FACTS on Dubya's great recession

Excuse me, but you don't seem to understand very much about banking.

Banks do not like foreclosures, they do not like becoming real estate barons.

What they want is their money, nothing more. They don't want people to fail, they want their customers to succeed.

Now, I ask you - what was different about this time, that didn't happen all the other times? There's a very simple answer - the widespread repackaging and bundling of mortgage loans and their loosely regulated sale on the secondary market.

Regulation is only part of the answer. The system is clearly to blame as well. The Dodd-Frank trend towards "dark" derivatives, and the complete failure of Dodd-era legislation to address what is now 2/3 of our financial economy.

Do you realize that the open interest on derivatives is presently seven hundred times the value of the underlying assets?

You know who's guaranteeing all that, right?

 

Yeah, Bankters are soooo weak willed they followed the regulated lenders to the bottom *shaking head*

Forget all about the Gov't regulated lenders loans performed 450%-600% better than the private markets, OR the world wide credit bubble (approx $20 trillion) 2000-2007...lol

Nah, it was decades old laws and policy that was at fault

 

True, that's ALL right wingers tend to do. They NEVER seem to accept responsibility for ANY of their failed policies or ideologies, ALWAYS blaming others.

Dubya's "Home ownership society" didn't cause the 2004-2007 underwriting collapse, it was decades old policy, Bill Clinton or Barney lol

Dubya just followed along with what Clinton and the Dems said about Iraq, they didn't have a choice but to invade

Dubya/GOP creating a UNFUNDED Medicare expansion without a penny of new revenues is good. Obamacares which is funded 100% is bad. BTW, CBO said costs this decade (2014-2020) will be the same for both programs)

NAFTA, the conservative Heritage idea that Ronnie gave US the dfay he ran for Prez in 1979 and which 60% of Dems voted against, is the liberals/Dems fault


9/11? NOT the group in charge for 9 months, NEVER holding a top level meeting on it, even with 40+ high level (CIA) warnings about Bin Laden or Al Quada, no it was Clinton for not taking out Bin Laden at a time he wasn't wanted for breaking any US law



lol

 

BANKS COULD CARE LESS ABOUT FORECLOSURES, THEY SIMPLY ACTED AS MIDDLE MEN AND PUSHED THE BAD PAPER OFF ON OTHERS, GENERALLY PENSION FUNDS AND MUNICIPALITIES!



Got it, you don't want to address Dubya's regulator failure, just want to look to the future? Let me gues, there is a GOP bill to address it? Didn't think so, lol


DUBYA NOT ONLY FOUGHT ALL 50 STATES WHO WANTED TO REGULATE THIS CRAP (YOU KNOW DUBYA WAS "MARKETS SELF CORRECT, RIGHT), HE ACTIVELY CHEERED THEM ON, AND BY FORCING F/F TO PURCHASE $440 BILLION IN MBS'S TO MEET HIS GOALS, HE FED WALL STREETS FRAUD BASED ORIGINATION SCHEME!!! Why do you think over 50% of the loans in 2005 wee low/no docs? Hint it WASN'T because they thought the loans were to perform better than checking a persons ability to pay!!!


You do know AIG had almost $600 billion in backing "asset backed securities" and yet had not a single penny to back stop the bets.

 

Your sarcasm is spot on. Too bad no one from the Right will be able to prove otherwise.

 

But the time in question has always been the beginning of 04 to the beginning of 07. The Democrats had just taken over at that the beginning of 07. Meaning, by that time, it was already too late. These MBS Dubya forced FF to use, were already in the works, during that critical time period.

 

As I understand, please correct me if I'm mistaken, the banks sold those loans and got their money. Thereby removing their incentive to make sure that the borrower could pay back the mortgage.At that point, the purchaser of the mortgage was stuck if the borrower did not pay off the loan. The mortgages were packaged together and rated AAA by top investment brokers sold to yet other investors and so it went.

