FACTS on Dubya's great recession

Do you actually think that the % of subprime loans doubling in 2004, 05 and 06 somehow negates the trillions of subprime mortgages that had been originated before? Maybe you think that the 10% or so of subprime mortgages annually in the previous decade and before were irrelevant and the "good" Clinton subprime? LOL. Maybe you think the factors that led up to WW2 took place ENTIRELY from 1939 on? because that's how childish posting and reposting and reposting that graph as if it draws to some "BUSHDIDIT" conclusion is.

To repeat, it's like blaming the kid, and the kid only, who was sneaking a cig, for blowing up the barn where his dad had been throwing oily rags in the corner for 20 years.

 

Well, bravo, you managed to craft a post that is somewhat clear and expresses an actual, cohesive thought of your own.

 

What caused the financial crisis? The Big Lie goes viral

One group has been especially vocal about shaping a new narrative of the credit crisis and economic collapse: those whose bad judgment and failed philosophy helped cause the crisis.

Rather than admit the error of their ways — Repent! — these people are engaged in an active campaign to rewrite history. They are not, of course, exonerated in doing so. And beyond that, they damage the process of repairing what was broken. They muddy the waters when it comes to holding guilty parties responsible. They prevent measures from being put into place to prevent another crisis.

Here is the surprising takeaway: They are winning. Thanks to the endless repetition of the Big Lie.

A Big Lie is so colossal that no one would believe that someone could have the impudence to distort the truth so infamously. There are many examples: Claims that Earth is not warming, or that evolution is not the best thesis we have for how humans developed. Those opposed to stimulus spending have gone so far as to claim that the infrastructure of the United States is just fine, Grade A (not D, as the we discussed last month), and needs little repair.

Wall Street has its own version: Its Big Lie is that banks and investment houses are merely victims of the crash. You see, the entire boom and bust was caused by misguided government policies. It was not irresponsible lending or derivative or excess leverage or misguided compensation packages, but rather long-standing housing policies that were at fault.

Indeed, the arguments these folks make fail to withstand even casual scrutiny. But that has not stopped people who should know better from repeating them.




Why are people trying to rewrite the history of the crisis? Some are simply trying to save face. Interest groups who advocate for deregulation of the finance sector would prefer that deregulation not receive any blame for the crisis.

Some stand to profit from the status quo: Banks present a systemic risk to the economy, and reducing that risk by lowering their leverage and increasing capital requirements also lowers profitability. Others are hired guns, doing the bidding of bosses on Wall Street.

They all suffer cognitive dissonance — the intellectual crisis that occurs when a failed belief system or philosophy is confronted with proof of its implausibility.


http://www.washingtonpost.com/busin.../31/gIQAXlSOqM_story.html?tid=pm_business_pop





Examining the big lie: How the facts of the economic crisis stack up



•The boom and bust was global. Proponents of the Big Lie ignore the worldwide nature of the housing boom and bust.

A McKinsey Global Institute report noted “from 2000 through 2007, a remarkable run-up in global home prices occurred.” It is highly unlikely that a simultaneous boom and bust everywhere else in the world was caused by one set of factors (ultra-low rates, securitized AAA-rated subprime, derivatives) but had a different set of causes in the United States. Indeed, this might be the biggest obstacle to pushing the false narrative. How did U.S. regulations against redlining in inner cities also cause a boom in Spain, Ireland and Australia? How can we explain the boom occurring in countries that do not have a tax deduction for mortgage interest or government-sponsored enterprises? And why, after nearly a century of mortgage interest deduction in the United States, did it suddenly cause a crisis?

These questions show why proximity and statistical validity are so important.


Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom. Check the mortgage origination data: The vast majority of subprime mortgages — the loans at the heart of the global crisis — were underwritten by unregulated private firms. These were lenders who sold the bulk of their mortgages to Wall Street, not to Fannie or Freddie. Indeed, these firms had no deposits, so they were not under the jurisdiction of the Federal Deposit Insurance Corp or the Office of Thrift Supervision. The relative market share of Fannie Mae and Freddie Mac dropped from a high of 57 percent of all new mortgage originations in 2003, down to 37 percent as the bubble was developing in 2005-06.


