chess online
| From | Message | ||
|---|---|---|---|
|
 Obvious: Liberal policies at the core of housing meltdownStep 1) Force banks to make loans to the poor that they would not otherwise make. Step 2) When the thing goes belly up blame the people we hate the most: bankers. The theme is literally Shakespearean! "Congressman Frank, of course, blamed the financial crisis on the failure adequately to regulate the banks. In this, he is following the traditional Washington practice of blaming others for his own mistakes. For most of his career, Barney Frank was the principal advocate in Congress for using the government's authority to force lower underwriting standards in the business of housing finance. Although he claims to have tried to reverse course as early as 2003, that was the year he made the oft-quoted remark, "I want to roll the dice a little bit more in this situation toward subsidized housing." Rather than reversing course, he was pressing on when others were beginning to have doubts. His most successful effort was to impose what were called "affordable housing" requirements on Fannie Mae and Freddie Mac in 1992. Before that time, these two government sponsored enterprises (GSEs) had been required to buy only mortgages that institutional investors would buy--in other words, prime mortgages--but Frank and others thought these standards made it too difficult for low income borrowers to buy homes. The affordable housing law required Fannie and Freddie to meet government quotas when they bought loans from banks and other mortgage originators. At first, this quota was 30%; that is, of all the loans they bought, 30% had to be made to people at or below the median income in their communities. HUD, however, was given authority to administer these quotas, and between 1992 and 2007, the quotas were raised from 30% to 50% under Clinton in 2000 and to 55% under Bush in 2007. Despite Frank's effort to make this seem like a partisan issue, it isn't. The Bush administration was just as guilty of this error as the Clinton administration. And Frank is right to say that he eventually saw his error and corrected it when he got the power to do so in 2007, but by then it was too late." www.theatlantic.com |
||
|
bill as usual, your view is one sided. watch the documentary 'inside job' for a deeper understanding of this issue. |
||
|
ZL... ----------------------- I did a little research on this point and discovered a study done by the Federal Reserve Bank of St. Louis that sought to determine who was responsible for the forclosure crisis. The purpose of the study was not to cast blame but to help guide future policy (i.e. are the lending reforms of Dodd-Frank going to be enough to prevent a future crisis). The report was titled: The Foreclosure Crisis in 2008: Predatory Lending or Household Overreaching? In the report they looked at the issue both demographically (buyer sophistication); and geographically (low vs. high income areas). In every area of examination the report determined that the problem lie, not with predatory lending, but with household overreaching. Here is an overview of the study’s more salient points: “Because we were interested in identifying the characteristics of households that were responsible for a disproportionate number of foreclosures, we looked beyond the simple averages described above. PersonicX Life Stage Segmentation is an Acxiom classification scheme that divides households into 21 life stages based on marital status, number of children in the household, employment status and other socio-economic characteristics.” “To see which of the 21 PersonicX groups contributed the most disproportionately to the foreclosure crisis, we calculated the share of total foreclosures represented by each group and the share of all households represented by each group. We subtracted the household share from the foreclosure share to derive the "excess foreclosure shares" of each group.” “Rather than rely solely on Acxiom's groupings, we also separated all the households into quadrants based on income and education to identify the most leveraged households in each quadrant based on their loan-to-income ratio. We conjectured that the most over-leveraged households in the low-income, low-education (bottom) quadrant were more likely to be victims of predatory lending, while the most overleveraged households in the high-income, high-education (top) quadrant were more likely to have overreached. Our tests showed that the most-leveraged households in the top quadrant were statistically more likely to enter foreclosure than the other households in the same quadrant. This pattern was not true, however, for households in the bottom quadrant. Once again, overreaching appeared to be the more important explanation of mortgage foreclosure.” “In addition to household profiles, our hypotheses also have differing implications for the geographic distribution of foreclosures. The predatory lending hypothesis predicts that the geographic distribution of foreclosures will reflect the spatial distribution of low-income and low-educated households because bankers (or their brokers) will seek out households most easily deceived, regardless of the household's location. In contrast, the overreaching hypothesis predicts that bubble dynamics will be the important factor explaining the foreclosures. This hypothesis implies that foreclosure rates will spike in specific "hot spots" where households and speculators bid up prices in an effort to buy more-expensive homes