Clinton Library Doc Dump Reveals Governments Role in the Housing Crisis...

Of-course, Clinton's seminal role in our Countries 2008 Financial Crisis has been well researched on documented by posters here at DP.

At least the one's who don't spend their off time manufacturing little George Bush dolls made out of Shower drain hair and old discarded candles.

We all know it was his administrations " Fair lending " initiative that forced banks to lower their decades old lending standards via threat of DOJ action, and his 1995 Home-ownership Strategy that co-opted the GSEs into the Sub-prime market by not only lowering their Capital requirement standards, but by increasing their quota for Sub-prime loans purchases.

[url=http://www.americanbanker.com/175/freddie-mac-jumps-into-subprime-mortgages-1041664-1.html]Freddie Mac Jumps into Subprime Mortgages - American Banker 175th Year Flashback Article - American Banker 175th Year Flashback[/URL]
1998....

" Freddie Mac is diving into subprime lending, ending months of speculation over how deeply the agency would go into the burgeoning market.

Freddie Mac and its rival, Fannie Mae, outlined their approaches to lending to tarnished borrowers at the Mortgage Bankers Association's annual meeting Tuesday in New York. Their participation could accelerate growth in a sector that has become a new frontier for many lenders and, ultimately, could bring rates down for borrowers."

Fannie Mae Eases Credit To Aid Mortgage Lending - NYTimes.com

" In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. "


His 10 Federal agency strong " Fair Lending Task Force '' targeted banks and lenders for " discriminatory lending practices" and in just 3 years, the DOJ under Janet Reno had already successfully targeted 13 lenders and vowed to target more.

He also appointed his Democrat buddies to chair potions and executive positions at the GSE's including Franklin Raines, who was at the center of a 2004 SEC investigation into Fannie Maes corruption.

Study Finds 'Extensive' Fraud at Fannie Mae

" Fannie Mae engaged in "extensive financial fraud" over six years by doctoring earnings so executives could collect hundreds of millions of dollars in bonuses, federal officials said yesterday in a report that portrayed a company determined to play by its own rules. "



A Recent Clinton Library Doc Dump reveals even MORE evidence that it was policies and Regulations created under the Clinton administration that's at the core of the Sub-prime bubble.

" Exhibit A in the 7,000-page Clinton Library document dump is a 1999 memo to him from his treasury secretary, Robert Rubin."

"Public disclosure of CRA ratings, together with the changes made by the regulators under your leadership, have significantly contributed to ... financial institutions ... meeting the needs of low- and moderate-income communities and minorities," Rubin gushed. "Since 1993, the number of home mortgage loans to African Americans increased by 58%, to Hispanics by 62% and to low- and moderate-income borrowers by 38%, well above the overall market increase.

Since 1992, nonprofit community organizations estimate that the private sector has pledged over $1 trillion in loans and investment under CRA."

" Other documents reveal how the community-activist group ACORN and other organizations met with Rubin and other top Clinton aides on "improving credit availability for minorities."

" Clinton's changes to the CRA let ACORN use the act's ratings to "target merging firms with less-than-stellar records and to get the banks to agree to greater community investment as a condition of regulatory approval for the merger," White House aide Ellen Seidman wrote in 1997 to Clinton chief economist Gene Sperling.

"Community groups have come to recognize how terribly powerful CRA has been as a tool for making credit available in previously underserved communities," Seidman added.

Seidman later boasted that Clinton's 1995 CRA revisions created not only the subprime mortgage market but also the subprime securities market. Of course, subprime loans and their high default rates ruined minority neighborhoods when the market crashed. "

Clinton Library's Doc Dump Reveals CRA Role In Subprime Mess - Investors.com

As you said, there are a lot of us that knew this already.

However, the presentation of facts will not deter those that will continue to blame Bush and the Republicans for what was without a doubt, a Democratic initiative to garner more votes from their primary voting block (those that get $$ from the government) that almost permanently destroyed our economy.

Fenton said:

Of-course, Clinton's seminal role in our Countries 2008 Financial Crisis has been well researched on documented by posters here at DP.

Click to expand...

ah, the never ending conservative flailing at the facts. All the conservative flailing has to ignore the facts that the 2005 and 2006 mortgages were the ones that caused the crisis and all the conservative flailing has to ignore Bush’s policies and regulation that encouraged and protected the bad mortgages in 2005 and 2006.

Can someone, anyone explain how anything Clinton did led to banks “DRAMATICALLY lowering their lending standards in late 2004” and anything Clinton did prevented Bush’s regulators from doing their job enforcing lending standards. just posting “Look! Clinton did this” over and over doesn’t really make the connection to banks “DRAMATICALLY lowering their lending standards in late 2004” or Bush’s regulators not doing their jobs.

From Bush’s President’s Working Group on Financial Markets October 2008

“The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”

http://www.treasury.gov/resource-center/fin-mkts/Documents/q4progress update.pdf

Vern said:

ah, the never ending conservative flailing at the facts. All the conservative flailing has to ignore the facts that the 2005 and 2006 mortgages were the ones that caused the crisis and all the conservative flailing has to ignore Bush’s policies and regulation that encouraged and protected the bad mortgages in 2005 and 2006.

Can someone, anyone explain how anything Clinton did led to banks “DRAMATICALLY lowering their lending standards in late 2004” and anything Clinton did prevented Bush’s regulators from doing their job enforcing lending standards. just posting “Look! Clinton did this” over and over doesn’t really make the connection to banks “DRAMATICALLY lowering their lending standards in late 2004” or Bush’s regulators not doing their jobs.

