All Forums > General Discussion > Non-Sports > Obama: Worst President Ever?
11/8/2013 1:03 PM
Posted by tecwrg on 11/8/2013 12:48:00 PM (view original):
"The deeper roots of the problem go back to the Community Reinvestment Act of 1977."

"Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers."

"By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings."

All these statements seem to run counter to your assertion that the subprime mortgage collapse had nothing to do with the CRA or the Clinton Administration.
Really? Even this one:

"In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers."


To me, that looks like the banks WANTED to give subprime loans. They weren't forced to by the CRA.

For the theory that CRA caused the mortgage crisis to be correct, there would have to be causation. It would have to be clear that the CRA forced banks to give loans to people the banks didn't want to give loans to. And there were enough of those bad loans defaulting to cause the collapse.

The article you linked shows how banks wanted to give the loans. Did Fannie play a role in allowing banks to shift away risky loans while still making a profit, giving the banks and incentive to write more ****** loans? Abso-*******-lutely. But that's not the CRA.

Again, for the fuckteenth time, almost all subrime loans were originated by companies not regulated by the CRA.

 
11/8/2013 1:10 PM
Posted by bad_luck on 11/7/2013 12:31:00 PM (view original):
Posted by tecwrg on 11/7/2013 12:19:00 PM (view original):
Posted by bad_luck on 11/7/2013 11:29:00 AM (view original):
Posted by MikeT23 on 11/7/2013 10:33:00 AM (view original):
Posted by bad_luck on 11/7/2013 10:26:00 AM (view original):
Posted by MikeT23 on 11/7/2013 10:15:00 AM (view original):

Didn't the economy crash, in part, because loans were given to people who had no means to pay them?   If so, I'm pretty sure that started under Clinton. 

Pretty sure it was under regulated banks giving the loans. Not Clinton (or Bush).
Are you familiar with the Community Reinvestment Act?    Rewritten by Clinton in the early/mid 90s to put pressure on banks to loan to low income individuals.

I am. But almost all subprime lenders weren't subject to CRA regulation (only banks were subject to the law, most subprime loans were made by other types of lenders). The bad loans weren't made because of government pressure. The bad loans were made because Wall Street really wanted the loans.
The bad loans were made because (a) the Clinton Administration encouraged that such loans be made, and (b) people were stupid enough to take out loans they couldn't possibly afford.

I may have mentioned this before, but I'll mention it again.  When my wife and I were shopping for our current house in 1996, we were "pre-approved" for a mortgage that was around $175k more than we felt confortable spending,  Had we been stupid and went with a much larger and more expensive house, there is around a 0% chance that we would have been able to afford to still be there.
Your a) is completely wrong.

Almost all subprime loans were made by companies not subject to CRA regulation. There was no law putting pressure on (or encouraging) them to make subprime loans.

Yes, people were stupid enough to take loans they couldn't afford. Most of those people were punished for their stupidity when they lost their home. But there was a huge Wall Street demand for loans and it was on the banks to underwrite the loans in a smart way. They failed to do so.

 
I say: "(a) the Clinton Administration encouraged that such loans be made"

You say: "your (a) is completely wrong"

I provide evidence that the Clinton Administration encouraged that subprime loans be made.

You argue something completely different.

So please tell me why my "(a) is completely wrong".
11/8/2013 1:41 PM
Ok.

If you want to say that Fannie Mae enabled/encouraged banks to make bad loans by buying those loans on the secondary market, I'll agree.

But the CRA isn't to blame. The subprime loans were made because the lenders wanted to make them. No law forced them to do it.
11/8/2013 2:01 PM
Did the Clinton Administration encourage the making of subprime loans?
11/8/2013 2:14 PM
Ok, sure. You were right about that. I was wrong. In the secondary market through Fannie Mae, banks were encouraged to give loans to low income people.

But they were not forced to, by the CRA or any other law, and the banks wanted to give the loans because they could make a profit and then well them off. Agree?
11/8/2013 2:15 PM
Posted by bad_luck on 11/8/2013 1:41:00 PM (view original):
Ok.

If you want to say that Fannie Mae enabled/encouraged banks to make bad loans by buying those loans on the secondary market, I'll agree.

But the CRA isn't to blame. The subprime loans were made because the lenders wanted to make them. No law forced them to do it.
I actually agree here.

If these banks really wanted to avoid cra they could have. For example, Northern Trust just dropped all clients under $2million in assets so they didn't have to comply with CRA and build branches in LMI areas.

Greed caused this mess. Greed from all parties - the banks, the borrowers, and the fed. Like BL said the banks were not forced to subprime lend, they wanted to.
11/8/2013 2:19 PM
The CRA is not my argument.  My argument was that roots of the economic collapse in 2007/2008 can be traced back to the Clinton Administration's encouragement of the issuance of subprime loans.  You seem to agree with that.  Seems like my work here on this particular topic is done.

Though the papers that I have referenced seem to assign some blame to the CRA.  I suppose your argument should be with the folks who wrote those papers.
11/8/2013 2:27 PM
Posted by tecwrg on 11/8/2013 2:19:00 PM (view original):
The CRA is not my argument.  My argument was that roots of the economic collapse in 2007/2008 can be traced back to the Clinton Administration's encouragement of the issuance of subprime loans.  You seem to agree with that.  Seems like my work here on this particular topic is done.

