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U.S. sues S&P over subprime ratings

OpportunityCost said:
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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We're getting closer to agreement here, except for one significant phrase: "risk from the types of loans they needed to make to be in compliance with CRA." Compliance with the CRA did not require banks to lower their lending standards to comply. There seems to an assumption amongst the anti-CRA folks that ending racial discrimination and redlining results in higher risk loans. That is not factually correct and seems to be based on racist assumptions. The CRA requires evaluating potential borrowers as individuals, not as members of an ethnic group or residents of a particular neighborhood. If anyone could point to any CRA legislation or regulation that mandates lower standards then I would not be harping on this point.
 
iguanaman said:
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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The majority of the money "made" off those bad loans was made by the GSEs who used it to buy more bad loans.

It was the primary funding for the secondary market.

The same GSEs that were put under regulatory pressure to buy more sub prime debt in the mid ninetees by HUD.
 
Fenton said:
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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I see that point, I don't necessarily oppose all uses, or types, of derivatives. The "shooter" I blame is the people who bundled the bad loans, those who gave them good ratings (which gets us back to the S&P lawsuit) and lax/corrupt regulators and legislators (who I acknowledge come from both political parties) who allowed it to happen. There is still no reason or proof for the belief that banning racial discrimination and redlining (ie. the CRA) is the cause-it was greed, corruption and laziness.
 
Fenton said:
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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No on so many levels. The crap that caused the crisis could not be sold to Fannie and Freddie because they did not meet their requirements.....you have read too much of the GOP talking points.. Fannie and Freddie did NOT cause the financial crisis.. it was private sector predatory lending and greed that caused it.
 
PeteEU said:
No on so many levels. The crap that caused the crisis could not be sold to Fannie and Freddie because they did not meet their requirements.....you have read too much of the GOP talking points.. Fannie and Freddie did NOT cause the financial crisis.. it was private sector predatory lending and greed that caused it.
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FNF owned half the mortgage paper at the end of 2007. Youre going to tell me they had no bad loans? Even you cant be that gullible.
 
Hard Truth said:
I see that point, I don't necessarily oppose all uses, or types, of derivatives. The "shooter" I blame is the people who bundled the bad loans, those who gave them good ratings (which gets us back to the S&P lawsuit) and lax/corrupt regulators and legislators (who I acknowledge come from both political parties) who allowed it to happen. There is still no reason or proof for the belief that banning racial discrimination and redlining (ie. the CRA) is the cause-it was greed, corruption and laziness.
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ugh.
All the processes that were abused were created to make CRA compliance easier. Do I need to say it a million times before you dem water carriers will get it?
 
PeteEU said:
No on so many levels. The crap that caused the crisis could not be sold to Fannie and
Freddie because they did not meet their requirements.....you have read too much of the GOP talking points.. Fannie and Freddie did NOT cause the financial crisis.. it was private sector predatory lending and greed that caused it.
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LOL !!!

They were mandated, put under a quota system to buy the "crap" in the early 90s, forced to increase the share of the crap in the mid ninetess.

They owned 66% of the "crap" by the end of 2008 and 80 % of the "crap" was on the books of Govt Financial entities when it all fell apart.

Hillarious. How could anyone be so ignorant.

By the mid 2000s the GSEs were offering no money down ARMS for people with no credit and questionable work history.

Buzz off dude. Grown-ups are discussing inportant issues.
 
Hard Truth said:
I see that point, I don't necessarily oppose
all uses, or types, of derivatives. The "shooter" I blame is the people who bundled the bad loans, those who gave them good ratings (which gets us back to the S&P lawsuit) and lax/corrupt regulators and legislators (who I acknowledge come from both political parties) who allowed it to happen. There is still no reason or proof for the belief that banning racial discrimination and redlining (ie. the CRA) is the cause-it was greed, corruption and laziness.
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All the greed, corruption and laziness in the world couldn't prior to the 90s force banks to lower their lending standards.

So, it had to be institutionalized. Regulated through Govt programs that started off with good intentions but were corrupted by politicians.

