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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 OpportunityCost View Post
    Banks didnt magically find a profit fairy in low income loans, they found a way to socialize the loss and keep the profit. Fix THAT and we will have a healthy mortgage market again.
    Now there's a point I can at least partially agree on, and it has nothing to do with the CRA banning discrimination. However, there was something of a "profit fairy;" the derivative.

    "Under US law and the laws of most other developed countries, derivatives have special legal exemptions that make them a particularly attractive legal form to extend credit."[29]
    ^ a b c Michael Simkovic, Secret Liens and the Financial Crisis of 2008, American Bankruptcy Law Journal, Vol. 83, p. 253, 2009 (cited on Wikipedia)


    "The strong creditor protections afforded to derivatives counterparties, in combination with their complexity and lack of transparency however, can cause capital markets to underprice credit risk. This can contribute to credit booms, and increase systemic risks.[29] Indeed, the use of derivatives to conceal credit risk from third parties while protecting derivative counterparties contributed to the financial crisis of 2008 in the United States.[29][30]
    ^ a b c Michael Simkovic, Secret Liens and the Financial Crisis of 2008, American Bankruptcy Law Journal, Vol. 83, p. 253, 2009
    ^ Michael Simkovic, Bankruptcy Immunities, Transparency, and Capital Structure, Presentation at the World Bank, January 11, 2011
    (cited on Wikipedia)
    Last edited by Hard Truth; 02-11-13 at 02:51 PM.

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

    Quote Originally Posted by Blue_State View Post
    I just finished reading the link you posted. Help me to understand how the OCC use of the NBA allowed for predatory mortgages? I could be missing something but everything I read is in relation to credit cards. The OCC used their power to work with credit cards, not mortgages.

    http://www.phil.frb.org/consumer-cre...Act_032004.pdf
    The Office of the Comptroller of the Currency has approved a final rule that frees national banks and their mortgage subsidiaries from complying with state predatory lending laws. The final rule builds on a series of court decisions and OCC interpretations, according to Comptroller John Hawke Jr., and it allows the OCC to pre-empt specific types of state laws that interfere with the lending activities and other powers of national banks.

    The American Bankers Association welcomed the OCC's action. But the Conference of State Bank Supervisors said they were "stunned" by the OCC's decision to finalize the rules, considering the concerns expressed by key members of Congress and state officials. "The arrogance and audacity of the comptroller's actions are astonishing," CSBS president Neil Milner said.
    State Predatory Lending Laws: OCC Approves Pre-emption Rule

    Where do you think the OCC got the balls to be that "arrogant"? The had "Mister Arrogance" himself, GW Bush backing them up that's why. Like Spitzer said, Bush would go to any length to protect the banks and their scam.
    Last edited by iguanaman; 02-11-13 at 04:16 PM.

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

    Quote Originally Posted by iguanaman View Post
    State Predatory Lending Laws: OCC Approves Pre-emption Rule

    Where do you think the OCC got the balls to be that "arrogant"? The had "Mister Arrogance" himself, GW Bush backing them up that's why. Like Spitzer said, Bush would go to any length to protect the banks and their scam.
    Jurisdictional pissing match. National banks saying they are subject to national oversight, not state or local. Seeing as its coming from the guy who was seeing hookers at the time, Ill have to see it less as respect for the law and more as a power grab or shakedown to get a settlement down the line.

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

    Quote Originally Posted by Hard Truth View Post
    Again, no mention of the CRA forcing banks to provide loans to unqualified borrowers. In fact, that statement doesn't even say that government regulations were at fault, instead it says: Mortgage industry participants appear to have been drawn to encourage borrowers to take on these riskier loans due to the high profits associated with originating these loans and packaging them for sale to investors. "[P]ackaging them for sale to investors" is referring to the derivatives, which most unbiased analysts say were a major factor in the mortgage crisis.
    Its really simple if you could follow logic in any sort of process.

    Banks needed a mechanism to insure themselves against risk from the types of loans they needed to make to be in compliance with CRA. The government provided that with GSE underwriting, CDS legislation, legalzation of mortgage deriviative formulas that were not sound, approval of the rating system being used at the time, legalization of increased leverage, ever higher GSE targets---all of which occurred across 2 administrations and began in yet a third.

    Its not a Dem problem or a Rep problem, its a DC establishment problem. They opened the door by creating mechanisms that allowed it to take place, then refused to regulate it before it crashed. Popular policy doesnt mean GOOD policy.

