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Mr. Kotter
09-19-2008, 12:57 PM
Are loans to unqualified applicants (affirmative action sorts of pressure on banks and lending institutions) a large part of what's happened with Wall Street?

I honestly don't know, but this article seems to make a lot of sense....

:hmmm:

I don't know if I buy it, but it's certainly an angle we won't likely be hearing from the Mainstream press anytime soon (too politically incorrect;) but, from a common sense perspective, it seems to have a ring of truth to it...

anyone know what where to find/how to find the numbers/per centages behind this assertion?


http://www.realclearpolitics.com/articles/2008/09/the_rest_of_the_meltdown_story.html

The Rest of the Meltdown Story
By Neal Boortz

What in the world is going on here?

You've seen the headlines, and you heard of the failures and buyouts. Lehman Brothers, Bear Stearns, Merrill Lynch, AIG; all big names and all in big trouble. Then those mysterious quasi-government agencies with names like Freddie and Fannie become wards of the state and you learn that you and your fellow taxpayers are potentially on the hook for tens of billions of dollars. At the end of the week Washington Mutual is looking for a buyer, and you start to wonder about the security of your own bank and your own savings account. Let's change that ad copy to WaMu -- boo hoo.

Somewhere in the back of your mind you understand that this is all tied somehow to bad mortgages. If you start reading a bit further to enhance your understanding you run into terms like Mortgage Backed Securities (MBS) and credit-default swaps, whatever in the world those are. Read further and you find out that a combination of falling home prices and mortgage defaults have put many investment banks and other financial institutions in deep puddin'. All this reading, all this watching the talking heads on TV, and you still don't really know what in the world is going on here.

Fear not. I'm here to help. I know ... I'm just another talk show host; but the fact is that when the stage was being set for the problems we're seeing today I was making most of my money as a real estate lawyer .. closing loans for some of the very institutions that are the tank today. This rather unique combination - closing lawyer and radio talk show host - gave me a front row seat to the politicization of mortgage loans that led us to today's headlines.

OK .. so we all know that a lot of really bad real estate loans were made. The political class would sure love for us to believe that the blame here rests squarely on "greedy" (try to define that word) mortgage brokers and lenders. The truth is that most of the blame rests on political meddling in the credit decisions of these mortgage lenders.

Twenty years ago the buzz-word in the media was "redlining." Newspapers across the country were filled with hard-hitting investigative reports about evil and racist mortgage lenders refusing to make real estate loans to various minorities and to applicants who lived in lower-income neighborhoods. There I was closing these loans in the afternoons, and in the mornings offering a counter-argument on the radio to these absurd "redlining" claims. Frankly, the claims that evil mortgage lenders were systematically denying loans to blacks and other minorities were a lot sexier on the radio than my claims that when credit histories, job stability, loan-to-value ratios and income levels were considered there was no evident racial discrimination.

Political correctness won the day. Washington made it clear to banks and other lending institutions that if they did not do something .. and fast .. to bring more minorities and low-income Americans into the world of home ownership there would be a heavy price to pay. Congress set up processes (Research the Community Redevelopment Act) whereby community activist groups and organizers could effectively stop a bank's efforts to grow if that bank didn't make loans to unqualified borrowers. Enter, stage left, the "subprime" mortgage. These lenders knew that a very high percentage of these loans would turn to garbage - but it was a price that had to be paid if the bank was to expand and grow. We should note that among the community groups browbeating banks into making these bad loans was an outfit called ACORN. There is one certain presidential candidate that did a lot of community organizing for ACORN. I won't mention his name so as to avoid politicizing this column.

These garbage loans to unqualified borrowers were then bundled up and sold. The expectation was that the loans would be eventually paid off when rising home values led some borrowers to access their equity through re-financing and others to sell and move on up the ladder. Oops.

