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

  1. #141
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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Grant View Post
    Of course. It cannot be any other way. Only those who are very well qualified should be allowed loans, and then at the banks discretion.
    You are wrong. If the banks discretion eliminates people from consideration simply because of where they live, i.e. red lining, then it is discrimination, and it is appropriate for the govt. to correct that wrong, just as they did with segregation in the south.

    Business can't do whatever they please, that is why we have laws such as sherman antitrust law. Subsidizing routes in one are to put a competitor out of business hurts competition in the long run, therefore it hurts society, therefore it has been made illegal. Same thing with red lining. Letting a company optimize its profit at any cost is not right.

    We don't oppose antitrust laws because we are ALL protected by them. It' interesting how many white people are willing to allow red lining to go on as "a banks right" while it does not affect them.

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

    Quote Originally Posted by finebead View Post
    That is a separate argument. The argument proferred here is that CRA was a major factor in the financial crisis, and I have shown it was NOT.

    Whether you like it at the individual bank level is another manner, but it was not a major factor in the financial crisis, unless you have some facts that show different results than the ones I've already posted.
    Its the entire point. Bank profit margin is below 10%. What happens when 10% of its mortgages fail?

  3. #143
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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by OpportunityCost View Post
    Its the entire point. Bank profit margin is below 10%. What happens when 10% of its mortgages fail?
    It misses the entire point of whether CRA was a major factor in the financial crisis. I established that CRA regulated loans made up 25% of the subprime loans and they suffered problems at only half the rate of the unregulated loans from Countrywide etal. A 10% default rate on 25% of the subprime debt (if that is the number and we don't know if 10% is the number, its one you made up for arguments sake, maybe you could try to find some facts!), that's just 2.5% of subprime issued, that may sink a bank but it would not sink the US housing market, US economy, and the worldwide economy.

    So the fact remains that CRA was not a major factor in the financial crisis.

    Now Pres. Bush committing to put 5.5 million minorities in houses during his administration, which he stated in 2002, at an average cost of 100K, that's $550 Billion, just about what the TARP he signed would cover up. The fact is that it was Bush policy to over stimulate the housing market, the repub run SEC allowed the biggest banks to increase their leverage 3X, the biggest banks became unstable and when the subprime teaser rates from Countrywide, New Century and Option One began to reset and people could not pay the mortgage, the banks failed. The republicans controlled the wheel and they blew it up.

    You have failed to prove CRA was a significant factor, and you have not refuted a single other fact I posted about Pres. Bush or Chris Cox at SEC and relaxation of the net capital rule.

  4. #144
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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by finebead View Post
    I believe CRA had adequate teeth. But
    CRA was NOT the problem with the

    financial crisis and I have posted proof of this in post 117, so I'll quote it again:



    CRA was NOT THE PROBLEM, it was the unregulated independent mortgage lenders like Countrywide, New Century, Freemont, Option One, etc.

    Then you had pres. Bush in 2002 set his objective to extend home ownership to 5.5 million minority families, I posted the speech already, and the repub Chris Cox led SEC allowing the biggest banks to triple their leverage in 2004, and repub Bill Frist blocking legislation to reform Fannie and Freddie in 2005. This debacle was mostly on the repubs who had their hands on the wheel the whole time the problem got out of hand and exploded.
    Your "proof " was that "some legal and finacial experts state" .....

    Thats not proof and its not even relevant to what I'm refering too.

    Libs like to point to CRA and say "see the CRA loans were a small portion of the loans in default ".

    I asked this of another poster in the "financial sector " and he returned with a prety dumb response of "the lenders.."

    What caused the lowering of standards on mortgages in general.

    Remember as you blame Bush who in fact in 2003 argued for further regulations on the GSEs to slow down the Govt mandated bubble, that the mechanisms put in place in the early 90s were up until the crash the root cause of this crisis.

    You want to mandate 2 trillion in easy and cheap credit ? Well sure your going to have massive corruption on both a Govt and Private level.

