The Community Reinvestment Act did not suggest or demand that mortgage companies lend money to people with no jobs, no credit and no potential to have either. They did that because they were greedy. They did that because the regulations that were in place when Jimmy Carter was President were decimated under Reagan and finally destroyed by a Republican Congress aided and abetted by Bill Clinton.
There is a lot of blame to go around here and a lot of people did things they should not have been able to do had government been enforcing regulations.
IMHO, the first step in getting us out of this mess is to guarantee the mortgages and get people back into their homes. Make sure that Wall Street knows that the bogus mortgages they sold and resold for billions are good now and keep the least guilty Americans (the homeowners) off the streets.
If you lost a few billion because you made risky investments that you clearly knew (with your MBA) were based on thin air, then that's your tough luck. If you believed that slick mortgage broker and now you and your family are being tossed out into the street, let's give you a break.
By the way, You don't have to be the head checker at the Walmart to figure out the cause of the failure of Fannie Mae and Freddie Mac.
They guaranteed loans to people who can't afford to buy houses on an Adjusted Rate Mortgage plan, and then when the mortgage payments escalated, the mortgagees defaulted. Then Freddie Mac and Fannie Mae were left holding thousands of mortages that weren't being paid off.
The cuplrits behind guaranteeing these bad loans are Representatives of the Government along with community organizing groups (ACORN, etc) who insisted that people who couldn't afford housing be given loans in spite of their inability to make the payments, and forced the mortgage industry to grant approval to the people who can't afford to buy their own houses, against the mortage company's better judgement.
Thus, by sticking their collective noses into private industry's business, Government do-gooders created this mess. Also known as Democrats.
Now, they blame Republicans.
I am not a financial genius, but speaking as one of those people who was granted a loan in spite of an inability to pay, and because of that, lost my house, I think I have some authority to speak on the subject.
And, not being a feduciary genuis, and although I suspected something was rotten at the time, I nevertheless trusted a lender instead of my own common sense and judgment.
Now, as a sadder but wiser man, I say, NO BAIL-OUTS! Let the free market clean up their own mess. We will eventually be stronger for it.
"Still don't get how to put a video on your blog, eh?"
Oh, I get it just fine, Mark. I simply went to the place where I saw the link and copied and pasted that instead. I think it was at your blog where I came upon it.
I did my research. When you look at actual data, instead of right-wing assumptions, you find that CRA banks made fewer risky loans. You will also find that the foreclosure rates for CRA loans was 0.047% in one state where the subprime rate was 14%!
And Ellen Seidman, the former director of the US Office of Thrift Supervision, "CRA does not either encourage or condone bad lending. Bank regulators were decrying bad subprime lending before the turn of the millennium (see Interagency Guidance on Subprime Lending), and warning the CRA-covered institutions we regulated that badly underwritten subprime products that ignored consumer protections were not acceptable. Lenders not subject to CRA did not receive similar warnings."
We have to face the fact that this crisis was caused by greedy financiers who gave mortgages to people whose qualifications they did not check, then re-packaged and re-sold those mortgages over and over knowing that the underlying assets were valueless. This is both a business failure and a political failure, and in the latter case, one of which both parties are guilty.
"We have to face the fact that this crisis was caused by greedy financiers who gave mortgages to people whose qualifications they did not check, then re-packaged and re-sold those mortgages over and over knowing that the underlying assets were valueless. This is both a business failure and a political failure, and in the latter case, one of which both parties are guilty."
This is true, except the last half of the last statement. Both parties are not guilty. Only the Democrat party is. Chris Dodd, Barney Frank, both Democrat banking committee chairs, Jim Johnson, Jamie Gorelick, and other Democrats who benefited by Fannie Mae and Freddy Mac's cooked books bonus programs. Even Barack Hussein Nobama enriched himself by millions of dollars taking kickbacks from those two institutions. Democrats all. Yes, I know there were some republicans involved, too, but their involvement was almost negliglible compared to the "morally superior" Democrats.
Plus, overregulation played an important part in this fiasco. regulation that was wholly sponsored by Democrats. The republicans tried to avert this disaster, and were continually blocked by the Democrats.
It's all the Democrats fault.
Really, DL, you should change your non-de-plume to Democrat Lover rather than Democracy Lover. It would be much more accurate.
