo Danaos et dona ferentes" - Virgil, The Aeneid, Book 2
And again this is where you CONVENIENTLY leave out the fact of Fanny and Freddie bought the High Risk loans from everyone thus providing the incentive for these institutions to make the loans.
Try reading the FIRST LINE of my post. It covers that which you think is conveniently missing. It is not.
Quote:
Congress was warned many times by the Administration of President Bush that this was a problem. What you also fail to mention is that Congress ignored the Administrations warnings about the GSE's. It is my understanding that HUD & OFHEO could not do anything with regards to the regulation because of the Congressional Charter and the fact that they were MANDATED by congress to buy these High Risk loans.
Now let's talk about Bush's lack of regulation:
LABATON, STEPHEN (September 31, 2003). "New Agency Proposed to Oversee Freddie Mac and Fannie Mae". The New York Times (The New York Times Company).
From that bastion of political support for GW Bush.
So please continue to lecture us on how Bush failed to regulate when it was the Congress whose job it was to deal with issues of stupid regulations. Fannie Mae and Freddie Mac were FOLLOWING the regulations!
Care to site the laws and regulations that were passed by the fully Republican Congress and signed into law by Bush as a result of this recommendation from September 11, 2003?
Try reading the FIRST LINE of my post. It covers that which you think is conveniently missing. It is not.
Care to site the laws and regulations that were passed by the fully Republican Congress and signed into law by Bush as a result of this recommendation from September 11, 2003?
So then, it IS congress' and not Bush's fault?
Thank you for at least having some integrity on the issue. Of course you fail to mention why the DEMOCRATICALLY controlled congress failed to act on the issues later on in Bush's term.
Your first line does say that Freddie and Fanny back the loans but you go and try to down play the impact of those loans later on by indicating that the loans backed under the CRA are not all that big of an issue!
You can not have it both ways. The CRA opened the doors for Freddie and Fannie to back these loans. You go on to say that Freddie and Fannie are the glue by which these institutions are held together, i.e. taxpayer money used to buy these loans that will not be paid back.
Then you try and say that the CRA is not responsible for Half of the bad mortgages because the lenders who made those were not "required" to do so under the CRA. However, Freddie and Fannie still bought those loans, and it was the CRA that allowed them to do so!
Thank you for at least having some integrity on the issue. Of course you fail to mention why the DEMOCRATICALLY controlled congress failed to act on the issues later on in Bush's term.
Your first line does say that Freddie and Fanny back the loans but you go and try to down play the impact of those loans later on by indicating that the loans backed under the CRA are not all that big of an issue!
You can not have it both ways. The CRA opened the doors for Freddie and Fannie to back these loans. You go on to say that Freddie and Fannie are the glue by which these institutions are held together, i.e. taxpayer money used to buy these loans that will not be paid back.
Then you try and say that the CRA is not responsible for Half of the bad mortgages because the lenders who made those were not "required" to do so under the CRA. However, Freddie and Fannie still bought those loans, and it was the CRA that allowed them to do so!
I really wish you would pay attention to what is written instead of just trying to "win". If Bush thought there was an issue he would propose bills to be presented to his Republican Congress and PUSH THEM THROUGH, much like Obama is presenting bills to his Democratic Congress [for which I am sure the kids on the right will give him all the blame].
The Democratically controlled Congress didn't add new Regulations because they didn't have either a super majority to combat a VETO nor did they, once the problem became evident in 2007 [when they became a majority] have reason as Treasury and FED were in the middle of plugging holes in the dam. I doubt anyone in Congress, left or right thought, at that time it was going to take this long.
You need to go back and READ the CRA part. CRA was responsible for less than 8% of the problem that we face, you don't seem to be able to understand the math involved. CRA did NOT open the doors for FM/FM, that is just blatantly wrong. CRA is a small little project that doesn't have the mass or momentum to open doors.
You really need to revisit what CRA is, who defines it and what its role has been over the past 20 years. Once you do so from a non-biased source you will see that your CRA argument falls apart completely. It only exists on the blogsphere, not in reality.
I really wish you would pay attention to what is written instead of just trying to "win". If Bush thought there was an issue he would propose bills to be presented to his Republican Congress and PUSH THEM THROUGH, much like Obama is presenting bills to his Democratic Congress [for which I am sure the kids on the right will give him all the blame].