•Private lenders not subject to congressional regulations collapsed lending standards. Taking up that extra share were nonbanks selling mortgages elsewhere, not to the GSEs. Conforming mortgages had rules that were less profitable than the newfangled loans. Private securitizers — competitors of Fannie and Freddie — grew from 10 percent of the market in 2002 to nearly 40 percent in 2006. As a percentage of all mortgage-backed securities, private securitization grew from 23 percent in 2003 to 56 percent in 2006


A 2008 analysis found that the nonbank underwriters made more than 12 million subprime mortgages with a value of nearly $2 trillion. The lenders who made these were exempt from federal regulations.

http://www.washingtonpost.com/busin...sis-stack-up/2011/11/16/gIQA7G23cN_story.html

 

Eh, spoke too soon.

 

Trillions in subprimes before huh? PLEASE without using Ed Pinto (AEI) magic "math", PRETTY PLEASE SHOW THAT?


ANYTHING? . Nope, didn't think you would answer this one Bubs. I'll wait though

 

November 27, 2007

A Snapshot of the Subprime Market



Dollar amount of subprime loans outstanding:

2007 $1.3 trillion

Dollar amount of subprime loans outstanding in 2003: $332 billion

Percentage increase from 2003: 292%



Subprime share of all mortgage originations in 2006: 28%


Subprime share of all mortgage origination in 2003: 8%

Note this:

lol

 

LAS VEGAS (AP) — A new federal report shows that speculative real estate investors played a larger role than originally thought in driving the housing bubble that led to record foreclosures and sent economies plummeting in Nevada, California, Arizona, Florida and other states.

Researchers with the Federal Reserve Bank of New York found that investors who used low-down-payment, subprime credit to purchase multiple residential properties helped inflate home prices and are largely to blame for the recession. The researchers said their findings focused on an “undocumented” dimension of the housing market crisis that had been previously overlooked as officials focused on how to contain the financial crisis, not what caused it.

More than a third of all U.S. home mortgages granted in 2006 went to people who already owned at least one house, according to the report. In Arizona, California, Florida and Nevada, where average home prices more than doubled from 2000 to 2006, investors made up nearly half of all mortgage-backed purchases during the housing bubble. Buyers owning three or more properties represented the fastest-growing segment of homeowners during that time.

“This may have allowed the bubble to inflate further, which caused millions of owner-occupants to pay more if they wanted to buy a home for their family,” the researchers noted.

Investors defaulted in large numbers after home values began to drop in 2006. They accounted for more than 25 percent of seriously delinquent mortgage balances nationwide, and more than a third in Arizona, California, Florida, and Nevada from 2007 to 2009.


http://www.businesstoday-eg.com/case-studies/case-studies/subprime-mortgage-crisis.html


GOV'T POLICY? lol

 

No. You first. For once you will actually respond to a reasonable point without deflection or be transparent for all here to see. Respond in a meaningful way to my apt analogies or admit that the mortgage economy was never a "light switch" that responded instantly and only to GWB policies.

BTW, there is nothing whatsoever wrong with Pinto's numbers, tangential and transparent as that attempted derail of yours is. Even if 100% of ALL subprime originated in the GWB administration, that doesn't discount the prior factors in that origination I've listed over and over in this thread.

"Inside Mortgage Finance, a common source of data on the mortgage market, treated and recorded as subprime only those loans reported as subprime by the originators or by Fannie and Freddie. Other loans were recorded as prime, even if they had credit scores that would have classified them as subprime. However, a FICO credit score of less than 660 is generally regarded as a subprime loan, no matter how originated. That is the standard, for example, used by the Office of the Comptroller of the Currency."

