86 replies to this topic

[Tiggs]

joc, on 09 October 2012 - 04:47 AM, said:

Saying that six percent of those loans were associated with the CRA is actually saying that ninety-four percent of the loans were not under review by the CRA.  That is because most lending institutions hold less than a billion dollars in assets.  So, no, I am not saying they are lying at all.

Then what are you saying? That all subprime mortgages are CRA associated by default?

[joc]

Tiggs, on 09 October 2012 - 04:49 AM, said:

Then what are you saying? That all subprime mortgages are CRA associated by default?

Of course all subprime mortgages are associated with CRA   Not by 'default'....by design.   Originally the CRA didn't discriminate among lending institutions.
So...let me ask you a question...why do you think that they Reformed the CRA to only scrutinize the loans of banks holding over a billion dollars in assets?

[Tiggs]

joc, on 09 October 2012 - 04:56 AM, said:

Of course all subprime mortgages are associated with CRA   Not by 'default'....by design.  

One of us is very confused. What do you think a subprime mortgage is, exactly?

Quote

So...let me ask you a question...why do you think that they Reformed the CRA to only scrutinize the loans of banks holding over a billion dollars in assets?

To reduce compliance burden, I'd imagine.

What confuses me is why you think that exempting financial organisations with having to comply with the CRA - a law that requires a proportional number of loans to be made to low-income neighbourhoods - would lead to those 94% of subprime loans that no-one was mandating them to make - the CRA's fault?

[Yamato]

If you guys ever want to stop wasting time making fake partisan political hay out of this crisis and some day want to understand it correctly, turn to people who understood it so well they saw it coming years in advance.  

[Merc14]

Tiggs, on 09 October 2012 - 04:23 AM, said:

As the inquiry states - It was a combination of several things  - but the most obvious one is the Rating Agencies, who's badging of junk subprime mortgages as AAA securities was, IMO, quite frankly criminal.

Without that AAA rating, banks wouldn't have been able to hold them on their balance sheet as collateral. When the housing collapse came and those "AAA" securities failed, suddenly banks were in a position where they did not have enough collateral to cover their balance sheet and so were effectively bankrupt. Those bankruptcy events then triggered the Derivatives cascade.

In short - if the Ratings Agencies had rated the mortgages with the actual rating that they had deserved - then the entire international financial crisis would never have happened.

Certainly contributed but only as part of the bigger scam.

[Merc14]

Yamato, on 09 October 2012 - 08:27 AM, said:

If you guys ever want to stop wasting time making fake partisan political hay out of this crisis and some day want to understand it correctly, turn to people who understood it so well they saw it coming years in advance.  

Of course they did and if you watched the first video I posted you'd see that Bush was warning about te bubble bursting and Barney Frank, who was the government watchdog, called BS and there were accusations of the racist republicans trying to keep poor people from getting homes.  It was absurd and even I saw it coming and I am far from an economist.

Edited by Merc14, 09 October 2012 - 11:31 AM.

[joc]

Tiggs, on 09 October 2012 - 05:07 AM, said:

One of us is very confused. What do you think a subprime mortgage is, exactly?





To reduce compliance burden, I'd imagine.

What confuses me is why you think that exempting financial organisations with having to comply with the CRA - a law that requires a proportional number of loans to be made to low-income neighbourhoods - would lead to those 94% of subprime loans that no-one was mandating them to make - the CRA's fault?

Not entirely.  You cannot 'not' blame some of the lending institutions..but come on...that is WHY we have regulations in place to begin with,  austensibly to keep everyone on the same page of sound financial principles.  But the CRA opened a pandoras box by reducing the compliance burden.

Quote

If you guys ever want to stop wasting time making fake partisan political hay out of this crisis and some day want to understand it correctly, turn to people who understood it so well they saw it coming years in advance.  

Peter Schiff was right.  But so was I when all of this first began.  I remember when it became 'legal' in Texas to borrow against the equity in your home.  The way they were advertising all that was by telling people...Look, you are drowning indebt to credit card companies...borrow money against the equity in your home (second mortgage) and pay off all those credit cards and have money left in your pocket to do the things you want to do.  But, people are creatures of habit...so, they payed off all those credit cards...and then ran them back up...finding themselves in a position of not being able to pay either mortgage or the credit card companies.
The blame can be spread around..but, and this is all I'm really saying, at the end of the day, the truth of the matter is that lax lending rules had a disasterous effect on the economy, whatever the original 'intentions' were.

[Tiggs]

joc, on 09 October 2012 - 11:59 AM, said:

Not entirely.  You cannot 'not' blame some of the lending institutions..but come on...that is WHY we have regulations in place to begin with,  austensibly to keep everyone on the same page of sound financial principles.  But the CRA opened a pandoras box by reducing the compliance burden.

The CRA opened up a Pandora's box by not mandating smaller banking companies to give a percentage of their mortgages to low-income neighborhoods?

Why would that be, exactly?

The legislation that you're probably looking for which largely deregulated the banking industry and allowed them to offer these ridiculous mortgages in the first place is the Garn–St. Germain Depository Institutions Act of 1982, which has absolutely nothing to do with the CRA.

Nobody forced the lending institutions to make the vast majority of subprime loans. No regulation compelled them to do so - certainly not the CRA.

