• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

House, Senate leaders finalize details of sweeping financial overhaul

Goldenboy219 said:
What law forced banks to give loans to people that could not afford them? Have any evidence to back up such statements?
Click to expand...

Yeah, I'd love to know what law forced banks not covered by CRA regulations to give loans to people with no income.

Some legal and financial experts note that CRA regulated loans tend to be safe and profitable, and that subprime excesses came mainly from institutions not regulated by the CRA. In the February 2008 House hearing, law professor Michael S. Barr, a Treasury Department official under President Clinton,[67][113] stated that a Federal Reserve survey showed that affected institutions considered CRA loans profitable and not overly risky. He noted that approximately 50% of the subprime loans were made by independent mortgage companies that were not regulated by the CRA, and another 25% to 30% came from only partially CRA regulated bank subsidiaries and affiliates. Barr noted that institutions fully regulated by CRA made "perhaps one in four" sub-prime loans, and that "the worst and most widespread abuses occurred in the institutions with the least federal oversight"
Click to expand...

Community Reinvestment Act - Wikipedia, the free encyclopedia

http://financialservices.house.gov/hearing110/barr021308.pdf

Hmmm. That fact seems to get in the way of "BLAME DEMOCRATS" so let's just pretend it's not true. After all, honesty is not a trait valued here.
 
Goldenboy219 said:
What law forced banks to give loans to people that could not afford them? Have any evidence to back up such statements?
Click to expand...

Well... since you asked, here's a bit of a good idea of what went down, in case no one answered your question:

Until the Clinton years, CRA compliance wasn’t a difficult matter for banks, which could get an A for effort simply by advertising loan availability in certain newspapers. Then the Clinton Treasury Department changed matters in 1995, requiring banks that wanted “outstanding” CRA ratings to demonstrate statistically that they were lending in poor neighborhoods and to lower-income households. But this new era of strict enforcement came about in response to conditions that no longer existed. The bank deregulation of the 1980s—initiated not by Republicans, but by the Carter administration’s federal Depository Institutions Deregulation and Monetary Control Act—paved the way for sharp competition among mortgage lenders. “The CRA may not be needed in today’s financial environment to ensure all segments of our economy enjoy access to credit,” argued a 1999 Dallas Federal Reserve Bank paper called “Redlining or Red Herring?”

But banks, engaged in a frenzy of mergers and acquisitions, soon learned that outstanding CRA ratings were the coin of the realm for obtaining regulators’ permission for such deals. Further, nonprofit advocacy groups—including the now famous Acorn and the Neighborhood Assistance Corporation of America (NACA)—demanded, successfully, that banks seeking regulatory approvals commit large pools of mortgage money to them, effectively outsourcing the underwriting function to groups that viewed such loans as a matter of social justice rather than due diligence. “Our job is to push the envelope,” Bruce Marks, founder and head of NACA, told me when I visited his Boston office in 2000. He made clear that he would use his delegated lending authority to make loans to households with limited savings, significant debt, and poor credit histories. The sums at his group’s disposal were not trivial: when NationsBank merged with Bank of America, it committed $3 billion to NACA. The housing arm of Acorn received a $760 million commitment from the Bank of New York.

Sizable pools of capital came to be allocated in an entirely new way. Bank examiners began using federal home-loan data—broken down by neighborhood, income, and race—to rate banks on their CRA performance, standing traditional lending on its head. In sharp contrast to the old regulatory emphasis on safety and soundness, regulators now judged banks not on how their loans performed, but on how many loans they made and to whom. As one former vice president of Chicago’s Harris Bank once told me: “You just have to make sure you don’t turn anyone down. If anyone applies for a loan, it’s better for you just to give them the money. A high denial rate is what gets you in trouble.” It’s no surprise, then, that as early as 1999, the Federal Reserve Board found that only 29 percent of loans in bank lending programs established especially for CRA compliance purposes could be classified as profitable.
Click to expand...

And where do the GSE's play in?

Was there a high enough level of CRA-related lending to spark our current crisis? Not on its own, of course. The crucial link was the extension of CRA-type thinking and regulation to the secondary mortgage markets through the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which buy loans from banks in order to provide liquidity. Beginning in 1992, the Department of Housing and Urban Development pushed Fannie and Freddie to buy loans based on criteria other than creditworthiness. These “affordable housing goals and subgoals”—authorized, ironically, by the Federal Housing Enterprises Financial Safety and Soundness Act—became more demanding over time and, by 2005, required that Fannie and Freddie strive to buy 45 percent of all loans from those of low and moderate income, including 32 percent from people in central cities and other underserved areas and 22 percent from “very low income families or families living in low-income neighborhoods.” As one former Fannie Mae official puts it: “Both HUD and many advocates in the early 2000s were anxious for the GSEs to extend credit to borrowers with blemished credit in ways that were responsible.”
Click to expand...
The Financial Crisis and the CRA by Howard Husock, City Journal 30 October 2008


Was all of this "on the dems". No it wasn't. It was all on the GOV'T being used to promote political needs into the markets. Anyone that tells you differently is playing partisan hackery games.
 
