Posted on 04/25/2013 3:34:55 PM PDT by Kaslin
I did learn something. I read the books by Sperry and Sowell. You should too. The simple fact was too much money was lent to people who couldn’t pay it back. Banks were forced by the government to do so. The result was predictable.
A pox on him and all the rest. What goes around eventually comes around and may they all get it in spades for what they have done to our country, our families and future generations. Real Americans can’t stand any of them.
You used the wrong picture of Bush, guys. I don’t see a teleprompter.
I think it’s time for a “Let’s bash David Gregory” thread.
You read two books by people not involved in the financial world and who were not warning of the impending problem as it developed.
Sowell is an economist and not someone involved in finance. Moreover he is 80 years old and obviously relied on researchers who didn’t bother to immerse themselves in the details of the mortgage world. The CRA plays a large role in his book but the majority of the subprime lending and innovation was done by the shadow banking system that was completely free of CRA regulation.
There are books and hundreds of articles on the mortgage debacle by people who are in the financial field and who were warning of the problem as it developed. Gillian Tett, Muolo and Padilla, Yves Smith wrote on the impending disaster as it was developing.
“The simple fact was too much money was lent to people who couldn’t pay it back. Banks were forced by the government to do so. The result was predictable.”
Tell me what law or regulation you think forced “banks” to lend money to people who couldn’t pay it back. And by “banks” do you mean retail banks, investment banks, pure mortgage lenders, or everyone who made mortgage loans?
By regulation do you mean the CRA? Or something else? The CRA applied only to deposit takers and not investment banks, hedge funds, pure mortgage lenders and the shadow banking system.
The majority of the subprime lending was made by non depository firms entirely free of CRA regulation. So what law forced these firms to make bad loans? They were free to make or not make loans as they pleased. That is a simple fact of the bubble, and one that you will have a hard time explaining away. The fact is that these firms were making subprime loans entirely because they chose to because it was immensely profitable while it lasted.
Yeah pal, why were there sub-prime loans in the first place?
Those loans were combined into "tranches" and assigned fantasy ratings of "AA" or "AAA" by Moody, S&P, and their fellow criminals.
Then the investment banks who were later bailed out by TARP stupidly bought these stacks of dog feces at face value, although no law passed by Democrats or anyone else required them to do so. So allow me to break out the world's smallest violin in sympathy for their plight......
I don’t intend to exculpate any banks or lending institutions who knowingly passed on toxic loans in any form. However, the fact remains that the Clinton admin in so many words “urged” lending institutions to lower their standards. I still put the majority of the blame on the government. But please read the books I’ve mentioned. Those guys studied the situation and have far more facts than I do.
hell, they still hate NIXON.
history will look favorably, generally, on Bush. It is said that a presidency cannot be evaluated until the one that follows is completed.
take that for what it is worth.
sperrys book is good. I have read it a couple of times.
I think he hits it on the head.
According to Sperry, Countrywide also had pressure put on them by HUD run by Andrew Cuomo at that time. Like the federally insured lending institutions, Countrywide also faced penalties by the government if they didn’t lower their standards.
“Yeah pal, why were there sub-prime loans in the first place?”
Because they were immensely profitable to the people that were writing them. I don’t know why the profit motive is suddenly so hard to understand.
A loan broker could get paid $10k for writing a subprime loan. And it was very easy to write several loans every day.
Hedge funds and investment banks were paying loan brokers the big money for subprime paper because they wanted to use it for creating CDOs and derivatives, which had become the big income generator in their business.
The IBs and hedgies and the rest of the shadow banking industry were totally unregulated by the government. They were not depository institutions and therefore did not come under the purview of the Community Reinvestment Act. They developed the subprime market because it was large, untapped, and high yield at a time when Treasury rates had become near zero.