before these homes become unaffordable.” “To more firmly support this visual evidence, we ranked all of the 50 states by home price appreciation (between 2000 and 2007) and foreclosure rates (in 2008) to evaluate their statistical correlation. The overreaching hypothesis suggests that these two characteristics should be positively correlated. Indeed, for all the states, the correlation is 0.23—positive as the overreaching hypothesis suggests, though not statistically different from zero. When we exclude the Great Lakes states, however, the rank correlation rises to 0.43 and is statistically significant. Again, the evidence is more consistent with the overreaching hypothesis than with the predatory lending hypothesis.” “By combining household foreclosure data from RealtyTrac with household data from Acxiom, we were able to create a profile of households in foreclosure during the early stages of the financial crisis. We found that many foreclosed households were young with relatively high income and education levels. Moreover, geographic foreclosure patterns were consistent with bubble dynamics as illustrated by the positive correlation between home-price appreciation and subsequent foreclosure rates. The weight of the evidence supports the overreaching hypothesis.” www.stlouisfed.org This is not to say that bankers were completely innocent; just that they are not nearly so responsible as they are made out to be. <...and they bundled those loans and resold them as secure investments.> ----------------------- You make it sound as if Fannie and Freddie were hoodwinked… nothing could be further from the truth: "The chief executive of the mortgage giant Freddie Mac rejected internal warnings that could have protected the company from some of the financial crises now engulfing it, according to more than two dozen current and former high-ranking executives and others." "In an interview, Freddie Mac’s former chief risk officer, David A. Andrukonis, recalled telling Mr. Syron in mid-2004 that the company was buying bad loans that “would likely pose an enormous financial and reputational risk to the company and the country.” “He said we couldn’t afford to say no to anyone,” Mr. Andrukonis said. Over the next three years, Freddie Mac continued buying riskier loans." "Indeed, executives of both companies maintain that one of the reasons the firms hold so many bad loans is that Congress has leaned on them for years to buy mortgages from low-income borrowers to encourage affordable housing. In 2004, Freddie Mac warned regulators that affordable housing goals could force the company to buy riskier loans." www.nytimes.com <as usual, your view is one sided. watch the documentary 'inside job' for a deeper understanding of this issue.> -------------------------- I’ll take a look at it, but I much prefer the written word to videos. |
||
|
Pecos This is the wording on the card (minus the different size fonts and colors etc): *************************************************************** A loan program designed to make owning a home more affordable. Only from Bank of America & Acorn Housing Corporation NO FICO score requirement Special reduced interest rate (regardless of FICO) 95% financing with loan amounts up to $500,000 (higher for 2-4 units) NO private Mortgage Insurance (PMI) even up to 100% financing Undocumented income may be used to qualify (up to $1200) Available for purchase and refinance Do not have to be a first-time buyer ***************************************************************** I keep that postcard as a reminder of how stupid our law makers can be. They and our community organizers went around forcing banks to make these loans. Is it any wonder we had a housing crisis? |
||
|
bill |
||
|
ZL.. ---------------------- There was a "malfeasance" aspect of the financial meltdown that was more serious than the explosion of foreclosures? Can you please explain a bit more? <...i never said fannie and freddie were hoodwinked. they participated in the scandal.> --------------------- I think "misguided liberal social policies" is a fairer way to describe it than "scandal." |
||
|
BTW... Softy I forgot about Acorn. Maybe ZL was right.... "scandal" is an apt description. |
||
|
softaire I respect Clinton in general, but definitely not for this. |
||
|
Bush tried to stop the crisis The George W. Bush administration was prevented from taking official action due to Senate Bill 190 of the 109 Congress never being allowed a full Senate vote, even though it was passed out of committee on a 13-9 vote along party lines (13 Republicans voted "Yes" and 9 Democrats voted "No"),[56] doing so would have prevented Congress' home ownership goals being realized. en.wikipedia.org More detail on S190: Below is a report of S.190 back in 2005 where some members of the Senate, Elizabeth Dole Chief among them, did the right thing and tried to lasso the craziness of Fannie Mae and Freddie Mac and got slapped down for it. The bill would have really helped to not bring us to where we are today. It got gunned down like a dog in the street and never came before the Senate for a vote. All the debate was about what types of assets could be held in the portfolios of Fannie and Freddie. The folks who voted "Yea" were trying to help by limiting the whacko subprime junk the government secured enterprises could hold. The "No" votes are those culpable for the mess we have now, they wanted the party to continue on, and now you are on the hook for it. randallparker.blogspot.com |
Log in 