I think i have a better idea of what "went down" than you ever will. Try and pay attention to the language we all agreed upon. No bank was forced to make loans to anyone they did not want to. At best, you can make a case that certain lenders were incentive. It does say volumes when we consider the focus of risk management.
 
Moderator's Warning:
Enough of the calling people ignorant and other such crap. Stick to the issue or there will be penalties.
 
Goldenboy219 said:
I think i have a better idea of what "went down" than you ever will. Try and pay attention to the language we all agreed upon. No bank was forced to make loans to anyone they did not want to. At best, you can make a case that certain lenders were incentive. It does say volumes when we consider the focus of risk management.
Click to expand...

But banks, engaged in a frenzy of mergers and acquisitions, soon learned that outstanding CRA ratings were the coin of the realm for obtaining regulators’ permission for such deals. Further, nonprofit advocacy groups—including the now famous Acorn and the Neighborhood Assistance Corporation of America (NACA)—demanded, successfully, that banks seeking regulatory approvals commit large pools of mortgage money to them, effectively outsourcing the underwriting function to groups that viewed such loans as a matter of social justice rather than due diligence. “Our job is to push the envelope,” Bruce Marks, founder and head of NACA, told me when I visited his Boston office in 2000. He made clear that he would use his delegated lending authority to make loans to households with limited savings, significant debt, and poor credit histories. The sums at his group’s disposal were not trivial: when NationsBank merged with Bank of America, it committed $3 billion to NACA. The housing arm of Acorn received a $760 million commitment from the Bank of New York.
Click to expand...

I'll leave you to ponder the bold part.
 
MrVicchio said:
I'll leave you to ponder the bold part.
Click to expand...

So there was no legislation that forced banks to make risky loans, only a consumer advocacy group or two making demands. Like i said before, fascinating.
 
Goldenboy219 said:
So there was no legislation that forced banks to make risky loans, only a consumer advocacy group or two making demands. Like i said before, fascinating.
Click to expand...

Look, you want to be "fascinated" by all means be so. I bet you won't admit that Janet Reno, AG at the time did this either?

Under the Clinton administration, federal regulators began using the act to combat “red-lining,” a practice by which banks loaned money to some communities but not to others, based on economic status. “No loan is exempt, no bank is immune,” warned then-Attorney General Janet Reno. “For those who thumb their nose at us, I promise vigorous enforcement.”

The Clinton-Reno threat of “vigorous enforcement” pushed banks to make the now infamous loans that many blame for the current meltdown, Richman said. “Banks, in order to not get in trouble with the regulators, had to make loans to people who shouldn’t have been getting mortgage loans.”

This threat combined with the government backing of Fannie and Freddie set the stage for the current uncertainty, because the “banks could just sell the loans off to Fannie or Freddie,” who could buy them with little regard for negative financial outcomes, Richman said.
Click to expand...
CNSNews.com - Financial Meltdown: Where Does the Buck Stop?

See for every "fascinating" moment you have, I reveal more of the story, the onion as it were, peels back each layer to show that in the end, Gov't demands forced behavior through rules, laws and regulations banks and lending institutions to act in a manner that was politically, not financially beneficial.
 
Dude, you have nothing. Nobody was forced to do anything, regardless of the stick rattling of Reno. Denying a particular community credit based on proper risk management models is not illegal, never was illegal, and was incentivized by specific government agencies to offer lower income communities credit. Hate to break it to you, but not every bank became infested with sub prime paper, and residential real estate is only a portion of a banks balance sheet (the majority is tied up in various commercial ventures).
 
Last edited:
Dittohead not! said:
Seriously? You must remember how the lack of regulation led to mortgage brokers giving out "creative" loans to people who could not pay them back, then selling the papers as good investments, don't you? Does the term "toxic assets" ring a bell? That is the sort of thing that happens when banks are allowed to gamble with other people's money. Government regulation should prohibit such practices.

I'm not sure that the government can be absolved of its involvment, or lack thereof. It was lack of oversight that led to the housing crash and the resulting recession, pure and simple.

I have no idea whether the financial reform that is being proposed is going to solve the problem or not, and you don't either. The particulars are not public as yet.
Click to expand...

obvious Child said:
Easy. No regulation on banks on verification to get a loan. Banks didn't have regulation over that aspect of their business. Banking regulation deals more with what type of assets they can/must have and what their ratios are.

And there was little regulation on derivatives. AIG had CDS that total liability easily exceeded its total assets and equity. There was no way they could ever pay even a fraction if those derivatives went bad.