Stopping racism/discrimination is a good thing but letting a powerful agency extend draconian measures to a industry that relies on "discrimination" to function without going bankrupt is what the CRA and HUD reformers of the 90s are guilty of.

CRA had been around since 1977. What politian(s) forced major changes and forced a quota system on the GSEs and private lenders using the backing and enforcment of those agencies ?
 
A loan officer told me you need to know 3 things to make a good loan.

Will He Pay ( credit history )
Can He Pay ( income / employment )
If He Doesn't Pay Can I Make Him Pay ( Collateral )

If you get a yes on those three questions then make the loan.

What part of that age old standard I just mentioned is racist ?

And were anx of those 3 things "tweaked" during the sub-prime disaster ?
 
OpportunityCost said:
ugh.
All the processes that were abused were created to make CRA compliance easier. Do I need to say it a million times before you dem water carriers will get it?
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I know that is what you think, but it still has not been proven by you or anyone lese that complying with the CRA requires lowering lending standards. This is a HUD statement that Fenton posted that seems much more credible "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."

Business people seek the highest possible profits, corporation are required to do so by charter. So why is it easier to believe that anti-discrimination laws are the cause of the problem rather than profit seekers using loopholes in the law.

That is a problem I have with conservatives in general, they tend to consider the most powerless people (the poor and minorities) to be incredibly powerful and malicious and they assume that all attempts to help the needy by ending discrimaination are the cause of all problems rather than the age-old universal human tendency to act greedily when given an opportunity (such as a loophole in the law).
 
Sub-prime mortgages were the TIP of the iceburg that sank this titanic.

The first, in a looooong line of dominoes, if you will.

What crashed the entire modern world, what required billions in bailouts, were the TRILLIONS in bets hedged on those loans. IE, dirivatives. People bet money they didn't have, that these loans would be payed off. The loans were not payed off. The people didn't have the money to cover their losses. This is why they needed to be bailed out. You have to understand, we are talking about more money than is in actual "existence". Not just as printed money...but EXISTING money. The amounts wagered exceeded the total amount of liquidated assests of every man, woman, and child in the US, and much of the world. In other words, they were betting in make believe dollars, but with the intention of getting real pay outs. If any of this sounds familiar, it's because the very same thing caused problems prior to the great depression. In essence, our "roaring 90s" finally came to it's inevitable end.
 
Hard Truth said:
I know that is what you think, but it still has not been proven by you or anyone lese that complying with the CRA requires lowering lending standards. This is a HUD statement that Fenton posted that seems much more credible "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."

Business people seek the highest possible profits, corporation are required to do so by charter. So why is it easier to believe that anti-discrimination laws are the cause of the problem rather than profit seekers using loopholes in the law.

That is a problem I have with conservatives in general, they tend to consider the most powerless people (the poor and minorities) to be incredibly powerful and malicious and they assume that all attempts to help the needy by ending discrimaination are the cause of all problems rather than the age-old universal human tendency to act greedily when given an opportunity (such as a loophole in the law).
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Thats not all I posted. Please try to continue using some integrity and NOT parse information that just suites your agenda.

I posted far more data, actual cuts from HUD and the GSEs explanations AND congressional hearings that showed groups like ACORN pushing the lowering of the GSEs lending standards.
 
Fenton said:
All the greed, corruption and laziness in the world couldn't prior to the 90s force banks to lower their lending standards.

So, it had to be institutionalized. Regulated through Govt programs that started off with good intentions but were corrupted by politicians.

Stopping racism/discrimination is a good thing but letting a powerful agency extend draconian measures to a industry that relies on "discrimination" to function without going bankrupt is what the CRA and HUD reformers of the 90s are guilty of.

