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At President Clinton’s direction, no fewer than 10 federal agencies issued a chilling ultimatum to banks and mortgage lenders to ease credit for lower-income minorities or face investigations for lending discrimination and suffer the related adverse publicity. They also were threatened with denial of access to the all-important secondary mortgage market and stiff fines, along with other penalties.

 

By this time, everyone should be aware of the federal policies that precipitated the housing bubble and its collapse — the push by Congress and two administrations to push higher-risk lending in order to expand home ownership, as well as the effort by Congress to get Fannie Mae and Freddie Mac to spread that risk through mortgage-backed securities.  While Wall Street made the situation worse by developing risky derivatives on those securities and failed to recognize the risk inherent in the securities themselves, the collapse wouldn’t have occurred at all had the federal government not intervened to distort lending for their own social-engineering goals.

Michael Bloomberg tried to explain that to Occupy Wall Street protesters this morning, and pointed out the contradiction between their protests and their demands:

“I hear your complaints,” Bloomberg said. “Some of them are totally unfounded. It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I’m not saying I’m sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn’t gave gotten them without that.

“But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it’s one target, it’s easy to blame them and congress certainly isn’t going to blame themselves. At the same time, Congress is trying to pressure banks to loosen their lending standards to make more loans. This is exactly the same speech they criticized them for.”

Bloomberg went on to say it’s “cathartic” and “entertaining” to blame people, but the important thing now is to fix the problem.

 

It’s even more important to not make the same mistake again, which is exactly what the OWS crowd wants.  They want Congress to intervene even more heavily to lower lending standards as a policy of “fairness,” which is exactly what Congress did in the late 1990s, and which started the housing bubble that nearly destroyed the financial sector in 2008.  And Investors Business Daily claims that they have the “smoking gun” that shows exactly how the government created the bubble in the first place by intimidating banks into distorted lending practices — based on a flawed study:

 

The Link, http://hotair.com/archives/201...risis-not-the-banks/

 

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What's been overlooked is that much of the rest of the world has copied the U.S. way of doing business, including mortgages, pensions/401K's, etc. 

In looking at International House Hunters on HGTV, I'm appalled at the prices of houses all over the world--especially in Europe and Canada.  A girl was offered a closet with no headroom in Paris for only $110K.  No one can afford the prices of flats in London, Amsterdam or Paris--$750K for a dumpy basement apartment I wouldn't even spend the night in. 

When European property owners start being foreclosed on, their little house of cards is going to fall--all the way to the U.S.  Yes, it will effect us too.  And, European banks aren't nearly as well capitalized as U.S. banks.

And to think that the whole future global financial crisis will have started by little Billy Clinton of Hope/Hot Springs, Arkansas and his liberal Congressional buddies  They forced our banks, Freddie Mac, and Fannie Mae into financing houses for people with bad credit, bad character and no capacity to pay for those houses. There's nothing lower than a real estate broker in Stockton, CA.

 

Surely the Germans and Dutch don't have their heads in the sand about their future real estate blowup.  Maybe their politicians are dividing their houses into E1 million apartments--getting rich while the getting's good.  Bailing out Greece, Italy, Spain, Ireland and Portugal is a party compared to the real estate failure that's looming "off their balance sheets."

The regressive progs praise Bloomberg, unless he tell essential truths. 

First cause of the problem was government insistence upon loans to those who could not make the payments. Fannie/Freddie/FHA caused an unreasonable climb in housing costs by injecting over $1 trillion into the housing market.

If those loaned money could have repaid the loans, there would be no crisis. 

 

All Ditzy's complaints are adjunct to the main causes.

Bamaman,

 

The unrealistic cost of real estate in Europe is not a result of anything in the US.  The ridiculous price of housing in London had been the case since the 1990s.  Part of the cause is much of the land, not the buildings, is owned and leased seperately.  The leaseholder is Prince Charles. 

 

Paris is expensive because of high taxes and limitations on construction.  As I lived in Paris for 18 months before moving to Huntsville, I'm too familiar with that situation.

Jimi's post:

 

"If it wasn't for lies and misrepresentation, I12 would never have anything to say. He is terminally confused and misinformed."

 

So, old fart,

 

Please tell how the Duchy of Cornwall, which includes much of the real estate (but not buildings) in central London, which is the property of the Prince of Wales, is a lie or misrepresentation.  Provide particulars upon the rather high rents. 

 

Or, how the constraints upon the height ot buildings in central Paris is a lie or misrepresentation. Or, provide evidence to the contrary for extremely high property taxes in Paris.  When presenting your evidence, please cite the tax offices in the particular arrondisement -- they vary, you know -- don't you!

 

Otherwise, keep head in duffle bag and STFU!

 
Originally Posted by interventor1212:

Jimi's post:

 

"If it wasn't for lies and misrepresentation, I12 would never have anything to say. He is terminally confused and misinformed."

 

So, old fart,

 

Please tell how the Duchy of Cornwall, which includes much of the real estate (but not buildings) in central London, which is the property of the Prince of Wales, is a lie or misrepresentation.  Provide particulars upon the rather high rents. 

 

Or, how the constraints upon the height ot buildings in central Paris is a lie or misrepresentation. Or, provide evidence to the contrary for extremely high property taxes in Paris.  When presenting your evidence, please cite the tax offices in the particular arrondisement -- they vary, you know -- don't you!

 

Otherwise, keep head in duffle bag and STFU!

 

Wrong reference.

The regressive progs praise Bloomberg, unless he tell essential truths. 

First cause of the problem was government insistence upon loans to those who could not make the payments. Fannie/Freddie/FHA caused an unreasonable climb in housing costs by injecting over $1 trillion into the housing market.

If those loaned money could have repaid the loans, there would be no crisis. 

 

All Ditzy's complaints are adjunct to the main causes.

Try again.

Or, STFU.

Ditzy,

 

Are you suffering from an inablity to recognize what is posted in reference to your posts vs. those of others. 

 

You made no counters to my statement.

 

As to your original statement:

 

"There was all manner of fraud on the part of mortgage originators which led to the issuance of many of the subprime mortgages.

The crisis was initiated by what happened to the mortgages after they were originated. 

Derivatives.

Leverage.

Collapse."

 

First cause was the government requiring the internal controls preventing those unable to pay back loans be breached to pursue goals of housing for the poor.  This is akin to an arsonist striking a match and setting a building afire.

 

The next step was Freddie/Fannie injecting over a trillion dollars into the housing market.  That drove up the price of housing drastically.  That was akin to the arsonist putting gasoline on the fire to make it burn with more ferocity.

 

What you quote are adjunct to the problem -- not the major contributors.  Akin to the buring house's fire alarm ot sprinkler system not working. That didn't cause the fire to burn brighter or hotter, only failed to impede the ferocity of the fire.  If no fire were set, neither a broken alarm or sprinkler system would have mattered.

 

Without the loans being made to persons who couldn't repay them, there would be no loans.  Without the extra trillion dollars in the housing market the bubble would have been much smaller and localized. 

 

In short, Ditzy, you let ideology blind you to the logic of the process.  So, I shall not STFU.

 

Oh!  You do realize when I said, old fart, I was referring to Jimi.  I suggest reading a bit more carefully in the future.  And, buy Beano!   

If 100% of the subprime mortgages had failed, it would have been small blip in the $15trillion mortgage industry.  

To use you analogy, the mortgages are just a small kitchen fire, and the derivatives are the gasoline thrown onto the fire. 

If you knew what you were talking about you would know the leverage ratios that were present and the cost of the resulting mortgages failures being 30X or even 50X the original value of the mortgages.  

Ditzy,

 

You fail to understand the true lessons of moral hazard.  Sub-prime mortgages increased from a historic average of 8% of the market to 20% by 2006.  Fannie/Freddie bought the mortgages and issued derivative against them to the tune of $1 trillion. 

 

The private market, seeing the federal government urge actions, they had denied in the past, created an entire new atmosphere.  If the regulator of the market would urge such behavior, why shouldn't we get on the band wagon, was the theme promulgated.

 

Why, its as if the SEC ignored fraud at the highest levels of a well known investment firm, even when they received repeated detailed warnings!  Couldm't happen, could it?  Oh, Right, Madoff! 

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