And you can explain this with actual facts and not partisan propaganda in actual economics terms? Or are you just another person RightinNyc is describing as effectively ignorant?
Click to expand...
Click to expand...

Here is a very good explanation of how government policies contributed to the financial crisis.

http://mercatus.org/sites/default/files/publication/NotWhatTheyHadInMind(1).pdf

And here is a perfect illustration of why this crisis was caused primarily by something policy makers cannot control, that is, excessive household debt.

HouseholdDebtPercentGDPQ42009.jpg

ChangeMortgageDebtQ42009.jpg


Bad policy and the aggregation of individual stupidity was the cause of this crisis. The "invisible hand" worked as expected, it was merely distorted by the government "solutions" to previous financial disasters. Just my opinion, of course.

P.S. - Obvious Child, your posting style is unnecessarily abrasive. Please refrain from insinuating that I'm "effectively ignorant".
 
Goldenboy219 said:
I think i have a better idea of what "went down" than you ever will. Try and pay attention to the language we all agreed upon. No bank was forced to make loans to anyone they did not want to. At best, you can make a case that certain lenders were incentive. It does say volumes when we consider the focus of risk management.
Click to expand...

I've said it at least three times. The real problem was complete disregard by banks of conservative best banking practices.

I'm still waiting for someone to show how it was regulation forced AIG to issue CDS that it had no possibility of ever even paying a fraction if they came due.

But I won't get an honest answer from partisans here.
 
alms said:
Bad policy and the aggregation of individual stupidity was the cause of this crisis. The "invisible hand" worked as expected, it was merely distorted by the government "solutions" to previous financial disasters. Just my opinion, of course.
Click to expand...

I won't disagree that individual stupidity wasn't a cause, in fact the disregard of conservative banking practices by non-CRA mortgages companies contributed to the vast majority. Not to mention the utter stupidity of buying a mortgage backed security without examining the actual underlying assets and the rampant fraud by Moody's and S&P in rating what they absolutely knew to be Cs as As in a corrupt pay for rating system similar to Circa-Enron pay for unqualified audit opinions. There's a large amount of things that went wrong, but arguing that it was just regulation as people like Mr. V has done over and over again is either exceedingly dishonest or expotentially ignorant.

Care to summarize that 50 page document?

P.S. - Obvious Child, your posting style is unnecessarily abrasive. Please refrain from insinuating that I'm "effectively ignorant".
Click to expand...

Sorry. I'm rather sick and tired of the large level of people who demonstrate time and time again they have no bloody clue what they hell they are talking about and yet expect to be taken seriously. When you cannot even understand the basic terms, why are you discussing this? But we have more then a few people who think they can. Maybe I should create code system?

"We've reached level Red of Stupid, pull out your anti-stupid gas filters"
 
Goldenboy219 said:
I think i have a better idea of what "went down" than you ever will. Try and pay attention to the language we all agreed upon. No bank was forced to make loans to anyone they did not want to. At best, you can make a case that certain lenders were incentive. It does say volumes when we consider the focus of risk management.
Click to expand...

Hey Goldenboy, tell me, if the CRAs was the problem, why did we have over 2 decades of no problems associated with it?
 
Since government regulation allegedly was the cause, and I know Mr. V won't dare answer this question for fear of showing his argument to be false,

What law forced Moody's and S&P to rate repackaged grade C mortgage securities as A's?

After all, that played a sizable role in the process of securitization which was the real problem. So if regulation was the problem, can someone find me the law that says Moody's and S&P have to rate low grade securities as much more investment worthy?
 
obvious Child said:
I won't disagree that individual stupidity wasn't a cause, in fact the disregard of conservative banking practices by non-CRA mortgages companies contributed to the vast majority. Not to mention the utter stupidity of buying a mortgage backed security without examining the actual underlying assets and the rampant fraud by Moody's and S&P in rating what they absolutely knew to be Cs as As in a corrupt pay for rating system similar to Circa-Enron pay for unqualified audit opinions. There's a large amount of things that went wrong, but arguing that it was just regulation as people like Mr. V has done over and over again is either exceedingly dishonest or expotentially ignorant.

Care to summarize that 50 page document?
Click to expand...

He cites four causal factors that lead to the crisis; bad bets, excessive leverage, domino effects, and 21st century bank runs; without all four of these factors, he maintains, the crisis couldn't have unfolded as it did.

After citing the four causal factors, he outlines five policy areas that impacted these factors; housing policy, capital regulation, industry structure, innovation, and monetary policy. He proceeds to assign each policy area a weight in relation to the aforementioned factors. As an example, housing policy is given a "high weight" in regards to "bad bets", but given "no weight" in regards to "excessive leverage". You can find the complete matrix on page nine.

I highly recommend you read the entire analysis. It's very informative and well done. The author is Dr. Arnold Kling, formerly the senior economist at Freddie Mac (1986-1994) and an economist on the staff of the Board of Governors of the Federal Reserve (1980-1986).