"Fannie and Freddie reported only a very small percentage of their loans as subprime, so in effect the subprime loans acquired by Fannie and Freddie should be added to the self-denominated subprime loans originated by others in order to derive something closer to the number and principal amount of the subprime loans outstanding in the financial system at any given time. One of the important elements of Edward Pinto’s work was to show that Fannie and Freddie, for many years prior to the financial crisis, were buying loans that should
have been classified as subprime because of the borrowers’ credit scores and not simply because they were originated by subprime lenders. Fannie and Freddie did not do this until after they were taken over by the federal government. This lack of disclosure on the part of the GSEs appears to have been a factor in the failure of many market observers to foresee the potential severity of the mortgage defaults when the housing bubble deflated in 2007."

http://fcic-static.law.stanford.edu/cdn_media/fcic-reports/fcic_final_report_wallison_dissent.pdf

 

23456789

 

SO NO, YOU CAN'T BACK UP YOUR TRILLIONS BS. GOT IT



Wallison BLAMING F/F AND GOV'T POLICY using Ed Pinto's "math"? lol


AGAIN


No, the GSEs Did Not Cause the Financial Meltdown (but thats just according to the data)

4. Conservatives sang a different tune before the crash: Conservative think tanks spent the 2000s saying the exact opposite of what they are saying now

MY FAV, AEI'S Peter Wallison in 2004: “In recent years, study after study has shown that Fannie Mae and Freddie Mac are failing to do even as much as banks and S&Ls in providing financing for affordable housing, including minority and low income housing.”


LOL


FIRST IN 2004 F/F WEREN'T DOING ENOUGH, THEN THEY ARE THE PROBLEM??? LOL


5. Expanding the subprime loan category to say GSEs had more exposure makes no sense: Some argue that the GSEs had huge subprime exposure if you create a new category that supposedly represents the risks of subprime more accurately. This new “high-risk” category is associated with a consultant to AEI named Ed Pinto, and his analysis deliberately blurs the wording on “high-risk” and subprime in much of his writings. David Min broke down the numbers, and I wrote about it here. Here’s a graphic from Min’s follow-up work, addressing criticism:




Even this “high risk” category isn’t risky compared to subprime and it looks like the national average. When you divide it by private label, the numbers are even worse. Private label loans “have defaulted at over 6x the rate of GSE loans, as well as the fact that private label securitization is responsible for 42% of all delinquencies despite accounting for only 13% of all outstanding loans (as compared to the GSEs being responsible for 22% of all delinquencies despite accounting for 57% of all outstanding loans).” The issue isn’t this fake “high risk” category, it is subprime and private label origination.

The Financial Crisis Inquiry Commission (FCIC) panel looked carefully at this argument and also ended up shredding it. So even those who blame the GSEs can’t get the numbers to work when they make up categories.

6. Even some Republicans don’t agree with this argument: The three Republicans on the FCIC panel rejected the “blame the GSEs/Congress” approach to explaining the crisis in their minority report. Indeed, they, and most conservatives who know this is a dead end, tend to take a “it’s a whole lot of things, hoocoodanode?” approach.

Peter Wallison blamed the GSEs when he served as the fourth Republican on the FCIC panel. What did the other three Republicans make of his argument? Check out these released FCIC emails from the GOP members. They are really fun, because you can see the other Republicans doing damage control and debating whether Wallison and Pinto were on the take for making this argument — because the argument makes no sense when looking at the data.

There are lots of great quotes: “Re: peter, it seems that if you get pinto on your side, peter can’t complain. But is peter thinking idependently [sic] or is he just a parrot for pinto?”, “I can’t tell re: who is the leader and who is the follower,” “Maybe this email is reaching you too late but I think wmt [William M. Thomas] is going to push to find out if pinto is being paid by anyone.” And then there’s the infamous event where Wallison emailed his fellow GOP member: “It’s very important, I think, that what we say in our separate statements not undermine the ability of the new House GOP to modify or repeal Dodd-Frank.”




LOL

http://www.ritholtz.com/blog/2011/1...ampaign=Feed:+TheBigPicture+(The+Big+Picture)

 

Unresponsive, unstructured wall of gibberish, as usual.

