AUSTAN GOOLSBEE: I think the world vests too much power, certainly in the president, probably in Washington in general for its influence on the economy, because most all of the economy has nothing to do with the government.
We certainly can agree on this. If they are not left-leaning why do you think bullying banks into loaning money to people incapable of paying the loans would be tied to Reagan's policies?
There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.... John Rogers
My wife and I used to go and look at new houses, and spent some time debating whether to trade up to a larger one or not. I'm glad now that we stayed in our old, paid for house.
I wondered at the time just who, in this rather low income area, was buying all of the high end houses that were being built. They seemed to start at around 2,500 square feet and go up from there.
Now I know. The houses were sold to people who should have been purchasing smaller and less expensive houses, people who now are defaulting on those creative loans.
What I can't see is how the government "forced" lenders to make all the creative below market mortgages. It looks to me as if the lenders were speculating on the market, as were the buyers. Some of both made quite a lot of money on this speculation before the market crashed.
What should have been done, but wasn't, by the government was regulation to keep mortgage lenders and borrowers alike from speculating with leveraged money.
But, the government forced lenders to do this? There really isn't a case for that.
Can't we just turn Congress off and then turn it back on again?
To those not willing to accept that the housing failure was due to progressive tactics that are not only still in place, but many on the progressive side would like to see them ramped up...
j-macWASHINGTON – Using tools provided by the federal Community Reinvestment Act, community organizers led by a self-described "banking terrorist" applied bullying tactics to secure high-risk mortgages and to shake down lending institutions for billions of dollars – actions that likely contributed to the "mortgage meltdown" that triggered the worst economic crisis since the Great Depression.
That's the substance of a new report by the Capital Research Center on the Neighborhood Assistance Corporation of America headed by Bruce Marks.
"Time and again, NACA has combined the street tactics of protest and demonstration with public policy tools such as the Community Reinvestment Act to pressure banks into expanding their operations in poor neighborhoods," says the report authored by David Hogberg. "NACA typically extracts self-serving concessions from banks, forcing them to provide it with funds that it then uses to make mortgage loans to low-income borrowers. NACA rolls the fees it earns servicing these loans back into its campaign of bullying banks."
In 2007, the year before the crash, NACA obtained $10 billion in bank commitments for its own loan commitments with what the group admits were aggressive, hounding intimidation tactics.
"NACA has been accused of being overly aggressive and personal," explains the group's website. "NACA wears this as a badge of honor, leaving no stone unturned and often hounding CEOs from their shareholder meetings to their homes. The rationale is simple: lenders have a personal and often devastating impact on the lives of the people who they refuse to provide affordable credit to or take advantage of through predatory loans and scams."
Read more: How banks were bullied into making bad loans How banks were bullied into making bad loans
I disagree. The government was responsible for creating, promoting, and passing off a GSE to banks as a legitimate backer tied to the government. And the government created the CRA which was responsible for loosening banking standards that allowed banks to create a risky investment tool to mitigate their risk that they were being told they had to take, and when regulators started blowing the whistle, demo's berated them, and called the regulators the problem....Should I post yet again the video?
Many factors were involved in the housing bubble, and blaming one source is foolish.