the real cause of the financial meltdown

“So very desperate to shift the blame.

Tsk � Tsk

Whatever Happened To That Republican Ideal Of Personal Responsibility? � It vaporises when their #&%!$ hits the fan. � Have fun being back in the minority for a generation.

”

“In 2001, President Bush made his first of many calls for regulatory reform of Fannie Mae and Freddie Mac.

In 2003 Republican Congressman Richard Baker introduced a House Bill H.R. 2725 calling for Regulatory Reform of Fannie Mae and Freddie Mac. Republican Congressmen Richard Baker was quoted in 2003 in Money Magazine about his reform he wanted for Fannie Mae and Freddie Mac, �I have concerns that if appropriate resources aren't allocated for internal risk management, the consequences will be far more severe than just a real estate slowdown. The losses would fall quickly through the capital these companies have and down to shareholders and taxpayers. These companies have some of the lowest capital margins of any financial institution in the nation, yet, at the same time, they are two of the largest. The concern is that if something doesn't work out the way they predict, the American taxpayer could be called on to pay off the debt in some sort of bailout.�

In 2003 Republican Senator Chuck Hagel introduced his first of several Senate Bills, this one S.1508 calling for Regulatory reform of Fannie Mae and Freddie Mac. Later in an open letter, 24 Republican Senators including Senator McCain said, �If effective regulatory reform legislation ... is not enacted this year, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole,"

Every single Democratic Senator opposed the Hagel bills, including Senator Obama. Senator Obama received $120,349 in political donations from employees of Freddie Mac and Fannie Mae.

http://www.americanthinker.com/2008/10/what_really_happened_in_the_mo.html

http://money.cnn.com/magazines/moneymag/moneymag_archive/2003/09/01/348649/index.htm”

“Still whining and making excuses prosecutor. Like Tilt said, no personal responsibility.”

“We listened to them bltch for the last thirty years (at least) about how the regulation of markets strangled their potential.

Well, they got what they wanted.

And now that their pet project blew up and took the global economy with it they want to weasel out of it. � Imagine that......

”

“There's a real problem when people are more partisan and less American.”

“Exactly!!! The evenly balanced fraudulent march of big government ; left, right ,left, right...”

“It was the regulations of the market that cause the current Barney Frank Recession. Led by Congressional Democrats like Barney Frank, the lending institutions were pressured to increase lending to unqualified mortgagors. This pressure and regulations led to the current subprime financial crisis that caused the Barney Frank Recession. You see, Barney Frank had a lover, Herb Moses, who was an executive at Fannie Mae. Together, they wanted to distort the housing market through manipulation and regulation to increase home ownership to the unqualified buyers despite the unquestionable economic risk.”

“There has been a struggle between FNMA/FHLMC and the large banks for decades. The banks have wanted to limit the GSEs so they could get a larger and more profitable share of the market. There were problems at Fannie & Freddie but they were only a small part of the financial meltdown. To pretend otherwise is a lie, pure and simple.”

“[quote]
Disowned by the Ownership Society
By Naomi Klein

This article appeared in the February 18, 2008 edition of The Nation.
January 31, 2008

Remember the "ownership society," fixture of major George W. Bush addresses for the first four years of his presidency? "We're creating...an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property," Bush said in October 2004. Washington think-tanker Grover Norquist predicted that the ownership society would be Bush's greatest legacy, remembered "long after people can no longer pronounce or spell Fallujah." Yet in Bush's final State of the Union address, the once-ubiquitous phrase was conspicuously absent. And little wonder: rather than its proud father, Bush has turned out to be the ownership society's undertaker.

Well before the ownership society had a neat label, its creation was central to the success of the right-wing economic revolution around the world. The idea was simple: if working-class people owned a small piece of the market--a home mortgage, a stock portfolio, a private pension--they would cease to identify as workers and start to see themselves as owners, with the same interests as their bosses. That meant they could vote for politicians promising to improve stock performance rather than job conditions. Class consciousness would be a relic.

It was always tempting to dismiss the ownership society as an empty slogan--"hokum" as former Labor Secretary Robert Reich put it. But the ownership society was quite real. It was the answer to a roadblock long faced by politicians favoring policies to benefit the wealthy. The problem boiled down to this: people tend to vote their economic interests. Even in the wealthy United States, most people earn less than the average income. That means it is in the interest of the majority to vote for politicians promising to redistribute wealth from the top down.