From Bush’s President’s Working Group on Financial Markets October 2008

“The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”

http://www.treasury.gov/resource-center/fin-mkts/Documents/q4progress update.pdf

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No, " flailing " VERN is your assertions that it ALL started in 2004.

I mean did you not READ the thread VERN ??

Its about Clintons CRA changes that allowed PUBLIC DISCLOSURE of Banks CRA scores.

Its a actual memo from his Treasury Secretary to Clinton bragging about the effectiveness of Clintons 1995 CRA changes.

You want to know how Clinton forced banks to lower their standards ?

He unleashed 10 Federal Agencies on them including the DOJ who promptly sued any banks who did not comply with his " fair lending initiative "

Janet Reno bragged about the effectiveness of the 1995 CRA changes in 1998.

In just 3 years she successfully sued 13 banks and vowed to sue more

I guess we get to look forward to you spamming this thread with the same irrelevant President Working Group quote over and over and over.

Fenton said:

No, " flailing " VERN is your assertions that it ALL started in 2004.

I mean did you not READ the thread VERN ??

Its about Clintons CRA changes that allowed PUBLIC DISCLOSURE of Banks CRA scores.

Its a actual memo from his Treasury Secretary to Clinton bragging about the effectiveness of Clintons 1995 CRA changes.

Click to expand...

er uh Fenton, “LOOK! something something Clinton” doesn’t explain why banks “DRAMATICALLY lowered their lending standards in late 2004”. And your “LOOK something something CRA” is just another version of “LOOK! something something Clinton”. The best part of the “LOOK something something CRA” is that the bank’s normal regulator does the CRA rating and they work for Bush. so if you want to cling to the silly delusion the mean ole CRA “forcing” banks to give out bad loans then you have to blame Bush because it was his mean ole regulators doing the forcing in 2005 and 2006.

How does OCC determine a CRA rating?

OCC evaluates a financial institution's activities under CRA based on information about—
• The institution: Its capacity, constraints, business strategies, competitors, and peers; and
• The community: Its demographic and economic data, and lending, investment, and service opportunities.

OCC: Community Reinvestment Act (CRA) Questions and Answers

You want to know how Clinton forced banks to lower their standards ?

He unleashed 10 Federal Agencies on them including the DOJ who promptly sued any banks who did not comply with his " fair lending initiative "

Click to expand...

no silly, the DOJ "promptly" sued banks when they violated the law. and that still doesnt connect the dots to banks "DRAMATICALLY lowering their lending standards in late 2004”.

I guess we get to look forward to you spamming this thread with the same irrelevant President Working Group quote over and over and over.

Click to expand...

there it is again. Fenton whines about Bush's President's Working Group on Financial Markets but he just cant quite put into words why its "irrelevent" or "out of context" or "ridiculous". Which proves my point, he can only flail at the facts.

Vern said:

er uh Fenton, “LOOK! something something Clinton” doesn’t explain why banks “DRAMATICALLY lowered their lending standards in late 2004”. And your “LOOK something something CRA” is just another version of “LOOK! something something Clinton”. The best part of the “LOOK something something CRA” is that the bank’s normal regulator does the CRA rating and they work for Bush. so if you want to cling to the silly delusion the mean ole CRA “forcing” banks to give out bad loans then you have to blame Bush because it was his mean ole regulators doing the forcing in 2005 and 2006.

How does OCC determine a CRA rating?

OCC evaluates a financial institution's activities under CRA based on information about—
• The institution: Its capacity, constraints, business strategies, competitors, and peers; and
• The community: Its demographic and economic data, and lending, investment, and service opportunities.

OCC: Community Reinvestment Act (CRA) Questions and Answers




no silly, the DOJ "promptly" sued banks when they violated the law. and that still doesnt connect the dots to banks "DRAMATICALLY lowering their lending standards in late 2004”.



there it is again. Fenton whines about Bush's President's Working Group on Financial Markets but he just cant quite put into words why its "irrelevent" or "out of context" or "ridiculous". Which proves my point, he can only flail at the facts.

Click to expand...

LOL !!

You're so obsessed with Bushy you can't even stay on topic

The TOPIC of this thread is how Clintons CRA changes forced banks to Lower their lending standards

His Treasury Secretary is celebrating the success of his new CRA Regulations in that memo.

Are you not capable of living in a reality that doesn't involve blaming George Bush ?

Go troll somewhere else VERN.

Vern said:

ah, the never ending conservative flailing at the facts. All the conservative flailing has to ignore the facts that the 2005 and 2006 mortgages were the ones that caused the crisis and all the conservative flailing has to ignore Bush’s policies and regulation that encouraged and protected the bad mortgages in 2005 and 2006.

Can someone, anyone explain how anything Clinton did led to banks “DRAMATICALLY lowering their lending standards in late 2004” and anything Clinton did prevented Bush’s regulators from doing their job enforcing lending standards. just posting “Look! Clinton did this” over and over doesn’t really make the connection to banks “DRAMATICALLY lowering their lending standards in late 2004” or Bush’s regulators not doing their jobs.

From Bush’s President’s Working Group on Financial Markets October 2008

“The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”

http://www.treasury.gov/resource-center/fin-mkts/Documents/q4progress update.pdf

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well, when you remove the rhetoric from that all you have is errors, omissions and a the continuation of the cowardice of the American Regressive-Progressive movement's attempt to rewrite history.