What do you mean by "Dodd-Frank trend towards "dark derivatives""? Is Dodd-Frank designed to regulate them or does it somehow allow or encourage them?
What is a "dark derivative"?
Are you saying that 2/3 of our National economy is invested in these "dark derivatives"? If not, what makes up 2/3 of our National economy? Where are you getting this number from?

Please tell us where you get these numbers from.

 

You're missing the point. And you also don't know much about banking.

Look here - clever young investment bankers get rewarded (handsomely, usually) for coming up with new investment vehicles with which the bank can make money. However all of the bank's investments are vetted by senior (and I do mean senior) management, for instance at Goldman Sachs you don't get to sell hundreds of billions of dollars of securities without having the Directors' approval. And these senior directors are all very smart, they've all been around the block dozens of times in dozens of places. They would detect immediately if there was a risk big enough to threaten the bank's business. And in that case they would veto the clever new investment vehicle of the young advisor, because they value their jobs. They don't want to put the bank at risk, a senior banking director would never do such a thing.

It has nothing to do with the future, and your blind partisanship is making you stupid.

Dubya's regulators don't make the law, they only enforce it - and that's only if they have the budget, and if the political will exists. That's always true, of every regulatory activity by the federal government.

Dubya didn't make the rules, Chris Dodd did. (Or rather, didn't, as you as so painstakingly pointing out).

Do you think for even one instant the very wise banking directors would have exposed their institutions to such an obvious risk if the securities weren't guaranteed by the US government?

Now, ask yourself, what kind of a moron would guarantee an unregulated security?

Hm?

Look man, Dubya was a sleazebag, as scummy as they come - and he had plenty of problems, and he made plenty of mistakes - but "failure to regulate house flipping" isn't one of them.

The numbers say that this whole entire problem you just spent 85 pages talking about, was only five percent of the issue. Fannie and Freddie were only a tiny part of the problem. Look at Lehman - why exactly did they go under?

Right. And my question is "why does the law allow that?"

Dubya didn't make the law, Chris Dodd did.

Dubya can't enforce a law that doesn't exist. First Congress has to pass a law that says "this must be regulated", and they didn't. (In fact, they did the exact opposite, didn't they?)

 

But that's just it. In this case they never came up with "new investment vehicles". The only new investment vehicle was FF. FF was not really their "new investment".

 

Just a mishmash of more right wing nonsense trying to defend Dubya's regulator failure AS THE BANKSTERS RAN A WORLD WIDE CREDIT BUBBLE AGAIN. Weird how SOOOOO many banks were under capitalized after Harding/Coolidge's' "laisse affaire" garbage in the 1920's, THEN Ronnie's S&L crisis where they went big on trying to make money on developers TO FINALLY LEARN HOW TO BUNDLE (MBS'S) AND CREATE CRAP (synthietic CDO's???lol)


"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 Allen Greenspan. Sept 2008

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




INSIDE JOB REVIEW:

"An oversight by the film (Inside Job) was to ignore how risk managers at many banks knowingly failed to voice their fears about the way their companies operated. A risk manager once told me that to raise an issue that undermined the bank's multi-billion-dollar profits would have been to "sign his own death warrant". This inability to challenge trading desks generating billions in phantom profits was endemic." Ian Hart was a Wall St derivatives trader, before becoming a head-hunter for, among other banks, Lehman Brothers.

"This was a well-researched film that clearly explained the complexities of the crisis and the greed of bankers. It laid the blame squarely where it belongs – at the feet of bankers, of ratings agencies, of regulators ...Consumers enjoyed buying houses that ultimately they couldn't afford, but mortgages were shoved down their throats without any care on the part of the bankers. In the old days, the bank would say: "We don't think you can afford that mortgage, so we won't lend you money." The film showed how this kind of advice was thrown out of the window.