So what to do? It was Margaret Thatcher who pioneered a solution. The effort centered on Britain's public housing, or council estates, which were filled with die-hard Labour Party supporters. In a bold move, Thatcher offered strong incentives to residents to buy their council estate flats at reduced rates (much as Bush did decades later by promoting subprime mortgages). Those who could afford it became homeowners while those who couldn't faced rents almost twice as high as before, leading to an explosion of homelessness.

As a political strategy, it worked: the renters continued to oppose Thatcher, but polls showed that more than half of the newly minted owners did indeed switch their party affiliation to the Tories. The key was a psychological shift: they now thought like owners, and owners tend to vote Tory. The ownership society as a political project was born.

Across the Atlantic, Reagan ushered in a range of policies that similarly convinced the public that class divisions no longer existed. In 1988 only 26 percent of Americans told pollsters that they lived in a society bifurcated into "haves" and "have-nots"--71 percent rejected the whole idea of class. The real breakthrough, however, came in the 1990s, with the "democratization" of stock ownership, eventually leading to nearly half of American households owning stock. Stock watching became a national pastime, with tickers on TV screens becoming more common than weather forecasts. Main Street, we were told, had stormed the elite enclaves of Wall Street.

More: http://www.thenation.com/doc/20080218/klein
[/quote]

But let's remember... this current financial disaster is NOT a result of mortgages gone bad... At present some 95% of all mortgages are being paid in full and on time... It is predicted that in 2009 that 90% will be...

Even still, 10% Mortgage default is NOT enough to cause this problem alone.

The current problems seems to be mostly do to Credit Default Swaps and Derivatives... Very HIGH STAKES Gambling with borrowed money... The banks were making bets that they couldn't cover.

The rest is a result of a snowball effect... When the housing industry comes crashing down, there are a lot of jobs lost... when banks stop lending, business stops growing and people lose more jobs... and one things leads to another...

It's more complicated, of course... but the point is: The Mortgages aren't the cause of the problem... it's the UNREGULATED industry of money lenders...

... and this whole idea was spawned and grown by Conservatives... ...and the Dems were complicit along the way...

But to hear those on the right try to blame all of this on the Left is laughable... The Right introduced the idea... and as recently as 2004 BUSH wash promoting it big time!”

“It was the regulations of the market that cause the current Barney Frank Recession.

Jeezus. Must be nice to be so fugging deluded.”

“I sometimes wonder if they actually believe a tenth of what they post.

Bush's 'Ownership Society' dovetailed perfectly with the unregulated 'shadow' financial system and their rush to make a killing.”

“I think it's just the denial process.”

“Libbies are so SILLY.”

“Prosecutor, tell me how long its been since Moses and Frank broke up?”

“That's it, blame it all on everything except for the real problem- the price of the real estate was too high- can't you all just say that? No, because the american public can't think in anything other than payments and tax exemptions.”

“What? Twenty four months from now and gold will sell for $325.00 an ounce? All because of the interest rates and high cap gains rates - sure. Hyperinflation and falling gold -impossible you say? wait.
last edited: 12/24/08 7:28:30 AM”

“Also, how long has it been since Moses worked at Fannie Mae?”

““That's it, blame it all on everything except for the real problem- the price of the real estate was too high- can't you all just say that? No, because the american public can't think in anything other than payments and tax exemptions.”

No. That's not all of it... but you do make a good point.

Still, When Credit Default Swaps can pay out at 30:1, it's easy to see how a 5% default creates a WAY MORE SERIOUS problem than some inflated property values... Unless you're suggesting that properties were over-valued at 30:1”

“American Express will get $3.39 billion of fresh capital from the U.S. rescue fund, Capital One Financial Corp. has preliminary approval for $3.6 billion, and Discover Financial Services asked for $1.2 billion.

Anyone else think we oughta set the interest rate at 22.99% (compounded monthly) with a $3 million late fee?”

“Hehehe.... GREAT IDEA!”

“Kleety saves the economy!”

“Nice opinion piece of a syndicated columnist, Ickyma.

If the Democrats in Congress hadn't used regulation to tinker with the mortgage industry to create subprime mortgages, the U.S. would not have had either a collapse of the financial markets or bursting of a housing bubble. It that did not happen, no Barney Frank Recession.

For all of you who lost money in the stock market, lost your jobs or have reduced unemployment, thank Congressional Democrats who solidified to block the reforms that would have saved the economy when we had a chance.”

“I love it Kleet.
And the interest should shoot to 32.99% of they miss a payment.”

“citibank just did that to me. APR was 12.99%. I never missed a payment, nor was one late. I usually paid the balance off each month, however Christmas purchaces as well as a few other big ticket items, I carried a $300 balance into December billing period.

Got statement and notice APR was jacked up to 32.99% Customer Rep. advised that they could shoot rate up for whatever reason they wanted to. I confirmed the balance and advised that I was in process of sending EFT payment and for her to cancel account if the APR could not be lowered to 9%. She said that she would have to get a manager approval and that could not happen today. I said to close out account then.

She said that I will loose the points I had if I closed it. I told her to shove them.

Check your statements carefully!”

“You should tell them that you want a written statement from them that shows YOU closed the account... Otherwise a creditor in the future might see "Account Closed" and assume the previous creditor closed it and it might not look good.

Be sure to get that statement from them.”

““Nice opinion piece of a syndicated columnist, Ickyma.

If the Democrats in Congress hadn't used regulation to tinker with the mortgage industry to create subprime mortgages, the U.S. would not have had either a collapse of the financial markets or bursting of a housing bubble. It that did not happen, no Barney Frank Recession.

For all of you who lost money in the stock market, lost your jobs or have reduced unemployment, thank Congressional Democrats who solidified to block the reforms that would have saved the economy when we had a chance.”
prosecutor
9:34:23 AM
12/24/08

Uh huh - still no accountability. And we wonder why things are a mess.”

“That should've been posted under "Christmas Humor".”

“The Federal Reserve today cut a key interest rate to zero, allowing borrowers to get money for nothing. In a related move, the Fed also set the short-term lending rate of chicks to free.

Federal Reserve Chairman Ben Bernanke said the adjustments were necessary to avoid a deflationary spiral and to prevent the acquisitions of blisters on little fingers and thumbs.”

“Thanks icky! Just called back and asked them to email or fax that to me.”

“The commercial real estate market has yet to enter the fray. Just the vacant retail buildings alone may shake the dust out of grandpa HW's american dream. Limited Partnerships sure made things great, eh?”

“Chicks for free is just a target, not a set number.


PS

I got blistas on my fingas!

”

“Even if.... and that's a big 'IF', we take prosecutors view - isn't the real message here that the financial markets can collapse before they correct themselves?”

“And all this time they said regulation was evil.”

“Well, Prosecutor wouldn't answer my questions so I looked up the answer. Something was fishy about the way the right wing blogs were writing about it.

Frank and Moses broke up in 1998. Moses left Fannie Mae in 1998. Still somehow the deregulation gang wants to tell you its their fault - not administration that was in power for the last 8 years. Not the administration that had control of congress in its first term, while the President didn't veto a single bill.

Pay no attention to the guys who've been in power the last eight years. No, don't look at Bush.... errr.. Hey, look over there! There's two homosexuals who were overly enthusiastic about Fannie Mae. It's all their fault!
last edited: 12/24/08 6:56:55 PM”

“Don't need regulation if you don't have the most; crooked, evil and untrustworty political body know to man- the Federal government of the USA involved in every aspect of your life.”

“Would you rather have Mugabe? � LOL”

“ROTFLMAO...this is doodly compared to what is coming...Hey Tilt, Jamie Gorelick...is BACK!!!

Remember the memo that cost over 3000 Americans their lives? And guess what? Not a whole lot of them had raised their hands and offered to defend and protect the Constitution....”

“No surprise that the Kool-Aid Drinking Left accepts NONE of the responsibility for the mortgage/banking failures and continues to try to pin all of it on Bush and the Rebublicans, lol. Keep drinking it up and patting yourselves on the backs, girls. Your credibility, if you had any, shrinks by the day!”

“Left and right have both lost all credibilty. Party means nothing to an out of control overgrowth of worthless centralized bureacracy. And, all of you flag waving
party mice are where the problems began.”

“Tell me noncon - what if any responsibility lies with Bush and the Republicans?

Personally, I do think Frank was on the Fannie Mae bandwagon for too long and played a minor role in Fannie Mae being too loose and sloppy, which played a role in the meltdown. But blaming him for not supporting reforms in 2003 when Bush's power and popularity were sky high and his party was in the majority is rather pathetic and desperate - as is pointing to a relationship Frank had that ended 10 years ago with a guy who left Fannie Mae 10 years ago.”

“Libbies are so Silly.”

“Judas Priest, I swear you guys are all feckin' delusional. You read one thing and interpret it a million different ways. Reading is fundamental.

The blame lies everywhere, ped. The truth is easily found but it's never apparent to someone who doesn't want to know what it is. For ever "guilty" Republican there was an equally complicit Democrat. Period. Fail to admit that and you're not part of any solution. Deciding that government control over anything is a sound solution makes you (non-specific "you") part of the problem. So you, ped, tell me how Dems are exempt from any blame here?

Left and right have both lost all credibilty. Party means nothing to an out of control overgrowth of worthless centralized bureacracy. And, all of you flag waving
party mice are where the problems began.�
salebored


For once, salebored says something worthwhile using real words.”

“Noncon. The Dems aren't exempt. Barney Frank deserves some blame by being resistive to criticisms of some of the shenanigans Fannie Mae was engaged in. What I'm arguing is that it's ridiculous to call this the Barney Frank recession. The incompetence of the folks in charge for the last 8 years is a huge factor. Bush I and Clinton were pretty competent - even if I have significant complaints about both.”

“The Dems aren't exempt.

You have not been reading T*lt and Y2's posts. LOL”

“Fannie and Freddie combined were less then 15% of the subprime market and last I heard their default rate was 6 or 7%. The mortgage based derivative market was ten times the entire subprime market. So the GSEs share of the meltdown looks to be something on the order of one tenth of 1%.

If all the Republicans can find to distract from their responsibility in this is whatever involvement Barney Frank may have had with that less than a tenth of 1%, you need better opposition research. But going after the gay guy plays really well with 'the base' doesn't it? I don't think anyone finds that behavior surprising.

What's funny is watching what happens when one of these clowns goes after him to his face. He shreds 'em. They crawl out of the room missing a few pieces.


Nevermind that lenders lowered standards again and again as the bubbled swelled. They'd never see those loans again. Nevermind that the securities ratings companies were on the take. They quit realistically assessing risk in the pursuit of profit. Nevermind that the institutions making these deals could shop around for the most lax 'regulator' they could find.

And who has been preaching against any and all regulation since Goldwater? Barney Frank? � LMAO

After The Crash safeguards were established.... so they managed to build up a shadow financial system where they could 'play' unimpeded (with predictable results).

”

“Earlier this year the bedwetting libbies were clamoring for the "EVIL" lenders to be held accountable for bad mortgages...the more "calm rational"members of the site kept referencing the fact that the government had forced this failure by their policies....

WELLLLLLL what a difference a year makes.

http://online.wsj.com/article/SB10001424052748704107204574475110152189446.html

When the crisis first arose, the left's explanation was that it was caused by corporate greed, primarily on Wall Street, and by deregulation of the financial system during the Bush administration. The implicit charge was that the financial system was flawed and required broader regulation to keep it out of trouble. As it became clear that there was no financial deregulation during the Bush administration and that the financial crisis was caused by the meltdown of almost 25 million subprime and other nonprime mortgages�almost half of all U.S. mortgages�the narrative changed. The new villains were the unregulated mortgage brokers who allegedly earned enormous fees through a new form of "predatory" lending�by putting unsuspecting home buyers into subprime mortgages when they could have afforded prime mortgages. This idea underlies the Obama administration's proposal for a Consumer Financial Protection Agency. The link to the financial crisis�recently emphasized by President Obama�is that these mortgages would not have been made if regulators had been watching those fly-by-night mortgage brokers.

There was always a problem with this theory. Mortgage brokers had to be able to sell their mortgages to someone. They could only produce what those above them in the distribution chain wanted to buy. In other words, they could only respond to demand, not create it themselves. Who wanted these dicey loans? The data shows that the principal buyers were insured banks, government sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac, and the FHA�all government agencies or private companies forced to comply with government mandates about mortgage lending. When Fannie and Freddie were finally taken over by the government in 2008, more than 10 million subprime and other weak loans were either on their books or were in mortgage-backed securities they had guaranteed. An additional 4.5 million were guaranteed by the FHA and sold through Ginnie Mae before 2008, and a further 2.5 million loans were made under the rubric of the Community Reinvestment Act (CRA), which required insured banks to provide mortgage credit to home buyers who were at or below 80% of median income. Thus, almost two-thirds of all the bad mortgages in our financial system, many of which are now defaulting at unprecedented rates, were bought by government agencies or required by government regulations. ”

“So it is Obamas fault. I knew it!”

“The failure of McCains alien amnesty attempt was one of the biggest causes in the RE crash.”

“Sadly WK it looks like the Slobbering Barney Frank is head and shoulders in the lead of this debacle.”