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Thread: U.S. sues S&P over subprime ratings

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Fenton View Post
    More mitigation and selective ignorance form you. Yea G and S wanted to bankrupt themselves.
    What is it that you don't comprehend about the fact that subprime mortgage-backed securities were profitable before the housing bubble burst? Why do you think firms like Goldman Sachs and private investors bought them in the first place? Even Fannie Mae and Freddie Mac's own stockholders were pressuring them to buy more in the late 90s.

    Quote Originally Posted by Fenton View Post
    Hell, the GSEs created the MBS.
    Who cares? There was a huge market for them and they'd been in play for 40 years before the financial collapse.

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Fenton View Post
    No dude, CRA "loans" were NOT the issue. AGAIN, CRA having regulatory control over banks to force the lowering of underwriting standards WAS the issue.
    CRA was not the problem with the financial crisis, it was created by the republicans.

    Here is a good article about the impact of CRA, and it was marginal impact on the financial crisis.

    Role of CRA Community Reinvestment Act 2

    The Community Reinvestment Act (CRA) encourages banks to expand mortgage lending in the communities in which they have branch offices, subject to maintaining overall levels of financial safety and soundness. Some have argued that this regulation forced banks to lower their credit standards and engage in riskier mortgage products in order to extend credit to lower-income individuals, who perhaps should not have received such loans. However, data provided by the Home Mortgage Disclosure Act (HMDA) reveal that loans covered by the CRA accounted for only a fraction of mortgage lending to lower-income borrowers and neighborhoods. This is especially true of higher-priced, or subprime, mortgages.1 CRA assessment-area lending
    accounted for only nine percent of higher-priced loans to lower-income borrowers and neighborhoods, while independent mortgage companies accounted for the majority. Further, the subprime share of assessment-area loans made to lower-income borrowers and lower-income neighborhoods was lower than the subprime share for all loans made between 2004 and 2006.

    The Vast Majority of Subprime Lending to Lower-Income Borrowers and
    Neighborhoods Was Outside the Requirements and Scrutiny of the CRA

    <snip>

    There are many causes to the collapse of the housing market and the recent financial turmoil, but the contribution of the CRA appears marginal. While banks did engage in subprime lending in their assessment areas, they did so at a lower rate than the market in general and accounted for only a small fraction of subprime loans to lower-income borrowers and lowerincome
    neighborhoods. The data suggest that far from being forced into risky corners of the market, the institutions under the scrutiny of the CRA were crowded out by unregulated lenders.
    http://www.jchs.harvard.edu/sites/jc...n08-2_park.pdf

    This is the first paper I read at the Harvard Joint Center for Housing Studies, and it says about the same thing that the Fed governors said, CRA was not a primary cause of the housing debacle of financial collapses of the banks. The majority was caused by private industry.

    If you want to make the case that CRA played a major role in the crisis, first explain HOW it MADE the banks MAKE loans to people who did not deserve them. I know the CRA bill, and I don't believe it.
    Last edited by finebead; 02-08-13 at 11:39 PM.

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Napoleon View Post
    What is it that you don't comprehend about the fact that subprime mortgage-
    backed securities were profitable before the housing bubble burst? Why do you think firms like Goldman Sachs and private investors bought them in the first place? Even Fannie Mae and Freddie Mac's own stockholders were pressuring them to buy more in the late 90s.


    Who cares? There was a huge market for them and they'd been in play for 40 years before the financial collapse.
    Wow your corrupted. Youv'e gone from denying to justifying.

    WHY were they profitable ?? Why ?

    Was there a massive housing bubble mandated by cheap and easy credit ?

    Was there GSEs who were commited to buying up massive amounts of debt ?
    Offering up loans to any one and everybody with a heartbeat will tend to create a massive bubble and falsley inflate the value of said securities associated with that bubble.

    But you know this right ? Your in the "financial sector "

    You still don't get it. Your willing to cherry pick symptoms but refuse to or are unable to "comprehend" the crisis in its entirety.

    That the institutionalizing of sub-prime mortgages by Govt and the mandated lowering of standards under the false premise of " combatting racism or bigotry " nearly caused the failure of our finanacial system.

    Blame the banks...how simple. The banks didn't have the abillity to bundle those mortgages with good ones to sell off to investors who lost billions when it crashed.

    But as you and your ilk call for punishment of the manufactured "evil bank guy " you fail to grasp where the real crime was commmited.

    Holders suing who ? Why didn't one politician have to answer for this ?

    Ill tell you why. Because there are enough people out there like you and Hard Truth who bought the BS, hook line and sinker.

    Sure MBS use to be a good investment, when their value wasn't hidden and corrupted with sub-prime trash.

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Napoleon View Post
    Take off the partisan glasses for a minute. Sub-prime mortgage backed securities were not a bad investment before the real estate bubble burst which is why hundreds of billions of dollars worth were privately being bought and sold in the market for decades. There are no make believes or could have beens. That is just reality. Fannie and Freddie were left with the lion's share because most firms saw the writing on the wall when home values started depreciating and started dumping the securities on their clients but it wasn't their loss which had the biggest impact. It was the failure of firms like Lehmann Brothers and Bear Stearns and the ruin of thousands of private individuals who had invested in these securities.
    You literally can't be using this as an argument?

