Hinderaker writes:
The financial crash from which America is still struggling to recover was, of course, reasonably complex. But the basics are not hard to understand: the federal government wanted to increase “access” to home ownership by encouraging banks to make loans to underqualified buyers–what would traditionally have been called bad loans. The government used a carrot-and-stick approach. The stick was constant pressure on banks to show that they were not “red-lining” but rather were taking their share of risk with respect to home loans. The carrot was Fannie Mae and Freddy Mac, who reassured banks that they could make bad loans without fear of the usual consequences, since those government-sponsored entities would take them off the banks’ books.Yes, the economy tanked as the plunging real estate market spread financial disaster throughout the economy like a tidal wave. People who lost their jobs and homes as a result have the government to blame, or more specifically, the Democratic Party, who continually seeks new ways to "spread the wealth," often with disastrous results. The bad news is that Obama is still pushing banks to continue making these bad loans.
Liberals have tried to revise this history, but, as Conn Carroll writes in the Examiner, the facts are the facts...
Read it all here.
Young college grads who see bleak prospects ahead should not protest the banks, they should protest the federal government, and vote to turn the social engineers out of Congress. In other words, vote Republican. The Republican Party is far from perfect, but it is a step in the right direction for all those who desire economic opportunity, economic growth and prosperity.
> the financial crisis was caused by Congress,
ReplyDelete> forcing banks to make bad loans.
That's way too simple, and mostly not true.
First, it wasn't the banks who were making most of the loans. For an example, look up the history of
Golden West and New Century. They were the big loan originators.
WaMu was an exception -- they were a bank that was making the loans.
And nobody was forcing them -- they were making tremendous profits.
There were three main things Congress did that set the stage for the financial bust:
1998 - Congress repeals Glass-Steagall, allowing FDIC-insured banks, whose deposits
were guaranteed by the government, to start very risky investments.
2004 - The Office of the Comptroller of the Currency federally preempted state laws
regulating mortgage credit. Prior to this, many states had anti-predatory lending laws.
This allowed people like Countrywide to sell increasingly risky loan products.
2004 - The SEC changed the leverage rules for five Wall Street banks. The “Bear
Stearns exemption” replaced the 1977 net capitalization rule that had a 12-to-1
leverage limit. The new rule allowed unlimited leverage, which in turn let banks run amok.
But WHERE do you think these changes came from? From the banks!
Banks spent billions on lobbying to get these changes, all of which provided fabulous short-term
profits.
But this also changed the playing field to let them drive the car off the cliff, which they most certainly did.
"Congress forced banks to make bad loans" -- It's much more the case that the banks bribed Congress
for increased deregulation, and then they partied like there was no tomorrow.
PS - Hinderaker is biased. That's not to say he's wrong, but his handling of the Brian Darling memo
shows his bias.
You're wrong, Steve, and have gathered a bunch of pseudo-facts to support your bias. The truth is exactly as described by the article which Hinderaker quotes. The facts are also outlined in Mark Levin's book "Tyranny and Freedom" as well as Thomas Woods book "Meltdown."
ReplyDeleteThe subprime mortgage fiasco was forced on the banks, beginning with the Clinton Administration's lawsuits against mortgage lenders to force them to make loans on an affirmative action basis rather than on good credit. Rather than refute your Democrat propaganda here, I will make a separate post detailing the Democrat's destruction of the housing market and the economy.
>> Rather than refute your Democrat propaganda
ReplyDeleteGood grief.
This issue is not Dem/Republican, it's not liberal or conservative.
Systemic changes allowed this to happen. We as a society allowed this to happen.
For example, the GSEs WERE part of the
subprime pipeline, and so deserve some of the blame. But they were
not loan originators, and they weren't forcing any bank to do anything.
For the big picture, consider the relative influence of the big banks versus government.
When has government EVER been able to make big finance do anything??? It's the other way around.
When Congress repealed Glass-Steagall, were the banks howling in outrage?
Of course not. They were gloating.
Big finance OWNS our government.
How about some info from the Wall Street Journal (Nov 10, 2011):
[In response to Romney saying that "The federal government
came in ... and ... told banks they had to give loans to people
who couldn’t afford to pay them back.]
WSJ: Some conservative academics have said that Fannie Mae and
WSJ: Freddie Mac fueled the financial crisis because they had to meet
WSJ: federal quotas to finance low- and moderate-income homeowners.
WSJ:==> But academic research has shown that those mandates didn’t
WSH:==> spur the types of exotic lending at the heart of the
WSJ:==> subprime-loan crisis. Many of the worst mortgage lenders
WSJ:==> weren’t banks and weren’t subject to federal regulation.
So is that more "Democrat propaganda?"
The 2007/2008 meltdown was a complex event, and was the result of several
long-term trends in finance and government. How could it be otherwise?
You're angry and you want simple answers and easily identified villains.
You dismiss alternative views as propaganda.
The real picture is complex with many shades of grey.
Just repeating "congress forced banks to make bad loans" is WILDLY oversimplified and
does not contribute to the discussion.
Steve said: This issue is not Dem/Republican, it's not liberal or conservative.
ReplyDeleteSystemic changes allowed this to happen. We as a society allowed this to happen.
For example, the GSEs WERE part of the subprime pipeline, and so deserve some of the blame. But they were not loan originators, and they weren't forcing any bank to do anything.
Oh horse shit. Three quarters of all home loans are financed by Freddie Mac and Fannie Mae, and the GSE's (which are Democrat controlled and Democrat loyal) could have stopped this lending by raising their loan acceptance standards. However, they didn't do it because they are the ones who wanted to make easy credit loans to minorities in the first place. To quote from "Meltdown":
Fannie was also deeply involved in the politically instigated move to lower lending requirements in the name of helping "disadvantaged" groups. In September 1999, the New York Times reported that Fannie Mae was easing credit requirements on the mortgages it bought from banks. The initiative, the Times said, would encourage banks "to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans."
Steve said: When has government EVER been able to make big finance do anything??? It's the other way around.
This is just an unproven, Democrat sound-bite, signifying nothing (talk about "simple explanations").
Actually, Big Government did force mortgage loan companies into making bad loans by suing companies like AccuBanc. Again, quoting from "Meltdown":
Andrew Cuomo, who also served as HUD secretary under Bill Clinton, spoke with delight after a victorious "discrimination" settlement with AccuBanc Mortgage that forced it to make loans on what the secretary admitted was an "affirmative action" basis. The institution would "take a greater risk on these mortgages, yes ... give families mortgages who they would not have given otherwise, yes; they would not have qualified but for this affirmative action on the part of the bank, yes.... Lending that amount [$2.1 billion] in mortgages which will be a higher risk, and I'm sure there will be a higher default rate on those mortgages than on the rest of the portfolio."
I have already inflicted heavy damage on your naivete, do you wish to continue?
Yes, the Democrats caused the meltdown, not the banks, and no, the meltdown and its causes are not difficult to understand, but not so easy to cover up with the B.S. you Dems are spreading to cover your butts.
I have a lot more info that I will present in a separate article when I have the time.