Sorry. I'm rather sick and tired of the large level of people who demonstrate time and time again they have no bloody clue what they hell they are talking about and yet expect to be taken seriously. When you cannot even understand the basic terms, why are you discussing this? But we have more then a few people who think they can. Maybe I should create code system?

"We've reached level Red of Stupid, pull out your anti-stupid gas filters"
Click to expand...

It's alright, but I don't think there's any reason to automatically assume I'm one of those people simply because I disagree with you.
 
alms said:
He cites four causal factors that lead to the crisis; bad bets, excessive leverage, domino effects, and 21st century bank runs; without all four of these factors, he maintains, the crisis couldn't have unfolded as it did.

After citing the four causal factors, he outlines five policy areas that impacted these factors; housing policy, capital regulation, industry structure, innovation, and monetary policy. He proceeds to assign each policy area a weight in relation to the aforementioned factors. As an example, housing policy is given a "high weight" in regards to "bad bets", but given "no weight" in regards to "excessive leverage". You can find the complete matrix on page nine.

I highly recommend you read the entire analysis. It's very informative and well done. The author is Dr. Arnold Kling, formerly the senior economist at Freddie Mac (1986-1994) and an economist on the staff of the Board of Governors of the Federal Reserve (1980-1986).
Click to expand...

Will do.

EDIT: That is a pretty good article. I agree with his take on the Basel Accords, but Basel never truly accounted for a variety of products. Basel does still seem very much stuck in the 1980s and 1990s. Rather a poor model of asset tiers when you don't even cover many assets which could also be liabilities.

I'm fairly impressed. He brings up SIVs. Which I do think are largely evil.

It's alright, but I don't think there's any reason to automatically assume I'm one of those people simply because I disagree with you.
Click to expand...

I don't know about that. The longer you stay here you might change your mind about that. This place is kind of like the ocean. Stupidity ebbs and flows like the troughs and peaks of waves. Right now it's either at the peak or getting there. The level of stupid right now is outrageous. One fool here thought that because banks sat on the TARP money they didn't need it but did not understand the word "recapitalize." Christ sake.

IMO, America is screwed not solely because of its government, but because of the sheer, unending idiocy of some of its voters.
 
Last edited:
MrVicchio said:
House, Senate leaders finalize details of sweeping financial overhaul

How the hell do peeps support the dems when they do crap like this???
Click to expand...

Please tell me you're not that thick... Please tell me your just making your usual hyper-partisan jabs and don't really mean what you say....

Please tell me that you understand, at least in a general sense, that our economy is so vastly complex, a machine with millions of working parts... The statement "No one will know until this is actually in place how it works.", though not reassuring, is honest. No economist can predict with absolute certainty the outcome of fiscal policy change. And with changes to a system as massive as ours, credible economists will limit their speculation to specific cause/effect outcomes, using the words "may, and "might". They leave the moronic partisan speculation to the TV pundits.

Also, as usual, you limit your comment in the OP to a single meaningless jab. If you have an opinion on a specific aspect of financial regulatory reform, why not state it? Or, are you afraid to show us you don't have clue what you're talking about?
 
hazlnut said:
Please tell me you're not that thick... Please tell me your just making your usual hyper-partisan jabs and don't really mean what you say....

Please tell me that you understand, at least in a general sense, that our economy is so vastly complex, a machine with millions of working parts... The statement "No one will know until this is actually in place how it works.", though not reassuring, is honest. No economist can predict with absolute certainty the outcome of fiscal policy change. And with changes to a system as massive as ours, credible economists will limit their speculation to specific cause/effect outcomes, using the words "may, and "might". They leave the moronic partisan speculation to the TV pundits.

Also, as usual, you limit your comment in the OP to a single meaningless jab. If you have an opinion on a specific aspect of financial regulatory reform, why not state it? Or, are you afraid to show us you don't have clue what you're talking about?
Click to expand...


2,000 pages of "we don't know how it's really gonna work out, but trust us". Heard that with healthcare, and the disaster from that is just starting to take shape. You wanna let them **** the financial sector too? Well.. you WOULD but YOU aren't the people I'm talking too.
 
With Senator Byrd now in the hospital critically ill, is this bill in jeopardy now?
 
obvious Child said:
Since government regulation allegedly was the cause, and I know Mr. V won't dare answer this question for fear of showing his argument to be false,

What law forced Moody's and S&P to rate repackaged grade C mortgage securities as A's?

After all, that played a sizable role in the process of securitization which was the real problem. So if regulation was the problem, can someone find me the law that says Moody's and S&P have to rate low grade securities as much more investment worthy?
Click to expand...

Still No Answer.

Regulation you say?

Funny. I can't find a single law on the books that says rating agencies must rate junk status securities as investment grade.
 
obvious Child said:
Still No Answer.

Regulation you say?