Of course such elementary distinctions as the difference between commercial banks and investment banks, deposit takers and investment firms, the regulated lending industry and the shadow banking industry are completely unknown to those who just “know” that the government forced all of the subprime loans to be made. The fact that the majority of subprime loans were lent by firms entirely free of regulation is never allowed to interfere with their preferred story, no matter how much the story is at variance with the facts.
“According to Sperry, Countrywide also had pressure put on them by HUD run by Andrew Cuomo at that time. Like the federally insured lending institutions, Countrywide also faced penalties by the government if they didn’t lower their standards.”
Ameriquest and Argent were the leaders that developed the subprime market, not Countrywide. They were pure mortgage lenders and not regulated by the CRA.
Countrywide was a follower in subprime lending, not a leader or innovator. And as long as they weren’t taking deposits they weren’t subject to the CRA.
“According to Sperry, Countrywide also had pressure put on them by HUD run by Andrew Cuomo at that time. “
Apparently you and Sperry like to pretend that Dubya wasn’t President for the eight years following Clinton. The eight year period that just happened to cover most of the bubble years.
Did Clinton and Cuomo possess magical powers that forced Bush to continue their policies? If these policies were so onerous why was Dubya powerless to change them?
The facts are that these policies, while bad in themselves, were not the driving force behind the subprime bubble. The problem was worldwide and involved trillions of dollars. There weren’t trillions of dollars of subprime loans made by regulated lenders.
“According to Sperry, Countrywide also had pressure put on them by HUD run by Andrew Cuomo at that time. Like the federally insured lending institutions, Countrywide also faced penalties by the government if they didn’t lower their standards.”
Ameriquest and Argent were the leaders that developed the subprime market, not Countrywide. They were pure mortgage lenders and not regulated by the CRA.
Countrywide was a follower in subprime lending, not a leader or innovator. And as long as they weren’t taking deposits they weren’t subject to the CRA.
“According to Sperry, Countrywide also had pressure put on them by HUD run by Andrew Cuomo at that time. “
Apparently you and Sperry like to pretend that Dubya wasn’t President for the eight years following Clinton. The eight year period that just happened to cover most of the bubble years.
Did Clinton and Cuomo possess magical powers that forced Bush to continue their policies? If these policies were so onerous why was Dubya powerless to change them?
The facts are that these policies, while bad in themselves, were not the driving force behind the subprime bubble. The problem was worldwide and involved trillions of dollars. There weren’t trillions of dollars of subprime loans made by regulated lenders.
I haven’t read Sperry’s book, I’ve only read the reviews at Amazon. Most of what I know of the subprime market I learned during the bubble from people involved in it, other than the purely Wall Street aspects which I filled in with Tett and Smith and other writers who were involved in that end of the business.
From the reviews of Sperry, which are overwhelmingly positive, it looks like he fingers Fannie and Freddie and the CRA.
If so then he has no explanation for the explosion of subprime lending in the unregulated market, which dwarfed what F&F and the regulated lenders were doing and which was in fact taking the market away from the GSEs. The private CDO market was a rival to what the GSEs had been doing since their creation. That private market was where all of the innovation was done, the No Docs, the NINJA loans, the whole toxic mess.
There is a bias on the Left for always blaming the private sector no matter what the facts are. But there is also a bias on the Right for always blaming the government and exempting the private sector no matter what the facts are. I know people who were making tons of money in subprime lending. No government overseer was forcing them to do anything. And their bankroll came directly from Wall Street. This was all voluntary. And while my own knowledge began with personal contacts there are any number of books and articles that spell out this same information.
In the sense that those who bought all that toxic paper had (good) reason to believe that the taxpayer would be forced to eat their losses, I quite agree.
Sperry gives Bush his share of blame for urging the lowering of standards for Hispanic borrowers. But he still puts the major share of the blame on the Clinton admin. Sperry’s conclusion is that pressure by the government on lending institutions to ease standards caused the disaster. And he states as far as the dollar amount of bad loans, the numbers were in the trillions. If you disagree, read Sperry’s book or contact him and argue it out with him.
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