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Thread: US Median Income Lowest Since 1995

  1. #151
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    Re: US Median Income Lowest Since 1995

    Quote Originally Posted by PeteEU View Post
    This deregulation lead to the unregulated private sub-prime mortgage market that was ultimately responsible for the financial melt down.
    What was unregulated were private brokers per se. Subprime credit markets and everything happening within them were put under the regulatory control of the Fed pursuant to legisaltion passed by Congress in 1994.

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    Re: US Median Income Lowest Since 1995

    Quote Originally Posted by Cardinal Fang View Post
    What was unregulated were private brokers per se. Subprime credit markets and everything happening within them were put under the regulatory control of the Fed pursuant to legisaltion passed by Congress in 1994.
    So that is why pizza delivery boys were allowed to be loan advisor's or what ever it was called and the massive amount of predatory lending was allowed? The private sub-prime mortgage market was the problem, because they lent out money to people who would NOT QUALIFY for a loan via Fannie and Freddie!
    PeteEU

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    Re: US Median Income Lowest Since 1995

    Quote Originally Posted by iliveonramen View Post
    I think issues like student loan debt is playing a part here as well.
    Could well be in many cases. Interesting perhaps to look on a state level at increases in annual student debt burden as against state budget cuts for higher education over the same time periods. In state after state, there is a close match. Blowback from more unwise right-wing tax-and-spending cuts parsimony. Put the burden on our college grads instead and see what happens. Another great right-wing plan...

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    Re: US Median Income Lowest Since 1995

    Quote Originally Posted by PeteEU View Post
    So that is why pizza delivery boys were allowed to be loan advisor's or what ever it was called and the massive amount of predatory lending was allowed? The private sub-prime mortgage market was the problem, because they lent out money to people who would NOT QUALIFY for a loan via Fannie and Freddie!
    Yes, that's correct. A lot of storefront operations with kids sitting there trying to falsify the numbers just enough to get them through Desktop Underwriter without being flagged for review by an actual person. If they couldn't manage it, sell the stuff off to Wall Street.

    The problem was that the power to intervene and bring a halt to abuse of subprime credit markets existed at the Fed which simply refused to exercise it. All anyone ever got out of Greenspan was that his crack staff was on top of the situation and that the Fed would take action promptly in the event that any action became necessary. Hah!

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    Re: US Median Income Lowest Since 1995

    Quote Originally Posted by Cardinal Fang View Post
    Sheesh!!! At least get the basics down! Fannie and Freddie did not lend to anyone. They are not lenders. They purchase existing mortgage notes from the original lenders. This is how those original lenders recapitalize so that they can lend again. The GSE's then sell the notes they have acquired into secondary mortgage markets made up of large, institutional investors such as central and international banks, insurance companies, pensions funds, money-market funds, charitable trusts, university endowments, and the like. They used to sell notes one at a time, but that was rather ineffficient, so they began creating bundles of say 100 mortgages and selling participation shares in those. Such shares are called mortgage-backed securities. They are sold with a GSE guaranty. It is those guarantys to institutional investors that (where now necessary) are being paid by the government. Payments have become necessary in some cases because so many original mortgage holders have not been able to make their scheduled payments on account of having lost jobs and wealth due to the Republican-created Great Bush Recession.
    Interesting, it was Bush and McCain who tried repeatedly to reform Fannie and Freddie, and was shot down by democrats.

    LOL! Bush wanted nothing more than for the GSE's to lose market share, and eventually they did. Fannie Mae's market share for original purchases fell from more than 70% early in the decade to less than 25% by late 2006.Standards for conforming loans (i.e., loans that the GSE's would actually purchase) were lowered modestly, and for the same reason that they should be today -- they were preventing large numbers of perfectly well qualified and potentially profitable borrowers from obtaining conventional credit. The Wall Street private-label shops by comparison had practically no standards at all. They would take the slop that the GSE's wouldn't take and just about anything else as well. Then they'd sell it all to somebody else. Strip off the profit and sell off the risk. What a great game until the roof caved in on them. And the rest of us.
    Here's another joke, it was Fannie and Freddie that were buying up loans from banks that gave out loans to people with no money down, no credit, no job, and no way to pay the loan. That is how far Fannie and Freddie lowered their lending standards to banks, and that they would buy up the loans. And it was Old Barney Frank that told us that Fannie and Freddie was in excellent financial shape, and then it collapsed. Let me remember Barney Frank was a Democrat.