[Tiggs]

Yamato, on 09 October 2012 - 08:27 AM, said:

If you guys ever want to stop wasting time making fake partisan political hay out of this crisis and some day want to understand it correctly, turn to people who understood it so well they saw it coming years in advance.  

Peter Schiff predicted the housing bubble correctly, as did many people. He's also correct when he talks about the issue with the economy not generating wealth, other than via house price rises and stock portfolios, both of which are subject to sudden reset.

What absolutely no-one realized back then, was that the subprime loans had been repackaged and resold to the international banks as AAA equities. You'll note that Schiff's talking about a US recession, not a world one.

Edited by Tiggs, 09 October 2012 - 02:09 PM.

[Tiggs]

Merc14, on 09 October 2012 - 11:30 AM, said:

Of course they did and if you watched the first video I posted you'd see that Bush was warning about te bubble bursting and Barney Frank, who was the government watchdog, called BS and there were accusations of the racist republicans trying to keep poor people from getting homes.  It was absurd and even I saw it coming and I am far from an economist.

Y'know - if the best partisan argument you have is a clip of Barney Frank not being psychic in a committee which has a Republican majority - then you don't really have one, do you?

Also - I missed the part in your first video about Bush calling the housing Bubble. I see the White House saying that the GSE's were too big and needed to be re-regulated. That's not the same thing.

[Merc14]

Tiggs, on 09 October 2012 - 02:27 PM, said:

Y'know - if the best partisan argument you have is a clip of Barney Frank not being psychic in a committee which has a Republican majority - then you don't really have one, do you?

Also - I missed the part in your first video about Bush calling the housing Bubble. I see the White House saying that the GSE's were too big and needed to be re-regulated. That's not the same thing.

Not the only argument I have and haven't been partisan at all but Barney was a central figure here and has walked awy unscathed.  I think he managed this because a lot of people on the hill were making money.  Anyways, joc has a far better handle on this so I am going to sit back and learn something.

Edited by Merc14, 09 October 2012 - 02:50 PM.

[ninjadude]

Tiggs, on 09 October 2012 - 04:23 AM, said:

Those bankruptcy events then triggered the Derivatives cascade.

Which is the real cause of the economic event. There was about 4 quadrillion in money invested in these weirdo instruments called derivatives. More money than exists on the planet. They should not have allowed this economic gambling on just about anything that an investor wishes without having any real interest or stake.

[joc]

ninjadude, on 10 October 2012 - 02:39 AM, said:

Which is the real cause of the economic event. There was about 4 quadrillion in money invested in these weirdo instruments called derivatives. More money than exists on the planet. They should not have allowed this economic gambling on just about anything that an investor wishes without having any real interest or stake.

For once, I agree with you.  They never should have allowed banks to loan to people who could never pay the loans back.  I have been saying for years that the entire global economy is a house of cards.  So much leveraging and no real substantial anything.

Quote

Quote

joc, on 09 October 2012 - 12:59 PM, said:

Not entirely.  You cannot 'not' blame some of the lending institutions..but come on...that is WHY we have regulations in place to begin with,  austensibly to keep everyone on the same page of sound financial principles.  But the CRA opened a pandoras box by reducing the compliance burden.

The CRA opened up a Pandora's box by not mandating smaller banking companies to give a percentage of their mortgages to low-income neighborhoods?

Why would that be, exactly?

The legislation that you're probably looking for which largely deregulated the banking industry and allowed them to offer these ridiculous mortgages in the first place is the Garn–St. Germain Depository Institutions Act of 1982, which has absolutely nothing to do with the CRA.

Nobody forced the lending institutions to make the vast majority of subprime loans. No regulation compelled them to do so - certainly not the CRA.

No, the CRA opened a pandoras box by not 'regulating' the smaller banks.  You're right no one forced the smaller banks to make subprime loans.  But, that is like saying Congress didn't compell Mexicans to come across the border illegally.  Of course Congress didn't force anyone into illegal immigration...but they turned a blind eye to the problem.   Exactly what the CRA did by allowing banks of less than a billion dollars  in assets to get away without any scrutinization of what they were doing whatsoever.  I think a lot of it was monkey see, monkey do...got to get into the subprime mortgage game...and hey, guess what guys, if you want to be a mortgage broker...whallah...if you ain't got a billion dollars...loan anything to anyone and no one is going to say jack about it.   And no one said jack about it...Meanwhile, the larger banks who were being compelled to make a percentage of subprime loans were inventing ways to get rid of these toxic assets...bundling these subprimes into a packaged derivative and selling them to basically suckers who wanted to get into the subprime lending game quickly.

[Tiggs]

joc, on 10 October 2012 - 03:02 AM, said:

No, the CRA opened a pandoras box by not 'regulating' the smaller banks.  

Ummm. No. All banks are subject to exactly the same regulations regarding loans.

Not all banks have to make a percentage of their loans to low-income households.

See the difference?

[Yamato]

Tiggs, on 09 October 2012 - 02:09 PM, said:

Peter Schiff predicted the housing bubble correctly, as did many people. He's also correct when he talks about the issue with the economy not generating wealth, other than via house price rises and stock portfolios, both of which are subject to sudden reset.

What absolutely no-one realized back then, was that the subprime loans had been repackaged and resold to the international banks as AAA equities. You'll note that Schiff's talking about a US recession, not a world one.

And these credit ratings are a bad joke.  Does absolutely no-one realize that now?

And who is "many people"?