Unfortunately, it's clear that for many investment banks business continues pretty much as normal and that another crisis is only a matter of time. Sure, there's greater scrutiny of bonuses – but many bankers think they were not responsible personally for the crisis and they're worth every penny they're paid. Clearly they're not." The bank director


The interviewees above wished to remain anonymous




http://www.theguardian.com/film/2011/feb/17/inside-job-financial-crisis-bankers-verdicts




During the lending boom, the industry developed products that were "extremely risky that were pushed by everybody up and down the food chain," Mr. Robbins said. "We forgot about our customers, and making money and our commission checks were more important," he said. Kate Berry, "Wachovia Alum Has Tips for an Industry Rebound," American Banker (September 15, 200



The truth is that many of us in the industry were deeply distressed by the growing practice of pushing high risk loans on borrowers who had no reasonable expectation of being able to repay the mortgage. Disclosures were often less than adequate, and faced with a bewildering array of loan terms, borrowers tended to trust their mortgage banker or broker. The broken trust that resulted has damaged borrower confidence in the mortgage industry. I liken the situation to that of a doctor and patient dealing with a medical procedure. The patient bears some reasonable risk. But they don't bear the risk of malpractice by the doctor. In our industry, we have frankly seen too much mortgage malpractice. - Testimony before the Senate Banking Committee Washington, D.C. April 10, 2008



http://www.responsiblelending.org/m...the-financial-crisis-quotes-from-bankers.html

 

More right wing mishmash and dodging. Shocking

The massive growth of nonconventional mortgage securitization had spread at least $3.8 trillion of assets directly linked to these mortgages to financial institutions around the world by the beginning of 2007. Nonetheless it is clear that the markets, the credit ratings agencies, regulators,and most of the large banks all registered comparatively little response when housing prices started
to stall out and mortgage default rates began to rise in late 2006. Several large banks such as Merrill Lynch and Citibank continued expanding their non-prime businesses aggressively during the first two quarters of 2007. In March of 2007 Fed chairman Ben Bernanke stated in congressional testimony that “at this juncture, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.” The credit ratings agencies also continued to maintain an implausibly upbeat outlook through the first two quarters of 2007.


Only after they faced widespread mocking on the financial blogosphere, congressional questioning, and an overall crisis of legitimacy did the agencies take serious steps to adjust MBS bond ratings to reflect the deteriorating conditions in the mortgage market. Their reasons for reticence were clear. First, they had a vested interest in hoping the situation would improve since their reputations and significant portion of the revenues rested on a strong MBS market. Second, they knew what downgrades would mean




Based on the preceding discussion, we would argue that the proximate causes of the crisis can be found in two shifts in the structure of the mortgage finance field. First, the easy credit available to all forms of financial investors after 2000 meant that money could be made by borrowing money at a low interest rate and then turning around and buying MBS.

This process of leveraging was the core strategy of banks and many other financial institutions


The steep decline in mortgage originations after 2003 reflected neither weakness in the housing market nor slackening demand from the secondary market. Rather, a saturated prime market and an interest rate hike led to a significant drop off in the refinancing activity that had driven the 2003 boom


The second cause (which is not well understood) is as important as the first. By 2004, there were simply not enough prime or conventional mortgages left in the U.S. to package into MBS


So, while those who had money to buy MBS were looking for product, those who were originating and packaging MBS lacked enough to sell them. This meant that there was a huge incentive to increase the number of mortgages. This incentive sent loan originators looking for new mortgage markets to feed the securitization machine and led to the rapid growth of the subprime and Alt-A markets.

The aggressive pursuit of those markets by banks of all kinds has led us to the current situation. The main role that regulators played was to refuse to intervene into these markets


Banks used cheap capital to create a bubble. Their lending strategies fueled and fed off the housing bubble, and they did so using mortgage products whose performance was premised on continued growth of that bubble.

http://www.tobinproject.org/sites/tobinproject.org/files/assets/Fligstein_Catalyst of Disaster_0.pdf

 

A way to have avoided Bush's Great Recession:

 

MORE NONSENSE. CHRIS DODD? LOL, You mean the GOP majority House 1995-Jan 2007 had NOTHING to do with it? Chris Dodd who had a 51 vote margin of Dems in the Senate for 2 years, was responsible??? lol


THE GAAADMN SECURITIES WERE NOT GUARANTEED BY THE GOV'T, HOW THE FKK DO YOU NOT NOT THAT? THAT WAS WHY DUBYA HAD TO "DESTROY THE FREE MARKET TO SAVE IT" BUBS!!!

