Page 13 of 13 FirstFirst ... 3111213
Results 121 to 126 of 126

Thread: More Job Seekers Give Up

  1. #121
    Equal Opportunity Hater
    obvious Child's Avatar
    Join Date
    Apr 2008
    Location
    0.0, -2.3 on the Political Compass
    Last Seen
    12-09-14 @ 11:36 PM
    Lean
    Other
    Posts
    19,883

    Re: More Job Seekers Give Up

    Quote Originally Posted by OpportunityCost View Post
    Untrue. Washington Mutual collapsed due to their exposure in this market. They were the 4th largest bank at the time. Its hard to PROVE causation but if you remove what you think is the cause and it stops...well, there you are.
    But as a percent of their total holdings, CRA couldn't have been that large. You seem to be ignoring the other factors in play here, such as tanking commercial holdings, weakening deposits, reduction in non-loan based income.

    Because it did. In 95 banks were required to meet a certain percentage of LMI (Low and Moderate Income) customers to meet CRA standards as required by regulators and could then also not refuse loans to more qualified customers who were only slightly better off but not up to previous standards of financial stability.
    Except that the CRA did not apply to all banks. In fact the CRA's actual coverage was relatively small as a percent of the market and most of the subprime were mortgages issued outside of the CRA regulation. If you want to claim that the CRA lowered requirements, then we can also blame a whole host of other factors, including the Republican drive to eliminate obstacles under the grandiose theme of Bush's "Ownership Society." The fact that the CRA operated for three decades without this mess suggests it wasn't the primary issue. Removing the housing sector ENTIRELY, American debt from corporations to governments to individuals was due for a correction. No country can keep moving with that use of leverage and not encounter a correction sooner or later. Sure did the housing market cause the first tumble? No doubt. But if we had moderate levels of leverage, responsible banking, responsible CDS, healthy individual savings, we would absolutely NOT be in this mess.

    In 2007 Fannie Mae and Freddie Mac were required to show that 55% of their loans were LMIs. From 2005 to 2007, Fannie and Freddie bought approximately $1 trillion in sub-prime and Alt-A loans. This amounted to about 40 percent of their mortgage purchases during that period. Seems sizable to me.
    That's right off American Spectator. Do you have anything more reliable, such as actual legislation on Fannie and Freddie?

    But that doesnt explain CountryWide, Lehmen Bros, or Washington Mutual. The CDS were a symptom, the toxic loans were the true problem.
    Toxic loans just caused a problem that was going to go bad to go bad faster. And CDS were not a symptom. CDS were a different problem that was exacerbated by the crisis. AIG should never have been issuing liability well in the hundreds of billions pass its liquid capacity to meet even a fraction of that.

    Just the opposite, they regulated riskier loans and relaxed standards, they encouraged and enforced them. Maybe you cant see it but government incentives drove all the stupid reckless behavior. If they couldnt make money off it and it were not encouraged by legislation and regulation, they wouldnt have done it. Banks dont just start making risky loans.
    The problem is you are arguing that every loan was a CRA loan, covered, regulated and mandated by the CRA. The legislation simply does not support such an argument. And you seem to be highly unable to blame anything but the CRA.

    From 2003 to late 2006, conventional loans (including jumbo loans) declined from 78.8 percent to 50.1 percent of all mortgages, while subprime and Alt-A loans increased from 10.1 percent to 32.7 percent.
    Volume or dollar value? You really need to say that. It appears you are just copying the American Spectator article without actually doing any research yourself.
    Which by the way I can report you for plagiarism.

    Because GSEpurchases are not included in these numbers, in the years just before the collapse of home prices began, about half of all home loans being made in the United States were non-prime loans. Since these mortgages aggregate more than $2 trillion, this accounts for the weakness in bank assets that is the principal underlying cause of the current financial crisis.
    The fact that the CRA was operating for thirty years suggests it was something else that caused the decline in home quality sales. that is left out of your American Spectator article. No one is arguing that home buying got real easy. But what you seem to ignore that the CRA wasn't a new thing. And that home ownership didn't get any easier in the thirty years it was operating. If one factor remains constant, doesn't that suggest it was not in fact the issue?

    Personally, sounds to me like you think it was all the greedy bankers.
    Then you haven't been reading my posts carefully.

    It wasnt just that. It was the bankers, brokers, regulators, terrible housing policy, and paid for polticians all responsible. I still feel that the government representatives didnt pay enough and the banks should have been allowed to fail.
    Actually it was more then just that. It was massive overuse of leverage in business and individuals (not mortgages) that did us in. Housing alone should not have caused a mess like this. Businesses reliant upon credit circa South Korea 1997 and a savings rate that's negative are honestly IMO the real issue.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

  2. #122
    Sage
    OpportunityCost's Avatar
    Join Date
    Jan 2011
    Last Seen
    12-10-17 @ 09:11 PM
    Gender
    Lean
    Conservative
    Posts
    16,719

    Re: More Job Seekers Give Up

    I will agree that the CDSs were a huge problem. Trading on leverage is like Russian roulette, one wrong guess will kill ya. Mortgage deravitives are even worse, they are like putting 5 bullets into the gun.