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

    Quote Originally Posted by OpportunityCost View Post
    Its really simple if you could follow logic in any sort of process.

    Banks needed a mechanism to insure themselves against risk from the types of loans they needed to make to be in compliance with CRA. The government provided that with GSE underwriting, CDS legislation, legalzation of mortgage deriviative formulas that were not sound, approval of the rating system being used at the time, legalization of increased leverage, ever higher GSE targets---all of which occurred across 2 administrations and began in yet a third.

    Its not a Dem problem or a Rep problem, its a DC establishment problem. They opened the door by creating mechanisms that allowed it to take place, then refused to regulate it before it crashed. Popular policy doesnt mean GOOD policy.
    Actual CRA loans have a better then average sucess rate, it was non-CRA subprimes that made up the bulk of failed mortgages. Blaming the CRA has no basis in fact. Blaming Bush and the Republican Congress for not stopping the scam is a no brainer. They were either clueless or willing partners in the subprime bubble and that is a fact.
    HUD Archives: President George W. Bush Speaks to HUD Employees on National Homeownership Month (6/18/02)

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

    Quote Originally Posted by iguanaman View Post
    Actual CRA loans have a better then average sucess rate, it was non-CRA subprimes that made up the bulk of failed mortgages. Blaming the CRA has no basis in fact. Blaming Bush and the Republican Congress for not stopping the scam is a no brainer. They were either clueless or willing partners in the subprime bubble and that is a fact.
    Read more closely. All of what I talked about was facilitated to allow a release valve for the risk FOR CRA. In the end it was used for things other than CRA but it was created for the purpose of CRA compliance.

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

    Quote Originally Posted by OpportunityCost View Post
    Read more closely. All of what I talked about was facilitated to allow a release valve for the risk FOR CRA. In the end it was used for things other than CRA but it was created for the purpose of CRA compliance.
    Why is that the reason and not the money they made from selling those bad loans? In your world, bankers don't care about money? Only about fulfilling some toothless Govt. program who's supporters are not even in power? You must think bankers are fools.

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

    Quote Originally Posted by PeteEU View Post
    And Fannie and Freddie did not have
    anything to do with predatory lending nor the bubble.....
    Wow....

    They FINANCED the bubble. Bought the debt, bundled the mortgages, good with bad and sold them off to investment banks as derivitives.

    Derivitives filled with rotten loans.

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

    Quote Originally Posted by iguanaman View Post
    Why is that the reason and not the money they made from selling those bad loans? In your world, bankers don't care about money? Only about fulfilling some toothless Govt. program who's supporters are not even in power? You must think bankers are fools.
    See this what partisan blinders makes you think. Establishment DC, thought CRA was a good thing and enabling it to do more was also a good thing, so mechanisms that allowed the financial industry to comply with that must be good. And by establishment, I mean Dems and Reps, both sides wanted this monstrosity.

    Banks saw they could make a LOT of money from that, they arent off the hook. None of it would have been possible without legislative enablers on both sides of the aisle. Thats why the monumental blame shift is ongoing.

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

    Quote Originally Posted by Hard Truth View Post
    Now there's a point I can at least partially agree on, and it has nothing to do
    with the CRA banning discrimination. However, there was something of a "profit fairy;" the derivative.

    "Under US law and the laws of most other developed countries, derivatives have special legal exemptions that make them a particularly attractive legal form to extend credit."[29]
    ^ a b c Michael Simkovic, Secret Liens and the Financial Crisis of 2008, American Bankruptcy Law Journal, Vol. 83, p. 253, 2009 (cited on Wikipedia)


    "The strong creditor protections afforded to derivatives counterparties, in combination with their complexity and lack of transparency however, can cause capital markets to underprice credit risk. This can contribute to credit booms, and increase systemic risks.[29] Indeed, the use of derivatives to conceal credit risk from third parties while protecting derivative counterparties contributed to the financial crisis of 2008 in the United States.[29][30]
    ^ a b c Michael Simkovic, Secret Liens and the Financial Crisis of 2008, American Bankruptcy Law Journal, Vol. 83, p. 253, 2009
    ^ Michael Simkovic, Bankruptcy Immunities, Transparency, and Capital Structure, Presentation at the World Bank, January 11, 2011
    (cited on Wikipedia)
    Its NOT the fault of the derivitives or the CDSs,which are nothing new.

    Its when those derivitives are a bundle of good and junk mortgages and then passed off to investors with no way to assess their true value.

    Dont blame the gun, blame the dhooter.

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