Yes, the US economy would've tumbled into ANOTHER GOP great depression IF we allowed the Banksters to fail AGAIN!!!


“When regulators don’t believe in regulation and don’t get what is going on at the companies they oversee, there can be no major white-collar crime prosecutions,”...“If they don’t understand what we call collective embezzlement, where people are literally looting their own firms, then it’s impossible to bring cases.”

http://www.nytimes.com/2011/04/14/business/14prosecute.html?pagewanted=all

The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence.
'
http://www.huffingtonpost.com/william-k-black/the-two-documents-everyon_b_169813.html

Dubya was warned by the FBI of an "epidemic" of mortgage fraud in 2004. He gave them less resources.

http://articles.latimes.com/2008/aug/25/business/fi-mortgagefraud25

Shockingly, the FBI clearly makes the case for the need to combat mortgage fraud in 2005, the height of the housing crisis:

Financial Crimes Report to the Public 2005

http://www.fbi.gov/stats-services/publications/fcs_report2005

The Bush Rubber Stamp Congress ignored the obvious and extremely detailed and well reported crime spree by the FBI.

THE BUSH ADMINISTRATION and CONGRESS stripped the White Collar Crime divisions of money and manpower.

http://www.nytimes.com/2008/10/19/washington/19fbi.html?pagewanted=all

DUBYA FOUGHT ALL 50 STATE AG'S IN 2003, INVOKING A CIVIL WAR ERA RULE SAYING FEDS RULE ON "PREDATORY" LENDERS!

DUBYA ALLOWED THE INVESTMENT BANKS TO GO FROM 12-1 LEVERAGE TO 35-1+ IN 2004

THE SEC RULE THAT BROKE WALL STREET

http://www.cnbc.com/id/46808453#



DUBYA FORCED FANNIE/FREDDIE TO PURCHASE $440 BILLION IN MBS'S IN THE SECONDARY MARKET (THINK WALL STREET(THINK WALL STREET).


DUBYA GOT RID OF CLINTON'S RULE (NOTE THESE ARE RULES BUBS, REGULATORY AGENCIES CHANGE, NOT CONGRESS) THAT FORBID SUBPRIME LOANS IN 2004. AT NEAR THE SAME TIME IN 2004 DUBYA UPPED THE "AFFORDABLE HOUSING GOALS OF F/F FROM 50% TO 56%.


CONGRESS'S FAULT? lol

 

[/QUOTE]

Therein lay the problem.

The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and thrift institutions and the federal branches and agencies of foreign banks in the United States. ...

Headquartered in Washington, D.C., it [the OCC] has four district offices located in New York City, Chicago, Dallas and Denver. It has an additional 48 field offices throughout the United States, and a London office to supervise the international activities of national banks. It is an independent bureau of the United States Department of the Treasury and is headed by the Comptroller of the Currency, appointed to a five-year term by the President with the consent of the Senate.

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

John C. Dugan was the 29th Comptroller of the Currency for the United States Department of the Treasury, sworn in August 2005. He completed his term on August 14, 2010. ... Comptroller Dugan was the Under Secretary of the Treasury for Domestic Finance in 1992 and served in Department of the Treasury from 1989 to 1993. Before that he was minority counsel and minority general counsel for the United States Senate Committee on Banking, Housing, and Urban Affairs, from 1985 to 1989. He also served as director of Minbanc, a charitable organization, and was a member of the American Bar Association's committee on banking law. Before serving as Comptroller, Dugan worked for 12 years as a lobbyist representing the banking industry.[1]

​

http://en.wikipedia.org/wiki/John_C._Dugan

The OCC, responsible for regulation of the nation's bank, under the Department of the Treasury, which is under the White House. It's Director is appointed by the President and confirmed by the Senate.

