FACTS on Dubya's great recession

LIE


Fannie, Freddie and the Right Wing Myth of a "Mortgage Meltdown"


But where are the losses?

As the one Pinto-skeptic in the room, Zandi proceeded to answer his own question, "Where are the losses?" As of year-end 2013, approximately $1 trillion in credit losses on pre-crisis loans had been realized. But the realized loss rate among different sectors varied considerably. Best in class were Fannie and Freddie, with a realized loss rate of 3%. Then came depository institutions, like banks, which had a realized loss rate of 6%. The strong outlier was private label mortgage securities, with a realized loss rate of 23%, seven times that of the GSEs.

These numbers are in line with Laurie Goodman's 2010 projections, which showed a 24% overall loss rate on private 1st lien securities. And Zandi's 2013 numbers are consistent with his year-end 2012 numbers, which showed private label losses as 51% of the grand total, and GSE losses as 14% of the nationwide total.

These lopsided disparities are confirmed over and over from data going back two decades. By any standard"--"delinquencies, defaults, loss severity"--"GSE mortgages perform exponentially better than the rest of the market, whereas private label mortgages perform exponentially worse. To state otherwise is to lie.


THIS WAS EVEN WITH DUBYA REQUIRING F/F TO PURCHASE $440 BILLION IN MBS, UPPING THEIR "GOALS" FROM 50% TO 56% AND GETTING RID OF CLINTON'S RESTRICTIONS ON SUBPRIMES FOR THOSE GOALS, lol

....Subordination explains why GSEs' purchases had a nominal impact on the expansion of subprime securitizations. Fannie and Freddie were very specific about the triple-A tranches they purchased, limiting acquisitions to the most senior triple-A tranches, as illustrated in an FCIC graphic of one subprime securitization, CMLTI NC-2006. As you can see, Fannie Mae bought the top $156 million slice, which was senior to $580 million other triple-A tranches, and senior to all the other lower-rated tranches.



The GSEs purchased tranches that got repaid before all the others, and consequently had average lives of less than one year, until the end of the boom. As the GSEs kept buying more and more private label single-family mortgage bonds, their year-end holdings never increased. At year-end 2004, Fannie and Freddie held about $233 billion in single-family bonds. Three years later, after buying another $433 billion in single-family bonds, the GSEs' year-end holdings were slightly down, to about $223 billion, or 10% of $2.2 trillion total private label bonds outstanding.


Just as the most senior tranches can repay very quickly, the most subordinated tranches can get wiped out very quickly.

http://www.opednews.com/articles/Fa...c_Housing_Insolvency_Meltdown-150207-203.html


lol

 

Good post, yep, Dubya had US household debt double in his first 7 years. No one wants to seem to accept the entire Dubya term was one big ponzi scheme




James Kennedy and Alan Greenspan, on the effect of mortgage equity withdrawals (MEWs) on the growth of the US economy.




Notice that in both 2001 and 2002, the US economy continued to grow on an annual basis (the "technical" recession was just a few quarters). Their work suggests that this growth was entirely due to MEWs. In fact, MEWs contributed over 3% to GDP growth in 2004 and 2005, and 2% in 2006. Without US homeowners using their homes as an ATM, the economy would have been very sluggish indeed, averaging much less than 1% for the six years of the Bush presidency. Indeed, as a side observation, without home equity withdrawals the economy would have been so bad it would have been almost impossible for Bush to have won a second term.

The Economic Blue Screen of Death

http://www.investorsinsight.com/blo.../10/17/the-economic-blue-screen-of-death.aspx

 

There was another thing I noticed long before the housing market Crashed. The guy that made the famous " There is an irrational exuberance" comment in late 1996 during the dot.com bubble (Alan Greenspan) went completely silent during the housing bubble. He knew, as I knew at the time being a student of such cycles, that the dot.com bubble, as is the case with all bubbles, would burst.

I remember talking to my like minded buddies about this 180 degree turn of the Fed Chief under Bush. Again this was long before the crash happened.

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

Greenspan made a hasty exit for the door in 2006, knowing of course what was about to transpire. What transformed this risk averse "irrational exuberance" Fed head into an easy money, pro risk junkie ?