Yes, I know there were some republicans involved, too, but their involvement was almost negliglible compared to the "morally superior" Democrats.
Sure, the Republicans just controlled the White House, the Senate, and the House from 2000 to 2006. How can anyone think they might have anything to do with this?
If I had a nickel for every time that I heard Bush or one of his lackeys tout record levels of home ownership as validation of his economic policies, I would not be concerned about what happened to my IRA yesterday.
That's a good point, actually. I wonder what the numbers would look like if the bad mortgages were taken out. Of course, record numbers of home owners IS a good thing and can be a result of the overall great economic health we've enjoyed for the last seven years (up to about nine months ago), even with the bad mortgages taken into account. (I think I just repeated myself.) But bad mortgages or not, the fact remains that the economy has been great overall for the lion's share of Bush's term.
Marshall, maybe you or one of your posters can answer a question for me.
I’ve been following with interest the current debate on the “bail-out” bill. Right off the bat I have to say I’m highly skeptical of anything concerning this mess that’s rushed through congress.
But here’s a little something that I find very “disturbing”.
It seems that I keep hearing that we have to pass this bill, and fast, or our credit will dry up. Then the politicians and pundits bring up the specter of an employer not being able to make payroll, because of the “credit crises”. You’ve all heard it. Let me break it down. “You dumb-ass bumpkins, quit calling and emailing our offices, telling us you’re against this bill, don’t you know, you ignorant fools, you might not get paid if we don’t pass this bill”.
Poppycock! With very few exceptions (maybe a contractor with a long-term contract) any business that has to borrow money to make payroll is exactly the kind of person or entity that shouldn’t be borrowing money. Their business is in dangerously bad shape and lending money to such an entity is exactly what got us into this mess to start with.
So this kind of rhetoric makes me distrust this bill even more.
I’m I wrong? Is there something I haven’t considered?
I would think that there are many types of businesses that have perfectly valid reasons for tapping credit lines to make payroll during certain parts of the year. Many retailers make the overwhelming majority of their profits during the holiday season. I would expect them to use credit lines to make payroll and build up inventory in the fall. Many accounting firms make most of their profits during tax season but have to make payroll throughout the rest of the year. Car dealerships have big outlays at the beginning of the model year.
But you see Vinny that’s where your wrong. Healthy businesses plan for slow downs.
It’s my business to know small business. I’m telling you what you put forth is not the case.
Retailers, have plenty to make payroll, if they’re a profitable business. If they’re gambling on a good holiday season, then they are not a good credit risk. Accounting firms know when they’re “high times” are versus low times and plan for such.
But I appreciate your attempt. Because I’d like to know.
While I think Vinny's points are valid, and actually reflected in something I heard Hugh Hewitt say this evening (don't ask for details---it's bowling night and I'm lubed), it would seem to me that such businesses need to be managing their money better. If they are seasonal, that seasonal profit should be lasting them throughout the year so that borrowing shouldn't be necessary. At some point, all borrowing requires repayment. If borrowing is to meet debt, when does one catch up and have a surplus? Isn't that the point of having a business? To build wealth? To me, building wealth means, to use a cartoon example, Scrooge McDuck sitting on a pile of cash. Living on credit is not one's own pile, but someone else's. I understand credit for start-ups and expansions, but not for running day to day business. Sounds like some are living beyond their means. As Blamin suggests, they're not the type to whom one should be lending dough.
I've been trying to keep up with all the varied opinions on this issue and it's tough to do. At present, I feel about it in a manner similar to Newt Gingrich who opposed it, but now feels like to do nothing is far worse. Except I'm not sure of the consequences of doing nothing. There's been varied opinions on that as well. Whatever happens, I hope they go back to some version of what came before all this, which was to only lend to those most likely to pay back. The rest need to increase their means by other means.
Don't get me wrong. All we have is what we're told. I don't feel good about that anymore than I feel good about a bail-out. Just for starters, it should be a loan with consequences attached, not earmarks. We, the people, have to sit back and take it because other than voting these bums out in November, we have to take their word for things, reluctantly or not. Making matters worse, there are Repubs about whom I've felt are good dudes on both sides of this issue. It blows.
