User Tag List

First 1234 Last

Results 11 to 20 of 80

  1. #11
    Permabanned
    Join Date
    Mar 2008
    MBTI
    ISTP
    Enneagram
    9w8
    Posts
    3,187

    Default

    Quote Originally Posted by oberon View Post
    Pardon me, but it seems to me that mortgage commoditization happened not because of government regulation, but because of the lack of government regulation.

    Local banking should be a utility function period, the way it was in 1975.
    PART OF the reason why the housing market collapsed was because the government put pressure on companies to give nonsensical loans to people who could not afford them. There were other factors at play in the collapse and the bursting of the bubble, but the government definitely played its part. It's not government regulation, so much as government intervention. Where it gets worse is in how the government is choosing to deal with the problem they helped to create. The latter I'm sure you're very much aware of.

    Guess again who's to blame for U.S. mortgage meltdown




    WND MONEYNETDAILY
    Guess again who's to blame for U.S. mortgage meltdown
    Analysts point not to greed, but to social activist politics
    Posted: September 19, 2008
    6:19 pm Eastern

    By Drew Zahn
    2009 WorldNetDaily


    Stan J. Liebowitz

    While many pundits are pointing to corporate greed and a lack of government regulation as the cause for the American mortgage and financial crisis, some analysts are saying it wasn't too little government intervention that cased the mortgage meltdown, but too much, in the form of activists compelling the government to pressure Freddie Mac and Fannie Mae into unsound though politically correct lending practices.

    "Home mortgages have been a political piata for many decades," writes Stan J. Liebowitz, economics professor at the University of Texas at Dallas, in a chapter of his forthcoming book, Housing America: Building out of a Crisis.

    Liebowitz puts forward an explanation that he admits is "not consistent with the nasty-subprime-lender hypothesis currently considered to be the cause of the mortgage meltdown."

    In a nutshell, Liebowitz contends that the federal government over the last 20 years pushed the mortgage industry so hard to get minority homeownership up, that it undermined the country's financial foundation to achieve its goal.

    "In an attempt to increase homeownership, particularly by minorities and the less affluent, an attack on underwriting standards was undertaken by virtually every branch of the government since the early 1990s," Liebowitz writes. "The decline in mortgage underwriting standards was universally praised as 'innovation' in mortgage lending by regulators, academic specialists, (government-sponsored enterprises) and housing activists."

    He continues, "Although a seemingly noble goal, the tool chosen to achieve this goal was one that endangered the entire mortgage enterprise."

    "As homeownership rates increased there was self-congratulation all around," Liebowitz writes. "The community of regulators, academic specialists, and housing activists all reveled in the increase in homeownership."

    An article in the Los Angeles Times from the late '90s praised the sudden surge in homeownership among minorities, calling it "one of the hidden success stories of the Clinton era."

    John Lott, a senior research scientist at the University of Maryland, however, claimed in a Fox News article yesterday that the success came at a great price.

    According to Lott, the Federal Reserve Bank of Boston produced a manual in the early '90s that warned mortgage lenders to no longer deny urban and lower-income minority applicants on such "outdated" criteria as credit history, down payment or employment income.

    Furthermore, claims Lott, Fannie Mae and Freddie Mac encouraged and praised lenders like Countrywide and Bear Stearns for adopting the slackened policies toward minority applicants.

    "Given these lending practices mandated by the Fed and encouraged by Fannie Mae and Freddie Mac," writes Lott, "the resulting financial problems for financial institutions such as Countrywide and Bear Stearns are not too surprising."

    (Story continues below)




    Liebowitz' contention that lenders were under pressure to loosen their standards for racial and political goals was confirmed years ago by the companies at the heart of today's crisis: Fannie Mae and Freddie Mac.

    A New York Times article from Sept. 1999 states that Fannie Mae had been under increasing pressure from the Clinton administration to expand mortgage loans among low- and moderate-income people and that the corporation loosened its lending requirements to comply.

    An ominous paragraph of the article reads, "In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s."

    Liebowitz likewise predicted in a 1998 paper the risk of sacrificing sound financial policy for social activism.

    "After the warm fuzzy glow of 'flexible underwriting standards' has worn off," Liebowitz wrote, "we may discover that they are nothing more than standards that led to bad loans. It will be ironic and unfortunate if minority applicants wind up paying a very heavy price for a misguided policy based on a badly mangled idea."

    And though some have speculated that lenders in the '90s dove into sub-prime mortgages in an effort to gouge new markets, the president and chief operating officer of Freddie Mac in 1999, David Glenn, confessed his company was pushed by a federal agenda.

    "The mortgage industry intends to pursue minorities with greater intensity as federal regulators turn up the heat to increase home ownership," Glenn said in his remarks at the annual convention of the Mortgage Banker Association of America.

    "The federal government in the meantime has increased pressure on lenders to seek out minorities, as well as low-income groups and borrowers with poor credit histories," Glenn said. "Fannie Mae recently reached an agreement with the U.S. Department of Housing and Urban Development to commit half its business to low- and moderate-income borrowers. That means half the mortgages bought by Fannie Mae would be from those income brackets."

    In that same year, Freddie Mac warned of the logical pitfalls of pursuing loans on the basis of skin color and not credit history.

    The Washington Post reported that the company conducted a study in which it was found that far more black people have bad credit than white people, even when both have the same incomes. In fact, the study showed a higher percentage of African Americans with incomes of $65,000 to $75,000 had bad credit than white Americans with incomes of below $25,000.

    Such data demonstrated that when federal regulators demanded parity between racial groups in lending, the only way to achieve a quota would be to begin making intentionally bad lending decisions.

    The study, however, came under brutal attack in the U.S. Congress and was ridiculed with charges of racism.

    A few years later, when Greg Mankiw, chairman of President Bush's Council of Economic Advisers, voiced a warning about weakened underwriting standards, Congress rebuffed him as well.

    The Wall Street Journal quoted Congressman Barney Frank, D-Mass., in 2003 as criticizing Greg Mankiw "because he is worried about the tiny little matter of safety and soundness rather than 'concern about housing.'"

    Frank, chairman of the House Financial Services Committee, rejected a Bush administration and Congressional Republican plan for regulating the mortgage industry in 2003, saying, "These two entities Fannie Mae and Freddie Mac are not facing any kind of financial crisis." According to a New York Times article, Frank added, "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."


  2. #12
    Oberon
    Guest

    Default

    Quote Originally Posted by Risen View Post
    PART OF the reason why the housing market collapsed was because the government put pressure on companies to give nonsensical loans to people who could not afford them. There were other factors at play in the collapse and the bursting of the bubble, but the government definitely played its part. It's not government regulation, so much as government intervention. Where it gets worse is in how the government is choosing to deal with the problem they helped to create. The latter I'm sure you're very much aware of.

    Guess again who's to blame for U.S. mortgage meltdown
    Yeah, I was aware of it... Can't really argue with the article, either.

  3. #13
    Minister of Propagandhi ajblaise's Avatar
    Join Date
    Aug 2008
    MBTI
    INTP
    Posts
    7,917

    Default

    The reason Rick Santelli's rant doesn't really work is because wall-street and financial types have much of the current public sentiment against them. Maybe if Santelli was a factory worker instead of a commodity trader, and the video showed this, it would be more legitimate.

  4. #14
    Senior Member Lateralus's Avatar
    Join Date
    May 2007
    MBTI
    ENTJ
    Enneagram
    3w4
    Posts
    6,276

    Default

    In that same year, Freddie Mac warned of the logical pitfalls of pursuing loans on the basis of skin color and not credit history.

    The Washington Post reported that the company conducted a study in which it was found that far more black people have bad credit than white people, even when both have the same incomes. In fact, the study showed a higher percentage of African Americans with incomes of $65,000 to $75,000 had bad credit than white Americans with incomes of below $25,000.

    Such data demonstrated that when federal regulators demanded parity between racial groups in lending, the only way to achieve a quota would be to begin making intentionally bad lending decisions.

    The study, however, came under brutal attack in the U.S. Congress and was ridiculed with charges of racism.
    It's sad that being truthful can lead to charges of racism. We (as a country) are so worried about offending someone, we've thrown practicality out the window. We're screwed because both parties aren't going to fix the problem. They're going to do what is politically expedient, which is not what is economically viable. This whole issue is infuriating. Your average idiot just wants to call banks greedy and call it a day when that's simply not the source of the problem.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  5. #15
    Habitual Fi LineStepper JocktheMotie's Avatar
    Join Date
    Nov 2008
    Posts
    8,193

    Default

    Someone still hasn't explained to me how letting these banks fail, and auctioning off their bad assets to local and intermediate banks that actually practiced good lending is a bad idea.

    The thing that kills me is that a lot of people blame the conservatives for what has happened, yet the government style for the last 8 years hasn't really been anything close to a typical conservative government, at least my interpretation of one.



  6. #16
    Minister of Propagandhi ajblaise's Avatar
    Join Date
    Aug 2008
    MBTI
    INTP
    Posts
    7,917

    Default

    Quote Originally Posted by JocktheMotie View Post
    Someone still hasn't explained to me how letting these banks fail, and auctioning off their bad assets to local and intermediate banks that actually practiced good lending is a bad idea.