The pressure to conform under the Bush administration was palpable in all facets. From ignoring our own department of energy statements that the Aluminum tubes were not suitable for uranium enrichment (along with statements from the International Atomic Energy Agency to similar effect) to an en masse revolt of scientists against the Bush administrations bully tactics.

http://www.theguardian.com/world/2004/feb/19/science.highereducation

Is it such a stretch to conclude that Greenspan was influenced by these bullies ? I think not.

 

I think Ayn Rand Greenspan just bought into his own BS, IMHO. He did "blame" the Banksters



"I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms," said Greenspan.

He suggested his trust in the responsibility of banks had been misplaced: "Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity (myself especially) are in a state of shocked disbelief."


The congressional committee's Democratic chairman, Henry Waxman, pressed him: "You found that your view of the world, your ideology, was not right, it was not working?" Greenspan agreed: "That's precisely the reason I was shocked because I'd been going for 40 years or so with considerable evidence that it was working exceptionally well."

http://www.theguardian.com/business/2008/oct/24/economics-creditcrunch-federal-reserve-greenspan

OF COURSE TODAY HE'S BACK ON THE "FREE MARKETS" BANDWAGON CLAIMING GOV'T IS INTERFERING WITH NEW RULES ON BANKSTERS *shaking head*

 

That is Greenspan in BS and protect behind mode. Greenspan knew that the housing bubble would burst. He knew that the subprime mortgages piling into mortgage backed securities would cause default and Credit default swaps would come due triggering a leveraged loss nightmare.

Let me give an example. Assume you have an MBS worth 10 billion dollars and it defaults. The assets are worth say 5 billion so investors in that fund take a 50% hit. This is bad but such is life.

But hold on ! Investors could also buy insurance against the loss in the form of a Credit Default Swap (CDS). Unlike house insurance the investors did not have to own the underlying asset.

The amount of CDS's you could sell against default was practically unlimited. So assume that AIG had sold CDS's equivalent to 10 billion against default on the MBS above.

The cost of the CDS per year was roughly 1% on a triple A MBS. This means that if the MBS defaults the CDS pays out 100 x or 1 trillion dollars on a 10 billion dollars in insurance.

At the end of 2007 the CDS market had grown to 60 Trillion dollars. This puts "too big to fail" into a whole knew perspective. http://www.reuters.com/article/2008/09/18/us-how-aig-fell-apart-idUSMAR85972720080918

This was gambling, plain and simple and Greenspan knew it 100%. It took 85 Billion to bail out AIG for losses it had accumulated due to MBS default and the Government started buying up illiquid MBS securities to avoid triggering further swaps. That was part of the 700 billion dollar program we know as TARP Troubled asset relief program. This was going down during October/December 2008.

In terms of numbers towards the deficit for the 2009 fiscal year (which starts of course in October 2008 ) are roughly as follows.

400 Billion was already baked into the cake 3.1 Trillion in estimated spending. 600 billion due to decrease in revenue (2.7 Trillion expected vs 2.1 Trillion actual due to the crash) and 400 billion in bailing out banks and toxic relief.

Total deficit handed to Obama ... Thanks Dubya ... 1.4 Trillion

The disingenuous clown show known as the GOP regularly tries to attribute this amount to Obama. The reality is that the 1.4 trillion deficit was all Bush (Obama was not even in office) and much of the next 2 or 3 years should can also be attributed to Bush.

 

Wrong Iremon! The beginning of the rise was very important and signaled what was to come. It is the only logical point to start. We could go back to Carter and his choice of policies, but he didn't get anywhere with them.

The bubbled STARTED with the beginning of the upswing of prices vs value, no matter how much you would like to put all the blame on Bush. The bubble would not have continued had it not started with Clinton's policies. I liked Clinton, he was a good fiscal president, but he was not perfect.

So what? His policies continued into Bush's term.

No matter how many times you say it, you are wrong.

Nope! It began in 1996, started up, went above the value curve before Bush and then it continue to grow until it exploded.

Your attention to left wing propaganda has got your thinking messed up.