Funny. I can't find a single law on the books that says rating agencies must rate junk status securities as investment grade.
Click to expand...

When did I claim Moody's or S&P to do anything. You constructed an argument you CLAIM I have made, and as usual for you is a super narrow "what exact law made this happen" sort of thing. Knowing full well I have never implied there was a law that forced those groups to behave in any manner. IF you want to have a mature discussion, an honest one, let's keep the discussion to things said, not OC's demands for answers to questions no one but OC created.

I all ready showed that companies were forced to give loans they otherwise would not have as per the Clinton Justice Department as part of the "anti-redlining" bs, further more I showed how companies were faced with the decision of giving money (that they were later able to slide the GSE's thus making the whole situation at least appear to be profitable) to maintain complaince or to fight the issue and risk losing.

But don't bother answering if all you are going to do is stay on the faux demand you have for the faux question I never asked, implied or mentioned.
 
MrVicchio said:
When did I claim Moody's or S&P to do anything.
Click to expand...

You claimed that this mess was due to regulation. Part of this mess was due to effectively fraudulent ratings given to securitized mortgages that were grade C but Moody's and S&P rated as A. Since this mess was due to regulation as you have repetitively stated and fraudulent ratings were partially the cause, it logically deems that your argument argues that regulation required ratings agencies to rate securities higher then they really were.

You constructed an argument you CLAIM I have made
Click to expand...

See above. I constructed a logical argument from your claim. Simply because you do not understand the subject does not make me wrong.

Do you reject that you posted the following earlier in the thread?

It had nothing to do with "lack of regulation" and everything to do with DC dicatating business practices to banks
Click to expand...

Did DC dictate to S&P and Moody's how to rate securities? While S&P and Moody's are not banks per se, you clearly meant that the problem was DC dictating policy. You may correct me if you think that the problems of AIG and investment banks (whose problems stem from related issues) were not related to regulation.

and as usual for you is a super narrow "what exact law made this happen" sort of thing. Knowing full well I have never implied there was a law that forced those groups to behave in any manner
Click to expand...

Let's recap:
1) You claimed the financial crisis was due to regulation.
2) Part of the crisis was due to fraudulent ratings
3) Simply because you do not understand point 2 does not mean it does not exist
4) Applying point 1 to point 2, we logically see your argument concluding that regulation required ranting agencies to rate at grades that were not true.

IF you want to have a mature discussion, an honest one, let's keep the discussion to things said, not OC's demands for answers to questions no one but OC created.
Click to expand...

Not quite. If you wanted to have a mature discussion, you'd first understand the subject. While that obviously is not going to happen, it does not invalidate that multiple factors caused this mess. One of those factors was bad ratings. As you have explicitly stated the problem was regulation. Thus, as I repeat myself for the third (?) time, your argument logically concludes that ratings agencies were legally required by regulation to rate at grades higher then was accurate.

I all ready showed that companies were forced to give loans they otherwise would not have as per the Clinton Justice Department as part of the "anti-redlining" bs
Click to expand...

And I showed that the majority of the subprimes that went bad were from banks not covered by the CRA, a point you still refuse to acknowledge. Furthermore, I also showed that we should have seen this mess well before now. While I do not contest that Fanny/Freddie did incentivize non-CRA banks to make bad loans, it does not invalidate the point I am making here.

But don't bother answering if all you are going to do is stay on the faux demand you have for the faux question I never asked, implied or mentioned.
Click to expand...

See my fourth paragraph. As they say in Law, ignorance is no excuse.
 
Last edited:
obvious Child said:
You claimed that this mess was due to regulation. Part of this mess was due to effectively fraudulent ratings given to securitized mortgages that were grade C but Moody's and S&P rated as A. Since this mess was due to regulation as you have repetitively stated and fraudulent ratings were partially the cause, it logically deems that your argument argues that regulation required ratings agencies to rate securities higher then they really were.
Click to expand...
It seems more logical that you make leaps for other people and then attack them for things they never said or implied. Wait, that's not logical, that's factual. The whole mess WAS started by Gov't regulation. The Gov't, in order to promote politically beneficial "Affordable Housing" goals, pushed financial institutions into making financially unwise decisions. Granted, some banks and institutions went from being prodded into it, to being full time partners reaping massive, if false profits, that doesn't really matter. They wouldn't have had the Gov't not decided that it was in the best interest of politicians that people that shouldn't own homes, could.