    Who bought and then mixed up hundreds of billions of MBSs and then sold them out onto the market ?

    You think ANY private entity could have gotten away with doing that with FEDERALLY backed securities ?

    Your and the rest of the libs input on this topic just doesn't make sense. It ignores the primary actors and arbitrarily gives private lending institutions massive regulatory power to change the lending standards of Govt backed loans.

    ANY Jr loan officer can tell you that giving a loan to someone with shaky credit, a short or no work history or with no down payment is a recipe for default.

    And guess what. Millions of these loans defaulted and the tax payer picked up the tab.
    Last edited by Fenton; 02-10-13 at 06:10 PM.

  5. #145
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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Fenton View Post
    Your "proof " was that "some legal and finacial experts state" .....

    Thats not proof and its not even relevant to what I'm refering too.
    The article sites 1) a Federal Reserve study, 2) Janet Yelin, president of the San Francisco fed, and 3) Traiger & Hinckley LLP, a law firm that counsels financial institutions on CRA compliance.

    Every one an expert.

    You have shown NOTHING, where is your proof???

  6. #146
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    Re: U.S. sues S&P over subprime ratings

    Quote Originally Posted by Fenton View Post
    Remember as you blame Bush who in fact in 2003 argued for further regulations on the GSEs to slow down the Govt mandated bubble, that the mechanisms put in place in the early 90s were up until the crash the root cause of this crisis.
    And it was Bill Frist and the repubs who let GSE reform die on the vine in 2005, the last opportunity to do any good. See proof below:

    Now I'm going to show you how the republicans fixed it so Fannie and Freddie could not be regulated, when regulation was needed.

    Freddie Mac arranged stealth lobbying in 2005

    Associated Press ,Oct. 19, 2008

    WASHINGTON — Freddie Mac secretly paid a Republican consulting firm $2 million to kill legislation that would have regulated and trimmed the mortgage finance giant and its sister company, Fannie Mae, three years before the government took control to prevent their collapse.


    In the cross hairs of the campaign carried out by DCI of Washington were Republican senators and a regulatory overhaul bill sponsored by Sen. Chuck Hagel, R-Neb. DCI's chief executive is Doug Goodyear, whom John McCain's campaign later hired to manage the GOP convention in September.


    Freddie Mac's payments to DCI began shortly after the Senate Banking, Housing and Urban Affairs Committee sent Hagel's bill to the then GOP-run Senate on July 28, 2005. All GOP members of the committee supported it; all Democrats opposed it.


    In the midst of DCI's yearlong effort, Hagel and 25 other Republican senators pleaded unsuccessfully with Senate Majority Leader Bill Frist, R-Tenn., to allow a vote.

    "If effective regulatory reform legislation ... is not enacted this year, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole," the senators wrote in a letter that proved prescient.


    Unknown to the senators, DCI was undermining support for the bill in a campaign targeting 17 Republican senators in 13 states, according to documents obtained by The Associated Press. The states and the senators targeted changed over time, but always stayed on the Republican side.


    In the end, there was not enough Republican support for Hagel's bill to warrant bringing it up for a vote because Democrats also opposed it and the votes of some would be needed for passage. The measure died at the end of the 109th Congress.


    The Republican senators targeted by DCI began hearing from prominent constituents and financial contributors, all urging the defeat of Hagel's bill because it might harm the housing boom. The effort generated newspaper articles and radio and TV appearances by participants who spoke out against the measure.


    Inside Freddie Mac headquarters in 2005, the few dozen people who knew what DCI was doing referred to the initiative as "the stealth lobbying campaign," according to three people familiar with the drive.
    They spoke only on condition of anonymity, saying they fear retaliation if their names were disclosed.


    Freddie Mac executive Hollis McLoughlin oversaw DCI's drive, according to the three people.


    "Hollis's goal was not to have any Freddie Mac fingerprints on this project and DCI became the hidden hand behind the effort," one of the three people told the AP.