 

You are correct, Bush us to blame for following the left wing mantra for housing for the poor and the policies under Clinton started the actual problem (Carter was instrumental in some legislation making it possible) and Bush perpetuated. You have to recognize that Iremon is a left wing extremist who sees himself as a demigog. He creates and believes left wing propaganda. Clinton was actually a good fiscal president, but he most certainly played a big part in the housing balloon and bust. No intelligent person can deny that with sincerity.

 

Yes, you have said that a lot. It is untrue. What is true is, that only in Bush's admin did the bubble go out of control. But the actual start of the problem was in 1996, as your/my link proved conclusively, the beginning of the rise of inflation started in 1996/97. As much as you want to exonerate Clinton for any blame, you cannot legitimately do it. BTW, thank you for relinking my graph which conclusively proves my point. The rest of your posts are just hype you copied off the internet to make people believe you are smart. But with your/my graph you proved yourself wrong. BTW, the proper price to value did not actually occur until Obama took office. Unfortunately the recession caused by the housing balloon and crash fueled a recession and many job loses starting mostly in the construction industry then spreading out.

The next thing you are liable to get hyper about is a US Treasury quote which states, "What is the difference between the debt and the deficit?"

"The deficit is the fiscal year difference between what the United States Government (Government) takes in from taxes and other revenues, called receipts, and the amount of money the Government spends, called outlays. The items included in the deficit are considered either on-budget or off-budget."

"You can think of the total debt as accumulated deficits plus accumulated off-budget surpluses."

The Treasury tells us that from FY to FY there is either a surplus or a deficit. It further tells us that the ending debt can be compared to the beginning debt will equal the actual unvoodooed deficit. It further says that the total debt includes all previous deficits/debt and that the accumulated off-budget surpluses become debt liabilities by law.

I imagine you may wail about that too if I remember you at all.

 

What definition of "bubble" are you using ? Any kind of trend analysis would never claim "bubble" until the price of said commodity moves at least a certain percentage above the long term trend line.

 

Bush's documented policies and statements in timeframe leading up to the start of the Bush Mortgage Bubble include (but not limited to)

Wanting 5.5 million more minority homeowners
Tells congress there is nothing wrong with GSEs
Pledging to use federal policy to increase home ownership
Routinely taking credit for the housing market
Forcing GSEs to buy more low income home loans by raising their Housing Goals (2004)
Lowering Investment bank's capital requirements, Net Capital rule (2004)
Reversing the Clinton rule that restricted GSEs purchases of subprime loans (2004)
Lowering down payment requirements to 0% (2004)
Forcing GSEs to spend an additional $440 billion in the secondary markets (2003)
Giving away 40,000 free down payments (2004)
PREEMPTING ALL STATE LAWS AGAINST PREDATORY LENDING (2003)


But the biggest policy was regulators not enforcing lending standards.

FBI saw threat of loan crisis

A top official warned of widening mortgage fraud in 2004, but the agency focused its resources elsewhere

"We think we can prevent a problem that could have as much impact as the S&L crisis,"

They ended up with fewer resources, rather than more.


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."




Q Did the Community Reinvestment Act under Carter/Clinton caused it?


A "Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "


http://www.federalreserve.gov/newsevents/speech/20081203_analysis.pdf


Q I'm serious, my conservative friends are really really really adamant that policies from 1864, 1977, 1992, 1995, 1997 1999 and 2000 are to blame. What do I say to them?

A just explain the facts to them and show them the actual data that proves it didnt start until late 2004.

Q Yea, that didnt work. try again.

A Just point out to them that what they believe cannot be supported by any data whatsoever and that their empty factless rhetoric in no way changes any facts. For example, say they claim that the Bush Mortgage Bubble started in 1997 and they claim this is backed by almost every mainstream economist supported by empirical data. First ask them to back up their claims. And then ask them "how do you ignore the empirical data already posted in this thread?". Then ask them how anything from 1997 prevented Bush's regulators from enforcing proper lending standards. (of course they will do nothing but repeat their 'claims')

Q They really dont want to 'let go' of their beliefs. Why do they cling to such specious beliefs?
A Sorry, I cant explain it. Mental health issues are not my field of study