    Sub-prime mortgages weren't issued as MBSs without alt-a and prime loans attached. So as long as 90% of them paid off, it looked like a good investment. Fannie and Freddie were stuck holding them because they kept buying them. They didn't stop in 2006 or 2007 when the writing was on the wall. They actually expanded their holdings. They bet wrong just like everyone who was hold the crap securities.

    Also note.. every investment looks good until it falls apart. Tulips were a really good investment from Nov 12th 1636 to Feb 3rd 1637. But we now call that Tulip mania.

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Fenton View Post
    Wow your corrupted. Youv'e gone from denying to justifying.

    WHY were they profitable ?? Why ?

    Was there a massive housing bubble mandated by cheap and easy credit ?

    Was there GSEs who were commited to buying up massive amounts of debt ?
    Offering up loans to any one and everybody with a heartbeat will tend to create a massive bubble and falsley inflate the value of said securities associated with that bubble.

    But you know this right ? Your in the "financial sector "

    You still don't get it. Your willing to cherry pick symptoms but refuse to or are unable to "comprehend" the crisis in its entirety.

    That the institutionalizing of sub-prime mortgages by Govt and the mandated lowering of standards under the false premise of " combatting racism or bigotry " nearly caused the failure of our finanacial system.

    Blame the banks...how simple. The banks didn't have the abillity to bundle those mortgages with good ones to sell off to investors who lost billions when it crashed.

    But as you and your ilk call for punishment of the manufactured "evil bank guy " you fail to grasp where the real crime was commmited.

    Holders suing who ? Why didn't one politician have to answer for this ?

    Ill tell you why. Because there are enough people out there like you and Hard Truth who bought the BS, hook line and sinker.

    Sure MBS use to be a good investment, when their value wasn't hidden and corrupted with sub-prime trash.

    And you still don't get it. 80% of subprime loans were issued free of CRA regulation so your remarks about CRA regulation being responsible are total bunk as every expert on the subject has pointed out. Private companies and investors were buying and selling mortgage backed securities for 40 years and, in fact, starting 10 years before the CRA had even been conceived. Financial institutions get the blame for two reasons: 1. They issued subprime loans with obscene rates, penalties, and fees that their clients could not possibly afford by the truckload and completely free of regulation. It was these loans which made up the bulk of toxic securities. and 2. Investment firms like Goldman Sachs lied to their own clients, what they refer to as "muppets", and marketed securities to them they knew to be toxic as good investments. Unfortunately, you're too full of partisan bile to accept those facts but that doesn't mean they'll ever go away.
    Last edited by Napoleon; 02-09-13 at 12:27 AM.

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Napoleon View Post
    And you still don't get it. 80% of subprime loans were issued free of CRA
    regulation so your remarks about CRA regulation being responsible are total bunk as every expert on the subject has pointed out. Private companies and investors were buying and selling mortgage backed securities for 40 years and, in fact, starting 10 years before the CRA had even been conceived. Financial institutions get the blame for two reasons: 1. They issued subprime loans with obscene rates, penalties, and fees that their clients could not possibly afford by the truckload and completely free of regulation. It was these loans which made up the bulk of toxic securities. and 2. Investment firms like Goldman Sachs lied to their own clients, what they refer to as "muppets", and marketed securities to them they knew to be toxic as good investments. Unfortunately, you're too full of partisan bile to accept those facts but that doesn't mean they'll ever go away.
    What caused the lowering of lending underwriting standards for that "80%" ?

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Fenton View Post
    What caused the lowering of lending underwriting standards for that "80%" ?
    The lenders themselves.

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by OpportunityCost View Post
    Cmon Kush, you and I both know everyone from the homeowners to the raters to the lenders to the agencies that the GSEs and the loans they underwrote were backed by the US government. The raters certainly did and when push comes to shove they will testify to that; because it was a criteria in their rating.
    You are essentially making my point: there was a systemic breakdown in the risk assessment industry between 2002 and 2006. To such a degree that the worlds largest banks (not just GSE's) were heavily composed of BBB paper that was rated AAA.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Napoleon View Post
    The lenders themselves.
    It seems people cannot accept the fact that CRA loans (even sub prime CRA loans) performed better than their counterparts at equal risk levels.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Napoleon View Post
    The lenders themselves.
    LOL !!! So much for your week attempt at trying to remain objective.

    You went off the deep end and took the bait.

    The lenders had no more abillity or power to lower underwriting standards of Govt backed sub-prime mortgages than donald duck.

    Your'e so partisan you have to marginalize your argument and continue to push the manufactured narrative of the left.


    Those "eeebil banks". How simplistic could you be ?

    Your in the "financial industry" ? Without the fundamental abillity to remain objective ? Do you work for the Govt ?

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