Skip to comments.U.S. panel sifts subprime wreckage, blames Greenspan (MSM covering for corrupt politicos w/agendas)
Posted on 04/07/2010 4:34:52 PM PDT by NormsRevenge
WASHINGTON (Reuters) The wreckage of Wall Street's subprime mortgage machine was laid bare on Wednesday by a U.S. congressional panel that pointed the finger at Alan Greenspan for not stopping it from running out of control.
The former Federal Reserve chairman -- once revered as the oracle of economic wisdom -- defended his legacy before the panel, which also heard a former Citigroup (C.N) executive say he had warned of the subprime danger.
The Financial Crisis Inquiry Commission kicked off three days of hearings with a look at securitization of subprime mortgages, in which risky home loans were bundled and resold in the secondary debt market.
At the peak of America's real estate bubble, Wall Street firms were securitizing huge amounts of subprime loans, putting bad assets on financial institutions' books and unmanageable debts on the shoulders of many homeowners.
It all came crashing down two years ago, triggering a devastating wave of foreclosures, paralysis in capital markets, and the worst financial crisis in generations. Since then, the market for subprime mortgage debt has virtually vanished.
"The Fed utterly failed to prevent the financial crisis," said commission member Brooksley Born at a hearing where Greenspan, other regulators and banking executives testified.
In reply to Born and other commission members, Greenspan, who is 84 and retired as Fed chairman in 2006, said:
"Did we make mistakes? Of course, we made mistakes ...
"Managers of financial institutions, along with regulators, including but not limited to the Federal Reserve, failed to comprehend the underlying size, length and potential impact" of market risks that contributed to the 2007-2009 crisis.
(Excerpt) Read more at news.yahoo.com ...
Whitewash in Progress..
On Friday, the commission will hear from former executives and regulators of housing finance giant Fannie Mae (FNM.N).
The commission’s hearings were not expected to unearth revelations that significantly alter the tale of the crisis, which is fairly well understood by now. But its proceedings could add momentum to a push for a regulatory overhaul.
This has nothing to do with getting to the truth of what actually caused the financial melt down. This is pure PR to demonize the free market, the fed, Wall Street and the banks. The goal, of course, is to get more regulations and control over our free market — as we progress on our march to socialism.
Greenspan kept interest rates way too low because of the 911 attacks and the Iraq war. Osama Bin Ladin was the real winner
These despicable f,n rats! They planned this all along and they point fingers while the GOP sat and took thier sh## and did nothing!
Greenspan Rejects Criticism of Policies at Hearing
WASHINGTON The committee examining the causes of the financial crisis heard a strong defense of the Federal Reserve from its former chairman on Wednesday as the panel began three days of hearings 0n the failure to rein in Citigroup, Fannie Mae and the subprime mortgage market.
In his testimony, an unflinching Alan Greenspan fended off a barrage of questions about the Feds failure to crack down on subprime mortgages and other abusive lending practices during his lengthy tenure.
He pointed out that the Fed had warned about subprime lending and low-down-payment mortgages in 1999, and again in 2001. And he argued that if the Fed had tried to slow the housing market amid a fairly broad consensus about encouraging homeownership, the Congress would have clamped down on us.
He added: There is a lot of amnesia thats emerging, apparently.
Greenspan could do a hell of a lot of god for this country if he came out pointing fingers at the real culprits and NAME NAMES
(Barney Frank, Chris Dodd)
How much money did Clintionista Robert Rubin make trashing City??
Yep...typical Reuters propoganda.
Somebody should ask Andrea Mitchell what she thinks of RAT politicians with sweetheart loan deals trashing her husband.
Anything coming from these people is a bunch of noise. There are so many people to blame for this mess that we do not have enough prison space to hold them. This will be all about putting the blame on someone who is out of office, and who did nothing that he can be held criminally liable for. Greenspan sure had a huge part in it. But to say it ends there is would just be bunch of crap. There are others who are at least equally to blame. Including Treasury officials, Regulatory officials, Congress, Big bankers, and the list goes on. What is really crazy is that all of the fraud still goes on.
According to Robert Reich, Greenspan is not the only one:
He includes the usual suspects of the Clinton administration.
Start with the Community Reinvestment Act and watch Saul Alinsky, by-the-book radicalism strangle Congress. No Income/ No Assets (NINA) home loans by Fannie Mae were the chemical tankers in this 30-year train wreck.
Quote from the article: He added: There is a lot of amnesia thats emerging, apparently.
As they say... victory has a thousand fathers, defeat is an orphan.
We went from being a country who never met a credit card offer or no/low-downpayment mortgage they didn’t like (circa 2005), to a country of finger pointing misers (circa 2008 - now).
75% of the 5 - 7 million mortgages that are 6 months delinquent right now were originally packaged as traditional prime.
By the early 2000s, the average prime loan DID NOT fit the traditional definition of a prime mortgage: 20% down payment, fully documented income, fixed rate, low debt-ratio.
Back then, a down payment was not called an investment, it was an obstacle to home ownership. Practically nobody wanted to put 20% down. Instead, they wanted to invest that money in the stock market and borrow as much as possible on their mortgage so that they could maximize their mortgage interest deduction on their tax returns.
A 2008 study of 4 million foreclosures found that low or no down payment is the #1 common denominator in foreclosed mortgages... 51% of the 4 million foreclosures in that 2008 study were originally packaged as prime loans.