Q Where to they get such factless baseless beliefs?
A the 'conservative entertainment complex' has literally put out 1000's of lying editorials about this. What proves they are lying is not one of them has ever mentioned anything I posted in this Q&A. You cant explain Bush's working group telling you it started late 2004. So dont mention it. You cant explain away "bush protecting predatory lenders" so you absolutely can never ever mention it in an editorial. You cant explain away Bush lifting restrictions Clinton placed on GSE purchases of subprime mortgages when you are crafting a narrative that "bush tried to stop the bubble"


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%


Proportion of subprime mortgages made from 2004 to 2006 that come with "exploding" adjustable interest rates: 89-93%



Subprime share of all mortgage originations in 2006: 28%


Subprime share of all mortgage origination in 2003: 8%

 

From your page one link:
“A U.S. Department of Housing and Urban Development report published in 2000 documented "the rapid growth of subprime lending during the 1990s" and called for increased scrutiny of subprime lending due to "growing evidence of widespread predatory practices in the subprime market." http://www.federalreserve.gov/PUBS/FEDS/2008/200859/

“Given the poor credit profiles of these borrowers and the high price of housing relative to their incomes, however, it seems more likely that, in the absence of subprime adjustable-rate mortgages, these borrowers would not have gotten credit at all.” (ibid)

Okay, I went back to page one and it told me nothing I did not know as a Real Estate Agent during the 90’s. It started in the 90’s, which was why I told the black couple I was showing houses not to get an ARM and mentioned my affordable house with the less than $300 house payment, but they only wanted to look at big houses while he was wearing greasy coveralls, and combined with the zoning laws that James Bovard in “Lost Rights” was against which required me to build a bigger house than I wanted in the 80’s, the Democrat Negroid coworker in the 80’s who opposed my idea of interspersing smaller more affordable housing of 850 square foot in among larger houses did so because he didn’t want a poor Negroid living next to him because of the Real Estate principle of regression, an idea I had because of my Socialist New Zealand girlfriend who showed me around Christchurch in the early 80’s and the “government” houses interspersed in the hood that looked nice and were nothing like our sardine cans and public housing projects, so without changes in both local and federal laws immediately and strong regulations in 2000 (when the report came out about the problem during Clinton) it was inevitable. Someone should have done something in the 90’s but the Negroid opposed my idea, and if you can’t get the votes you can’t get the laws changed.

 

Good thing Clinton restricted that subprime loans in 2000 right? What changed that? Hint DUBYA


"(In 2000, (Clinton)) HUD restricted Freddie and Fannie, saying it would not credit them for loans they purchased that had abusively high costs or that were granted without regard to the borrower's ability to repay."

How HUD Mortgage Policy Fed The Crisis

"In 2004(Dubya), the 2000 rules were dropped and high‐risk loans were again counted toward affordable housing goals."



http://www.prmia.org/sites/default/files/references/Fannie_Mae_and_Freddie_Mac_090911_v2.pdf


Your racism is noted Bubs. Your inability to use reason, logic and honesty are also noted


TRY TO REFUTE THIS POST BUBS


http://www.politicalforum.com/showthread.php?t=394878&page=74&p=1064799533#post1064799533

 

THE LINK YOU USED:

About 700,000 mortgages were originated annually between 1998 and 2000 by lenders whose primary business was originating subprime loans (Mayer and Pence, forthcoming). A U.S. Department of Housing and Urban Development report published in 2000 documented "the rapid growth of subprime lending during the 1990s" and called for increased scrutiny of subprime lending due to "growing evidence of widespread predatory practices in the subprime market."

(DUBYA FOUGHT ALL FIFTY STATES WHO ATTEMPETED TO DO THIS, INVOKING A CIVIL WAR ERA RULE IN 2003, BTW)

Despite these concerns, lending to risky borrowers grew rapidly in the 2000s, as shown in Table 1. The number of subprime mortgages originated nearly doubled from 1.1 million in 2003 to 1.9 million in 2005. Near-prime Alt-A originations grew at an even faster rate, from 304,000 in 2003 to 1.1 million in 2005. In dollar terms, nonprime mortgages represented 32 percent of all mortgage originations in 2005, more than triple their 10 percent share only two years earlier (Inside Mortgage Finance, 200. This momentum began to change in the middle of 2005, when mortgage rates started to rise and house price appreciation first began to slow. Nonprime lending leveled off in 2006, dropped dramatically in the first half of 2007, and became virtually nonexistent through most of 2008.