    My argument is that CRA relaxed lending practices as a whole. They may have only applied to a small percentage but...when its all a corporation structure, their hands are tied when it comes to applicants that are only slightly better off and would have been refused before. Plus, its crazy to give banks better and better CRA ratings by making more risky loans.

    Again saying that the CRA worked for three decades without impact is misleading, in 1995 they underwent some dramatic and forceful changes to their regulatory mission and powers. Things take time to go off the rails when it comes to long term investments like mortgages. It took 7 to 8 years, I was saying in 2004-2005 that home prices are crazy inflated and took my own advice and got out. Things are ripe for a tumble anytime something just drifts off the CPI like home prices did.

    Bank margin weakness and asset weakness stemmed from a cheap money policy that was excerbated by the push to more affordable housing at the same time---the homes were the assets. Thats why large scale losses impacted so heavily.

    There are a large variety of causes and effects in this mess...all the more reason to let the market work them out and not have government regulating financial actuarials OR rescuing financials that make bad choices.

  3. #123
    Equal Opportunity Hater
    obvious Child's Avatar
    Join Date
    Apr 2008
    Location
    0.0, -2.3 on the Political Compass
    Last Seen
    12-09-14 @ 11:36 PM
    Lean
    Other
    Posts
    19,883

    Re: More Job Seekers Give Up

    Quote Originally Posted by OpportunityCost View Post
    I will agree that the CDSs were a huge problem. Trading on leverage is like Russian roulette, one wrong guess will kill ya. Mortgage deravitives are even worse, they are like putting 5 bullets into the gun.
    CDS are fine in themselves. CDS is just insurance. The same risky rules of insurance apply to CDSs. No insurance company should be issuing liability that surpasses its capacity to even meet a fraction of it with quick assets. AIG's London office had a really toxic sales environment where bonus were dependent upon total sales with 50% of profit going straight into the office. With a small office, it's not hard to see why people got greedy and then go stupid. It amazes me that AIG actually let this go on for so long as a division that should not have been able to cause the whole company to become a going concern became so. It's like a tiny portion of Ford's luxury brands able to cause the whole firm to go under. One really has to wonder about the leadership there. When people get uber-greedy, they get uber-stupid.

    My argument is that CRA relaxed lending practices as a whole.
    No one is going to argue otherwise. I just don't buy that as the primary problem as the CRA was ongoing for thirty years before the crisis. We should have seen relaxed practices earlier. That said, I do believe that non-CRA related legislation and practices such as the overarching Bush Ownership Society did contribute to the huge mess not to mention the an even BIGGER problem I didn't touch on earlier. Honestly, this whole mess is Greenspan's fault. Low interest rates fueled much of the tech bubble. When that collapsed astronomical amounts of capital went into real estate producing a massive bubble further fed with cheap rates. Add that to relaxed overall housing and commercial loans and the overuse of non-mortgage leverage, it's actually a good question why this isn't happen sooner. If we are to blame an individual, I blame Alan.

    They may have only applied to a small percentage but...when its all a corporation structure, their hands are tied when it comes to applicants that are only slightly better off and would have been refused before. Plus, its crazy to give banks better and better CRA ratings by making more risky loans.
    Except that CRA loans were never as profitable as non-CRA loans. So even getting poor rantings doesn't mean squat to a bank. It's about the bottom line. A bank will always heavy on the profitable good mortgages.

    Again saying that the CRA worked for three decades without impact is misleading, in 1995 they underwent some dramatic and forceful changes to their regulatory mission and powers.
    And that was 13 years before the crisis as well. If the CRA was truly to blame, the problem should have arouse quickly after the changes.

    Things take time to go off the rails when it comes to long term investments like mortgages. It took 7 to 8 years, I was saying in 2004-2005 that home prices are crazy inflated and took my own advice and got out. Things are ripe for a tumble anytime something just drifts off the CPI like home prices did.
    But that also ignores a whole host of completely CRA-unrelated factors.

    Bank margin weakness and asset weakness stemmed from a cheap money policy that was excerbated by the push to more affordable housing at the same time---the homes were the assets. Thats why large scale losses impacted so heavily.
    Which had nothing to do with the CRA. Leverage of that amount HAD to have a correction coming on its own.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

  4. #124
    Sage
    OpportunityCost's Avatar
    Join Date
    Jan 2011
    Last Seen
    12-10-17 @ 09:11 PM
    Gender
    Lean
    Conservative
    Posts
    16,719

    Re: More Job Seekers Give Up

    No one is going to argue otherwise. I just don't buy that as the primary problem as the CRA was ongoing for thirty years before the crisis
    Jesus. CRA was never the same thing after the rules changes in 1995. Stop playing the false meme of 30 years of blah blah bull****. It was not the same thing AT ALL after 95.