What you want to draw from that, into super specific cases of X, Y or Z are all on you OC. I'm gonna stay on topic and with what people say, not go off into the realm of assumed positions to attack just to make myself look good to me. You have that covered.

obvious Child said:
See above. I constructed a logical argument from your claim. Simply because you do not understand the subject does not make me wrong.
Click to expand...
I understand the subject far better then you deem willing to credit me with, and thus you toss in the passive aggressive implication that I am stupid or ignorant because I fail to agree with you.

obvious Child said:
Do you reject that you posted the following earlier in the thread?
Click to expand...
I posted it. Why did you bold this part? You're again creating arguments never made. A bad habit you should work on breaking.

obvious Child said:
Did DC dictate to S&P and Moody's how to rate securities? While S&P and Moody's are not banks per se, you clearly meant that the problem was DC dictating policy. You may correct me if you think that the problems of AIG and investment banks (whose problems stem from related issues) were not related to regulation.
Click to expand...
Again, you are making a general discussion, which I am engaged in, into a hyper specific case of certain companies and how they were or were not affected by Gov't actions. Since I never brought them into the discussion, nor have I stated a belief why do you insist on pretending that I have. This is not the "Land of Make Believe" it's a debate forum. Please keep your questions to comments and positions I have stated, not ones you have extrapolated for yourself.


obvious Child said:
Let's recap:
1) You claimed the financial crisis was due to regulation.
Click to expand...

It was.

obvious Child said:
2) Part of the crisis was due to fraudulent ratings
Click to expand...

Please quote where I have said this.

obvious Child said:
3) Simply because you do not understand point 2 does not mean it does not exist
Click to expand...
I have asked that you stop the personal insults and attacks. JUST BECAUSE ONE DOES NOT AGREE WITH YOU DOES NOT MAKE THEM STUPID OR IGNORANT.
obvious Child said:
4) Applying point 1 to point 2, we logically see your argument concluding that regulation required ranting agencies to rate at grades that were not true.
Click to expand...
Since Point 2 was never one I personally made, rather one you assigned to me, I am forced to admit that your conclusion, crafted for yourself shows tht you say I am wrong. I will leave the decision on how wrong you think I am to you, and reality to the rest of us.

obvious Child said:
Not quite. If you wanted to have a mature discussion, you'd first understand the subject. While that obviously is not going to happen, it does not invalidate that multiple factors caused this mess. One of those factors was bad ratings. As you have explicitly stated the problem was regulation. Thus, as I repeat myself for the third (?) time, your argument logically concludes that ratings agencies were legally required by regulation to rate at grades higher then was accurate.
Click to expand...
/Translating:
"You are too ****ing stupid to get this, I am far superior to you, and now you must answer why you took this position I have laid out that you have taken or else you must admit you are as stupid as I claim you are".

:roll:


obvious Child said:
And I showed that the majority of the subprimes that went bad were from banks not covered by the CRA, a point you still refuse to acknowledge. Furthermore, I also showed that we should have seen this mess well before now. While I do not contest that Fanny/Freddie did incentivize non-CRA banks to make bad loans, it does not invalidate the point I am making here.
Click to expand...
Sub-Prime Loans became a hot money making, fast buck system. When Banks A, B and C, covered by the CRA were forced into this, and then figured how to make money off it, others followed. That's the market at work. I'm merely pointing on the situation and how it all ties together, not cherry picking minutia to try and trap you with.


obvious Child said:
See my fourth paragraph. As they say in Law, ignorance is no excuse.
Click to expand...
See the rules, personal insults aren't welcome here.
 
Last edited:
MrVicchio said:
It seems more logical that you make leaps for other people and then attack them for things they never said or implied. Wait, that's not logical, that's factual. The whole mess WAS started by Gov't regulation. The Gov't, in order to promote politically beneficial "Affordable Housing" goals, pushed financial institutions into making financially unwise decisions. Granted, some banks and institutions went from being prodded into it, to being full time partners reaping massive, if false profits, that doesn't really matter. They wouldn't have had the Gov't not decided that it was in the best interest of politicians that people that shouldn't own homes, could.
Click to expand...

Still you ignore the functioning basis of credit markets; even if the government incentivized specific banks to make loans, who was responsible for the rating of junk debt at AAA levels? Why was junk allowed to run rampid through our financial system? The answer is lack of regulation. At best, you can argue government incentives played a role in "popping" the proverbial housing bubble. The real culprit is the part that facilitated this bubble, because overvaluation requires the necessary financing, and as OC pointed out, sub prime mortgages do not make up the majority of our real estate market (nominally). Unless of course you can point me out some CRA "prodded" banks that made $750,000 loans to people with low incomes.

Again, you are making a general discussion, which I am engaged in, into a hyper specific case of certain companies and how they were or were not affected by Gov't actions. Since I never brought them into the discussion, nor have I stated a belief why do you insist on pretending that I have. This is not the "Land of Make Believe" it's a debate forum. Please keep your questions to comments and positions I have stated, not ones you have extrapolated for yourself.
Click to expand...

Then go ahead and explain to all of us how the government forced banks to make loans (the penalties, maybe the aftermath of banks who did not comply), why banks were compelled to make home equity loans (in 2005, $750 billion was taken out in equity loans), why ratings agencies rated much of this toxic debt AAA, and why it was allowed to move away (thereby removing of the risk) - in an unprecedented fashion - from the banks that originated the loans?