....The share of subprime mortgages that were seriously delinquent increased from about 5.6 percent in mid-2005 to over 21 percent in July 2008. Alt-A mortgages saw an even greater proportional increase from a low of 0.6 to over 9 percent over the same time period.


...We focus on 30-year mortgages originated on properties in the continental United States between January 1, 2003, and June 30, 2007.

Structure of Nonprime Mortgages

...The overwhelming majority--over 75 percent--of subprime mortgages that originated over the 2003-2007 period were so-called "short-term hybrids," shown in Panel A of Table 2. In this type of mortgage, the interest rate is fixed for two or three years and then becomes an adjustable rate tied to market interest rates. The initial fixed rate is often called a "teaser" rate, because the interest rate was typically scheduled to rise two or more percentage points after the initial period ended. These mortgages were sometimes marketed as "credit repair" mortgages: borrowers could make on-time payments during the fixed-rate period, thereby improving their credit scores, and then refinance into prime mortgages before the mortgage switched to an adjustable rate. Colloquially, these mortgages were often referred to as "2/28s," with the "2" referring to the initial two years of fixed interest rates and the "28" referring to the following 28 years of adjustable interest rates. Most of the remaining 25 percent of mortgages in these pools were fixed-rate.

http://www.federalreserve.gov/pubs/feds/2008/200859/

 

There have been many periods were housing prices have risen with normal historical fluctuations: See, for example, the late 1970s and late 1980s.



The rise in prices in 1970s didn't "signal" an enormous bubble. The rise in prices in 1980s didn't "signal" an enormous bubble. The fact that prices rose did not indicate a bubble or cause a bubble.

Why did you dodge my questions? Back to your old tricks, eh?

So what that prices started to rise in 1997? So what is your point? That Clinton should have slammed on the regulatory brakes and clamped down on banks because housing prices rose from the bottom of the trough? And that since he didn't the housing bubble is Clinton's fault?

Your "logic" is just silly and only illustrates your rank partisan attempts to blame Democrats for an event that occurred while Republicans controlled Congress and the Administration.

Many conservatives try in their desperate attempts, like yours, to blame Democrats for the housing bubble which started, blew up to absurd levels,and started imploding on Bush and the Republicans' watch.

Sure, look at that bad "bubble" in 1997. What bull(*)(*)(*)(*).

Your claim is obviously false, as anyone can see. Prices started rising in 1997. Housing prices were below the historical trend in 1997. Your attempt to claim there was a bubble in 1997 is just partisan nonsense. Any person with even a slight degree of objectivity would agree there was no bubble in 1997.

So are you arguing that Clinton should have slammed on the regulatory brakes on lending and banking because of that big bad "bubble" in 1997?

Not matter how much you would like to put all the blame on Clinton, there was no bubble when Clinton was president for him to do anything about.

The folks who were in power and how the power to do something about it were Bush and the Republicans. But Mr. Ownership Society and the party of "Business can regulate itself" did nothing, or worse, promoted policies that helped inflate the bubble.

That's funny, I'm not the one arguing there was a housing prices bubble in 1997. So I'll disagree with your opinion. Others can decide for themselves.

Anyone else here want to claim there was a housing price bubble in 1997 like DNSmith?

 

LOL, the guy who's claiming there was a "bubble" in housing prices in 1997 is talking about what "intelligent" people can deny with sincerity.



Folks like DNSmith who cannot defend his RW extremist positions typically resort to ad hom attacks as here.

And I suspect we'll also see his "friends" pop in shortly, if history is any guide.

 

Addressed in my post above. To claim there was a bubble in 1997 is ludicrous, partisan nonsense.

How's the fishing? You've thoroughly demostrated your partisan ignorance on budget matters in prior threads, and I'll decline your blatant attempt to divert this thread here.

- - - Updated - - -

Anyone else see DNSmiths "bubble" in 1997?



Me neither.