CRA had been around since 1977. What politian(s) forced major changes and forced a quota system on the GSEs and private lenders using the backing and enforcment of those agencies ?
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It would be much more accurate to say that the banks (and you) are now using that as an excuse for their predatory behavior. The "aim" of the CRA was to simply outlaw "red-lining" of inner city areas causing borrowers there to be unable to get loans no matter wnat thier qualifications. CRA loans did not modify qualifications. That was later when the banks no longer had to care about qualifications since they intended to sell them off. What does that have to do with the CRA program at all?
Not one bank was forced to make even one subprime loan and I dare you to prove it. Forced means by court order by the way. Don't you think bankers have lawyers either?
 
iguanaman said:
It would be much more accurate to say that the banks (and you) are now using that as an excuse for their predatory behavior. The "aim" of the CRA was to simply outlaw "red-lining" of inner city areas causing borrowers there to be unable to get loans no matter wnat thier qualifications. CRA loans did not modify qualifications. That was later when the banks no longer had to care about qualifications since they intended to sell them off. What does that have to do with the CRA program at all?
Not one bank was forced to make even one subprime loan and I dare you to prove it. Forced means by court order by the way. Don't you think bankers have lawyers either?
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The aim of the CRA was to achieve affirmative action in home lending, and if banks didn't play "within the perceived rules", they were taken to court...
 
AlabamaPaul said:
The aim of the CRA was to achieve affirmative action in home lending, and if banks didn't play "within the perceived rules", they were taken to court...
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Good evening, AP. I see you're working in your sweet spot this evening.
 
AlabamaPaul said:
The aim of the CRA was to achieve affirmative action in home lending, and if banks didn't play "within the perceived rules", they were taken to court...
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Just how many times were they taken to court after GW Bush was in office? CRA loans did not modify quaifications anyway. Subprime loans did not qualify as CRA loans. That's why Bush's Minority Housing Initiative had nothing to do with the CRA. The no money down home loan was invented under Bush.

HUD Archives: President George W. Bush Speaks to HUD Employees on National Homeownership Month (6/18/02)
 
iguanaman said:
Just how many times were they taken to court after GW Bush was in office? CRA loans did not modify quaifications anyway. Subprime loans did not qualify as CRA loans. That's why Bush's Minority Housing Initiative had nothing to do with the CRA. The no money down home loan was invented under Bush.
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There seems to be a lack of consensus on that point.

New Study Finds CRA 'Clearly' - Investors.com
news.investors.com › IBD Editorials › Perspective
Dec 20, 2012 – Lenders not subject to the CRA, such as subprime giant Countrywide Financial, still fell under its spell. Regulated by HUD, Countrywide and ...

:argue
 
Sometimes the links just don't post properly.

New Study Finds CRA 'Clearly' - Investors.com
news.investors.com › IBD Editorials › Perspective
Dec 20, 2012 – Lenders not subject to the CRA, such as subprime giant Countrywide Financial, still fell under its spell. Regulated by HUD, Countrywide and ...
 
This is my last attempt.

New Study Finds CRA 'Clearly' - Investors.com
news.investors.com › IBD Editorials › Perspective
 
AlabamaPaul said:
The aim of the CRA was to achieve affirmative action in home lending, and if banks didn't play "within the perceived rules", they were taken to court...
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You can only call it affirmative action if you can prove banks were required to provide loans to unqualified borrowers. So far, no on e on this thread has been able to show any legislation or regulation that does that. The CRA did require loans to unqualified borrowers, so it was an ant-discriminatory law, not a form of affirmative action.
 
Hard Truth said:
You can only call it affirmative action if you can prove banks were required to provide loans to unqualified borrowers. So far, no on e on this thread has been able to show any legislation or regulation that does that. The CRA did require loans to unqualified borrowers, so it was an ant-discriminatory law, not a form of affirmative action.
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I suggest you research the associated lawsuits lenders were forced to contend with regarding the issue...
 
Somerville said:
not that I actually think any bankster will go to prison but still - it is a step in the right direction. A direction toward correcting the fallacious notion that Wall Street cares very much about honest behaviour.



more from Bloomberg - Default in 10 Months After AAA Spurred Justice on Credit Ratings - Bloomberg
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Thanks for making me spit a good sip of beer out my mouth.....

"Feds sue S&P over subprime ratings - Feb. 5, 2013"

It's like stabbing yourself and suing the knife..... hahahaha

I don't even know what to say about our idiotic present government or our general population that voted these retards into positions of power.....

Then people wonder why there is a divide???

Apparently people don't comprehend the economy is collapsing - despite the media lovefest for Obama and his ilk - whatever...
 
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