We have almost 12 TRILLION dollars in outstanding residential mortgage debt (that does not include apartments or commercial, 12 trillion is just 1 - 4 family residential mortgages). Half of that 12 trillion was originated in 8 short years from 2000 - 2008.
When a person can grasp the fact that the vast majority of 6 Trillion dollars in mortgages that were done during that 8 year period when the market was OVER-PRICED were technically non-prime loans (and they were “under water” from day one), then they will understand the scope of this problem and they will realize that this new program as well as all of the others programs cannot fix it.
The only answer is to let them go into foreclosure (or short sale) and let someone who who has a job and can afford the payment buy the houses at the true market value.
Prolonging the pain and creating yet another moral hazard is all the gov’t doing by not letting that happen.
We're not really heading towards socialism, it's more akin to a Musolini type facism, or a Soviet styled Communism. Barak Hussein Obama is a hardliner, not a soft socialist. In fact, as religion and religious people in America get more and more marginalized by the media, culture and government, the closer we move towards Communism every day. Stifling Christianity, (not stamping it out), had to occur first because it is the antithesis of Communism. And it really doesn't matter how Christianity gets suppressed and the State becomes the peoples' source of "health and prosperity". All that matters for Communism to conquer a free people is that these things do happen. This is why Obama declared definitively to the world, "America is NOT a Christian nation", (as though that would be an evil thing if it were).
Now, I believe, these things have happened sufficiently enough for the Left to initiate the overthrow of capitalism, that bastion of personal freedom and source of individual prosperity. It's hard to watch America fall apart so quickly, but falling apart we are. The State will continue to increase and freedom will continue to decrease.
It will be interesting to see how the American people will respond once enough of them gain a deeper understanding of what's being forced upon them.
The entire real estate supply chain is to blame, as well as government officials responsible for oversight on the supply chain. Starting with Fwank and Dodds.
Interesting indeed. For some reason, I don't feel like popcorn this time around.
If you want to know how Greenspan is attempting rewrite history then you need to know about Brooksley Born.
She warned everyone about the dangers of over the counter derivatives. Those financial instruments that contained multiple fractions of combined mortgages parts. Greenspan is responsible for letting the whole thing get loose and fast.
Here she is letting him have it for trying to pretend it was congress, even though congress did go along with it.
“At todays Financial Crisis Inquiry Commission hearing, Brooksley Born, the former head of the Commodity Futures Trading Commission, declared Alan Greenspans tenure at the Federal Reserve an unmitigated failure to his face. Greenspan accords a certain degree of respect on Capitol Hill, despite Borns accurate take on his many failures, and so this outburst was highly unusual and gratifying.
Born, who pushed to strictly regulate derivatives under the Clinton Administration, but lost the battle to, among other people, Alan Greenspan, told the former Federal Reserve chair that his agency failed to prevent housing bubble, failed to prevent the predatory lending scandal, failed to prevent the activities that would bring the financial system to the verge of collapse. “
This all started under Clinton. Read it and weap...
There is an excellent program on CNBC called House of Cards that does a great job explaining how the financial collapse came about, and places the blame where it belongs, which is pretty much everywhere.
I’ve seen that. :)
But for those FReepers and anyone else who hasn’t, I urge you to watch the Frontline special linked above. It is excellent. This woman was treated shamelessly; yet had they listened to even 25% of what she warned about, we wouldn’t be in this mess.
I wish Bush would have found a place for her in the administration. She strikes me as a very principled public servant.
The blame isn’t as widespread as it superficially seems. The people responsible are trying to point at the ones downstream for repackaging bad loans, but the culprits were those that encouraged, mandated and wrote the bad loans. Together with those who wroted laws setting up Freddie and Fannie, putting the US taxpayer on the hook.
I'm sure he came up with that description while in bed with Andrea.
Now I have to scrub my brain with a wire brush and bleach...
So true. The derivative market was the bottom line that gave the government enterprises the capability to sell off the bad loans. It’s really a funny kind of Ponzi scheme. They put blinders on the watchdogs and then went into business selling bad paper. All it took was a breathing bag of skin that could successfully sign a loan application. If dogs and cats could have signed the loans they would have done that too. If they could transfer those bad loans somewhere they could not have screwed us. But they had that covered. They made a law preventing any government agency from monitoring that market. That was a Clinton administration & congress that did that. Remember how home ownership was the big achievement? You have to love our government when it does what it does the best. It took suckers to take out the loans and lending institutions like the two government enterprises to create this freight train disaster.
Greenspan is just a convenient scapegoat here. The real cause of the collapse was Congress, in particular the democrats and little corrupt fascists like Barney Frank and Christopher Dodd.
ANDREW CUOMO AND FREDDIE AND FANNIE
How the youngest Housing and Urban Development secretary in history gave birth to the mortgage crisis
By Wayne Barrett (8-5-08)
There are as many starting points for the mortgage meltdown as there are fears about how far it has yet to go, but one decisive point of departure is the final years of the Clinton administration, when a kid from Queens without any real banking or real-estate experience was the only man in Washington with the power to regulate the giants of home finance, the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC), better known as Fannie Mae and Freddie Mac. . .
But do they ever blame themselves? The financial press?
Never. They never do their duty when it counts.
The press spends too much time protecting their pols, instead of the public.