I think the consensus of most lawmakers is that doing something is better than doing nothing.
I disagree. I think if we let the free market work through this, it will eventually survive. The Congress is in too much of a hurry to fix this thing. I believe it has to do with the fact that the elections are so close. They don't want to appear to the voters as if they aren't doing something.
Here's an idea:
Someone should do some research and see how many of the lawmakers voting yes are up for re-election, and how many aren't. Same for those voting no. I bet many of them aren't running.
I also think throwing money at this problem is the absolute worst thing to do. It is treating the sympton instead of the disease. It is a temporary fix at best, and economic suicide at worst.
I agree with some of your points for sure and your basic, underlying philosophy absolutely.
I heard today from some talk show guy that there are indeed a goodly number of supporters of this bail out who are up for re-election. And I agree that November is a definite influence on this situation. In addition, I agree that our economy can recover from most anything given the chance. That's because, as McCain has stated but from which he has since seemed to back off, the fundamentals of our economy are strong. What some seem to miss is that those fundies can be strong and we can still find ourselves in trouble because the fundies weren't applied or "obeyed".
Unfortunately, for me, I haven't heard much of anything in terms of what the consequences of doing nothing would be. There have been a few economists who oppose the bail out on some talk shows, but as luck would have it, I haven't been able to be near a radio when they were on. So on that score, I'm totally in the dark.
My fear is that though we might eventually survive as a nation, many who aren't to blame might get f'd big time. I wouldn't want that to happen. Hard to keep up with all the angles of this one.
23 comments:
Marshall,
The Community Reinvestment Act did not suggest or demand that mortgage companies lend money to people with no jobs, no credit and no potential to have either. They did that because they were greedy. They did that because the regulations that were in place when Jimmy Carter was President were decimated under Reagan and finally destroyed by a Republican Congress aided and abetted by Bill Clinton.
There is a lot of blame to go around here and a lot of people did things they should not have been able to do had government been enforcing regulations.
IMHO, the first step in getting us out of this mess is to guarantee the mortgages and get people back into their homes. Make sure that Wall Street knows that the bogus mortgages they sold and resold for billions are good now and keep the least guilty Americans (the homeowners) off the streets.
If you lost a few billion because you made risky investments that you clearly knew (with your MBA) were based on thin air, then that's your tough luck. If you believed that slick mortgage broker and now you and your family are being tossed out into the street, let's give you a break.
Democracy Lover,
Do a simple search of “The Community Reinvestment Act”, and do a little research.
I’m guessing you’ll be very surprised at what you find. That is, you’ll be surprised if you’re a hunter of truth.
Marshall, A pretty good video. The quote: “…to have their dreams torn away by reality…” was especially powerful.
Still don't get how to put a video on your blog, eh?
Don't copy and paste the URL. Copy and paste the embed code.
Sorry, Blogger posted my same comment twice. I didn't click it twice. I swear i didn't! That's my story and I'm sticking to it.
By the way, You don't have to be the head checker at the Walmart to figure out the cause of the failure of Fannie Mae and Freddie Mac.
They guaranteed loans to people who can't afford to buy houses on an Adjusted Rate Mortgage plan, and then when the mortgage payments escalated, the mortgagees defaulted. Then Freddie Mac and Fannie Mae were left holding thousands of mortages that weren't being paid off.
The cuplrits behind guaranteeing these bad loans are Representatives of the Government along with community organizing groups (ACORN, etc) who insisted that people who couldn't afford housing be given loans in spite of their inability to make the payments, and forced the mortgage industry to grant approval to the people who can't afford to buy their own houses, against the mortage company's better judgement.
Thus, by sticking their collective noses into private industry's business, Government do-gooders created this mess. Also known as Democrats.
Now, they blame Republicans.
I am not a financial genius, but speaking as one of those people who was granted a loan in spite of an inability to pay, and because of that, lost my house, I think I have some authority to speak on the subject.
And, not being a feduciary genuis, and although I suspected something was rotten at the time, I nevertheless trusted a lender instead of my own common sense and judgment.
Now, as a sadder but wiser man, I say, NO BAIL-OUTS! Let the free market clean up their own mess. We will eventually be stronger for it.
Damn! It did it again!
"Still don't get how to put a video on your blog, eh?"