Your assertion that the greatest collapse of financial institutions world wide since the Great Depression happened in four short years is absurd, even doltish progressives should know that economics is a tide not a wave.

A guy named James Carter started this ball headed toward the **** hole, when his meddling in the economy caused "stagflation" and he tried to "jump start" the US economy by home building created by lower regulations for home buyers.

In the Clinton era, the regulations were evaporated. At the time, Canada went through a commission of inquiry to look into following suit, and came away with even tougher regulations - the opposite direction - as has one of the world's safest banking systems as a result.

The ongoing attempt to lay all things at the feet of George Bush has gotten contemptibly sick

Fearandloathing said:

well, when you remove the rhetoric from that all you have is errors, omissions and a the continuation of the cowardice of the American Regressive-Progressive movement's attempt to rewrite history.

Click to expand...

I do have to chuckle when a conservative posts nothing but empty factless rhetoric as he attempts to paint the facts I've posted as rhetoric.

Your assertion that the greatest collapse of financial institutions world wide since the Great Depression happened in four short years is absurd, even doltish progressives should know that economics is a tide not a wave.

Click to expand...

Actually the underlying cause, the Bush Mortgage Bubble, happened in two short years. Banks "DRAMATICALLY lowered their lending standards in late 2004” and the MBS markets collapsed late 2006. It took another year for the Great Bush Recession to start and then a year later Bush made it Great when he let Lehman fail. I've posted the facts.

In the Clinton era, the regulations were evaporated. At the time, Canada went through a commission of inquiry to look into following suit, and came away with even tougher regulations - the opposite direction - as has one of the world's safest banking systems as a result.

Click to expand...

"regulations evaporated"? wow, you've a got a real talent for empty factless rhetoric (Fenton just whines at me). You post great phrases like "regulations evaporated". Speaking of which, this doesn't look "regulations evaporated". The Clinton admin saw the abuses in the small subprime market and restricted Freddie and Fannies purchases of loans that didn't account for the borrower's ability to repay the loan.

"(In 2000) HUD restricted Freddie and Fannie, saying it would not credit them for loans they purchased that had abusively high costs or that were granted without regard to the borrower's ability to repay."

How HUD Mortgage Policy Fed The Crisis

That would explain why subprime Early Payment Defaults were stable for 5 years from 2000 to 2004. I posted the graph above (that's what makes it not "empty factless rhetoric") Did you see how the EPDs shot up in 2005 and then shot up again in 2006. Do you know why? It seems Bush reversed the Clinton rule (among other Bush policies)

"In 2004, the 2000 rules were dropped and high‐risk loans were again counted toward affordable housing goals."
http://www.prmia.org/pdf/Case_Studies/Fannie_Mae_and_Freddie_Mac_090911_v2.pdf

FL, that's an example where "regulations evaporated". Again notice how I backed up my point. that makes it not "empty factless rhetoric" like your post.

Fearandloathing said:

In the Clinton era, the regulations were evaporated.

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FL, I really like that phrase "regulations evaporated". You really have a gift. Speaking of which, here's another example where "regulations evaporated". Bush PREEMPTED ALL STATE LAWS AGAINST PREDATORY LENDING.

“By early 2004, these concerns prompted Georgia and more than 30 other states to pass laws designed to eliminate abusive or predatory lending practices by the financial services firms, including those with federal charters, operating within their boundaries.
Acting on a request from a national bank, the OCC in 2003 concluded that federal law preempts the provisions of the Georgia Fair Lending Act (GFLA) that would otherwise affect national banks’ real estate lending.

http://www.occ.gov/publications/publications-by-type/economics-working-papers/2008-2000/wp2004-4.pdf

Why in the world would Bush make 30 state laws against predatory lending "evaporate"? Oh, to increase subprime lending.

"In addition, clarification of the applicability of state laws to national banks should remove disincentives to subprime lending and increase the supply of credit to subprime borrowers.”

Again, see how I can post facts unlike you and Fenton (but you do have a gift). Anyhoo, that perfectly explains why subprime mortgages that were only 9 % in 2001 and only 10% in 2003 shot up to 32% in 2005 and then 40% in 2006. And remember the graph? not only was the percentage of subprime mortgages shooting up but their was quality was declining (DRAMATICALLY so). Remember, Bush told you his bubble was "triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”

The ongoing attempt to lay all things at the feet of George Bush has gotten contemptibly sick

Click to expand...

"Contemptibly sick"? that's what I would call all the right wing lies about Benghazi, Obamacare and well everything that's happened the last 6 years but I digress. So the Bush Mortgage Bubble started late 2004. You cant dispute that (its why fenton whines about me posting Bush's President's Working Group on Financial Markets). Bush's policies and the fact that the regulators who work for Bush not only didn't stop the bubble they encouraged it. Its why the Bush Mortgage Bubble started late 2004. Bush's policies. Bush's regulation.

So FL, you and all the conservative simply cannot address the actual and relevant facts so flail away. Its all you can do.

Fenton said:

You're so obsessed with Bushy you can't even stay on topic

The TOPIC of this thread is how Clintons CRA changes forced banks to Lower their lending standards
.

Click to expand...

Fenton, the topic of the thread is how you think the CRA caused the Bush Mortgage Bubble. I'm simply proving again that the CRA didn't cause the Bush Mortgage Bubble. You simply cant address the facts so you just whine at them. Speaking of your whining, are you ever going to even attempt to explain how Bush's President's Working Group on Financial Markets is "irrelevent" or "out of context" or "ridiculous"?

Vern said:

Fenton, the topic of the thread is how you think the CRA caused the Bush Mortgage Bubble. I'm simply proving again that the CRA didn't cause the Bush Mortgage Bubble. You simply cant address the facts so you just whine at them. Speaking of your whining, are you ever going to even attempt to explain how Bush's President's Working Group on Financial Markets is "irrelevent" or "out of context" or "ridiculous"?

Click to expand...

Robert Rubin disagrees with your obsessive Bush blame..

" Public disclosure of CRA ratings, together with the changes made by the regulators under your leadership, have significantly contributed to ... financial institutions ... meeting the needs of low- and moderate-income communities and minorities," Rubin gushed. "Since 1993, the number of home mortgage loans to African Americans increased by 58%, to Hispanics by 62% and to low- and moderate-income borrowers by 38%, well above the overall market increase.

Go argue with your Home Made Bush doll. The facts are the facts and they've never supported your ridiculous opinions.

Fenton said:

Robert Rubin disagrees with your obsessive Bush blame..

" Public disclosure of CRA ratings, together with the changes made by the regulators under your leadership, have significantly contributed to ... financial institutions ... meeting the needs of low- and moderate-income communities and minorities," Rubin gushed. "Since 1993, the number of home mortgage loans to African Americans increased by 58%, to Hispanics by 62% and to low- and moderate-income borrowers by 38%, well above the overall market increase.

Go argue with your Home Made Bush doll. The facts are the facts and they've never supported your ridiculous opinions.

Click to expand...

OH NO! public disclosure of CRA ratings. Oh the tragedy Fenton. Yes, Clinton's policies were successful in increasing lending to low income buyers. But what does that have to do with the Bush Mortgage Bubble that started in late 2004 when banks "DRAMATICALLY lowered their lending standards"? You just don't seem to be offering an explanation other than "LOOK something something Clinton". So not only do you have to ignore that the Bush Mortgage Bubble started late 2004 and you have to ignore that Bush's regulators were in charge of the CRA ratings. If you want to pretend the CRA caused the Bush Mortgage Bubble then blame Bush. He was in charge of the CRA ratings. Pretend and ignore, that's all you can do. Let the Fed explain it

"Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "

http://www.federalreserve.gov/newsevents/speech/20081203_analysis.pdf

Why do all the experts say the Bush Mortgage Bubble started in 2004? Suprime loans shot up 300% from 2003 to 2006. No Doc loans shot up 1000% from 2004 to 2006. Wow, 50% of all loans in 2006 were No Doc loans. Can you put into words how the CRA "lay in the weeds" until 2004. What else happened in 2004? Oh yea, Bush PREEMPTED ALL STATE LAWS AGAINST PREDATORY LENDING (to name one of his toxic housing policies). Now why did Bush PREEMPT ALL STATE LAWS AGAINST PREDATORY LENDING? oh yea, to increase subprime lending. Wow, another successful Bush policy.

So not only do you post "LOOK! something something Clinton" you also have to post "DONT LOOK at the facts". Sorry fenton all the whining in the world doesn't change the facts.

Vern said:

OH NO! public disclosure of CRA ratings. Oh the tragedy Fenton. Yes, Clinton's policies were successful in increasing lending to low income buyers. But what does that have to do with the Bush Mortgage Bubble that started in late 2004 when banks "DRAMATICALLY lowered their lending standards"? You just don't seem to be offering an explanation other than "LOOK something something Clinton". So not only do you have to ignore that the Bush Mortgage Bubble started late 2004 and you have to ignore that Bush's regulators were in charge of the CRA ratings. If you want to pretend the CRA caused the Bush Mortgage Bubble then blame Bush. He was in charge of the CRA ratings. Pretend and ignore, that's all you can do. Let the Fed explain it

"Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "

http://www.federalreserve.gov/newsevents/speech/20081203_analysis.pdf

Why do all the experts say the Bush Mortgage Bubble started in 2004? Suprime loans shot up 300% from 2003 to 2006. No Doc loans shot up 1000% from 2004 to 2006. Wow, 50% of all loans in 2006 were No Doc loans. Can you put into words how the CRA "lay in the weeds" until 2004. What else happened in 2004? Oh yea, Bush PREEMPTED ALL STATE LAWS AGAINST PREDATORY LENDING (to name one of his toxic housing policies). Now why did Bush PREEMPT ALL STATE LAWS AGAINST PREDATORY LENDING? oh yea, to increase subprime lending. Wow, another successful Bush policy.

So not only do you post "LOOK! something something Clinton" you also have to post "DONT LOOK at the facts". Sorry fenton all the whining in the world doesn't change the facts.

Click to expand...

LOL !!!

Only YOU Vern could think that giving massive amounts of Mortgages to LOW INCOME individuals was a " successful policy ". I mean you DID just admit Clinton's regulations increased the number of loans made to Low income lenders.

VERN, how does someone with a Low Income qualify for a mortgage ?? When I applied for my first Mortgage there were Income ( and Credit ) requirements and NO, a Low Income would mean that you were NOT going to be approved.

So now you finally agree, after all this time that Clinton Lowered lending standards. Your'e actually starting to listen to Historical evidence and not the voices in your head telling Bush is hiding around the corner.

And Sub-prime lending got its start far before 2004 VERN.

From 1998...............

" Freddie Mac is diving into subprime lending, ending months of speculation over how deeply the agency would go into the burgeoning market.

BUR·GEON
Verb :

begin to grow or increase rapidly; flourish.
"manufacturers are keen to cash in on the burgeoning demand"
synonyms: flourish, thrive, prosper, improve, develop; More
put forth young shoots; bud.


Freddie Mac and its rival, Fannie Mae, outlined their approaches to lending to tarnished borrowers at the Mortgage Bankers Association's annual meeting Tuesday in New York. Their participation could accelerate growth in a sector that has become a new frontier for many lenders and, ultimately, could bring rates down for borrowers.

Chairman Leland C. Brendsel said Freddie will begin buying lower-quality loans over the coming year and proceed further down the credit spectrum in 1999. "We will buy all the loans we can that meet our parameters and can be priced profitably."

Freddie Mac will deal with mainstream lenders as well as companies that have traditionally offered subprime products, he said. "

Freddie Mac Jumps into Subprime Mortgages - American Banker 175th Year Flashback Article - American Banker 175th Year Flashback

Fenton said:

LOL !!!

Only YOU Vern could think that giving massive amounts of Mortgages to LOW INCOME individuals was a " successful policy ". I mean you DID just admit Clinton's regulations increased the number of loans made to Low income lenders.

Click to expand...

Oh that's right, I forgot, you have the special definition of "low income = subprime". And of course you have "subprime = toxic". They just weren't toxic until Bush's policies and regulation let them stop checking the borrower's ability to repay the loan. Its why the Bush Mortgage Bubble started late 2004 when banks "DRAMATICALLY lowered their lending standards". You just cant whine away the facts.

VERN, how does someone with a Low Income qualify for a mortgage ??

Click to expand...

They apply that's how. They weren't buying houses on the beach fenton.

So now you finally agree, after all this time that Clinton Lowered lending standards. Your'e actually starting to listen to Historical evidence and not the voices in your head telling Bush is hiding around the corner.

Click to expand...

poor fenton, if Clinton lowered lending standards why did the Bush Mortgage Bubble start late 2004 when banks "DRAMATICALLY lowered their lending standards"? Fenton, if you want to blame the CRA then you have to blame Bush. again you just cant whine away the facts.

Fenton said:

[...] The TOPIC of this thread is how Clintons CRA changes forced banks to Lower their lending standards [...]

Click to expand...

Okay. From your NYT link in your OP:

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers.

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Historians are pretty clear that the collapse occurred as a result of the derivative market gone wild. I think you can blame most of that on the banksters (not that the gov't shouldn't have been watching closer, but I suspect the banksters are much more skilled than the regulators, plus they have the advantage of being able to influence the regulators via lobbying).

[...] However, the Financial Crisis Inquiry Commission (FCIC) concluded that Fannie & Freddie "were not a primary cause" of the crisis and that CRA was not a factor in the crisis.[25] Further, since housing bubbles appeared in multiple countries in Europe as well, the FCIC Republican minority dissenting report also concluded that U.S. housing policies were not a robust explanation for a wider global housing bubble.[25]

Author Michael Lewis wrote that a type of derivative called a credit default swap (CDS) enabled speculators to stack bets on the same mortgage securities. This is analogous to allowing many persons to buy insurance on the same house. Speculators that bought CDS protection were betting that significant mortgage security defaults would occur, while the sellers (such as AIG) bet they would not. An unlimited amount could be wagered on the same housing-related securities, provided buyers and sellers of the CDS could be found.[63] When massive defaults occurred on underlying mortgage securities, companies like AIG that were selling CDS were unable to perform their side of the obligation and defaulted; U.S. taxpayers paid over $100 billion to global financial institutions to honor AIG obligations, generating considerable outrage.[64]

Derivatives such as CDS were unregulated or barely regulated. Several sources have noted the failure of the US government to supervise or even require transparency of the financial instruments known as derivatives.[65][66][67] A 2008 investigative article in the Washington Post found that leading government officials at the time (Federal Reserve Board Chairman Alan Greenspan, Treasury Secretary Robert Rubin, and SEC Chairman Arthur Levitt) vehemently opposed any regulation of derivatives. In 1998 Brooksley E. Born, head of the Commodity Futures Trading Commission, put forth a policy paper asking for feedback from regulators, lobbyists, legislators on the question of whether derivatives should be reported, sold through a central facility, or whether capital requirements should be required of their buyers. Greenspan, Rubin, and Levitt pressured her to withdraw the paper and Greenspan persuaded Congress to pass a resolution preventing CFTC from regulating derivatives for another six months — when Born's term of office would expire.[66] Ultimately, it was the collapse of a specific kind of derivative, the mortgage-backed security, that triggered the economic crisis of 2008.[67]

Great Recession - Wikipedia, the free encyclopedia

Click to expand...

Karl said:

Historians are pretty clear that the collapse occurred as a result of the derivative market gone wild.

Click to expand...

Not really. Derivatives added to the Financial Crisis but were not the cause of the problem. Toxic mortgages caused it.

Bush’s Working Group on Financial Markets October 2008

"The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007."

http://www.treasury.gov/resource-center/fin-mkts/Documents/q4progress update.pdf

Derivatives are a bilateral transaction. It's essentially a bet between two parties. Does the massive influx of betting on the superbowl affect the game or the NFL? No. the collapse of the MBS markets caused the credit crunch in early 2007. the recession started late 2007. When it came time for people to collect their "bets", institutions like AIG made too many bad bets. This only made the credit crunch worse. We bailed out AIG so they could pay off their "bets."

The Bush Recession became the Great Bush Recession when Paulson let Lehman fail. It caused a panic. The Financial Commission tries to claim the panic was caused by Lehman and "impending collapse" of AIG. from the Financial Commission.

"The crisis reached seismic proportions in September with the failure of Lehman Brothers and the impending collapse of the insurance giant American International Group (AIG). Panic fanned by a lack of transparency of the balance sheets of major financial institutions, coupled with a tangle of interconnections among institutions perceived to be “too big to fail,” caused the credit markets to seize up. "

the problem was the panic already started with Lehman and the credit market was already "seizing" if not "seized" before that. Its hard to stop a panic once it starts. Its why we couldn't bailout AIG fast enough. Bear Stearns had already failed and been bailed out as well as Freddie and Fannie. So "collapses" were not spooking the market let alone "impending collapses." Not bailing out Lehman started the panic.

"Lehman's collapse was a seminal event that greatly intensified the 2008 crisis and contributed to the erosion of close to $10 trillion in market capitalization from global equity markets in October 2008, the biggest monthly decline on record at the time"

Case Study: The Collapse of Lehman Brothers

Fenton said:

No, " flailing " VERN is your assertions that it ALL started in 2004.

I mean did you not READ the thread VERN ??

Its about Clintons CRA changes that allowed PUBLIC DISCLOSURE of Banks CRA scores.

Its a actual memo from his Treasury Secretary to Clinton bragging about the effectiveness of Clintons 1995 CRA changes.

You want to know how Clinton forced banks to lower their standards ?

He unleashed 10 Federal Agencies on them including the DOJ who promptly sued any banks who did not comply with his " fair lending initiative "

Janet Reno bragged about the effectiveness of the 1995 CRA changes in 1998.

In just 3 years she successfully sued 13 banks and vowed to sue more

I guess we get to look forward to you spamming this thread with the same irrelevant President Working Group quote over and over and over.

Click to expand...

Your fallacy is that financial institutions were encouraged and enabled by the government. Yet, there was no law forcing banks to do something they didn't want to do. Believing such requires a belief that banks have no power, even though they employ an army of lobbyists and lawyers.

The government didn't force banks and mortgage companies to place ads in newspapers and TV saying: "no job, no credit, no problem." The gov't didn't force brokers to create no income verification loans. Those companies did it because they were making lots of money doing it. Why? Because they took no risk because they sold those loans at a profit the minute the ink was dry.

I know tht the right-wing narrative is that the whole problem was that Democrats wanted black people to own homes but that was not the cause of this problem.

Some background: we used to have a workable system for avoiding financial crises, resting on a combination of government guarantees and regulation. On one side, bank deposits were insured, preventing a recurrence of the immense bank runs that were a central cause of the Great Depression. On the other side, banks were tightly regulated, so that they didn’t take advantage of government guarantees by running excessive risks.

From 1980 or so onward, however, that system gradually broke down, partly because of bank deregulation, but mainly because of the rise of “shadow banking”: institutions and practices — like financing long-term investments with overnight borrowing — that recreated the risks of old-fashioned banking but weren’t covered either by guarantees or by regulation. The result, by 2007, was a financial system as vulnerable to severe crisis as the system of 1930. And the crisis came.

Vern said:

Not really. Derivatives added to the Financial Crisis but were not the cause of the problem. Toxic mortgages caused it. [...]

Click to expand...

My position is that if the derivative markets had been properly regulated (fractionally) instead of leveraged to insane proportions then the mortgage bubble would have been of lesser dimensions and therefore more manageable when it burst. In other words, it seems that the derivatives fueled the bubble... and the inability to pay off on the derivatives when the bubble burst caused the financial institutions to founder and fail, which led to the stock market crash.

Keep in mind that the real estate bubble was a global event, and the financial institutions involved in the derivative market were operating on a global basis (some claim they exacerbated the recent/current mess in Greece -- Wall St. Helped to Mask Debt Fueling Europe’s Crisis).

At the end of the day, it's banksters behaving badly... a familiar story.

Karl said:

My position is that if the derivative markets had been properly regulated (fractionally) instead of leveraged to insane proportions then the mortgage bubble would have been of lesser dimensions and therefore more manageable when it burst.

Click to expand...

Its seems to me that you're mixing two different things. The leverage was used to buy assets. And the spike in leverage was 2004 when Bush relaxed the net capital rule. That increased demand for mortgage backed securities. The effects of that can be clearly seen in the graph of private label vs GSE purchases of MBS’s.


I’m just not seeing the connection between derivatives deregulation in 1999 and lower lending standards in late 2004 when banks literally stopped checking the borrower’s ability to repay the loan. I do see a connection between Bush’s policies and regulation. And relaxing capital requirements was one of those policies. It increased demand for MBS's. Its affect was indirect where preempting all state laws against predatory lending was a direct affect.

Karl said:

Okay. From your NYT link in your OP:



Historians are pretty clear that the collapse occurred as a result of the derivative market gone wild. I think you can blame most of that on the banksters (not that the gov't shouldn't have been watching closer, but I suspect the banksters are much more skilled than the regulators, plus they have the advantage of being able to influence the regulators via lobbying).

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" Historians " ???? Bankers ?

LOL !!

You have no idea what's your'e talking about.

The GSE's actively pursued lenders as far back as 1997, including Country Wide. In the late 1990's Country Wide created a Mortgage product that was made exclusively for Fannie May and by 2004, Country Wide was Fannie Mae's top provider for their worthless loans.

Fannie Mae even bragged about it

" Countrywide tends to follow the most flexible underwriting criteria permitted under GSE and FHA guidelines. Because Fannie Mae and Freddie Mac tend to give their best lenders access to the most flexible underwriting criteria, Countrywide benefits from its status as one of the largest originators of mortgage loans and one of the largest participants in the GSE programs. …

When necessary—in cases where applicants have no established credit history, for example—Countrywide uses nontraditional credit, a practice now accepted by the GSEs "

In 1998, Freddie Mac issued the first publicly available securitization of CRA loans, issuing $384.6 million of such securities.

As for privately created Securities backed by Sub-prime loans, Fannie and Freddie were the primary consumers of those worthless securities as they bought, bundled and securitized MBSs that were distributed throughout Capital Markets all over the world.

In 2008, Fannie and Freddie were declared insolvent holding over 5 Trillion in loans and sub-prime securities.

MTAtech said:

Your fallacy is that financial institutions were encouraged and enabled by the government. Yet, there was no law forcing banks to do something they didn't want to do. Believing such requires a belief that banks have no power, even though they employ an army of lobbyists and lawyers.

The government didn't force banks and mortgage companies to place ads in newspapers and TV saying: "no job, no credit, no problem." The gov't didn't force brokers to create no income verification loans. Those companies did it because they were making lots of money doing it. Why? Because they took no risk because they sold those loans at a profit the minute the ink was dry.

I know tht the right-wing narrative is that the whole problem was that Democrats wanted black people to own homes but that was not the cause of this problem.

Some background: we used to have a workable system for avoiding financial crises, resting on a combination of government guarantees and regulation. On one side, bank deposits were insured, preventing a recurrence of the immense bank runs that were a central cause of the Great Depression. On the other side, banks were tightly regulated, so that they didn’t take advantage of government guarantees by running excessive risks.

From 1980 or so onward, however, that system gradually broke down, partly because of bank deregulation, but mainly because of the rise of “shadow banking”: institutions and practices — like financing long-term investments with overnight borrowing — that recreated the risks of old-fashioned banking but weren’t covered either by guarantees or by regulation. The result, by 2007, was a financial system as vulnerable to severe crisis as the system of 1930. And the crisis came.

Click to expand...

Wrong....

From a Janet Reno Speech in 1998...


" It has been my experience in these five years in office that most bankers want to be good and responsible corporate citizens, or they're willing to be if they're nudged in the right direction by vocal, knowledgeable, constructive groups such as the NCRC members and by Justice Department lawyers who care and want to do the right thing.

I have found, and I think and I hope that you have found, that lenders have listened and learned. Bank commitments, as we have noted, have increased within the last four years. The figures are staggering: an 86 percent increase of all bank commitments under the Act since it went into effect more than 20 years ago.

The new Community Reinvestment Act regulations enable lenders to develop customized strategic plans for meeting their obligations under the Act, and many have been developed in partnership with your local organizations. In this way you are not only helping to rebuild your communities, but you are showing bankers how to be responsible corporate citizens. In short, you can't do it just with capital, you can't do it just with people who care; we can do it together.

We want to see equal credit being offered by banks because it is the right thing to do, because the law requires it, because it is good business, because people accept it.

You've noted that since the inception of our fair lending initiative in 1992 the Department has filed and settled 13 major fair lending lawsuits. We are going to continue these efforts under the Acting Assistant Attorney General Bill Lann Lee in every way that we possibly can. We will continue to focus on discrimination in underwriting, the process of evaluating the qualifications of credit applicants. This was the issue in our suits against Shawmut in Boston, Northern Trust Company in Chicago, and First National Bank of Donna Anna in New Mexico. "

Did the Democrat shakedown work ??

Yep, Sub-prime increased 10 fold under Clinton...
http://www.huduser.org/publications/pdf/brd/12Bunce.pdf
" From 1993 to 1998, the number of subprime refinance loans reported under the Home Mortgage Disclosure
Act (HMDA) increased tenfold, from 80,000 subprime refinance loans in 1993 to
790,000 in 1998."

And the Fannie and Freddie got into thew burgeoning Sub-Prime market...

Freddie Mac Jumps into Subprime Mortgages - American Banker 175th Year Flashback Article - American Banker 175th Year Flashback

" Freddie Mac is diving into subprime lending, ending months of speculation over how deeply the agency would go into the burgeoning market.

Freddie Mac and its rival, Fannie Mae, outlined their approaches to lending to tarnished borrowers at the Mortgage Bankers Association's annual meeting Tuesday in New York. Their participation could accelerate growth in a sector that has become a new frontier for many lenders and, ultimately, could bring rates down for borrowers.

Chairman Leland C. Brendsel said Freddie will begin buying lower-quality loans over the coming year and proceed further down the credit spectrum in 1999. "We will buy all the loans we can that meet our parameters and can be priced profitably."

Freddie Mac will deal with mainstream lenders as well as companies that have traditionally offered subprime products, he said."

Vern said:

Oh that's right, I forgot, you have the special definition of "low income = subprime". And of course you have "subprime = toxic". They just weren't toxic until Bush's policies and regulation let them stop checking the borrower's ability to repay the loan. Its why the Bush Mortgage Bubble started late 2004 when banks "DRAMATICALLY lowered their lending standards". You just cant whine away the facts.



They apply that's how. They weren't buying houses on the beach fenton.





poor fenton, if Clinton lowered lending standards why did the Bush Mortgage Bubble start late 2004 when banks "DRAMATICALLY lowered their lending standards"? Fenton, if you want to blame the CRA then you have to blame Bush. again you just cant whine away the facts.

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Oh thats right, your half assed "research " is based around your Bush obsession, and not the truth.

Its why when I challenge you to quantify your ridiculous assertions you just wind up repeating yourself by quoting the same innane sentence over and over and over.

When your argument is countered with REAL data you whine about it being wordy.

No one believes Subprime actually started in 2004 VERN.

In fact the 2011 SEC investigation into the Democrat defended Fannie and Freddie show Subprime lending increased 10 fold under Clinton.

But that report has more than one sentence in it so there's no chance you'll ever read ut

Fenton said:

[...] In 1998, Freddie Mac issued the first publicly available securitization of CRA loans, issuing $384.6 million of such securities. [...]

Click to expand...

Your claim that the CRA was responsible for the Great Recession has been long debunked. Rant at will, no one outside the right wing echo chamber is listening :roll:

Karl said:

Your claim that the CRA was responsible for the Great Recession has been long debunked. Rant at will, no one outside the right wing echo chamber is listening :roll:

Click to expand...

LOL !

By who ??? Not you, that's for sure. How can you " debunk " something by ignoring it ? You just ignored Janet Renos' own words where she brags openly about the success of the 1995 CRA regulations.

I'm still waiting for someone to " debunk " anything I've posted on this issue. No one has and whats even funnier, the people that have tired do it by ignoring EVERYTHING that happened prior to 2004.

Maybe you just don't understand the 1995 CRA Regulatory changes.

First, the NBER did their own research and came to this conclusion...
Did the Community Reinvestment Act (CRA) Lead to Risky Lending?

" Yes, it did. We use exogenous variation in banks’ incentives to conform to the standards of the Community Reinvestment Act (CRA) around regulatory exam dates to trace out the effect of the CRA on lending activity. Our empirical strategy compares lending behavior of banks undergoing CRA exams within a given census tract in a given month to the behavior of banks operating in the same census tract-month that do not face these exams. We find that adherence to the act led to riskier lending by banks: in the six quarters surrounding the CRA exams lending is elevated on average by about 5 percent every quarter and loans in these quarters default by about 15 percent more often. These patterns are accentuated in CRA-eligible census tracts and are concentrated among large banks. The effects are strongest during the time period when the market for private securitization was booming."


A Conclusion that's was supported by Bill Clinton's own Treasury Secretary. Maybe you should read the first post in this thread a little more carefully. Bill Clintons' Treasury Secretary sends a Memo to Clinton actually congratulating him for the effectiveness of his CRA changes.

Your selective outrage at a part of the process and not the cause of the Bubble doesn't negate the evidence that it was Government policies that not only mandated the creation of Sub-prime loans but that Fed allowed the crisis to reach systemic proportions.

It was Government Policies ( and corrupt Democrats ) that co-opted the GSE's into the Sub-Prime Market by raising their quota of Sub-prime loan purchases. First to 30 %, then to 40 % in 1995, then to 50 % in 2000.

And it was Clinton who from 1993-1998, appointed his Democrat buddies to their executive and chair positions.

From 2000-2004, while Bush was pushing for a Third party Regulator, Fannie and Freddie participated in unprecedented Securities fraud and bought Trillions in CRA and Sub-prime loans and securities.

Testimony: Accounting Irregularities at Fannie Mae (Chairman Christopher Cox, June 16, 2006)

What did the Democrats do in Committee ? They did what they always do. Thy lied their asses off.


By mid-2008 Fannie and Freddie (the "GSEs") had a combined $5.4 trillion in securities outstanding, all of which were backed by the GSEs' full faith and credit. These securities financed 45% of all the residential mortgage debt in the U.S. GSE securities were viewed as having the implicit guaranty of the U.S government and were aggressively marketed to investors worldwide.

The 2011 SEC investigation into Fannie and Freddie's unprecedented corruption exposed over a Trillion dollars in Sub-prime debt they never reported.

Fannie and Freddie were also the primary consumers of Securities backed by Sub-prime loans right up until they were declared insolvent in 2008.

Fenton said:

Karl said:

Your claim that the CRA was responsible for the Great Recession has been long debunked. Rant at will, no one outside the right wing echo chamber is listening :roll:

Click to expand...

LOL ! By who ??? Not you, that's for sure. How can you " debunk " something by ignoring it ? You just ignored Janet Renos' own words where she brags openly about the success of the 1995 CRA regulations.

I'm still waiting for someone to " debunk " anything I've posted on this issue. [...]

Click to expand...

It has been debunked by several investigations and reports on the issue, which I'm sure have been aired here many times before. Republicans on investigative committees have admitted as such (earlier posted). It can be seen to some extent by your change in tactic from saying the CRA caused the crash to saying it led to "risky lending" (I'm certain it did, to some extent).

However, it is quite clear that the right wing echo chamber has created an alternate reality on this (and many other) issues and there is no need to waste everyone's time pointing out things that the right quite simply refuses to hear but instead continues to rant. The CRA as the cause of the Great Recession already been argued. Your side lost, whether you know it or will admit it or not. Have a nice day :2wave: