Posted on 09/28/2008 6:01:24 AM PDT by pleikumud
I don’t mean to change the subject, but the biggest Ponzi scheme of all is Socialist Security.
Just the tip of the iceberg. Bush said the other day “This Sucker is going down”. Once a Ponzi breaks it can not be fixed.
No! The fault lies with the citizens..US!! We were not vigilant in protecting our freedom. Now we pay the PIPER!!
The community reinvestment act was applicable to all banks, not just Fannie and Freddie. Under the act - or more accurately said - under the regulations created under Clinton, banks could only do things like opening new branches if they were sufficiently fulfilling the needs of all members of their community. This includes the low-income earning people with poor credit history. This regulation led to suits by institutions such as ACORN against banks and institutions for their non-compliance with the regulations. In fact, our boy Obambi was involved in a suit against citibank for similar issues.
Another part of the problem is the state of foreclosure law. Although someone “owns” the mortgage, and it is backed by actual property it takes at least several months and frequently years for a bank to foreclose on the property. During this time, the bank is unable to extract any value from the property.
Additionally, the securitization of mortgages has led to sales and resales of these mortgages. Often, it is unclear who owns the mortgage and it is questionable whether they maintained proper paperwork to preserve their ability to foreclose on the mortgage. This brings us to a position in which the true owner of the mortgage may not be able to foreclose.
“Think about the added contraction of credit and its impact on the economy.”
What contraction? The Fed needs credit to be used. Consumers want credit. Someone will be the go-between and provide the credit offered by the Fed to the consumers. The markets need credit. They need consumers to use credit. There will be credit. I just refi’d my car at a lower interest rate. I just qualified for a new home at a great rate and the qual was painless. There is credit. Everyone relies on credit. There will be credit.
This whole “crisis” is a scam.
The term "Unqualified borrowers" need not only mean the poor. Those middle class people you mention would be unqualified borrowers also if reasonable borrowing standards were in place.
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This is a crisis. It was a Democrat scam, and now the Democrats are in a position to turn it into an even larger scam.
whether they were qualified or not is a separate issue. What I am curious about is the class of people primarily responsible for the loan defaults.
The problem is twofold. The first has been pointed out to you, value. When the housing bubble burst, it created the situation where the assets had less value than mortgage balances.
The second problem is liquidity. You can't spend a house.
It’s probably spread across the whole spectrum.
The poor guy is going to be in over his head with a $50,000 loan, the working class guy at $100,000, the middle class guy at $200,000 & the wealthy guy at a million or more.
The qualification standard was changed (lowered) to help the guy on the low end buy a house & then that changed standard was used throughout the whole spectrum.
“The second problem is liquidity.”
Yes, I agree that could become aa issue but again I was asking about the *loss* not whether liquidity could be an issue.
I appreciate that there so many opionated armchair “econmists” posting here but I wasn’t asking for another “opinion” unless it’s backed with some credentials.
Once again:
“What’s odd about this is I have yet to read of a single economist ascribing this crisis to what is described above.”
Do you have links to credible economists who would agree with your “theories”. It shouldn’t be that so hard to find if it’s so well known and accepted right?
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