Oh, I get it just fine, Mark. I simply went to the place where I saw the link and copied and pasted that instead. I think it was at your blog where I came upon it.
So blamin and Mark,
I did my research. When you look at actual data, instead of right-wing assumptions, you find that CRA banks made fewer risky loans. You will also find that the foreclosure rates for CRA loans was 0.047% in one state where the subprime rate was 14%!
And Ellen Seidman, the former director of the US Office of Thrift Supervision, "CRA does not either encourage or condone bad lending. Bank regulators were decrying bad subprime lending before the turn of the millennium (see Interagency Guidance on Subprime Lending), and warning the CRA-covered institutions we regulated that badly underwritten subprime products that ignored consumer protections were not acceptable. Lenders not subject to CRA did not receive similar warnings."
We have to face the fact that this crisis was caused by greedy financiers who gave mortgages to people whose qualifications they did not check, then re-packaged and re-sold those mortgages over and over knowing that the underlying assets were valueless. This is both a business failure and a political failure, and in the latter case, one of which both parties are guilty.
"We have to face the fact that this crisis was caused by greedy financiers who gave mortgages to people whose qualifications they did not check, then re-packaged and re-sold those mortgages over and over knowing that the underlying assets were valueless. This is both a business failure and a political failure, and in the latter case, one of which both parties are guilty."
This is true, except the last half of the last statement. Both parties are not guilty. Only the Democrat party is. Chris Dodd, Barney Frank, both Democrat banking committee chairs, Jim Johnson, Jamie Gorelick, and other Democrats who benefited by Fannie Mae and Freddy Mac's cooked books bonus programs. Even Barack Hussein Nobama enriched himself by millions of dollars taking kickbacks from those two institutions. Democrats all. Yes, I know there were some republicans involved, too, but their involvement was almost negliglible compared to the "morally superior" Democrats.
Plus, overregulation played an important part in this fiasco. regulation that was wholly sponsored by Democrats. The republicans tried to avert this disaster, and were continually blocked by the Democrats.
It's all the Democrats fault.
Really, DL, you should change your non-de-plume to Democrat Lover rather than Democracy Lover. It would be much more accurate.
Saint Mark, how do things like Gramm-Leach-Bliley fit into all of this?
Yes, I know there were some republicans involved, too, but their involvement was almost negliglible compared to the "morally superior" Democrats.
Sure, the Republicans just controlled the White House, the Senate, and the House from 2000 to 2006. How can anyone think they might have anything to do with this?
If I had a nickel for every time that I heard Bush or one of his lackeys tout record levels of home ownership as validation of his economic policies, I would not be concerned about what happened to my IRA yesterday.
"If I had a nickel..."
That's a good point, actually. I wonder what the numbers would look like if the bad mortgages were taken out. Of course, record numbers of home owners IS a good thing and can be a result of the overall great economic health we've enjoyed for the last seven years (up to about nine months ago), even with the bad mortgages taken into account. (I think I just repeated myself.) But bad mortgages or not, the fact remains that the economy has been great overall for the lion's share of Bush's term.
Marshall, maybe you or one of your posters can answer a question for me.
I’ve been following with interest the current debate on the “bail-out” bill. Right off the bat I have to say I’m highly skeptical of anything concerning this mess that’s rushed through congress.
But here’s a little something that I find very “disturbing”.
It seems that I keep hearing that we have to pass this bill, and fast, or our credit will dry up. Then the politicians and pundits bring up the specter of an employer not being able to make payroll, because of the “credit crises”. You’ve all heard it. Let me break it down. “You dumb-ass bumpkins, quit calling and emailing our offices, telling us you’re against this bill, don’t you know, you ignorant fools, you might not get paid if we don’t pass this bill”.
Poppycock! With very few exceptions (maybe a contractor with a long-term contract) any business that has to borrow money to make payroll is exactly the kind of person or entity that shouldn’t be borrowing money. Their business is in dangerously bad shape and lending money to such an entity is exactly what got us into this mess to start with.
So this kind of rhetoric makes me distrust this bill even more.
I’m I wrong? Is there something I haven’t considered?