And who did President Bush appoint and the Republican Senate approve for the job of regulating and overseeing the nations' banks in the midst of the worst housing lending bubble in modern history?

A guy who had spent the previous 12 years as a DC lobbyist for the banks.

You can't make this stuff up.

 

Therein lay the problem.

The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and thrift institutions and the federal branches and agencies of foreign banks in the United States. ...

Headquartered in Washington, D.C., it [the OCC] has four district offices located in New York City, Chicago, Dallas and Denver. It has an additional 48 field offices throughout the United States, and a London office to supervise the international activities of national banks. It is an independent bureau of the United States Department of the Treasury and is headed by the Comptroller of the Currency, appointed to a five-year term by the President with the consent of the Senate.

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

John C. Dugan was the 29th Comptroller of the Currency for the United States Department of the Treasury, sworn in August 2005. He completed his term on August 14, 2010. ... Comptroller Dugan was the Under Secretary of the Treasury for Domestic Finance in 1992 and served in Department of the Treasury from 1989 to 1993. Before that he was minority counsel and minority general counsel for the United States Senate Committee on Banking, Housing, and Urban Affairs, from 1985 to 1989. He also served as director of Minbanc, a charitable organization, and was a member of the American Bar Association's committee on banking law. Before serving as Comptroller, Dugan worked for 12 years as a lobbyist representing the banking industry.[1]

​

http://en.wikipedia.org/wiki/John_C._Dugan

The OCC, responsible for regulation of the nation's bank, under the Department of the Treasury, which is under the White House. It's Director is appointed by the President and confirmed by the Senate.

And who did President Bush appoint and the Republican Senate approve for the job of regulating and overseeing the nations' banks in the midst of the worst housing lending bubble in modern history?

A guy who had spent the previous 12 years as a DC lobbyist for the banks.

You can't make this stuff up.[/QUOTE]

 

I am curious why do you name a recession after a President? What do you call the 2000/2001 slowdown recession?

 

There was NO recession in 2000-2001. Sure stocks dived after the "free markets" hosed everything again, but there was no recession in the US

According to the National Bureau of Economic Research (NBER), which is the private, nonprofit, nonpartisan organization charged with determining economic recessions, the U.S. economy was in recession from March 2001 to November 2001, a period of eight months at the beginning of President George W. Bush's term of office. However, economic conditions did not satisfy the common shorthand definition of recession, which is "a fall of a country's real gross domestic product in two or more successive quarters,"



http://en.wikipedia.org/wiki/Early_2000s_recession#United_States

Want to give Clinton 80%+ "credit" for allowing that to blow up? I'm 100% behind you!



I call it Dubya's great recession BECAUSE he worked so hard to get it Bubs. Simple enough for those who are honest to see!

 

Here's the problem; you and Iremon have them swamped with so many links to begin with, which reinforces your case, that they simply can't keep up. There are just too many resources of information out there that point to Bush as the main culprit in all this. It is such a powerful case, that if you will notice, and I know you and Iremon have, most of the links you post go virtually unchallenged. And that has been the case since this thread started. Kudos to you and Iremon for this mountain of information, that for the most part go unchallenged.

 

I have noticed that and thanks.

It's "Iriemon by the way, with two "i"'s. Thanks.

 

Causes of the "Great Recession": https://www.youtube.com/watch?v=aDS5fuVoIFA Also a good discussion on the current disastrous path we are on.

Yes, a 15 year old girl can trace the genesis back to Clinton, the CRA, and reduced credit requirements to help poor people buy homes. Once again, government forcing measures that are not grounded in good economics and setting precedent by taking the pain of failure off the back of participants by the use of government guarantees prove to cause huge problems. Regulators FORCED the banks to make subprime mortgages.

Regulations would have stopped the mess you say? Regulations forcing banks to make quotas of loans to low and moderate income people is what CAUSED the problems. Then you give them a market in the GSEs to sell them downstream, then allow the GSEs under Clinton cronies Raines, Johnson, Gorelick to package and sell CDOs downstream and you have enabled the Great Recession.