 

From your link:

“Fannie Mae was pressured by the Clinton administration in 1999 to expand mortgage loans to low and medium income borrowers by increasing the ratios of their loan portfolios in poverty‐stricken inner city areas set out in the CRA of 1977. Because of these increased ratio requirements, institutions in the primary mortgage market demanded that Fannie Mae eased its credit Fannie Mae & Freddie Mac requirements on the mortgages it purchased, which enabled them to make loans to subprime borrowers at interest rates higher than conventional loans. Fannie Mae was also pressured by its shareholders to maintain its record profits.”
http://www.prmia.org/sites/default/files/references/Fannie_Mae_and_Freddie_Mac_090911_v2.pdf

“Then in 2003, the Bush Administration recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis in the late 1980s. A new agency would be created within the Treasury Department to assume supervision of Fannie Mae, to set capital‐reserve requirements for the company and to determine whether Fannie Mae is adequately managing the risks of its expanding portfolios.” (ibid)

“On September 31, 2003, the New York Times reported that the plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac was broken. The Times also reported Democratic opposition to Bush's plan: ‘These two entities ‐‐ Fannie Mae and Freddie Mac ‐‐ are not facing any kind of financial crisis,’ said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ‘The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.’" (ibid)

And your point is that Clinton started it, Bush tried to fix it, and the Democrats in Congress ("oversight") needed for for passing laws said there was no problem.

 

What about Bush blocking the Republican bill to regulate Fannie and Freddie? Are you ignorant of that fact because your RW propaganda sources never told you about it, or did you know that and your intentionally trying to create a deceptive portrayal of the facts?

 

Got link?

“Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999” http://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html

 

Here is the vote of the Democrats on HR 1461, the Federal Housing Finance Reform Act of 2005, which was the *only* bill to regulate F/F *ever* to be passed by a chamber of the Republican controlled Congress.

Party - Ayes - Nays
Republican 209 15
Democratic 122 74

http://clerk.house.gov/evs/2005/roll547.xml


And here is the the Bush administration's response to this, the only bill to regulate F/F ever pased by either chamber of the Republican controlled Congress:

"the Administration opposes the bill"

http://www.presidency.ucsb.edu/ws/index.php?pid=24851

And here's links to an article about Republican Mike Oxley, of Sarbannes-Oxley fame, then ranking Republican majority member and chair of the House Financial Committee on Financial Services and sponsor of that bill, saying how they "got a one-finger salute” from the Bush White House.


He fumes about the criticism of his House colleagues. “All the handwringing and bedwetting is going on without remembering how the House stepped up on this,” he says. “What did we get from the White House? We got a one-finger salute.”

The House bill, the 2005 Federal Housing Finance Reform Act, would have created a stronger regulator with new powers to increase capital at Fannie and Freddie, to limit their portfolios and to deal with the possibility of receivership.

Mr Oxley reached out to Barney Frank, then the ranking Democrat on the committee and now its chairman, to secure support on the other side of the aisle. But after winning bipartisan support in the House, where the bill passed by 331 to 90 votes, the legislation lacked a champion in the Senate and faced hostility from the Bush administration. Adamant that the only solution to the problems posed by Fannie and Freddie was their privatisation, the White House attacked the bill. Mr Greenspan also weighed in, saying that the House legislation was worse than no bill at all.

http://www.ft.com/cms/s/0/8780c35e-7e91-11dd-b1af-000077b07658.html
http://www.salon.com/tech/htww/2008/09/10/greenspan_bush_fannie_freddie/index.html
http://krugman.blogs.nytimes.com/2008/09/10/one-finger-salute/

It's amazing how many conservatives are completely unaware of these facts. Well, not really.

 

Opposing something because he wanted better, wow, great argument:

“STATEMENT OF ADMINISTRATION POLICY

(House)
(Rep. Baker (R) Louisiana and 19 cosponsors)

The Administration has long called for legislation to create a stronger, more effective regulatory regime to improve oversight of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks ("housing government-sponsored enterprises" or "housing GSEs") and appreciates the considerable efforts of Chairman Oxley and Chairman Baker in crafting H.R. 1461. However,

H.R. 1461 fails to include key elements that are essential to protect the safety and soundness of the housing finance system and the broader financial system at large. As a result, the Administration opposes the bill.