The Democratically controlled Congress didn't add new Regulations because they didn't have either a super majority to combat a VETO nor did they, once the problem became evident in 2007 [when they became a majority] have reason as Treasury and FED were in the middle of plugging holes in the dam. I doubt anyone in Congress, left or right thought, at that time it was going to take this long.
You need to go back and READ the CRA part. CRA was responsible for less than 8% of the problem that we face, you don't seem to be able to understand the math involved. CRA did NOT open the doors for FM/FM, that is just blatantly wrong. CRA is a small little project that doesn't have the mass or momentum to open doors.
You really need to revisit what CRA is, who defines it and what its role has been over the past 20 years. Once you do so from a non-biased source you will see that your CRA argument falls apart completely. It only exists on the blogsphere, not in reality.
Why would Bush Veto something that he urged the Democrats to do? Now you are not making sense.
You are missing the point of what I am saying about the CRA.
True that CRA was directly attributable for 8%. My point is that when you submit the loans to be bought by FM/FM they bought loans that were directly attributable to CRA (as governed by who had to give them out) and they also bough Sub Prime Loans from those lenders who were not required to issue them.
If this is not the case then please explain why companies who are designed to make a profit, and boy did they, give out high risk loans unless someone else was going to buy them? And that vehicle by which they were bought was the CRA.
Why would Bush Veto something that he urged the Democrats to do? Now you are not making sense. Bush made his suggestion in 2003, to a REPUBLICAN CONGRESS NOT in 2007 to a Democratic Congress [see YOUR post for date details].
You are missing the point of what I am saying about the CRA.
True that CRA was directly attributable for 8%. My point is that when you submit the loans to be bought by FM/FM they bought loans that were directly attributable to CRA (as governed by who had to give them out) and they also bough Sub Prime Loans from those lenders who were not required to issue them.
If this is not the case then please explain why companies who are designed to make a profit, and boy did they, give out high risk loans unless someone else was going to buy them? And that vehicle by which they were bought was the CRA. Community Reinvestment Act - Wikipedia, the free encyclopedia
NO, NO, NO. You are confusing several lending instruments and trying to clump them together at the end to make a point.
Here is the flow for loans to Fannie/Freddie. Banks, mortgage brokers, thrifts, credit unions, ALL lending institutions process the vast majority of their loans, Prime and SubPrime through Fannie/Freddie. Think of that flow of business as the Mississippi River of mortgage commerce. It goes on whether CRA exists or not. It flows fully and completely without CRA even being in the picture. Once loans are guaranteed by FM/FM the banks go out and make more loans, package the current loans into big bundles, sell the bundles to investors who then leverage the securities and resell them again and again. By the way, AIG is somewhere in the middle of this insuring institutions.
Now this little stream that flows into the Mississippi downstream is called CRA. It makes special loans and it makes regular loans [laws don't allow it to make "JUST" special loans. Those loans go to ONLY Depository banks [the big guys] who make the loans, usually at a extra point or two profit and have them also guaranteed by FM/FM [just like nearly every other loan they make]. As these loans are bundled up and sold to investors they merge into the system just like every other loan package in the big mortgage stream.
CRA accounts for just 8% of all loans and, as of late 2007 they had a 92% on time payment record. In other words, they were not defaulting at a rate higher than expected.
PUt as simply as possible CRA was brought into the National attention because some folks needed someone to blame for this and it seemed damned convenient to link ACORN and CRA and blacks and poor and assume that it had to be the cause. Surely those ten thousand Harvard MBAs couldn't have anything to do with it. Surely it couldn't be the unbridled Financial Sector that had been allowed to run free for several years. There had to be someone to blame and guess who was convenient.
So, even after it was proven to be completely incorrect that CRA was the culprit in the Financial Sector meltdown, the blogsphere still keeps it wound up because a good story is much more important that just admitting that they were wrong and pulling the stories from thousands of blogs. Hate makes folks stupid.
__________________ You really find out who your friends are when testifying at trial. Some of my "friends" said some pretty hateful things when they were being hauled away in handcuffs...
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