re: Bush Mortgage Bubble FAQs[W:1083,1531]
If there are as many "actors" as keep claiming, how come you simply cannot point to anything factual or relevant to Banks DRAMATICALLY LOWERING THEIR LENDING STANDARDS LATE 2004 and bush's regulators letting them? In spite of the dozens of posts you've posted, you've not posted one thing that would allow banks to DRAMATICALLY LOWER THEIR LENDING STANDARDS in late 2004 and you've not posted one thing that would prevent Bush's regulators from doing their jobs.
er uh eohrn, as you say "Proposing a hypothetical as a means to underpin and strengthen an already weak argument is hardly going to help strengthen your position. " I don't have to imagine whether congressional democrats wanted to change F&F regulation or not because REPUBLICANS controlled congress and Bush killed reform.
Of course you have to imagine that
F&F caused the Bush Mortgage Bubble
Bush didn't kill reform
republicans didn't control congress
reform had something to do with subprime
Bush didn't reverse the Clinton rule that restricted F&F's purchases of abusive subprime loans.
Let's look at the toxic subprime mortgage supply chain for a moment.
Shady mortgage originators took advantage of the lax lending standards which were introduced during the Clinton administration, and were made even more lax in the Bush administration (admitted), issuing NoDoc SubPrime mortgages. This is an example of an actor taking actions without which the bubble would not have happened, or if it did, much less severe.
Next, the shady originators immediately sold the mortgages to other financial entities, probably a bank or Fannie and Freddie. So they didn't expose themselves to the bad risk the introduced to the financial system, but pawned off that risk to the next guy in the supply chain. Actors taking actions which had a part in creating the bubble and the crash.
The banks that bought these toxic subprime mortgages had fully operational investment department as well as commercial banking departments. The commercial department handed over the toxic subprimes to the investment department, which securitized them into an investment vehicle by carving them up in 'traunches'. That would not have been possible with the Glass-Seagall act in place, legislation which to these barriers away was Clinton. Also, the mere action of securitizing toxic subprime mortgages is another example of actors taking actions, without which the bubble would not have formed and popped.
In order to sell off securitized toxic mortgages as investment grade securities, they need an investment rating. Here is were the rating agencies did their jobs poorly, in that they didn't know what it was they were rating, nor how risky it was, but gave them AAA ratings they didn't deserve. Actors taking actions without which the bubble wouldn't have formed.
The investment departments of these banks now also went further to minimize their risk by applying Credit Default Swaps against the investment vehicles they were selling from going bad. Basically, they insured the investment. Actors taking actions without which the bubble wouldn't have formed and popped. AIG was one of the big players in the subprime CDS game, hence when the investments went bad, they needed a government bailout. Actors taking actions that caused the bubble and collapse.
Investment banks then went around and sold these insured investments across the planet to all kinds of institutional investors. Actors taking actions again. Once the bubble popped they wanted their investment money back, causing a claim against the investment banks, which in turn caused a claim against the AIG and the likes. The whole thing unwound back. Again, actors taking actions.
In ever step in this toxic subprime mortgage supply chain was actors in the process taking actions. Any one of them could have decided NOT to do what the did, and it would have reduced, if not eliminated, the bubble and collapse.
During all this there were some congress people as well ass administration people, both Republican and Democrat, that saw the risk being introduced via these toxic subprime mortgages. The congress people, both Republican and Democrat, who were gaining a perceived advantage from Fannie and Freddie diving into these toxic subprime mortgages with both feet were reticent to disrupt their advantages. Congress did't do a good job of overseeing the GSE's Fannie and Freddie, regardless of how corrupt they had become with all the cash that was sloshing through them. The needed re-regulation of Fannie and Freddie never happened. Actors, actions, and decisions once again.
What also needs to be said is that the entire ecosystem in which this supply chain existed, was allowed to exist, and was able to exist, is a requirement for a bubble to form and collapse.
The conditions for this ecosystem were not the creation of just Bush the younger (as Vern mentions, the lack lending standards, and regulatory reform that was started, killed and started once again, these are on Bush the younger), but also a creation of Clinton (starting the idea of reduced lending standards and creating the precedence of government interference in lending standards, and bringing the weight of the entire government agencies bullying on banks to reduce their lending standards as well as lending goals for Fannie and Freddie to achieve and finally the removal of the Glass-Steagal Act separating investment and commercial banking, a span across which toxic mortgages infected the investment industry), and even a creation of Bush the elder, with his administrations initial meddling in the mortgage industry.
In all of this mosaic, it really isn't a legitimate position for 100% blame on a single person or a single entity. It was a systemic failure over multiple presidential administrations, across many multiple businesses in many multiple industries.
This is my position, and to date, I've not seen sufficient evidence that would make me think that 100% blame assignment to Bush the younger is legitimate or just. I've not seen sufficient evidence to make me think that all these actors I've described above, and all their actions described above, and all their decisions described above didn't have a contribution to the bubble forming, the severity of the bubble, and the collapse. Had any one of them acted differently, had any one of them made different decisions, it is my belief that the bubble would not have been as severe, if it would have happened at all.
In my opinion, the attempt to assign 100% of the blame to Bush the younger, is foolish, overly partisan, and not in line with the facts and events as I know and understand them. Of course, opinions are like assholes, and everyone's got one. You are free to believe whatever it is that helps you get through the day.
Yes, we can argue all day long about this or that, or who did this or that, or who started which policy that enabled this or that, or who killed which regulatory efforts or proposals, but in the end, it really doesn't have as a significant bearing on the bubble as what the supply chain did with those set conditions. The supply chain, which was the mass production part of the bubble, is wholly to blame for the severity of the collapse.
