4 comments

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  davboz

  9 months ago

  This is not the government. This is the World Financial takeover. America is not just gone. It's been gone.
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  Adam J

  9 months ago

  Wow, lots of misinformation you compiled here.
  1. Partially correct, Freddie and Fannie securitized alot of crappy loans. However Freddie and Fannie are public for-profit companies, 13 of 18 directors are chosen by stockholders, the other five Bush put on the board.
  
  2. Most subprime mortgage originators were virtually unregulated, and thus not "encouraged" by the government
  
  3. I actually agree with some of this article, phasing out Freddie and Fannie and their "implicit" guarentees would be a good thing... however it blames the CSA in part, which is ludicrious, most subprime lenders weren't regulated by the CSA, and CSA regulated banks have done far better in this crisis- they've had less expsure because they sold less subprimes.
  
  4. Ludicrious argument, if Mark to market accounting didn't have to be done by financial institions, then they would be able to claim these instruments are worth far more then they actually are, and be able to leverage themselves even more and put themselves at even greater risk. The majority of this crisis isn't just that bankers made a bad bet on the housing market & interest rate, but they were able to leverage themselves out thanks to deregulation and exposed themselves to incredible amounts of risk.
  
  6/7. Ah yes, its all the fault of a 1977 law... get serious. This crisis started in late 2002/2003- nowhere near 1977 when the law was enacted or 1995 when Clinton amended it. Not to mention lenders regulated by the CSA were LESS likely to originate subprime loans then unregulated lenders. How could it have affected the crisis when the entities actually governed by the statute lended less subprimes?
  
  8. Another one I somewhat agree with... the Fed is one of the major factors in this problem, people became addicted to low interest thanks to the fed's ridiculously low interest rate for so long. However, the government will always chose their own interest rate, I can't comprehend how this is "intervention" or "regulation", just incompetence. Also, the bailout is a crummy situation, but the damage caused by the failure of Lehman shows just how dangerous it can be to the market for these huge banks to fail. But lax regulation has let themselves get in the position where they can fail... these banks upon which our system is supported are allowed to leverage themselves out at absurd levels.
  
  9. I don't think anyone is claiming the bailout does anything more then treat the symptoms, not the disease itself. It obviously creates a moral hazard problem, but look at what has happened as a result of Lehman's failure... every bank who was counterparty to Lehman suddenly found themselves scrambling paying to find new counterparties for the deal... and they're likely to get only pennies on the dollar from Lehman (and it'll probably take a decade for Lehman to pay those pennies).
  
  10. Dude, that analyzes the English system... not ours. There are some risks caused by our system of deposit insurance, but it allows individuals to invest their money virtually risk free, which is valuable for individuals who don't have the time or expertise to evaluate the risk of other investment forms. Also, it is inevitable that banks can get into trouble if a "run on the bank" occurs and all creditors make calls- banks cannot maintain perfect liquidity... no investor can.
  
  11. Regurgitates points made in your other articles.
  
  12. A completely ludicrious government intervention I agree, but also has nothing to do with the crisis (other then being a typical government overreaction). I'm with you when it comes to fighting these kinds of absurd regulations that always seems to result from crisises... but the fact remains that this market failure can occur again unless we ensure banks are well regulated.
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  Qwinn

  9 months ago

  "6/7. Ah yes, its all the fault of a 1977 law... get serious. This crisis started in late 2002/2003- nowhere near 1977 when the law was enacted or 1995 when Clinton amended it."
  
  No one has argued that the 1977 law had enough teeth to cause the crisis. Everyone arguing this blames the 1995 amendment for giving it the necessary teeth. Are you seriously arguing that it's ludicrous to imagine that laws that effectively originated in 1995 would begin to reach crisis proportions 7 years later? Besides, it wasn't even just the 1995 laws that made the mess, it was also the lawsuits by ACORN that made them get reinterpreted in order to effectively become bad mortgage -quotas-.
  
  "Not to mention lenders regulated by the CSA were LESS likely to originate subprime loans then unregulated lenders. How could it have affected the crisis when the entities actually governed by the statute lended less subprimes?"
  
  It did wind up that way -eventually-. AFTER the bad loans were forced, and the banks wound up having a crapload of bad loans on their books, they did indeed look to find ways to get them off their books. This required them to lobby for and develop the tranching tactics and other methods that allowed to make these bad loans look like good loans. Some shady folks did indeed take these tactics, meant to soften the blow of acquiring a crapload of bad debts, and decided to make money off them. That is why the numbers eventually came to look the way you describe. But those techniques would not have arisen or made possible (or had effective arguments justifying them) without the bad loans in the first place. Necessity was the mother of those truly awful inventions. Without the initial impetus of those bad loans, the rest wouldn't have happened. Regulation caused the mess. Sure, you could create -more- regulations that offset the ill effects of the -initial- regulations, but considering that those who gave the CRA teeth couldn't predict the unintended consequences of their initial regulations, why should anyone expect them to get the second set right? It would make much more sense to get rid of the CRA and other regulations that caused the problem, rather than heap on a new set intended to ameliorate the horrible effects of the first. Then 10 years from now we can create a third set of regulations meant to fix the crashes caused by the 2nd, etc.
  
  Qwinn
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• 

  Leon T.

  9 months ago

  "2. Most subprime mortgage originators were virtually unregulated, and thus not "encouraged" by the government"
  
  Not really true. All but a couple of states regulate the mortgage brokers and lenders in their states. In addition, they were directly regulated by HUD (even if it wasn't an FHA loan, most housing/mortgage laws are governed by HUD) and by the FTC (anything involving credit is overseen by the FTC, among others).
  
  When FNMA/FHLMC said that they would buy loans that otherwise would never had been made, lenders relaxed their lending criteria. They also were required to lend a certain percentage in designated areas as part of the Community Reinvestment Act. Also, banks were "encouraged" to lend to low income borrowers. This encouragement generally took the form of banking regulators refusing to allow expansions, mergers, and new charters until the loan portfolio matched what regulators' thought it should (in terms of percentages of low income lending).
  
  The sub-prime mortgage argument is a little confusing, because you had sub-prime borrowers (bad credit, bad pay history, etc.) and you had sub-prime mortgages (good/great credit, but could not verify income).
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