Oddly, those who want to dump this all at the feet of GWB over a two or three year time frame don't seem to want to acknowledge the seeds of the housing bubble, thus the recession were planted in the Clinton administration. They also don't want to acknowledge that had the Democrats (who resisted ALL regulations of the GSEs which they had used as employment for their cronies) had control of the House and Senate in 2006. Barack Obama was a Senator and also resisted cracking down on the GSEs.

And, because this is such a good and quick summary of the mess: https://www.youtube.com/watch?v=TuCHqPkxGqg Watch Bawney Fwank and Maxine Waters stop the institution of oversight on GSEs and the housing market.

Posting lots of stuff in confusing paragraphs and overstated rhetoric doesn't prove the case that all the problem was caused by Bush.

 

LOL, now we have conservatives bragging about how they get their information from internet videos featuring 15 year-olds who don't even know the difference between a deficit ("the biggest problem we have is the $16 trillion deficit") and the debt, supposedly lecturing us on the housing crisis.

As is obvious from the content of his post.

What will they be citing next? Interviews with kindergarteners?

 

Just MORE right wing crap. Shocking you'd take a 15 y/o "opinion" on a WORLD WIDE CREDIT BUBBLE AND BUST

Even more silly is YOU accept her premise that the US has a $16+ trillion DEFICIT instead of DEBT.OR her false premise that in 3 years it will be 23 trillion, (BY 2015, HINT IT'S AT $18 TRILLION DEBT TODAY, LOL) lol


DEMS COULDN'T STOP A SINGLE GOP BILL IN THE HOUSE 1995-JAN 2007

ONLY ONE BILL MADE IT OUT OF THE HOUSE ON GSE REFORM, HR1461 IN 2005, DUBYA OPPOSED IT, LOL



GAWDDD


START AT PAGE ONE 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."




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



"Another form of easing facilitated the rapid rise of mortgages that didn't require borrowers to fully document their incomes. In 2006, these low- or no-doc loans comprised 81 percent of near-prime, 55 percent of jumbo, 50 percent of subprime and 36 percent of prime securitized mortgages."

https://www.dallasfed.org/assets/documents/research/eclett/2007/el0711.pdf

Q HOLY JESUS! DID YOU JUST PROVE THAT OVER 50 % OF ALL MORTGAGES IN 2006 DIDN’T REQUIRE BORROWERS TO DOCUMENT THEIR INCOME?!?!?!?

A Yes.




Q WHO THE HELL LOANS HUNDREDS OF THOUSANDS OF DOLLARS TO PEOPLE WITHOUT CHECKING THEIR INCOMES?!?!?

A Banks.

Q WHY??!?!!!?!

A Two reasons, greed and Bush's regulators let them




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.

 

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




Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom



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

These firms had business models that could be called “Lend-in-order-to-sell-to-Wall-Street-securitizers.” They offered all manner of nontraditional mortgages — the 2/28 adjustable rate mortgages, piggy-back loans, negative amortization loans. These defaulted in huge numbers, far more than the regulated mortgage writers did.

Consider a study by McClatchy: It found that more than 84 percent of the subprime mortgages in 2006 were issued by private lending. These private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year. And McClatchy found that out of the top 25 subprime lenders in 2006, only one was subject to the usual mortgage laws and regulations.

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






It is clear to anyone who has studied the financial crisis of 2008 that the private sector’s drive for short-term profit was behind it. More than 84 percent of the sub-prime mortgages in 2006 were issued by private lending. These private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year. Out of the top 25 subprime lenders in 2006, only one was subject to the usual mortgage laws and regulations. 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.forbes.com/sites/stevedenning/2011/11/22/5086/

 

Okay, my bad! My eyesight has seen better days. Sorry!

 

"Irie" was the name of my sailboat. "Irie" = Caribbean slang for "alright" as in "everyting be irie"
"Mon" = Caribbean slang for "man"