The regulatory regime envisioned by H.R. 1461 is considerably weaker than that which governs other large, complex financial institutions. This regime is of particular concern given that Fannie Mae and Freddie Mac currently hold only about half of the capital of comparable financial institutions.” http://www.presidency.ucsb.edu/ws/index.php?pid=24851

 

GAWD. Go to page one AND USE HONESTY THIS TIME BUBS

Q Did the Community Reinvestment Act under Carter/Clinton caused it?


A "Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "





Q I'm serious, my conservative friends are really really really adamant that policies from 1864, 1977, 1992, 1995, 1997 1999 and 2000 are to blame. What do I say to them?

A just explain the facts to them and show them the actual data that proves it didnt start until late 2004.

Q Yea, that didnt work. try again.

A Just point out to them that what they believe cannot be supported by any data whatsoever and that their empty factless rhetoric in no way changes any facts. For example, say they claim that the Bush Mortgage Bubble started in 1997 and they claim this is backed by almost every mainstream economist supported by empirical data. First ask them to back up their claims. And then ask them "how do you ignore the empirical data already posted in this thread?". Then ask them how anything from 1997 prevented Bush's regulators from enforcing proper lending standards. (of course they will do nothing but repeat their 'claims')

Q They really dont want to 'let go' of their beliefs. Why do they cling to such specious beliefs?
A Sorry, I cant explain it. Mental health issues are not my field of study



Q Where to they get such factless baseless beliefs?
A the 'conservative entertainment complex' has literally put out 1000's of lying editorials about this.



...Q What about the conservative 'narrative' that Bush tried to stop the bubble?

A Its simply another false narrative created by the 'conservative entertainment complex'. That narrative is 'crafted' around the statements of Bush saying fannie and freddie needed to be regulated. Lets look at the structure of this narrative

Bush said GSEs needed to be regulated (actually true)
Barney Frank and other dems said GSEs were fine (actually true)
Democrats blocked reform (false)
GSEs caused the crisis (false)

Just another mish mosh of lies spin and half truths the 'conservative entertainment complex' relies on to push their agenda. Lets deconstruct the narrative. Yes, Bush repeatedly talked about GSE reform. The problem is reform in 2003 had nothing to do with subprime mortgages. As I've already documented, Bush lifted the restrictions Clinton placed on the GSEs to limit their purchase of abusive subprime loans. Later in 2004, Bush would increase the GSE housing goals forcing them to buy more low income home loans and get them to buy 440 billion more minority home loans in the secondary market.

"•Substantially increase by at least $440 billion, the financial commitment made by the government sponsored enterprises involved in the secondary mortgage market, specifically targeted toward the minority market;"

Homeownership Policy Book - Executive Summary

"In April, HUD proposed new federal regulations that would raise the GSEs targeted lending requirements. HUD estimates that over the next four years an additional one million low- and moderate-income families would be served as a result of the new goals."

HUD Archives: HUD DATA SHOWS FANNIE MAE AND FREDDIE MAC HAVE TRAILED THE INDUSTRY IN PROVIDING AFFORDABLE HOUSING IN 44 STATES

[SUP]there goes the narrative that Bush tried to stop anything [/SUP]


Q What about the second part of the "bush tried to stop the bubble" narrative when "Barney Frank and other dems said GSEs were fine "? GSE's did go bankrupt

A Yes Barney Frank and other dems said there was nothing wrong with the GSEs. And they were fine in 2003. The Bush Mortgage Bubble hadn't started yet (remember we learned that it didnt start until late 2004). Once the Bush Mortgage Bubble started, any entity that bought mortgages or invested in mortgage backed securities got hammered. Of the big five investment banks, only one survived and remained independent (it did change its charter to commercial bank to qualify for TARP funds). Numerous hedge funds went under. And yes, Freddie and Fannie went bankrupt. The difference is nobody was forcing hedge funds, investment banks, pension funds, insurance companies etc. to buy mortgages and mortgage backed securities (see above).


Oh and here's the key part of about democrats saying there was nothing wrong with GSEs: They were just repeating what Bush told them. (yea, this doesnt get mentioned in any 'conservative entertainment complex' editorials does it?).