    Before 2004, Fannie Mae and Freddie Mac were Democratic strongholds. After 2004, Republicans ran their political operations. McLoughlin, who joined Freddie Mac in 2004 as chief of staff, has given $32,250 to Republican candidates over the years, including $2,800 to McCain, and has given none to Democrats, according to the Center for Responsive Politics, a nonpartisan group that tracks money in politics.
    On Friday night, Hagel's chief of staff, Mike Buttry, said Hagel's legislation "was the last best chance to bring greater oversight and tighter regulation to Freddie and Fannie, and they used every means they could to defeat Sen. Hagel's legislation every step of the way."


    "It is outrageous that a congressionally chartered government-sponsored enterprise would lobby against a member of Congress's bill that would strengthen the regulation and oversight of that institution," Buttry said in a statement. "America has paid an extremely high price for the reckless, and possibly criminal, actions of the leadership at Freddie and Fannie."
    Nine of the 17 targeted Republican senators did not sign Hagel's letter: Sens. Mitch McConnell of Kentucky, Christopher "Kit" Bond and Jim Talent of Missouri, Conrad Burns of Montana, Mike DeWine of Ohio, Lamar Alexander of Tennessee, Olympia Snowe of Maine, Lincoln Chafee of Rhode Island and George Allen of Virginia. Aside from the nine, 20 other Republican senators did not sign Hagel's letter.
    Freddie Mac Tried to Kill Republican Regulatory Bill in 2005 | Fox News

    Bill Frist (R-Tenn) did not bring the bill up for a vote because there was not adequate repub support to regulate Fannie, and since they were in the majority in the senate, that ended the effort. It turns out you don't have to buy the whole senate, you just have to get enough votes on the margin to deny the majority their majority, and DCI did that. But you will notice this did not come to light until 2008. For the republicans, you can be for regulation and against regulation at the same time.

    Heck, by my count, that's 25 repubs in the senate in favor of reform, and 29 against, out of a total of 54 repub senators. The repubs couldn't even get a majority in their own caucus. This was not on Barney Frank, this could never have passed the senate because the republicans would have killed it if it came to a vote. Frist was just too smart to show the public the real story. Then you can talk about reform and blame its failure on someone else, since the hypocrits weren't on the record.

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

    Quote Originally Posted by OpportunityCost View Post
    If bolded is less than 90%, it is not profitable. Vast majority doesnt make it. Thats exactly why relaxed lending standards are not good.
    No one on this thread has proven that the law required lenders to lower their standards.

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

    Quote Originally Posted by Grant View Post
    Of course. It cannot be any other way. Only those who are very well qualified should be allowed loans, and then at the banks discretion.
    No one on this thread has provided evidence that the law required lenders to lower their standards. By "banks discretion" do you mean that banks should be allowed to discriminate based on race or nieghborhood? Because that is what the CRA prohibits and you oppose the CRA.

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

    Come on you people who keep saying that the CRA forced lenders to give loans to unqualified borrowers, you keep quoting and citing all sorts of peripheral opinions and information. So why can't you quote the language of the CRA legislation or promulgating regulations that requires lenders to give loans to unqualified borrowers? Could it be that requirement doesn't exist? We have several citations that say that such requirements don't exist and the CRA did not have a significant impact on the mortgage collapse? You have nothing.

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

    Quote Originally Posted by OpportunityCost View Post
    Look at their pro-bono work. Covington & Burling LLP | Publications

    About halfway down. Bleeding heart liberals through and through, I wouldnt trust their judgement in anything but to wring billable hours out of it. You pick a DC law firm out of thin air or did google do it for you?
    The report is from a US Dept. of Treasury website that explains the workings of the Community Development Financial Institutions Fund.

    You and the others who make claims about the CRA forcing unqualified loans have provided absolutely no evidence that such a rule exists. If you were correct, the evidence would be easy to find in the legislation or regulations. Since the evidence does not exist all you can do is dance around the question without giving an honest answer.

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