I would think that there are many types of businesses that have perfectly valid reasons for tapping credit lines to make payroll during certain parts of the year. Many retailers make the overwhelming majority of their profits during the holiday season. I would expect them to use credit lines to make payroll and build up inventory in the fall. Many accounting firms make most of their profits during tax season but have to make payroll throughout the rest of the year. Car dealerships have big outlays at the beginning of the model year.
But you see Vinny that’s where your wrong. Healthy businesses plan for slow downs.
It’s my business to know small business. I’m telling you what you put forth is not the case.
Retailers, have plenty to make payroll, if they’re a profitable business. If they’re gambling on a good holiday season, then they are not a good credit risk. Accounting firms know when they’re “high times” are versus low times and plan for such.
But I appreciate your attempt. Because I’d like to know.
Let me reiterate. If you have to borrow money to make payroll, your business is in a piss poor situation.
While I think Vinny's points are valid, and actually reflected in something I heard Hugh Hewitt say this evening (don't ask for details---it's bowling night and I'm lubed), it would seem to me that such businesses need to be managing their money better. If they are seasonal, that seasonal profit should be lasting them throughout the year so that borrowing shouldn't be necessary. At some point, all borrowing requires repayment. If borrowing is to meet debt, when does one catch up and have a surplus? Isn't that the point of having a business? To build wealth? To me, building wealth means, to use a cartoon example, Scrooge McDuck sitting on a pile of cash. Living on credit is not one's own pile, but someone else's. I understand credit for start-ups and expansions, but not for running day to day business. Sounds like some are living beyond their means. As Blamin suggests, they're not the type to whom one should be lending dough.
I've been trying to keep up with all the varied opinions on this issue and it's tough to do. At present, I feel about it in a manner similar to Newt Gingrich who opposed it, but now feels like to do nothing is far worse. Except I'm not sure of the consequences of doing nothing. There's been varied opinions on that as well. Whatever happens, I hope they go back to some version of what came before all this, which was to only lend to those most likely to pay back. The rest need to increase their means by other means.
So that’s the common line. “We have to do something”.
A 400 page bill, that no one’s had a chance to peruse.
I’m sure there’s no BS in this bill, and even if there is, it’s sorely needed. (Read – bend over and grasp)
I’m so happy, I’m hearing this is a “bi-partisan” bill. Don’t worry – be happy.
All is well, don’t you worry! Our Gov’t will surely only do what is in our best interest!
Blamin,
Don't get me wrong. All we have is what we're told. I don't feel good about that anymore than I feel good about a bail-out. Just for starters, it should be a loan with consequences attached, not earmarks. We, the people, have to sit back and take it because other than voting these bums out in November, we have to take their word for things, reluctantly or not. Making matters worse, there are Repubs about whom I've felt are good dudes on both sides of this issue. It blows.
I think the consensus of most lawmakers is that doing something is better than doing nothing.
I disagree. I think if we let the free market work through this, it will eventually survive. The Congress is in too much of a hurry to fix this thing. I believe it has to do with the fact that the elections are so close. They don't want to appear to the voters as if they aren't doing something.
Here's an idea:
Someone should do some research and see how many of the lawmakers voting yes are up for re-election, and how many aren't. Same for those voting no. I bet many of them aren't running.
I also think throwing money at this problem is the absolute worst thing to do. It is treating the sympton instead of the disease. It is a temporary fix at best, and economic suicide at worst.
Mark,
I agree with some of your points for sure and your basic, underlying philosophy absolutely.
I heard today from some talk show guy that there are indeed a goodly number of supporters of this bail out who are up for re-election. And I agree that November is a definite influence on this situation. In addition, I agree that our economy can recover from most anything given the chance. That's because, as McCain has stated but from which he has since seemed to back off, the fundamentals of our economy are strong. What some seem to miss is that those fundies can be strong and we can still find ourselves in trouble because the fundies weren't applied or "obeyed".
Unfortunately, for me, I haven't heard much of anything in terms of what the consequences of doing nothing would be. There have been a few economists who oppose the bail out on some talk shows, but as luck would have it, I haven't been able to be near a radio when they were on. So on that score, I'm totally in the dark.
My fear is that though we might eventually survive as a nation, many who aren't to blame might get f'd big time. I wouldn't want that to happen. Hard to keep up with all the angles of this one.
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