Testimony from W’s Treasury Secretary John Snow to the REPUBLICAN CONGRESS concerning the 'regulation’ of the GSE’s Sept 2003

"Mr. Frank: ...Are we in a crisis now with these entities?

Secretary Snow. No, that is a fair characterization, Congressman Frank, of our position. We are not putting this proposal before you because of some concern over some imminent danger to the financial system for housing; far from it.“

- THE TREASURY DEPARTMENT'S VIEWS ON THE REGULATION OF GOVERNMENT SPONSORED ENTERPRISES



Q are you serious? I've heard "Barney Frank said Freddie and Fannie were fine" a million times as if it proved something and now I find out that Bush said it too. I give up. Whats my next question?

A uh you want to ask me about "dems blocking reform"

Q fine, did dems block reform?

A Well since everything else the 'conservative entertainment complex' said was a lie, why wouldnt this be a lie? Now remembering that Bush forced GSEs to buy more low income home loans, got freddie and fannie to buy an additional 440 billion in mortgage backed securities and reversed the restrictions Clinton placed on the GSEs purchases of subprime home loans this will not be much of a shock

"Strong opposition by the Bush administration forced a top Republican congressman to delay a vote on a bill that would create a new regulator for mortgage giants Fannie Mae and Freddie Mac."

Oxley pulls Fannie, Freddie bill under heat from Bush - MarketWatch

Despite what appeared to be a broad consensus on GSE regulatory reform, efforts quickly stalled. A legislative markup scheduled for October 8, 2003, in the House of Representatives was halted because the Bush administration withdrew its support for the bill,


(fyi, broad consensus means it would have probably passed. what happened to it again? oh yea bush stopped it)

 

Yes, the Bush administration was famous for saying one thing and doing another.

So instead of this REPUBLICAN bill to increase regulation and oversight of Fannie/Freddie, supported by over 90% of the REPUBLICANS and over 60% of the Democrats, as well as REPUBLICAN Mike Oxley and Democrat Barney Frank, Chair and minority Chair of the House Financial Services Committee, as well as support the acting head of the Administration's OFHEO, which was responsible for Fannie/Freddie oversight, or even any attempt to compromise, Bush gave them the "one fingered salute" and torpedoed the bill and we got ... nothing.

Feel free to explain how nothing was better.

 

Bush told Barney and democrats there was nothing wrong with Freddie and Fannie in 2003

Bush stopped GSE reform in 2003

Bush’s toxic housing and GSE policies from 2004

Bush said there was no housing bubble in 2005 ( Bernanke, Bush ' guy , currently chairman of the president's Council of Economic Advisers, in testimony to Congress's Joint Economic Committee)

http://www.washingtonpost.com/wp-dyn/content/article/2005/10/26/AR2005102602255.html



Bush attacked the very reform that would have prevented the Bush Mortgage Bubble

Bush attacked reform because he said it “would lessen the housing GSEs' commitment to low-income homebuyers


The republican chairman of the House Financial Services committee Mike Oxley blames Bush for reform not passing

The critics have forgotten that the House passed a GSE reform bill in 2005 that could well have prevented the current crisis, says Mr Oxley(R), now vice-chairman of Nasdaq.”

“What did we get from the White House? We got a one-finger salute.”


DUBYA WAS THE REGULATOR OF F/F BUBS




June 17, 2004

Builders to fight Bush's low-income plan
Groups ask HUD to rethink plan that would increase financing of homes to low-income people.


Home builders, realtors and others are preparing to fight a Bush administration plan that would require Fannie Mae and Freddie Mac to increase financing of homes for low-income people, a home builder group said Thursday.

http://money.cnn.com/2004/06/17/real_estate/lowcost_housing/

 

Weird how Dubya could get 2 UNFUNDED tax cuts, 2 UNFUNDED wars, UNFUNDED Medicare expansion through the GOP majority House, BUT the only F/F reform bill to pass was one Dubya opposed, right???

Bush talked about reform. He talked and he talked. And then he stopped reform. (read that as many times as necessary. Bush stopped reform). And then he stopped it again. A million quotes cant change that.



One president controlled the regulators that not only let banks stop checking income but cheered them on. And as president Bush could enact the very policies that caused the Bush Mortgage Bubble and he did. And his party controlled congress.