A Blog of Current Events and Ancient Issues.
Except it misses one critical component, the governments responsibility, via the Community Reinvestment Act, for forcing banks to get into the subprime mortgage market. A large part of the blame for this crisis rests on bad government social policy. The same type of policy we are going to get a lot more with the current group in Washington DC.
You have it right Colby. Government doesn't know when and when not to inject itself, and as a result the real culprits are rewarded with cover by the MSM and they then further reward their co-conspirators with huge chunks of our dollars - Frank Raines, Jim Johnson (Obama Buddies), Barney Frank, Chris Dodd, Tim Geithner (why didn't Wesley Snipes qualify for TreasSec?), Harry Reid, Nancy Pelosi, Maxine Waters et al. So now they're going to pass more strict oversight rules. Why? They didn't use the ones they had before. They were too busy trashing the economic growth and the Bush administration so they could convince the American people to put them in charge and make us even more of a Marxist State. In a short time we will see 20% inflation matched by 20% interest rates, but with people who wouldn't qualify for financing a week's groceries but will qualify to 'purchase' a house with money from people who really do produce for the country; the people in flyover country.
Colby and BeanerECMO: Wow, exactly! As good as the article summed up the situation it was missing the real culprit, the Community Reinvestment Act signed by Clinton in I think 1999. And tyhe role Barny Frank and his gay lover Herb Moses played in the development and promotion of the financial instruments at Fannie May made the situation as bad as it is.http://en.wikipedia.org/wiki/Barney_Frank
The reason why we have this crisis is because mankind, in general, believes man can take care of man. Unfortunately for mankind that is not so. The great merchant will fall. That is promised by our creator but not believed by mankind even though our creator cannot lie.
I agree totally with what Colby and Beaner said. I also want to take it one step further. The real culprit in all of this is Abe Lincoln. It's him and his Emancipation Proclamation that really got this country started down a bad road. If we wouldn't have had all those free slaves, and their descendants, we wouldn't be in this mess today. Minorities made up the bulk of sub prime loans and we all know that Community Reinvestment Act was created for black people. I don't know anyone in my neighborhood who this junk helped out.
Part of the Purpose of Government is to not learn any lessons, for if Large Problems get resolved, then there is no need for Government.
This article is evidence that far too many Americans can't see the forest for the trees. This perfect storm has three basic ingredients: 1) Corrupt politicians that have adopted an oligarchal philosophy of governement. 2) Greedy, coniving corporate executives that lobby Washington for purposes that go beyond the effective evolution of capitalism. 3) An American citizenry that has become far too complacent and/or ignorant to what is going on in this country.
From all I've ever heard, CRA portfolios perform as well or better than prime portfolios. The problem was a lack of oversight. Regulations exist to prevent these things from happening. "Liar Loans" are illegal, despite the cute name given to them. It's illegal to lie to a federally insured depository to get a loan or lie to get a federally insured mortgage. It's illegal for an underwriter to approve a loan with false statements. Where were the regulators? This is what the Republicans call "less government". Also known as "don't enforce the laws". Democrats and Republican all believe in free trade nad capitalism, but we also know there are crooks out there and left to their own designs they will break the law. That's why we have the OCC, OTS, FDIC and SEC. Where were they?
You want to blame the Government but no one talks about the ARMs that the Banks used. Yes the Government want more people to be able to move into homes. The Banks decided they could use Adjusted Rate Mortages as a Sub-Prime tool People could afford the inital rate believing thet would get pay raises to compensate for the later increase when the rate increased and there salary didn't they found themselves in a hole. The Banks did not think they would have to concern themselve with this because they would sale off the liablity. the bottom line is Greed came back and bite us all.
What got us into this mess? A stupidity epidemic. Millions of assholes with a miserable education from the sixties and seventies who had no idea that they could not afford that expensive house. No vaccine available either. Wish it was greed; that one can cure with a couple of hard whacks. Stupidity gets only worse. Jeldican
Colby and Beaner got it right...the CNN reporter totally omitted any mention of Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac were pressured by the Clinton Admin, and the Congressional Black Cacaus to provide housing to folks that can't afford it. Fannie and Freddie initially resisted lower their lending standards for down payments and minimum credit scores, but the Clinton Admin. and the Congressional Black Caucaus persisted and Fannie and Freddie gave in and lowered loan standards on down payment amounts and minimum credit scores. In fact, the Cinton Admin. CREATED Freddie Mac in the mid-90's to compete with Fannie Mae, to accelerate housing for subpime borrowers. This CNN reporter did not MENTION Fannie or Freddie, or Congress, or the Clinton Admin. at all...example of liberal media with biased reporting indeed!The whole loan re-packaging and selling process was aggravated by greedy real estate brokers, bankers, stupid CEO's on Wall St. at Liehman Bros., Merrill Lynch, AIG, etc. not to mention Country Wide Finance who specialized in sub-prime mortages.As this article reports, the % of subprime mortages written had escalated until in 2006, prime mortages were down to only 52% of the total. That means that almost half the mortages in 2006 were subprime!!To me, this report is yet another example of the media NOT doing a good job sorting out all the facts. RCM
Pretty words but you could have saved a bunch of print - its greed, greed, greed all around the table. Accountability begins at home - we're throwing tillions down a rathole!
For what it is worth, it is actually refreshing to see a factually accurate piece on this website. And while the comments here clearly outline some facts that were missing from the article it is also very refreshing to see that these posts are also reasonably insightful, and not full of the garbage contained on other websites. And I have to agree that this mess was caused by the greed of many, but let's put the blame where it belongs... That greed will always be there to exploit the "unintended consequences" that our politicians never consider. If only we could hold them as accountable for their actions as we do companies.. Oh yeah... we can... we can vote them out!!! Is it stupidity or complacency...
The Community Reinvestment Act did not force Bear Stearns, Lehman Brothers, Merrill Lynch and Citibank to leverage themselves to the hilt on bad investments.To call this a perfect storm is rather misleading, since it implies that it was an act of nature, when it was merely the predictable consequences of laziness on the part of investors who were lulled to sleep by good returns, and greed on the part of bankers who were allowed to gamble with other peoples money without having to worry about the consequences of bad bets.