 

So NO you can't explain why over 50% of loans in 2006 were no/low doc loans OR why over 1/3rd of mortgages in 2006 went to people who had at least 1 house (FLIPPERS). Got it, like EVERYTHING else in right wing world, ignore or just spin what you can't refute. I'm shocked. No really I am Bubs

" In Arizona, California, Florida and Nevada, where average home prices more than doubled from 2000 to 2006, investors made up nearly half of all mortgage-backed purchases during the housing bubble. Buyers owning three or more properties represented the fastest-growing segment of homeowners during that time."

GOV'T POLICY RIGHT? lol

 

Your dodge, again is noted Bubs

Weird you will not respond to CATO saying CRA wasn't needed and loans (though high priced) were being met in "poor" areas with private banks in 2000 OR Wallison's posit in 2004 that F/F WERE NOT DOING ENOUGH, LIKE BANKS AND S&L WERE IN THE "AFFORDABLE HOUSING" GAME, BEFORE TURNING ON A DIME IN 2008 AND BLAMING F/F, LOL

 

... and be more dishonest?

"An executive vice president and chief credit officer for Fannie Mae until the late 1980s, Pinto"

... but sure, he's just an "AEI consultant."

The rest of your cutpastes are riddled with similar cherry-picks, inaccuracies and blatant spin. They all come from the same rather undistinguished WaPo "Bubba-blogger" so why should I be surprised?

Once again, readers can compare:

http://en.wikipedia.org/wiki/John_A._Allison_IV

http://en.wikipedia.org/wiki/Barry_Ritholtz

One is an a highly regarded 40 year career banker, retired CEO of one of the ten largest, who consults the Fed Chair, the other? well he got a law degree from a third rate law school and is good at horseback riding. Oh, and he blogs for the second most LW newspaper (and the number one gov apologist newspaper) in the country.

 

There's nothing to dodge. Even arguendo, if I stipulate to those things, 1. that Cato said something contrary sometime somewhere, or that 2. Wallison did, WHAT'S YOUR POINT? You haven't made one. I can't and don't have to address a point that YOU AREN'T MAKING in any coherent way. Your entire argument in the thread consists of addled half-baked half-statements from blogs or irrelevant minutiae from elsewhere. Any attempted response to your addlepation will simply be met with more cutpaste from the exact same blogs with no interstitial, coherent reasoning whatsoever.

 

Weird, you mean they allow wingnutters to work for F/F? DOESN'T REFUTE A SINGLE WORD OF THE POST HOWEVER. YOUR DODGE IS NOTED BUBS, lol


Pinto's Journey from GSE Exec to Privatization Proselytizer

In 1974, fresh out of law school, Edward Pinto joined a Michigan affordable housing agency. By 1989 he was a top executive at Fannie Mae. Today Pinto is the go-to housing finance pundit — from the pro-privatization set.


http://www.americanbanker.com/special-reports/176_5/edward-pinto-journey-fannie-mae-1036732-1.html



Mortgages, Ed Pinto, And A Vast Conspiracy Of Silence

How did Pinto unearth this half century of "failure," given that the Federal Housing Administration belongs to a very elite group of mortgage lenders, those that received zero bailout funds during the financial crisis and remain standing today? Though FHA has been self-supporting since its founding 78 years ago, Pinto simply refuses to discuss that part FHA's financial track record.

Instead, he found a singular metric illustrated by his truly extraordinary hockey stick chart, one that transports us through 39 years of time travel in the blink of an eye. The two unbroken lines show dramatic inflection points, when "leverage" and "foreclosures" shoot up in straight lines, and when the date suddenly shifts from 1967 to 2006.


Pinto's key factoid is that FHA's foreclosure rate in 2006 is 13 times higher than it was in 1954. He attributes this spike in foreclosures to one singular cause, the spike in FHA borrower "leverage,"which involves other calculations unique to Pinto


lol



Nothing else penetrates into Pinto's little artificial world. Why should he consider any other changes that happened between 1967 and 2006? Why consider the dismantling of the Bretton Woods regime, the deregulation of interest rates, the legalization of adjustable-rate mortgages, the invention of securitization, the elimination of the consumer interest deduction, the demographic wave of baby boomers establishing new households, deregulation of savings & loans, the savings & loan crisis, the invention of financial derivatives, the lowering of tax rates, or the 21st century real estate bubble? Why ask if leverage increased anywhere else in the American economy? What do those things have to do with FHA's foreclosure rate, which is 13 times higher in 2006 than in it was in 1954?