It was.
Click to expand...

Hate to break it to you, your argument has more holes than two year aged swiss.

Sub-Prime Loans became a hot money making, fast buck system.
Click to expand...

Can you clarify? How did they become a hot money making, fast buck system? What were the mechanics behind it?

When Banks A, B and C, covered by the CRA were forced into this, and then figured how to make money off it, others followed. That's the market at work.
Click to expand...

Do you have any figures that can show in terms of nominal value, what the percentage make up of the entire US housing market was made up of sub prime paper? Ill throw out a gimmie as to why some home prices increased rapidly; some people who took out equity loans actually remodeled and expanded their homes thereby creating value. How is a $2,000,000 property worth $3.8 million in ten years?
 
Goldenboy219 said:
Then go ahead and explain to all of us how the government forced banks to make loans (the penalties, maybe the aftermath of banks who did not comply), why banks were compelled to make home equity loans (in 2005, $750 billion was taken out in equity loans), why ratings agencies rated much of this toxic debt AAA, and why it was allowed to move away (thereby removing of the risk) - in an unprecedented fashion - from the banks that originated the loans?
Click to expand...

Maybe audio and moving pictures will help.


And some words for you.

Under the Clinton administration, federal regulators began using the act to combat “red-lining,” a practice by which banks loaned money to some communities but not to others, based on economic status. “No loan is exempt, no bank is immune,” warned then-Attorney General Janet Reno. “For those who thumb their nose at us, I promise vigorous enforcement.”

The Clinton-Reno threat of “vigorous enforcement” pushed banks to make the now infamous loans that many blame for the current meltdown, Richman said. “Banks, in order to not get in trouble with the regulators, had to make loans to people who shouldn’t have been getting mortgage loans.”

This threat combined with the government backing of Fannie and Freddie set the stage for the current uncertainty, because the “banks could just sell the loans off to Fannie or Freddie,” who could buy them with little regard for negative financial outcomes, Richman said.

CNSNews.com - Financial Meltdown: Where Does the Buck Stop?
Click to expand...


Does any of this help you?
 
Last edited:
MrVicchio said:
It seems more logical that you make leaps for other people and then attack them for things they never said or implied. Wait, that's not logical, that's factual.
Click to expand...

Which is generally a claim made by those who do not understand the subject. Hence why you are making it.

The whole mess WAS started by Gov't regulation.
Click to expand...

You mean back in the 1970s and the two decades of no problems with the CRA? Oh wait.

The Gov't, in order to promote politically beneficial "Affordable Housing" goals, pushed financial institutions into making financially unwise decisions.
Click to expand...

Like the non-CRA covered banks that did the majority of the bad lending? Oh wait.

Granted, some banks and institutions went from being prodded into it, to being full time partners reaping massive, if false profits, that doesn't really matter.[/quote\

More like they saw profits and ran with it. You keep ignoring that the vast majority of bad subprimes came from non-CRA mortgage companies. Well, I can't expect you to ever admit you're wrong on anything.

They wouldn't have had the Gov't not decided that it was in the best interest of politicians that people that shouldn't own homes, could.
Click to expand...

Since you think regulation caused this mess, tell me, how did the repeal of regulation, namely the Glass–Steagall act actually make regulation that started this mess? Let me make a prediction here. You won't answer that.

What you want to draw from that, into super specific cases of X, Y or Z are all on you OC. I'm gonna stay on topic and with what people say, not go off into the realm of assumed positions to attack just to make myself look good to me. You have that covered.
Click to expand...

Again, that's because you don't understand the subject. You blame regulation, but you demonstrate you don't get it. Mortgages alone represent effectively an immaterial portion of the economy. If every subprime went bad and wasn't securitized and bought by leverage, we absolutely would not be in this mess. Harping that this mess was caused by regulation on the housing sector ignores where the real problems started. Hence why I bring in the actual doozies of this crisis.

I understand the subject far better then you deem willing to credit me with
Click to expand...

See above. And I doubt you do. Residential mortgages should not affect interbank commercial lending, much less commercial lending and investment banking. But they did. But not for the reasons you claim. You seem to operate under this notion that a tiny portion of our economy that does not deal with much of the lending lubricating the business world brought this mess down. That does not make sense nor does it demonstrate you understand the subject.

and thus you toss in the passive aggressive implication that I am stupid or ignorant because I fail to agree with you
Click to expand...

Which is little more then an excuse for why you do not understand.

I posted it. Why did you bold this part? You're again creating arguments never made. A bad habit you should work on breaking.
Click to expand...

So you do not reject that your argument is that the problem was that DC was dictating policy and thus caused this mess. Therefore, based on your argument, you think that problems such as fraudulent ratings were because DC dictated policy. If you do not like your argument's logic, abandon it. But don't attack me for utilizing it to show the weaknesses in your claims.