    Increasing home ownership has been a policy of every administration since the Great Depression. It was a national scandal when home ownership in fact declined under Reagan/Bush-41. Meanwhile, no one supported relaxation of lending standards. No law, rule, policy, or court decision has ever mandated that any lender make loans to unqualified borrowers. What did happen was that regulators charged with keeping just such things from happening stood by and allowed unscruplous private brokers to create all sorts of twisted loans that they knew full well could not be repaid through wanton abuse of particularly subprime credit markets. But that's a very different thing.
    Here again you wish to dodge the truth, it weas Barney Frank through Fannie and Freddie who lowered their standards of purchasing loans. Thus the lenders lowered their standards to meet Fannie and Freddie buying standards. Which amounted to no money down, no credit, no job, and no way to pay the loan.

    In the second wave, sure. Millions of people lost their jobs and their savings thanks to the Great Bush Recession. What would you have expected to happen? The first wave -- the one that actually triggered the credit crisis -- was heavily tilted toward tricked-out subprime loans that made the underwriters a lot of money and later cost the taxpayers a lot of money.
    Wrong again, it was the loose money being floated out by Barney Frank through Fannie and Freddie that people were allowed to buy as many homes as they wanted with no money down, no credit and no job. That is what created the bubble. No different than the tech bubble.

    You Liberal always like to skirt the truth, and say it was all Bush's fault. But in this case it was Bush and McCain that tried hard to reform Fannie and Freddie. If they had Fannie and Freddie would not have been buying up substandard loans. It was recognized by Bush and McCain that Fannie and Freddie was way over leveraged and it was on a free fall by buying up loans that had no credit security to back them up.
    Liberals - Punish the Successful, Reward the Unsuccessful
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    Re: US Median Income Lowest Since 1995

    Quote Originally Posted by Cardinal Fang View Post
    Had you intended to dispute any of the factual bases for the points raised in the post? It seems not. It seems that you were content with the baseless fluff of simply labeling such facts as "talking points" and then moving on. That's the sort of attitude that people take when their own positions are not based on facts at all, but rather crumble at the approach of them. And we do have rather a lot of that sort to contend with around these parts.
    What? Anyone can find a certain set of facts to support their proclivities, can they not? It's more telling, though, when one offers up only the best examples of one and the worst examples of another and then attempt to compare them. Tells you a lot about the person doing it. Tells you they have no interest in being rational or objective.
    The whole modern world has divided itself into Conservatives and Progressives. The business of Progressives is to go on making mistakes. The business of Conservatives is to prevent mistakes from being corrected.
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    Re: US Median Income Lowest Since 1995

    Quote Originally Posted by Cardinal Fang View Post
    Reading is fundamental. The post asserted that Obama is like FDR in that there is no established "average" for the work that either one them had to undertake upon inauguration. There is nothing partisan about such a statement, but there certainly may be in such a deeply flawed critcism of it.
    Do you know of anything else that may be fundamental?
    The whole modern world has divided itself into Conservatives and Progressives. The business of Progressives is to go on making mistakes. The business of Conservatives is to prevent mistakes from being corrected.
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    Re: US Median Income Lowest Since 1995

    Quote Originally Posted by Cardinal Fang View Post
    Quite the desperate stretch to implicate others not actually involved. The credit crisis that bled out into the Great Bush Recession grew up between 2002 and 2006. No Democrat had a hand on any lever of power during that timeframe. All Republicans all the time. There is no such thing as "shared responsibility" for this at all.
    That would only be an argument is democrats vored against Republican reforms. They didn't.


    As for the GSE's, Democrats (and sensible Republicans) in Congress merely resisted the Bush administration's efforts to destroy them and turn the mission over to Wall Street instead. Meanwhile, everyone realized that both real estate and financial markets were changing rapidly and that GSE-reform was overdue. Multiple bipartisan bills to do just that were developed on Capitol Hill, but the administration shot them down because they dealt only with safety-and-soundness issues and did not go far enough toward running the GSE's out of business.
    So instead of just stating there was bills that would deal with the crisis, can you name them.


    Not very likely. Tax Cuts for the Rich would never have been enacted and so would not have failed. There would have been no reason to freeze interest rates at extreme low levels, institutional investors would not suddenly have been drawn into secondary mortgage markets by a search for yield, Wall Street would not have perceived that demand and created the private-label securitzation shops that private brokers then fed enough slop into to poison the secondary markets thus creating the credit crisis.
    You are wrong here. First, tax cuts for the rich is not the cause of low interest rates. Low interest rates happen before the tax cuts. Also, the tax cuts were not just for the rich. It was a tax cut for everyone, and democrats agreed with the tax cuts, but not towards the rich.