Contrary to his professed interest in American enterprise, Pinto shows shows little curiosity about how the rest of the mortgage market performs


And if you look at the FHA in the context of the real world, Pinto's dramatic spike suddenly disappears. In fact, FHA's relative rise in delinquencies is much less pronounced than that of any other sector.

lol

http://www.opednews.com/articles/Mortgages-Ed-Pinto-And-A-by-David-Fiderer-130213-66.html

 

Got it, Wallison complaining F/F aren't doing enough in the "affordable housing" like banks and S&L's in 2004 shouldn't have any logic on his blaming F/F (and Gov't policies) for the subprime crisis 4 years later, lol

Your denial of logic AND inability to use honesty, is noted however Bubs

 

What's to explain? WHAT IS YOUR F-ING POINT? What -exactly- are you claiming? That because 50% of loans in 2006 were no/low doc loans that the GWB Administration is somehow solely responsible for the mortgage crisis? That seems to be your intent, string together a bunch of out of context, unconnected factoids and then have that MESS stand for some kind of cohesive argument? IT DOESN'T.

 

Ad hominem AFTER I ripped your "expert" a new one, FROM THE GOP MEMBERS OF THE FCIC COMMISSION? lol




Bailout Nation, with New Post-Crisis Update: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy
by Barry Ritholtz



Review
"Best books to make sense of financial crisis of 2009" (USA Today)

"Best business books of 2009" (Miami Herald)

"Investment Book of the Year" (Stock Trader’s Almanac)

"Succeeds in laying out all that transpired in easy-to-understand language. If you want to know how we got into this mess and what might still be coming, this is the book for you." (Wall Street Journal)

"The author writes with the fury of an insider mortified by the behavior of his heretical peers . . . There is much to be said for the book’s irreverence. Mr. Ritholtz has written an important book about a complicated subject, and yet you could still read it at the beach. Here’s hoping that some policy makers in Washington take it with them on vacation this month." (New York Times)

"Ritholtz makes a valuable new contribution to our understanding of how we arrived at this sorry juncture. He’s smart, sassy and often amusing. If you’re looking for an all-in-one place explanation of what went wrong and why, this is the book for you (or your confused neighbor)." (Bloomberg)

"Bailout Nation’s straightforward, compelling account puts the crisis in context, explains why the US government responded so stupidly, offers solutions, and advises how to prevent a repeat. Ritholtz’s indictment of the financial and political establishment is devastatingly accurate." (Asia Times)

"Before the housing and credit bubbles popped, Barry Ritholtz, a lawyer turned blogger and money manager, was one of the voices crying in the wilderness. His caustic (and occasionally profane) blog, The Big Picture, dissected macroeconomic news and relentlessly cut through spin. His book takes a long view of the roots of the economic crisis, tracing the history of a series of ever more expensive taxpayer-funded bailouts of failed industries." (Newsweek)

"Ritholtz’s book seeks to explain how the United States, once so proud, became "a nanny state for well-paid bankers. Ritholtz may be just the right person to explain the transition to both the disillusioned amateur and the finance junkie. He doesn’t pull his punches or bury the truth in layers of finance-speak, caveats, and disclaimers. Since he began blogging seven years ago, in-the-know readers of his popular blog, The Big Picture, have turned to Ritholtz for his prescient, refreshingly honest commentary on the economy. Anyone interested in understanding the roots of our current crisis should check out the book.." (Freakonomics)

"A comprehensive crisis scrapbook compiled by the money manager behind the popular financial blog the Big Picture in a quippy, no-nonsense voice..." (New York Magazine)

"These are some of the provocative and even dangerous questions that Barry Ritholtz takes on in Bailout Nation…Above all, Bailout Nation is about the socialization of risk and the privatization of profits." (Forbes)

http://www.amazon.com/Bailout-Nation-New-Post-Crisis-Update/dp/0470596325

 