    Except that CRA loans were never as profitable as non-CRA loans. So even getting poor rantings doesn't mean squat to a bank. It's about the bottom line. A bank will always heavy on the profitable good mortgages.
    Except once the CRA loans started defaulting they crapped all over market values and depressed the construction market. Which led to housing downward spiral.

    Which had nothing to do with the CRA. Leverage of that amount HAD to have a correction coming on its own.
    Again....ALL of the CRA loans are essentially leveraged because so many are expected to fail. They are pure write off material. They are systemic asset weakness. Asset weakness that was regulatory enforced and mandated. When you have 8% margins, eating 4% of your loans(by your own numbers) means you are in a world of hurt--because losing 4% of your loans means a hit of more than 4% of your margin.

    d that was 13 years before the crisis as well. If the CRA was truly to blame, the problem should have arouse quickly after the changes.
    Do I really need to dig out the number of times the Bush Administration was trying to reform Fannie and Freddie from 2002 onward? There WERE signs, you are just being too pigheaded and partisan to see them. If you were into real estate, you could see by 2003 and 2004 that market prices were approaching critical mass. I certainly could.

    But that also ignores a whole host of completely CRA-unrelated factors.
    Really? Why dont you back that assertion. Show me your evidence. My turn to pick apart your assertions without saying anything substantial.

    PS Ill give you the Greenspan knock, you cant continually have cheap monetary policy without consequences. I agree to that to some extent.

  5. #125
    Sage
    j-mac's Avatar
    Join Date
    Mar 2009
    Location
    South Carolina
    Last Seen
    12-08-17 @ 03:46 PM
    Gender
    Lean
    Conservative
    Posts
    30,272

    Re: More Job Seekers Give Up




    video proof of demo's standing in the way of reform that may have averted this mess.

    j-mac
    Americans are so enamored of equality that they would rather be equal in slavery than unequal in freedom.

    Alexis de Tocqueville

  6. #126
    Equal Opportunity Hater
    obvious Child's Avatar
    Join Date
    Apr 2008
    Location
    0.0, -2.3 on the Political Compass
    Last Seen
    12-09-14 @ 11:36 PM
    Lean
    Other
    Posts
    19,883

    Re: More Job Seekers Give Up

    Quote Originally Posted by OpportunityCost View Post
    Jesus. CRA was never the same thing after the rules changes in 1995. Stop playing the false meme of 30 years of blah blah bull****. It was not the same thing AT ALL after 95.
    But apparently it took more then a decade for those changes to kill the economy. Really. Try again.

    Except once the CRA loans started defaulting they crapped all over market values and depressed the construction market. Which led to housing downward spiral.
    Except that declining home values alone will not cause an economic recession by themselves. You seem extremely intent upon blaming just the CRA without examining other economic conditions at the time. And you appear to KEEP pretending the non-CRA reduction in obstacles to home ownership under the Bush "Ownership Society" had anything to do with it. This suggests you are nothing more then a hack.

    Again....ALL of the CRA loans are essentially leveraged because so many are expected to fail.
    If they are expected to fail, why did banks issue so many of them on the first place knowing they represented nothing but liabilities? The fact that banks never allocated reserves to cover such losses that as you assert would be 100% suggests your position is wrong. Even if banks were forced at gunpoint to issue a bad loan, they would allocate reserves to cover it. And since it would be a 100% loss, they would easily be able to project out the needed additional reserves. The difference between you and I (among others) is you ignore other facts, like bank reserves. Hence why it's easy to blow Jupiter sized holes in your arguments. Simple details don't support your arguments.

    They are pure write off material. They are systemic asset weakness. Asset weakness that was regulatory enforced and mandated. When you have 8% margins, eating 4% of your loans(by your own numbers) means you are in a world of hurt--because losing 4% of your loans means a hit of more than 4% of your margin.
    So why were there no additional reserves to cover this known loss? (hint: because your assertion is crap).

    Do I really need to dig out the number of times the Bush Administration was trying to reform Fannie and Freddie from 2002 onward? There WERE signs, you are just being too pigheaded and partisan to see them. If you were into real estate, you could see by 2003 and 2004 that market prices were approaching critical mass. I certainly could.
    No one is arguing that there was a problem. You arguing I'm not seeing the problem is rather dishonest considering my previous posts. I have in fact argued we were in for a correction REGARDLESS of housing. That hardly supports your idea that I'm being too pigheaded and partisan to see them.

    Really? Why dont you back that assertion. Show me your evidence. My turn to pick apart your assertions without saying anything substantial.
    Really? I already cited more then a few. From over leverage, to asset bubbles in real estate caused by the tech crash, to idiotic activities in CDS. Read my posts for a change. I'm not going to simply repeat my previous assertions because that's spamming.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

Page 13 of 13 FirstFirst ... 3111213

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •