What was unregulated were private brokers per se. Subprime credit markets and everything happening within them were put under the regulatory control of the Fed pursuant to legisaltion passed by Congress in 1994.
Could well be in many cases. Interesting perhaps to look on a state level at increases in annual student debt burden as against state budget cuts for higher education over the same time periods. In state after state, there is a close match. Blowback from more unwise right-wing tax-and-spending cuts parsimony. Put the burden on our college grads instead and see what happens. Another great right-wing plan...
Yes, that's correct. A lot of storefront operations with kids sitting there trying to falsify the numbers just enough to get them through Desktop Underwriter without being flagged for review by an actual person. If they couldn't manage it, sell the stuff off to Wall Street.
That would only be an argument is democrats vored against Republican reforms. They didn't.
So instead of just stating there was bills that would deal with the crisis, can you name them.
You are wrong here. First, tax cuts for the rich is not the cause of low interest rates. Low interest rates happen before the tax cuts. Also, the tax cuts were not just for the rich. It was a tax cut for everyone, and democrats agreed with the tax cuts, but not towards the rich.
Not directly yes, but indirectly they are. They are the ones who provide funding for lenders by buying mortages, hence they are the ones who set the standards. And then they repackage them and sell them to the investors.
Well, then you supported the policies that lead to the crisis.
Do you know what subprimie mortages is? Subprime mortages are mortages from people who do not qualify. Subprime lending - Wikipedia, the free encyclopedia
The interest was cut before the tax cuts, so the cut in interest rates can not be because the tax cuts failed. In fact the interest cuts happen because of a potential recession in 2001. The tax cuts were also done to prevent the recession. Economic activity did go up due to the stimulus, because without them there would have been a mild recession.
I never said nationalize. The government certainly shouldn't have full control of the banks. However, there should be regulations of banks, and there should be national lending standards.
Problem is your argument for this being a republican enterprise is that the tax cuts led to cut in interest rates, but the tax cuts happened after the cuts in the interest rates. People would get their rebate check by December 2001. By then the interest rate was already dropped from 6% to 2%.
All Bush ever tried to do was run the GSE's out of business. The inclusion here of the equally inadept McCain suggests that specific reference is intended to the the infamous S.190, an abject lesson in how easily the disinformation media dupes the pliant. S.190 was designed to cut the GSE's off at the knees by establishing draconian limits on their internal portfolios, thus choking off the volume of business they could engage in. In July 2005, the bill passed out of committee on a party-line vote, mostly as a courtesy to the White Hosue. Everyone in the room knew it was going to the floor to die. Everyone knew a GSE reform bill was needed. Everyone knew this was not going to be it. At the same time, a GSE reform bill did pass in the House by a margin of 330-91. It dealt with safety-and-soundness issues, strengthened the regulator, and upgraded capitalization. The Bush administration shot it down because it didn't do anything to drive the GSE's out of business.
This is a graph of secondary mortgage market share -- the percent of all securitizations being done by those who did them. It is probably the single most telling graph about the history of the credit crisis. The red line is the private-label Wall Street securitizers. Large percentages of that red line are subprime loans with increasing numbers of those written at poor and deteriorating underwriting standards. This is where the junk went when the GSE's wouldn't take it. That private-label bulge and takeaway from the GSE's is why the credit crisis happened.
That was in 2003, and when pointedly asked about that very thing during testimony related to the Bush administration's 2003 attempt to gut the GSE's by putting yet another czar on top of them, Treasury Secretary Snow was just as pointed in agreeing that no, the administration did not believe that any crisis existed within the housing finance industry.. Far from it, he said.
Yes, that would have made him a member of the minority party. The one with no power to do anything on its own. Congressman Frank again...
You are totally befogged. Barney Frank did not set any lending standards at all, and it was the STRONG limits posed by GSE underwriting minimums that forced all that garbage business to go off to Wall Street instead. Villains such as Countrywide's Angelo Mozilo were constantly bashing the GSE's, demanding that they weaken their standards and theatening to take their sizable chunk of prime business off to Wall Street as well if the GSE's didn't comply. They didn't comply.
You have made yourself look very foolish here indeed. Monetary policy is under the direction of the Fed. Principally the genius Alan Greenspan during the relevant time periods. It is quite safe to say that Barney Frank had no influence at all with Alan Greenspan. It was Greenspan who pledged in 2002 to keep interest rates at 1% until economic activity picked up. It was Greenspan who spoke out against the 2005 GSE reform bill passed in the House, saying that it was worse than no bill at all. It was Greenspan who consistently refused to use the oversight and regulatory powers that Congress (and Barney Frank, actually) had given the Fed with regard to subprime credit markets in 1994, even after it was pointed out that abuse of subprime markets was reportedly rampant and that substantial downstream risks were posed by such abuse.
Sloppy attempts at personal insult noted. But the bigger headline seems to be that even when called out multiple times by multiple posters for the total hollowness of your posts, you have no intention of backing up your slanders with anything at all. Have I got that about right?
What? How is anyone supposed to divine whatever it is you were trying to say?
Why aren't you aware of them already? Is it because you were not actually paying any attention at the time and have gotten all your news from the disinformation media? It's a little late now, of course, but go check out H.R. 1461 of the 109th Congress, the Federal Housing Finance Reform Act of 2005.
LOL! The federal funds rate target was at 6% at the start of 2001, but it had to be lowered to 3.75% by June on account of the Lesser Bush Recession. Tax Cuts for the Rich were also passed in June 2001, with various provisions being retroactive. Post-9/11, the target rate was lowered to 1.75%, but it was the cuts to 1.25% in late 2002 and then to 1.00% in mid-2003 that I was talking more about.
What I said was "That would only be an argument if democrats voted against Republican reforms. They didn't."
Maybe because I don't read your mind trying to figure which law you will use to your defence.
Oh... right. So you think the cuts from 1.75 to 1% was the cause of the inflated property market, and not the cuts from 6% to 1.75%?!
So you retract now your silly claim that Fannie and Freddy were certainly lending to people who were subprime, and now recognize that Fannie and Freddie don't actually lend to anybody at all. Good.
Selling off part of a mortgage portfolio is one among many ways in which lending institutions obtain funds to lend. They do the same thing with credit card and auto loan debt that they might hold for instance. Then there is the entirely separate market for commercial real estate. The list goes on, but no matter how they raise the funds, it is still the banks that do the lending.
Yes, unlike Wall Street, the GSE's set minimum underwriting standards for the loans they will agree to purchase. They always have done that and still do.
That's rich. Pointing out that loan standards TODAY are too tight has some affect on events in 2008 and earlier? I don't really think so.
Absolutely, but it is most definitely you that is confused. Subprime is simply everything that does not qualify as prime/conventional according to GSE-set standards. The finance companies (Household, Beneficial, etc) had been making tidy profits for decades serving these markets that traditional lenders through red-lining and other questionable practices had turned their backs on. But the finance companies made their money through payday-lender type terms of extortion. It's not like their customers had any place else to go. But they did have someplace else to go in the 1990's when Clinton made an acceptable CRA rating a condition for approval of new applications for acquisitions and interstate banking operations. CRA required that consistent with sound business practices, banks and S&L's taking federal deposit insurance had to make serious efforts to lend into the communities that they were taking deposits from. No more sucking all the savings out of urban low- and moderate income communities and using them all to build gated golf course communities in the upscale suburbs. They didn't have to make any actual loans at all. They merely had to make serious efforts to find qualified borrowers. Traditional lenders balked at first, but they were soon somewhat astonished as nearly half of the new borrowers they were able to unearth right next door were qualified at prime terms and nearly all the rest at Alt-A, the level down just a hair from prime. It is not hard to make a profit from lending to such populations, and with very few adjustments to terms for those in the Alt-A group, a substantial portfolio of CRA loans was soon built up that performed better than industry averages. Lending into these previously underserved or unserved markets turned out to be both good policy and good business.
It doesn't matter whether you use the word or not. When you want the federal government to take over and dictate work that banks do now, you are nationalizing them. Of course, nationalization of the banking system was one option back in 2009, and quite a number of people will still say that we missed the boat in not doing so. They point out that the recovery would have been easier, quicker, and more robust under such a scenario, and it is very hard to argue with that premise. The kicker however is that it is very hard to re-privatize a banking system once you have nationalized it. That was the biggest sticking point, and it was a very valid one indeed.
This amounts to already debunked babbling. The credit crisis was a child of the years 2002 to 2006. Democrats were in charge of nothing over that interval. It was all Bush and the neocons (all now reconstructed as lifelong "libertarians" it seems) who were responsible for this mess, lock, stock, and barrel. Cowboy capitalism met blind, laissez-faire, free-marketeerism, and this is the result we got.
Merely fixing the typos doesn't resolve the problems. What Republican reforms do you think Democrats did not vote against?
The descriptions originally provided were more than specific enough for anyone familiar with any of the relevant history to have known which was being talked about. Those with no such familairity might well have been left in the dark of course.
LOL! It was a bipartisan bill, the product of cooperation between Barney Frank (D) and Mike Oxley (R). This bipartisan result was possible because there was no actual disagreement over the need for GSE reform and no signficant disagreement over the safety-and-soundness issues that were in need of attention. What brought about stalemate time after time was the Bush admisntration's insistence that any bill chop the GSE's down in size so that more and more of their mission could be privatized. Indeed, a safety-and-soundness bill had been voted out of committee in the Senate in 2003 and Bush killed that as well. All he wanted was to move market share to Wall Street. His every effort was put toward that end and he simply didn't care about the rest.
LOL! There were only 45 of them. Keep in mind that this was in the days prior to the Republican resort to wall-to-wall, 24/7 obstructionism. Simple majorities passed bills back in those days but the Republicans didn't have 50 votes in favor within their own 55-person caucus. This is why S.190 failed. H.R. 1461 was never taken up in the Senate because Bush gave it the old one-finger salute.
What? No one can tell what affects HR 1461 would have had because it never became law. Housing prices meanwhile peaked -- as they should have -- in the Spring of 2006 just as the long string of Fed interest rate increases reached its conclusion.
I'll try again. This is about market effects. The initial cuts to 3.75% were recessioin oriented. The cuts to 1.75% were then to ward off post-9/11 investor panic. Those were both short-term moves. The subsequent cuts in 2002 and 2003 coupled with Greenspan's pledge to keep interest rates at such low levels for however long it took economic activity to pick up were like lighting a fire under real estate prices. Long-term low interest rates force the price of all long-term assets up. Surely, you do understand that much, and also that these plainly stated intentions were plenty enough to send institutional investors off on a search for yield, which they happened to find within normally staid secondary mortgage markets.
All propaganda, all the time. The dot-com bubble is a myth. It's a cover-up buzzword designed to cloak and conceal such things as the billions worth of rigged IPO's that hit especially the NASDAQ as soon as GLB was passed and the investment people could arrange crooked deals to benefit their favored commercial customers. Then there was a series of Enron-style accounting scandals at major firms, some of whom happened to be involved in telecommunications. Then there was the lose-your-shirt madess of people becoming convinced that they could make a living as "day-traders" (most often also on the NASDAQ) with of course the 24/7 support and encouragement of burgeoning cable business channels. Sheep to the slaughter. Got anything else to add to this pretend event of yours? Maybe some paper market losses that had reversed themselves within a matter of months or something?
:lamo