No, there's nothing "weird" about it. You are using LW blog after LW blog written by Beltway and other HACKS to try to discredit real, accomplished industry insiders such as Allison, Pinto and Wallison, who manage to shine any light of TRUTH on the mortgage collapse in ALL its necessary context. Nothing at all weird about that, it's been going on since the crash. The Complex on one side furiously trying to deflect all blame onto the private sector and convenient GWB for EIGHTY YEARS OF GOVERNMENT ILLICIT MORTGAGE STIMULUS, Clinton era GRAFT, lots involving Democrats like Frank, and everyone who took campaign money from F&F, and the other side ACKNOWLEDGING that the private sector shares blame, but laying equal if not more blame on government policy, not Republican policy, not GWB policy, but GOVERNMENT policy. God forbid the contextual truth gets out or the taxpayers would revolt. So we have WaPo hacks like Ritholz spreading "big lies" about supposed "big lies." Not weird at all, business as usual in gov-edu-union-contractor-grantee-lawyer-MSM Complex LIAR land.

 

Yes, your logic fails, again. IF over 50% of loans were low/no doc in 2006, ONE GOV'T POLICY THAT REQUIRED THEM? JUST ONE? Oops

But yes, you do a good job explaining your posts Bubs, but you leave out DUBYA'S REGULATOR FAILURE AS HE CHEERED ON THE BANKSTERS, IGNORING THE FBI WARNINGS, FIGHTING ALL 50 STATES WHO WANTED TO REIGN IN PREDATORY LENDERS, REQUIRING F/F TO PURCHASE $440 BILLION IN MBS'S AND GETTING RID OF CLINTON'S RULE THAT FORBID F/F FROM BUYING SUBPRIMES BUBS

 

Just more "blame F/F" and Gov't policy BS when the problem was pretty clear, according to Dubya's own group Bubs

Q When did the Bush Mortgage Bubble start?

A The general timeframe is it started late 2004.

From Bush's President's Working Group on Financial Markets March 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."

You know when F/F lost market share to wall street? PLEASE give me the laws that required wall street to do the PLS's in that period??? lol PLEASE. What law required the 50%+ low/no doc loans in 2006?? lol

 

If you did that (you probably didn't... eh, I'm pretty sure you didn't), I may not have seen it. I don't actually read most of your posts, as poorly structured and repetitive as they tend to be. Why should I? It's on -you- not me to draft your posts in a comprehendible way and to actually state some cohesive claim... which you almost never do.

- - - Updated - - -

Dealt with prior, unanswered. Irrelevant what year the bubble supposedly "started." And "President's Working Group?" dealt with that too, way back. Totally unanswered, probably in favor of cutpasting another Ritholtz hack blog entry for the eightieth time.

 

Which is it poorly structured or cut and paste? lol.

Glad to see you admit you don't actually read the posits and almost never respond to them Bubs




AGAIN

Peter Wallison blamed the GSEs when he served as the fourth Republican on the FCIC panel. What did the other three Republicans make of his argument? Check out these released FCIC emails from the GOP members. They are really fun, because you can see the other Republicans doing damage control and debating whether Wallison and Pinto were on the take for making this argument — because the argument makes no sense when looking at the data.

There are lots of great quotes: “Re: peter, it seems that if you get pinto on your side, peter can’t complain. But is peter thinking idependently [sic] or is he just a parrot for pinto?”, “I can’t tell re: who is the leader and who is the follower,” “Maybe this email is reaching you too late but I think wmt [William M. Thomas] is going to push to find out if pinto is being paid by anyone.” And then there’s the infamous event where Wallison emailed his fellow GOP member: “It’s very important, I think, that what we say in our separate statements not undermine the ability of the new House GOP to modify or repeal Dodd-Frank.”



http://www.ritholtz.com/blog/2011/1...ampaign=Feed:+TheBigPicture+(The+Big+Picture)

DID THE OTHER 3 GOP MEMBERS BLAME THE GSE'S OR CRA BUBS??? Oops

 

There is no argument or cohesive claim accompanied by any reasoning in there anywhere. "Oops" indeed.