    The thing that kills me is that a lot of people blame the conservatives for what has happened, yet the government style for the last 8 years hasn't really been anything close to a typical conservative government, at least my interpretation of one.
    Everyone knows letting banks fail would have very negative, perhaps devastating, effects on the economy. The main question right now is whether temporary bank takeover by the government would work in the long-term, instead of just for providing short-term relief.

    There is a model out there of a government temporarily taking over banks and solving it's bank crisis. Sweden, back in 1992.

  7. #17
    Habitual Fi LineStepper JocktheMotie's Avatar
    Join Date
    Nov 2008
    Posts
    8,193

    Default

    Quote Originally Posted by ajblaise View Post
    Everyone knows letting banks fail would have very negative, perhaps devastating, effects on the economy. The main question right now is whether temporary bank takeover by the government would work in the long-term, instead of just for providing short-term relief.

    There is a model out there of a government temporarily taking over banks and solving it's bank crisis. Sweden, back in 1992.
    Just the big ones though? The assets would still be auctioned off, to banks able to take the risk, plus they'd be sold on the cheap. Instead of the government taking equity and nationalizing like Sweden did, I don't see why other banks can't take this position, and pass the benefits to it's current clients.

    As it is now, there is no accountability for those large banks, and it's depressing. Bush did a crap job in going only halfway with that bailout, and now the current administration is only compounding the error.



  8. #18
    Minister of Propagandhi ajblaise's Avatar
    Join Date
    Aug 2008
    MBTI
    INTP
    Posts
    7,917

    Default

    Quote Originally Posted by JocktheMotie View Post
    Just the big ones though? The assets would still be auctioned off, to banks able to take the risk, plus they'd be sold on the cheap. Instead of the government taking equity and nationalizing like Sweden did, I don't see why other banks can't take this position, and pass the benefits to it's current clients.

    As it is now, there is no accountability for those large banks, and it's depressing. Bush did a crap job in going only halfway with that bailout, and now the current administration is only compounding the error.
    The problem with buying troubled assets through an auction process is that it's extremely unlikely bidding volume will get anywhere close to market-value. So this wouldn't be able to avoid hugely negative market effects.

    Public-private hybrid solutions will probably get support from some moderate and center-right politicians, but that could very well not be enough.

  9. #19
    Senior Member Lateralus's Avatar
    Join Date
    May 2007
    MBTI
    ENTJ
    Enneagram
    3w4
    Posts
    6,276

    Default

    Quote Originally Posted by ajblaise View Post
    The problem with buying troubled assets through an auction process is that it's extremely unlikely bidding volume will get anywhere close to market-value. So this wouldn't be able to avoid hugely negative market effects.
    This is incorrect. The auctioning process defines "market value" (assuming it's a fair auction, not something corrupt). There will be huge losses because of the market correction, but that's inevitable. When something is overvalued, there is ALWAYS a correction. The government cannot stop this. Either the asset's "market value" drops or the entire economy is inflated to give people the perception that the asset didn't drop in value, which has the same effect, only in the opposite direction...and it's much more harmful to the economy in the long run.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  10. #20
    Minister of Propagandhi ajblaise's Avatar
    Join Date
    Aug 2008
    MBTI
    INTP
    Posts
    7,917

    Default

    Quote Originally Posted by Lateralus View Post
    This is incorrect. The auctioning process defines "market value" (assuming it's a fair auction, not something corrupt). There will be huge losses because of the market correction, but that's inevitable. When something is overvalued, there is ALWAYS a correction. The government cannot stop this. Either the asset's "market value" drops or the entire economy is inflated to give people the perception that the asset didn't drop in value, which has the same effect, only in the opposite direction...and it's much more harmful to the economy in the long run.
    The reason it wouldn't reach market value is because securities are very risky and hard for prospects to evaluate, so in an auction, they would be undervalued.

    I think there are really few people taking that novel idea seriously.

Similar Threads

  1. [Other] Does you feel weird in conflict/standing up for yourself?
    By Melodrama in forum The NF Idyllic (ENFP, INFP, ENFJ, INFJ)
    Replies: 35
    Last Post: 09-15-2017, 02:01 PM
  2. Dressing up for Halloween for children
    By Nonpareil in forum The Bonfire
    Replies: 24
    Last Post: 10-05-2013, 02:40 PM
  3. Would the real folk-typologist please stand up?
    By SolitaryWalker in forum Myers-Briggs and Jungian Cognitive Functions
    Replies: 5
    Last Post: 02-13-2013, 03:38 AM
  4. "Stand up for Chuck"
    By swordpath in forum Politics, History, and Current Events
    Replies: 4
    Last Post: 08-25-2010, 11:47 PM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
Single Sign On provided by vBSSO