Again, you are making a general discussion, which I am engaged in, into a hyper specific case of certain companies and how they were or were not affected by Gov't actions.
Click to expand...

Indeed. I'm pointing out that your general argument is worthless because it does not deal with specifics, furthermore, it explicitly ignores the real causes of this crisis. I'm still laughing how you think less then 1% of our economy caused the near collapse of it. Subprime lending itself is insignificant to our economy. But your argument is indeed that DC dictated policy to force lending that represented less then 1% of our economy which crashed it. It's like saying that the CEO should be fired because his tiny pet project which represented effectively nothing in the company nearly caused bankruptcy. It just does not make sense.

Since I never brought them into the discussion, nor have I stated a belief why do you insist on pretending that I have. This is not the "Land of Make Believe" it's a debate forum. Please keep your questions to comments and positions I have stated, not ones you have extrapolated for yourself.
Click to expand...

Let's recap:
1) You claimed the financial crisis was due to regulation.
2) Part of the crisis was due to fraudulent ratings
3) Simply because you do not understand point 2 does not mean it does not exist
4) Applying point 1 to point 2, we logically see your argument concluding that regulation required ranting agencies to rate at grades that were not true.

Huh. Still not getting it?

It was.
Click to expand...

Good. Now you certainly cannot back away from that.

Please quote where I have said this.
Click to expand...

Please show me where I said you did. What I actually said was that your argument, as you have now twice explicitly argued was that regulation caused this crisis. Part of this crisis was due to fraud ratings. Therefore, the logic of your argument dictates that the fraudulent ratings were caused by regulation. This is little more then transitive logic. Again, if you do not like the logic of your argument, change it or abandon it. But don't get all fussy when someone uses your logic against you.

I have asked that you stop the personal insults and attacks. JUST BECAUSE ONE DOES NOT AGREE WITH YOU DOES NOT MAKE THEM STUPID OR IGNORANT.
Click to expand...

But not understanding the crisis and then saying ratings aren't a part does make one ignorant in the same fashion as saying guns are the problem but not understanding that majority of gun crimes involve stolen firearms.

Do you think that the ratings given by the rating agencies played no role at all in the crisis? A simple yes or no will suffice.

Since Point 2 was never one I personally made
Click to expand...

Irrelevant. I don't care if you personally stated it. Your argument as you have twice explicitly stated on record was that regulation caused this mess, not lack of regulation. I am now pointing to an area that helped cause this mess due to its complete lack of regulation. According to your argument that "regulation caused this mess" as you have explicitly stated, your argument deems fraud ratings as a form of regulation. Again, if you don't like your argument's logic, change it. But don't throw a hissy fit when someone uses it against you.

rather one you assigned to me, I am forced to admit that your conclusion, crafted for yourself shows tht you say I am wrong. I will leave the decision on how wrong you think I am to you, and reality to the rest of us.
Click to expand...

Apparently your "reality" includes the notion that fraudulent ratings weren't part of the crisis. Good luck finding knowledgeable people who buy that.

Translating:
"You are too ****ing stupid to get this, I am far superior to you, and now you must answer why you took this position I have laid out that you have taken or else you must admit you are as stupid as I claim you are".
Click to expand...

Do you disagree that you have explicitly stated that regulation caused this mess and not lack of regulation?

I'll make it real simple:

Your argument is "Regulation caused this mess" (which you have explicitly stated twice if not more)
Part of the cause was fraud ratings.
As fraud ratings were part of the cause, therefore they were a form of regulation.

See how easy that is? Just because you don't like your logic doesn't mean I'm wrong.

Sub-Prime Loans became a hot money making, fast buck system. When Banks A, B and C, covered by the CRA were forced into this, and then figured how to make money off it, others followed.
Click to expand...

Come again? CRA loans were profitable since 1977. What do you mean "figured out how to make money off it?" What changed was securitization of subprime along with fraud ratings (Among other things). And you are again ignoring how the majority of subprime abuse was not due to CRA. No one forced non-CRA mortgage firms to lend. No one forced them to do anything. How is that REGULATION when no one forced the banks that issued the worst of the lot?

That's the market at work.
Click to expand...

Okay. So apparently you think that non-CRA mortgage companies who were not forced to do subprime lending was actually regulation and is really the free market. I can't even begin to sort that mess out.

Choice = Regulation = Free Market.

Okay then.

I'm merely pointing on the situation and how it all ties together, not cherry picking minutia to try and trap you with.
Click to expand...

I think I'm going to need a veteran pathfinder to sort that mess out.

See the rules, personal insults aren't welcome here.
Click to expand...

Me pointing out the obvious lack of knowledge on your part is hardly an insult.
Click to expand...
 
You must log in or register to reply here.
Back
Top Bottom