Right now this crisis is being sold to the American public by the left as evidence the failure of the free market and capitalism. Not so. What we're seeing is the inevitable result of political interference in free market economics. Acme bank didn't want to loan money to Joe Homebuyer because Joe had a spotty job history, owed too much money on his credit cards, and wasn't all that good at making payments on time. The politicians told Acme Bank to figure out a way to make that loan, because, after all, Joe is a bona-fide minority-American, or forget about opening that new branch office on the Southside. The loan was made under politicial pressure; the loan, with millions like it, failed - and now we are left to enjoy today's headlines.

So ... why aren't you reading the whole story in the mainstream media? Come on, are you kidding me? Do you really expect the media to blame this mess on deadbeat borrowers and political interference in the free market when it is so easy to put the blame on greedy lenders and evil capitalists? Remember ... there's an election going on. One candidate is decidedly anti-capitalist. Do the math.

Chiefshrink
09-19-2008, 01:15 PM
Yes, and Obama was the 2nd highest in total billions and that was 3billion to be exact to skim away from Freddie and Fannie from this so-called community development otherwise known as "community organizing. What a Hypocrite!! Who was the 1st? Chris Dodd-DEM and of course his economic adivsors who were part of this scam as well. Change? yeah right. Obama is politics as usual. And now we are supposed be better patriots by paying more in taxes according to 'Bite Me' Joe.

Nightfyre
09-19-2008, 01:20 PM
It has a fair amount to do with it, though it certainly does not fully encapsulate the problem.

Chiefshrink
09-19-2008, 01:22 PM
It has a fair amount to do with it, though it certainly does not fully encapsulate the problem.

You said it! Fair amount!! I guess we are learning why people get into politics:cuss:

Chief Henry
09-19-2008, 01:22 PM
The article does a good job of explaining the catalyst of the current problems.

Nightfyre
09-19-2008, 01:23 PM
The article does a good job of explaining a catalyst of the current problems.

FYP.

tiptap
09-19-2008, 01:24 PM
It might be fair if there was some actual research into the location and ethnicity of the defaulted loans. But that might require some actual investigation like was done to fine the prejudicial practices in the earlier decades. No this guy can't be bothered with real work on a story. Go with your political gut.

Stewie
09-19-2008, 01:28 PM
I had hope here when he mentioned credit default swaps, but then he went elementary in his thinking with basic mortgage issues. Yeah, we know people were given loans they shouldn't have had. The real problem is what the banks did with these loans after they were approved - and it has everything to do with greed and big bonuses.

'Hamas' Jenkins
09-19-2008, 01:29 PM
Affirmative action for banks?

Jesus ****ing Christ.

Yeah, that's the problem.

Nightfyre
09-19-2008, 01:31 PM
Affirmative action for banks?

Jesus ****ing Christ.

Yeah, that's the problem.

Not the affirmative action portion, but the forced lending to non-credit worthy individuals was. See: Community Redevelopment Act.

Chief Henry
09-19-2008, 01:32 PM
FYP.

Mine was the correct version with out question.

'Hamas' Jenkins
09-19-2008, 01:33 PM
Not the affirmative action portion, but the forced lending to non-credit worthy individuals was. See: Community Redevelopment Act.

And what was lending to individuals who qualified for better rates yet still suckered into ARMs?

Stewie
09-19-2008, 01:35 PM
And what was lending to individuals who qualified for better rates yet still suckered into ARMs?

No one ever accused loan originators of being ethical.

Nightfyre
09-19-2008, 01:37 PM
Mine was the correct version with out question.

Except that it is not entirely true. There must be collusion of major entities in the market, atm. Specific firms are moving in manners that are completely irrational. This creates fear surrounding the firm and ultimately causes it to collapse. Sorry to burst your simplistic bubble.

Nightfyre
09-19-2008, 01:38 PM
And what was lending to individuals who qualified for better rates yet still suckered into ARMs?
Hey, when you get commission on the loan and your company ships it off to someone else, it doesn't matter.

tiptap
09-19-2008, 01:44 PM
And this is why there was an insular constraint removed by the Graham bill so that wasn't possible.

Chief Henry
09-19-2008, 01:48 PM
Except that it is not entirely true. There must be collusion of major entities in the market, atm. Specific firms are moving in manners that are completely irrational. This creates fear surrounding the firm and ultimately causes it to collapse. Sorry to burst your simplistic bubble.


The foundation of the problem or the meat and potatoes of problem we're highlighted very accuratley albeit fannie and freddie were the lead sled dogs to this debackle.

Nightfyre
09-19-2008, 01:53 PM
The foundation of the problem or the meat and potatoes of problem we're highlighted very accuratley albeit fannie and freddie were the lead sled dogs to this debackle.
His explanation didn't account for the irrationality within the markets of late.

Chiefshrink
09-19-2008, 01:53 PM
The foundation of the problem or the meat and potatoes of problem we're highlighted very accuratley albeit fannie and freddie were the lead sled dogs to this debackle.

With Obama right there with his hand out for 3billion in just 3yrs for his affirmitive action housing. :cuss:

Nightfyre
09-19-2008, 01:56 PM
With Obama right there with his hand out for 3billion in just 3yrs for his affirmitive action housing. :cuss:

3 billion is NOTHING compared to what Paulson authorized for Bear, AIG, Fannie/Freddie, Goldman-Sachs and Merrill Lynch. So maybe you should think about that before a democrat with a half a brain comes around and pushes your shit in. The corporate welfare here is egregious.

Chief Faithful
09-19-2008, 02:04 PM
The CRA is created under Carter, strengthen under Clinton then protected by the Democrats under Bush. The following is an exerpt from Wikipedia:

In 2003, the Bush Administration recommended what the NY Times called "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago." [5] This change was to move governmental supervision of two of the primary agents guaranteeing subprime loans, Fannie Mae and Freddie Mac under a new agency created within the Department of the Treasury. However, it did not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enabled them to issue debt at significantly lower rates than their competitors. The changes were generally opposed along Party lines and eventually failed to happen. Representative Barney Frank(D-MA) claimed of the thrifts "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." Representative Mel Watt (D-NC) added "I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing."

I'm still surprised the media has not dinged Obama for his community organizing with groups like ACORN.

tiptap
09-19-2008, 02:08 PM
Well this is a complicated matter even if your take could be taken as factual and relevant to the crisis. And Americans like sex, not numbers, for breakfast. It is easier to follow.

Nightfyre
09-19-2008, 02:10 PM
Well this is a complicated matter even if your take could be taken as factual and relevant to the crisis. And Americans like sex, not numbers, for breakfast. It is easier to follow.
I like sex, then numbers, then breakfast. Hell, that's about a perfect morning for me.

Mr. Kotter
09-19-2008, 05:04 PM
I had hope here when he mentioned credit default swaps, but then he went elementary in his thinking with basic mortgage issues. Yeah, we know people were given loans they shouldn't have had. The real problem is what the banks did with these loans after they were approved - and it has everything to do with greed and big bonuses.

I guess that's why I'd like to see a breakdown of the costs for these bailouts; how much is due to stupid lending policies, versus how much is due to manipulative and deceptive lending practices. I know such a breakdown will be hard to quantify, but I'd love to see an attempt by someone with more knowledge to serve as a starting point for a meaningful discussion--rather than the scapegoating and partisan politics that is being played with it.

banyon
09-19-2008, 05:20 PM
With Obama right there with his hand out for 3billion in just 3yrs for his affirmitive action housing. :cuss:

Uh, yeah, this mortgage crisis was Obama's fault somehow. :spock:

__________

President Reiterates Goal on Homeownership
Remarks by the President on Homeownership
Department of Housing and Urban Development
Washington, D.C.

http://www.whitehouse.gov/news/releases/2002/06/20020618-1.html
Policy in Focus: Home-Ownership


10:30 A.M. EDT

THE PRESIDENT: Well, thank you all very much for that kind welcome. I'm here for a couple of reasons. First, I want to thank you all for your service to the greatest nation on the face of the Earth. (Applause.) I'm here to celebrate National Homeownership Month, because I believe owning a home is an essential part of economic security. And I'm concerned about the security of America. (Applause.)

I had the pleasure on June the 12th of speaking to the last President who visited HUD. I wish number 41 a happy birthday. (Applause.) And I'm glad you've invited me here today, I really am. I first am really proud of Mel Martinez and Alphonso Jackson. I've known Mel for a while, I've known Alphonso for a long time. There was no question in my mind that these two fine Americans would do a great job in leading this important agency. (Applause.)

I want to thank all those who have assumed leadership roles, who have left your states and your friends to come and serve America. And that's important. Service to our country is an incredibly important part of being an American.

I want to thank all those who have worked here for a short time and long time, who will be here after we leave. I want to thank a man named Larry Thompson, who has worked here for -- where's Larry? (Applause.) Larry's been here for 30 years. And I want to -- appreciate your service, Larry, and thank you for setting such a fine example for many others inside this building who serve the country.

Let me first talk about how to make sure America is secure from a group of killers, people who hate -- you know what they hate? They hate the idea that somebody can go buy a home. They hate freedom; that's what they hate. They hate the fact that we worship freely. They don't like the thought of Christian, Jew and Muslim living side by side in peace. They don't like that at all. And therefore, they -- since they resent our freedoms, they feel like they should take out their resentment by destroying innocent lives. And this country will do everything we can possibly do to protect America. (Applause.)

And that's going to mean making sure our homeland is secure, and I appreciate the progress we're making on setting up a Department of Homeland Security. I know it's going to be hard for some in Congress to give up a little power here and there, but I think it's going to happen because people realize we're here to serve the American people, not here to serve a political party or turf in the United States Congress. (Applause.)

But the best way to secure the homeland is to hunt them down one by one. And I mean hunt them down one by one and bring them to justice, which is precisely what America will do. (Applause.)...


...But I believe owning something is a part of the American Dream, as well. I believe when somebody owns their own home, they're realizing the American Dream. They can say it's my home, it's nobody else's home. (Applause.) And we saw that yesterday in Atlanta, when we went to the new homes of the new homeowners. And I saw with pride firsthand, the man say, welcome to my home. He didn't say, welcome to government's home; he didn't say, welcome to my neighbor's home; he said, welcome to my home. I own the home, and you're welcome to come in the home, and I appreciate it. (Applause.) He was a proud man. He was proud that he owns the property. And I was proud for him. And I want that pride to extend all throughout our country.

One of the things that we've got to do is to address problems straight on and deal with them in a way that helps us meet goals. And so I want to talk about a couple of goals and -- one goal and a problem.

The goal is, everybody who wants to own a home has got a shot at doing so. The problem is we have what we call a homeownership gap in America. Three-quarters of Anglos own their homes, and yet less than 50 percent of African Americans and Hispanics own homes. That ownership gap signals that something might be wrong in the land of plenty. And we need to do something about it.

We are here in Washington, D.C. to address problems. So I've set this goal for the country. We want 5.5 million more homeowners by 2010 -- million more minority homeowners by 2010. (Applause.) Five-and-a-half million families by 2010 will own a home. That is our goal. It is a realistic goal. But it's going to mean we're going to have to work hard to achieve the goal, all of us. And by all of us, I mean not only the federal government, but the private sector, as well.

And so I want to, one, encourage you to do everything you can to work in a realistic, smart way to get this done. I repeat, we're here for a reason. And part of the reason is to make this dream extend everywhere.

I'm going to do my part by setting the goal, by reminding people of the goal, by heralding the goal, and by calling people into action, both the federal level, state level, local level, and in the private sector. (Applause.)

And so what are the barriers that we can deal with here in Washington? Well, probably the single barrier to first-time homeownership is high down payments. People take a look at the down payment, they say that's too high, I'm not buying. They may have the desire to buy, but they don't have the wherewithal to handle the down payment. We can deal with that. And so I've asked Congress to fully fund an American Dream down payment fund which will help a low-income family to qualify to buy, to buy. (Applause.)

We believe when this fund is fully funded and properly administered, which it will be under the Bush administration, that over 40,000 families a year -- 40,000 families a year -- will be able to realize the dream we want them to be able to realize, and that's owning their own home. (Applause.)

The second barrier to ownership is the lack of affordable housing. There are neighborhoods in America where you just can't find a house that's affordable to purchase, and we need to deal with that problem. The best way to do so, I think, is to set up a single family affordable housing tax credit to the tune of $2.4 billion over the next five years to encourage affordable single family housing in inner-city America. (Applause.)

The third problem is the fact that the rules are too complex. People get discouraged by the fine print on the contracts. They take a look and say, well, I'm not so sure I want to sign this. There's too many words. (Laughter.) There's too many pitfalls. So one of the things that the Secretary is going to do is he's going to simplify the closing documents and all the documents that have to deal with homeownership.

It is essential that we make it easier for people to buy a home, not harder. And in order to do so, we've got to educate folks. Some of us take homeownership for granted, but there are people -- obviously, the home purchase is a significant, significant decision by our fellow Americans. We've got people who have newly arrived to our country, don't know the customs. We've got people in certain neighborhoods that just aren't really sure what it means to buy a home. And it seems like to us that it makes sense to have a outreach program, an education program that explains the whys and wherefores of buying a house, to make it easier for people to not only understand the legal implications and ramifications, but to make it easier to understand how to get a good loan.

There's some people out there that can fall prey to unscrupulous lenders, and we have an obligation to educate and to use our resource base to help people understand how to purchase a home and what -- where the good opportunities might exist for home purchasing.

Finally, we want to make sure the Section 8 homeownership program is fully implemented. This is a program that provides vouchers for first-time home buyers which they can use for down payments and/or mortgage payments. (Applause.)

So this is an ambitious start here at the federal level. And, again, I repeat, you all need to help us every way you can. But the private sector needs to help, too. They need to help, too. Of course, it's in their interest. If you're a realtor, it's in your interest that somebody be interested in buying a home. If you're a homebuilder, it's in your interest that somebody be interested in buying a home.

And so, therefore, I've called -- yesterday, I called upon the private sector to help us and help the home buyers. We need more capital in the private markets for first-time, low-income buyers. And I'm proud to report that Fannie Mae has heard the call and, as I understand, it's about $440 billion over a period of time. They've used their influence to create that much capital available for the type of home buyer we're talking about here. It's in their charter; it now needs to be implemented. Freddie Mac is interested in helping. I appreciate both of those agencies providing the underpinnings of good capital.

$440 billion? :hmmm: That's a familiar number.

Mr. Kotter
09-19-2008, 05:33 PM
banyon,

I know Bush was on board. This has clearly been a bipartisan cluster-fugg. I'm not trying to assign blame, but rather I'm more interested in....what practices and policies are to blame. It's those practices and policies which should be examined, and if appropriate.....undergo scrutiny to avoid repeating or compounding the problem again, down the road.

Mr. K

banyon
09-19-2008, 06:08 PM
banyon,

I know Bush was on board. This has clearly been a bipartisan cluster-fugg. I'm not trying to assign blame, but rather I'm more interested in....what practices and policies are to blame. It's those practices and policies which should be examined, and if appropriate.....undergo scrutiny to avoid repeating or compounding the problem again, down the road.

Mr. K

I didn't think you thought that, I was informing "sportsshrink" that Bush actively requested apparently @ 500 billion in extra loans issued from Freddie and Fannie.