Blame for economic hard times

[flaja]

Where should the blame for our current economic distress be placed? Are people who bought into the housing bubble in an effort to get rich quick by buying one house after another, guilty? Or, do the bankers and mortgage companies and other money lenders, who made loans to people who had less than perfect credit ratings and not enough collateral to cover their loans, bear part of the blame?

We have popularly vilified creditors, but instead of doing anything to punish them, we have given them taxpayer bailouts. Shouldn’t we be doing something to make creditors suffer at least as much as debtors are?

 

[dogtowner]

Lenders were required to lower the bar by law and congressional pressure above aand beyond that. Freddy & Fannie happily (and illegally in many cases) bought the paper thereby legitimizing it.

And there were a few different classes of buyer. Those who would not ordinarily qualify to buy anything and those who employed gimick loans to buy far mor htan they could actually afford as investments seeing that the home values were on a strong upward trajectory.

Both collapsed when values stopped increasing and bubbles in the loans came up and they just walked.

So who is to blame ?

Buyers ? Sure. Common sense failures aplenty.
Lenders ? Perhaps but when you're threatened what do you do ?
F&F ? Absolutely.
Congress ? Absolutely. And in many ways from Barney slobbering about calls for tighter scrutiny of F&F being racist to he and Dodd claiming all was well as late as August 08.

But thats really in the past.

What we may want to be concerned about now is that the Fed has taken to buying mortgage backed securities (remember them ?) as F&F are bankrupt and no longer capable. May want to ask your congresscritter about that.

 

[asur]

Barney Franks and Chris Dodd were responsible and other rats
that refused oversight on the housing loans programs.

Just remember the Republicans tried to investigate it, but the Dems fought against it.

The Bad Economy today is Obama's Doing!
Jobs aren't coming back under Obama.
Even today we had an awful jobs report and real GDP
was negative in the last quarter.

Obama has given every American a lump of coal for Christmas
and a future carbon tax to boot!

Obama pissed on white folk and increased unemployment drastically in the black community
at the same time.

Obama also laid an egg on the handicapped, driving their unemployment rate to
~90%. Never has it been so bad for the disabled, but it's called CHANGE!

So 2009 was historically a bad year all around!

If George W. Bush had made a joke at the expense of the Special Olympics, would you have approved?

 

[ASPCA4EVER]

ASUR's RED NECK/RACIST MINDSET FLOATING TO THE SERVICE:
Obama pissed on white folk and increased unemployment drastically in the black community at the same time.

Doesn't surprise me any...but it is just so telling that you've finally printed what I've been saying for quite some time!

GET OVER IT!

 

[flaja]

Lenders ? Perhaps but when you're threatened what do you do ?

I have heard this claimed, but only on the net. But if it is true, why didn't lenders or the investors who were backing them protest in court? Couldn't lenders have raised interest rates to cool the market or have a cushion to cover the losses there knew they were going to have from complying with the government regulations? Lenders should have known that a bubble was in the making, but they didn’t act accordingly and allowed the bubble to burst.

 

[top gun]

The issue is complex. It became a perfect storm type of scenario.

While it's true Congress did set some lower standards to promote home ownership in low income families there was a legitimate reason for this attempt. At the time every study showed that increased ownership vs. rental produced more pride in intercity neighborhoods and raised appearance, property values and safety.

And there's no way to put the economic downturn on sub-prime loans as only 12% of the mortgages going belly up were sub-prime. That means 88% were good credit families going under. Why? At the time banks were pushing some really risky (read that bad) products. Artificially low starting ARM's vs. reasonable fixed rate loans and even the worst of the worst interest only loans.

Then you also had all kinds of other financial sector problems. Not only rampant greed even to the point of Bernie Madoff situations but also the fact that huge banks were not only gobbling up smaller banks as well as getting into many things outside of traditional banking. Also a factor the derivatives market where you could actually place bets (gambling)on your investments gaining or losing.

All this screamed out for better regulation to uncover problems and illegal business practices sooner and a more aggressive stand on Anti-Trust laws so that companies could never reach "too big to fail status.

Furthermore the $12 BILLION DOLLARS PER MONTH spent for years and years in Iraq further exacerbated the problem by increasing debt. Also there was a tax break mainly for the high income group at a time of war. This historically is not done.

So it was a broad problem that needed main adjustments to remedy. We stopped the crisis and things are greatly improving. We've achieved stabilization, seen some growth and even the last thing jobs is starting to come around as unemployment claims have dropped substantially 16 straight weeks in a row.

American is on a come back!

 

[dogtowner]

I have heard this claimed, but only on the net. But if it is true, why didn't lenders or the investors who were backing them protest in court? Couldn't lenders have raised interest rates to cool the market or have a cushion to cover the losses there knew they were going to have from complying with the government regulations? Lenders should have known that a bubble was in the making, but they didn’t act accordingly and allowed the bubble to burst.

there were no investors backing them up, that was Freddie&Fannie.

have you ever heard the expression 'you cant fight city hall' ? it goes exponential when its congress. as seen with Bear Sterns etal, they can literally make or break you.

 

[dogtowner]

Doesn't surprise me any...but it is just so telling that you've finally printed what I've been saying for quite some time!

GET OVER IT!

is it true or not true ?

 

[dogtowner]

The issue is complex. It became a perfect storm type of scenario.

While it's true Congress did set some lower standards to promote home ownership in low income families there was a legitimate reason for this attempt. At the time every study showed that increased ownership vs. rental produced more pride in intercity neighborhoods and raised appearance, property values and safety.

And there's no way to put the economic downturn on sub-prime loans as only 12% of the mortgages going belly up were sub-prime. That means 88% were good credit families going under. Why? At the time banks were pushing some really risky (read that bad) products. Artificially low starting ARM's vs. reasonable fixed rate loans and even the worst of the worst interest only loans.

Then you also had all kinds of other financial sector problems. Not only rampant greed even to the point of Bernie Madoff situations but also the fact that huge banks were not only gobbling up smaller banks as well as getting into many things outside of traditional banking. Also a factor the derivatives market where you could actually place bets (gambling)on your investments gaining or losing.

All this screamed out for better regulation to uncover problems and illegal business practices sooner and a more aggressive stand on Anti-Trust laws so that companies could never reach "too big to fail status.

Furthermore the $12 BILLION DOLLARS PER MONTH spent for years and years in Iraq further exacerbated the problem by increasing debt. Also there was a tax break mainly for the high income group at a time of war. This historically is not done.

So it was a broad problem that needed main adjustments to remedy. We stopped the crisis and things are greatly improving. We've achieved stabilization, seen some growth and even the last thing jobs is starting to come around as unemployment claims have dropped substantially 16 straight weeks in a row.

American is on a come back!

some lower standards ?
how about no verification of employment for starters. and we're not just talking sub-prime, that was across the board. a person who thinks that a home 4-5x their salary is something they can afford has no business buying a candybar.

yes, home ownership is a positive but not if you are in no position to pay the mortgage.

 

[asur]

dogtowner - The housing situation is completely crazy in the US.
I know someone, who hasn't paid their mortgage the last year
after getting the payments cut months ago.

There is no reason to think they will make another full payment since they
are now unemployed and living on unemployment benefits.

They never should have qualified for the original loan, which is
upside down, even with a lower interest rate, than they originally
bargained for. Nobody has kicked them out, so basically
they are living in a house for free, for now.

 

[flaja]

At the time every study showed that increased ownership vs. rental produced more pride in intercity neighborhoods and raised appearance, property values and safety.

Republicans have been saying this for over 30 years. But it was absolute folly to stimulate a market that was already overheated.

That means 88% were good credit families going under.

Mainly because of adjustable rate mortgages taken out by people that were stupid enough to believe that the rates would never increase.

the fact that huge banks were not only gobbling up smaller banks as well as getting into many things outside of traditional banking.

This started back in the 1980s when Regan and Company promised that deregulation was the greatest thing in the world. There used to be a dozen or more locally owned banks or state banks or regional banks where I live, but now we have Wachovia on every other corner.

Also a factor the derivatives market where you could actually place bets (gambling)on your investments gaining or losing.

Courtesy of GBW and Company.

All this screamed out for better regulation to uncover problems and illegal business practices sooner and a more aggressive stand on Anti-Trust laws so that companies could never reach "too big to fail status.

Furthermore the $12 BILLION DOLLARS PER MONTH spent for years and years in Iraq further exacerbated the problem by increasing debt.

As opposed to how many billions per month that goes for welfare, public schools, Medicare and Medicaid?

 

[flaja]

there were no investors backing them up, that was Freddie&Fannie.

People that buy CDs and government bonds aren’t investors? If there were no investors providing capital to fund mortgages, where was the money for mortgages coming from?

 

[dogtowner]

People that buy CDs and government bonds aren’t investors? If there were no investors providing capital to fund mortgages, where was the money for mortgages coming from?

What had been the good faith of F&F allowed them to sell their further bundled paper.

CDs and government bonds ? CDs have nothing to do with this and government bonds only came into play when F&F had to be bailed out.

You really need to educate yourself on the housing biz.

 

[flaja]

CDs and government bonds ? CDs have nothing to do with this and government bonds only came into play when F&F had to be bailed out.

If mortgages are not based on CDs and bonds or other investments, how do banks and mortgage companies ever accumulate enough money to cover the cost of a mortgage? Where does mortgage money come from?

Somebody has to have money to lend, i.e., invest; otherwise nobody would ever be able to borrow anything.

You really need to educate yourself on the housing biz.

Don't patronize me.