Skip to comments.Over at the Washington Post, in the comments section, "Brad" sums it up nicely
Posted on 08/27/2010 7:06:17 AM PDT by cycle of discernment
Below is a brief history of why the housing bubble burst.
» 1977: Democrat Jimmy Carter signs the Community Reinvestment Act, guaranteeing home loans to low-income families.
» 1999: Democrat Bill Clinton puts the CRA on steroids by pushing Fannie Mae and Freddie Mac to increase the number of subprime loans.
» September 1999: The New York Times publishes an article headlined "Fannie Mae Eases Credit to Aid Mortgage Lending," which warned of the coming crisis due to lax lending policies of the Clinton administration.
» 2003: The White House calls Fannie and Freddie a "systemic risk" and the Republican Bush administration pushes Congress to enact new regulations.
» 2003: Rep. Barney Frank, D-Mass., says Fannie and Freddie are "not in a crisis," bashes Republicans for crying wolf and calls F&F "financially sound." Democrats block Republican-sponsored regulation legislation.
» 2005: Federal Reserve Chairman Alan Greenspan voices warning over F&F accounting, saying, "We are placing the total financial system of the future at a substantial risk."
» 2005: Sen. Charles Schumer, D-N.Y., says he thinks F&F "over the years have done an incredibly good job and are an intrinsic part of making America the best-housed people in the world."
» 2006: Sen. John McCain, R-Ariz., again calls for reform of the regulatory structure that governs F&F.
» 2006: Democrats again block reform legislation.
» 2008: The housing market collapses; Democrats blame the Republicans.
(Excerpt) Read more at washingtonpost.com ...
That’s about the size of it.
Why the GOP hasn’t been shouting this from the rooftops is beyond me.
BUBBLE BUST BUMP....
Not quite. Artificially low interest rates were gasoline on a relatively small fire.
Can you please put the entire chronology on the Free Republic page? I haven’t the faintest idea where to look for the post starting at the WaPo front page.
Weaker-than-expected July orders for long-lasting U.S. manufactured goods suggested a slowdown in manufacturing and new U.S. single-family home sales unexpectedly fell in July to their slowest pace on record.
Meanwhile the liars continue to figure and the figures continue to lie as long as they can. When the bond rating drops and interest rates reach a Carterian 20% will the press admit that this arrogant POS in the WH does not know WTF he is doing? Or, worse, that he DOES know WTF he is doing?
Because while, institutionally, the Democrats were behind the mortgage excess, there were many Republicans on the bandwagon also. Lots of them Senators, probably many of them conservative. They, too, want to keep their seats.
Remember, first and foremost, they are all politicians.
They clearly are suicidal. There are a number of things they just let go by. The myth of the Clinton surplus, for instance. I sometimes don’t think the Republicans are really on our side.
It was a random comment to an article in the post, I’ll try to find the exact page link for you...but this is the comment in it’s entirety.
2007 Franklin Raines takes 90 million dollars in a bonus.
“Conservatives - doing the job the RINO/GOP won’t do” ping.
They left out the Clinton-Reno press conference where Clinton said that any lender who failed to adhere to the hugely, newly-expanded CRA would be prosecuted to the full extent of federal law.
Agreed on the gasoline, not on the size of the fire.
I will say some of the issues with the housing market were also a more liberal policy. For example Greenspan kept the int rates too low causing housing inflation, Bush himself said he wants everyone to be able to buy a house, so the subprime loans (which no democrat complained about) as well as below market int rates fed into the mess we have now.
Because when the controlled both the White House and both houses of Congress they failed to change it.
I agree that the lending standards described in this article were outrageously irresponsible, but I also believe that they played a very small role in the collapse of the U.S. housing market.
The real problem was the whole process under which all kinds of homeowners -- even responsible ones with great credit records -- were able to buy homes using heavily leveraged financing at record low interest rates. The "natural" economic consequence for this kind of arrangement was a combination of two trends that could never be sustained over time: (1) rising home prices (since home prices are largely driven by the monthly cost of ownership, not the actual price of the home); and (2) a long-term decline in revenue for lenders from mortgages even as their interest-rate risk increased dramatically (i.e., they were holding long-term loans at very low interest rates that are likely to increase in the future).
For all the complaints about bank lending standards over the last couple of years, it's important to remember that the U.S. legal and regulatory landscape for residential mortgages is very one-sided in favor of the borrower. Just think about it. You can go out and get a 30-year fixed-rate mortgage -- and refinance it whenever you want to if prevailing interest rates go DOWN, but the bank never has the option of renegotiating the terms of the loan if rates go UP.
Because the left is the MSM. We are only making headway against the left because we have a little bit of new media to combat their propaganda. Conservatives may shout this from the rooftops all they want, but most people will not hear it because it is spiked by the MSM.
To 9 - Correct you are! Which is why this hasn’t been shouted from the Capitol rooftop.
“I sometimes dont think the Republicans are really on our side.”
The Ruling Class only has one side; their own.
I think that’s exactly right.
He left out Ruben and Clinton set the collapse in motion by letting banks have gambling rights by instituting creation and trading of CDO’s and CDS’s in 1997. Also the 80/20 and other variations of 0 down mortgages that skirted PMI.