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    Re: US Median Income Lowest Since 1995

    Quote Originally Posted by Cardinal Fang View Post
    Sheesh!!! At least get the basics down! Fannie and Freddie did not lend to anyone. They are not lenders. They purchase existing mortgage notes from the original lenders. This is how those original lenders recapitalize so that they can lend again. The GSE's then sell the notes they have acquired into secondary mortgage markets made up of large, institutional investors such as central and international banks, insurance companies, pensions funds, money-market funds, charitable trusts, university endowments, and the like.
    Not directly yes, but indirectly they are. They are the ones who provide funding for lenders by buying mortages, hence they are the ones who set the standards. And then they repackage them and sell them to the investors.

    Standards for conforming loans (i.e., loans that the GSE's would actually purchase) were lowered modestly, and for the same reason that they should be today
    Well, then you supported the policies that lead to the crisis.

    What did happen was that regulators charged with keeping just such things from happening stood by and allowed unscruplous private brokers to create all sorts of twisted loans that they knew full well could not be repaid through wanton abuse of particularly subprime credit markets. But that's a very different thing.
    Do you know what subprimie mortages is? Subprime mortages are mortages from people who do not qualify. Subprime lending - Wikipedia, the free encyclopedia
    You just said you agreed with such loans.


    Interest rates were first cut to ward off investor panic after 9/11. Then Greenspan decided to keep them there long term because the Tax Cuts for the Rich had failed to generate any uptick in economic activity. Secondary mortgage markets were meanwhile, staid, plain-vanilla markets at the time. Famous for their safety, they suddenly offered attractive yields in comparison to 1%. Taking a position there was hardly gambling at the time.
    The interest was cut before the tax cuts, so the cut in interest rates can not be because the tax cuts failed. In fact the interest cuts happen because of a potential recession in 2001. The tax cuts were also done to prevent the recession. Economic activity did go up due to the stimulus, because without them there would have been a mild recession.

    However I argue that would have been better. Trying to desperately avoid the slowdown in 2001 by stimulus lead to the crisis in 2007.


    So you would have favored nationalizing the banking system? I thought that was only Commie statists.
    I never said nationalize. The government certainly shouldn't have full control of the banks. However, there should be regulations of banks, and there should be national lending standards.


    LOL!!! It was an exclusively Republican enterprise. Facbrications to the contrary are bilge.
    Problem is your argument for this being a republican enterprise is that the tax cuts led to cut in interest rates, but the tax cuts happened after the cuts in the interest rates. People would get their rebate check by December 2001. By then the interest rate was already dropped from 6% to 2%.

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    Re: US Median Income Lowest Since 1995

    Quote Originally Posted by Born Free View Post
    Interesting, it was Bush and McCain who tried repeatedly to reform Fannie and Freddie, and was shot down by democrats.
    All Bush ever tried to do was run the GSE's out of business. The inclusion here of the equally inadept McCain suggests that specific reference is intended to the the infamous S.190, an abject lesson in how easily the disinformation media dupes the pliant. S.190 was designed to cut the GSE's off at the knees by establishing draconian limits on their internal portfolios, thus choking off the volume of business they could engage in. In July 2005, the bill passed out of committee on a party-line vote, mostly as a courtesy to the White Hosue. Everyone in the room knew it was going to the floor to die. Everyone knew a GSE reform bill was needed. Everyone knew this was not going to be it. At the same time, a GSE reform bill did pass in the House by a margin of 330-91. It dealt with safety-and-soundness issues, strengthened the regulator, and upgraded capitalization. The Bush administration shot it down because it didn't do anything to drive the GSE's out of business.

    On May 5, 2006 -- 15 months after the bill was introduced -- Chuck Hegel circulated a letter among Republcian colleagues calling on Majority Leader Frist to schedule S.190 for debate and vote. He was not able to get 30 signatures. When he took the letter to Frist anyway, the latter had to explain that while Republicans held a 55-45 majority in the Senate, there was no way that Frist could get to 50 votes for S.190. Too many Republicans were opposed to it. Three weeks later -- on May 26, 2006 -- John McCain signed onto the bill as a cosponsor. He knew full well that the bill was dead but was looking for ways to show he was on top of the housing situation in advance of his campaign for the Presidential nomination. Typical Republican fraudster.

    So all this happened more than six years ago. Why didn't you know about any of it until just now?
    Last edited by Cardinal Fang; 09-30-12 at 07:30 AM.

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