Though the papers that I have referenced seem to assign some blame to the CRA.  I suppose your argument should be with the folks who wrote those papers.
Yes the framework was laid during the Clinton administration. Real estate can only appreciate at 15% per year for so long before a bubble is bound to burst. The cra was a part of the framework but its not like banks had a gun to their head to lend to subprime.... Just like those 'home flippers' at the time didn't have a gun to their head to take on so much debt. Both parties enjoyed the $$$ from it.... As did the government which is why rates remained low and policy remained lax and literally unregulated.
11/8/2013 2:28 PM
Posted by tecwrg on 11/8/2013 2:19:00 PM (view original):
The CRA is not my argument.  My argument was that roots of the economic collapse in 2007/2008 can be traced back to the Clinton Administration's encouragement of the issuance of subprime loans.  You seem to agree with that.  Seems like my work here on this particular topic is done.

Though the papers that I have referenced seem to assign some blame to the CRA.  I suppose your argument should be with the folks who wrote those papers.
If we're going to assign blame in this mess, I think it goes:

banksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanks

borrowersborrowersborrowersborrowersborrowersborrowersborrowersborrowersborrowers

secondarymarkets(Fannie/CDOs/wallst)secondarymarketssecondarymarketssecondarymarketssecondarymarketssecondarymarkets

LackofFederalOversightLackofFederalOversightLackofFederalOversight
 
11/8/2013 2:33 PM
Posted by bad_luck on 11/8/2013 2:28:00 PM (view original):
Posted by tecwrg on 11/8/2013 2:19:00 PM (view original):
The CRA is not my argument.  My argument was that roots of the economic collapse in 2007/2008 can be traced back to the Clinton Administration's encouragement of the issuance of subprime loans.  You seem to agree with that.  Seems like my work here on this particular topic is done.

Though the papers that I have referenced seem to assign some blame to the CRA.  I suppose your argument should be with the folks who wrote those papers.
If we're going to assign blame in this mess, I think it goes:

banksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanks

borrowersborrowersborrowersborrowersborrowersborrowersborrowersborrowersborrowers

secondarymarkets(Fannie/CDOs/wallst)secondarymarketssecondarymarketssecondarymarketssecondarymarketssecondarymarkets

LackofFederalOversightLackofFederalOversightLackofFederalOversight
 
They are all guilty.... Does it really matter who is 'more' guilty? Kinda like if I kill a man with a knife or I kill a man with a gun which is worse... Right?
11/8/2013 2:35 PM
I think that it's possible and preferable to assign different levels of blame.
11/8/2013 2:43 PM
Posted by bad_luck on 11/8/2013 2:35:00 PM (view original):
I think that it's possible and preferable to assign different levels of blame.
Right.  Like when the Democratic apologists try to spin the facts in order to place the brunt of the blame for the recession onto GWB when it more appropriately should be assigned to Bubba.
11/8/2013 2:47 PM
Posted by bad_luck on 11/8/2013 2:28:00 PM (view original):
Posted by tecwrg on 11/8/2013 2:19:00 PM (view original):
The CRA is not my argument.  My argument was that roots of the economic collapse in 2007/2008 can be traced back to the Clinton Administration's encouragement of the issuance of subprime loans.  You seem to agree with that.  Seems like my work here on this particular topic is done.

Though the papers that I have referenced seem to assign some blame to the CRA.  I suppose your argument should be with the folks who wrote those papers.
If we're going to assign blame in this mess, I think it goes:

banksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanksbanks

borrowersborrowersborrowersborrowersborrowersborrowersborrowersborrowersborrowers

secondarymarkets(Fannie/CDOs/wallst)secondarymarketssecondarymarketssecondarymarketssecondarymarketssecondarymarkets

LackofFederalOversightLackofFederalOversightLackofFederalOversight
 
Nothing for the companies that rated the Asset-Backed Securities bundles?

Look, the banks have a good chunk of the blame, no doubt.  But the banks had Clinton AND Bush leaning on them to loosen up credit standards because they had promised more home ownership to the electorate.  The banks saw (thought) they could make a profit while making subprime loans, so they were (too) happy to jump on board.  The non-bank lenders didn't want to miss out on a brand new, huge market, so they did too.  Borrowers took advantage of the minimal income verification, rating agencies rubber-stamped securities packages and the secondary market did a sh*t job of vetting the packages on their own.  It all trickles down.

I'm not saying regulations shouldn't have been tightened but, the fact of the matter is, it was the highest level of the federal government that initiated the mess.  To say it happened due to LACK of government involvement is disingenuous.  The lenders were encouraged BY THE GOVERNMENT to make these loans.  Government regulation of that market became a requirement because the government CREATED that market.  I find the "the only solution to the problem caused by idiots is to have the same idiots fix it" argument to be extraordinarily uncompelling.
11/8/2013 3:51 PM
Posted by tecwrg on 11/8/2013 2:43:00 PM (view original):
Posted by bad_luck on 11/8/2013 2:35:00 PM (view original):
I think that it's possible and preferable to assign different levels of blame.
Right.  Like when the Democratic apologists try to spin the facts in order to place the brunt of the blame for the recession onto GWB when it more appropriately should be assigned to Bubba.
You think the brunt of the blame for the recession should be placed on Clinton?

Wow.
11/8/2013 4:15 PM
Posted by bad_luck on 11/8/2013 3:51:00 PM (view original):
Posted by tecwrg on 11/8/2013 2:43:00 PM (view original):
Posted by bad_luck on 11/8/2013 2:35:00 PM (view original):
I think that it's possible and preferable to assign different levels of blame.
Right.  Like when the Democratic apologists try to spin the facts in order to place the brunt of the blame for the recession onto GWB when it more appropriately should be assigned to Bubba.
You think the brunt of the blame for the recession should be placed on Clinton?

Wow.
Blaming Clinton for the majority of the Financial Meltdown is silly. Some of his policies played a part in the matter but by the time the bubble had burst Clinton had been out of office for 7 years. If you want to reach then blame Reagan... He appointed Greenspan.
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