Because they allowed it. The shouting part should have occured long ago. Americans are fed up with good reason. While not promoting the socialist movement in our country, Republicans have, with few exceptions, aided and abetted it the last 60+ years.
GOP = enablers.
The full chronology:
During the collapse I read a similar time line which also mentioned a lawsuit filed (I think in Chicago) by ACORN, which forced banks to make such loans.
Does anyone have a link that has more detail on this?
You are being unfair.
Under the Bush administration, the GOP tried to stem this 3x...the dems blocked it everytime ( because it was a vote-getter for them) and the dems always successfully painted the GOP as “mean” for wanting to put back in safeguarding regulations—that is, aligning lending practices with proper standards to protect the system that had been in place since post WWII.
They also had a hand in it by remaining silent until the collapse.
And Bush sure didn’t do much to oppose it either.
Because they turn to jelly when anyone plays the race card and the mortgages for dead beats and illegal aliens was a pet project of the Black and Hispanic caucuses in COngress.
Obama and Biden do their “last eight years of Bush” BS and we never hear a Republican state the obvious. It wasn't the eight years of Bush, it was the last four years of Democrat control of the House and Senate. Adding Obama to that mix just multiplied the misery.
Until the Rats took over in 2007, we had record month to month job growth, record Federal Tax Revenue to the Treasury, 4.5% GDP growth and an Unemployment Rate of 5%.
As soon as Nancy and Harry took over, every one of those positive signs started to head the other direction. Coincidence (?), I think not.
But didn’t the low interest rates contribute to a robust market? With high interest rates, there would have been a much slower housing market. Wouldn’t this have led to other negative economic consequences?
“And Bush sure didnt do much to oppose it either.”
From the article:
» 2003: The White House calls Fannie and Freddie a “systemic risk” and the Republican Bush administration pushes Congress to enact new regulations.
» 2003: Rep. Barney Frank, D-Mass., says Fannie and Freddie are “not in a crisis,” bashes Republicans for crying wolf and calls F&F “financially sound.” Democrats block Republican-sponsored regulation legislation.
The GOP certainly could use this to campaign with now.
Because, all this while, the Republicans controlled Congress.
The Democrats were able to block reform only so long as several Republican Senators and Congressmen went along with them.
And, if the cries for reform were so strong, why didn't the GOP majority ever make Fannie and Freddie the major issue they should've been?
Fact is, the GOP majority didn't have the courage to follow-through on their efforts at reform. The time for them to be "screaming from the rooftops" was in 2005. Not now.
Through their inaction, the Republicans were almost as complicit in the meltdown as Democrats.
The RNC plays the role of the team that travels with and plays against the Harlem Globetrotters in exhibitions. They have well-choreographed moves that put on a show BUT are not designed to actually win the game.
It is absolutely inexcuseable that Barney Frank is still the Congressional point person for Banking.
Don’t forget about Jamie “The Wall” Gorelick”. She collected a tidy sum while we lost.
There were threats of lawsuits against banks who practiced ‘redlining’
Redlining was when you were rejected for a loan application because YOU COULD NOT AFFORD IT
But they threatened lawsuits if you ‘redlined’ a minority6
And the banks caved under massive government pressure
The onese who are NOT shouting this from the rooftops are currently happy because Obammy bailed them out...
You got to give bad loans...and you made congress-critters and politicians very happy.
They got votes, You got bailed out, so you didnt have to worry about these bad loans.
Everyone is happy except the taxpayers- but the democraps told them it was the Eeeeeeeevil Republicans and George Bush who did it.
BINGO, Nailed It, Post-of-the-day, and Bumpworthy!
Also note tagline.
It would make sense if Fannie was picking up the risk for the bad loans.
By the time the Bush administration rolled around, it was already too late. A major domino in the chain of events that helped precipitate the crisis — the repeal of the Glass-Steagall Act of 1933 — had already fallen in the late 1990s. In fact, it was the Republican Congress that passed the repeal of Glass-Steagall in 1999.
Simple. We were in the middle of two wars. The Republican administration had to buy off the Democrats in order to fund the wars. The Democrats held the country hostage for their own political gain.
And because the GOP is equally complicit. Seems to me that between Carter passing the CRA and the mortgage crisis of 2007-08, there were a few Republican presidents and Congresses that did little, if anything, to turn things around. Let’s not bury our heads in the sand and try to claim that the GOP is entirely without fault.
Suppose I could afford to make monthly mortgage payments of around $2,800 on a home ten years ago. If the mortgage term is 15 years and the rate is 8%, I could afford a mortgage of about $280,000 or so.
If you can afford the same monthly payments today but the term is 30 years and the rate is 5%, then you can afford about a $500,000 mortgage with the same monthly payment.
Did the price of the home go up by $220,000 because of normal economic factors of supply and demand? No. The price went up by $220,000 because the terms of your financing made it that way. This $220,000 figure showed up in the my pocket when the house was sold to you -- and then there was the "ripple effect" of realtor commissions, secondary economic benefits, positive impact on GDP figures, etc. And it was all just an illusion.
Excellent points. But I'd also like to add that Greenspan kept rates so low because he was trying to counter the effect from his previously inverting the yield curve (keeping interest rates too high).