Posted on 10/01/2016 12:07:05 PM PDT by Kaslin
Most fail to understand the simple maxim stated long ago by someone smarter than I will ever be. I think is was basically that, “Government is AT BEST a necessary evil.”
It is best employed only to provide the things people under ordinary circumstances cannot provide for themselves or to forbid vice or various infamous crimes.
Common defense being the principal example of the former.
But under control of various forms statists they want to provide things for the people that many can reasonably provide for themselves simply because some will always fall through the cracks or “charity isn’t sufficient” they will insist (even though in order to fund all their mad schemes of publicly funded do-gooding they steadily remove the means from the people whereby they could engage in charity ... till all have been forced to “give at the office” and it now takes two jobs to get by ... so we have to rely on government more, so it takes more ... a vicious circle if ever there was one.
What you write is accurate and describes “setting up the dominoes” but there are early dominoes to fall to cause the cascade and these don’t need to be large themselves ... they just need to fall at just the right time and place with enough energy to hit the next domino.
This is similar to what happens in a soap bubble, but it is easier to visualize since you can get the sense that the various parts in a collapse seem unconnected before the fall and after the fall again seem disconnected, discrete ... whereas a bubble is simply gone.
Okay, so they have dozens of “plans” which is the same as saying they don’t have any sort of plan at all.
Any obligation that the taxpayer had with respect to Fannie and Freddy had ceased by 1970 when they became private corporations listed on the NYSE.
You sound like you know whereof you speak, but so too does the person that produced this video. Could you peruse it and tell me where it is in error?
Well two minutes into that video is enough to tell me that it’s full of crap.
Background on the CRA might help. In Los Angeles banks would take deposits from customers living in poorer neighborhoods but refuse to lend to them. They would instead funnel the money to Beverly Hills or other wealthy neighborhoods.
The CRA required deposit-taking banks to lend a portion of those deposits in the neighborhoods that the deposits came from. The loans could be business loans, personal loans, whatever. Didn’t have to be mortgages and certainly didn’t require any mortgages made under it to be subprime.
If it was a horrible bill Reagan had 8 yrs to undo it. GHW Bush had 4 yrs to undo it. Neither administration ever said a word about it. The video has Clinton making it worse but GW Bush had years to undo it if that was so. This doesn’t mean that the CRA was great or even harmless, and it may have encouraged banks to make or purchase loans that they otherwise wouldn’t have- but it ought to tell you that not one Republican administration that lived with the CRA ever thought that it was worth the effort of scrapping.
The CRA didn’t create subprime mortgage lending. During the 1990s investment banks (non-deposit banks not covered by CRA) had been looking for places to lend money at higher rates. Lenders like Aames Home Loans and Household Finance had lent money at high rates but it was personal loans in tiny amounts. Wall Street needed something bigger, and someone eventually came up with the bright idea of funding mortgages for people who didn’t qualify for a conventional loan. A potentially large market of subprime borrowers.
One of the major players, and possibly the founding father, was Roland Arnall at Ameriquest. It was a pure mortgage lender and therefore exempt from the CRA. Ameriquest is where most of the great subprime lenders learned their trade and went on to start their own firms. None of this was forced by the CRA, and these firms competed against Fannie and Freddy, both of whom lost market share during the bubble because they dealt in conforming loans even if the borrower was subprime.
Anyway if you are really interested in learning all about the bubble and have too much time on your hands you can read “Chain of Blame” Muolo and Padilla, “Fools Gold” Tett, “Econned” Yves Smith and some others that I’ve forgotten. Wired Magazine’s article on David X Li and his “formula that killed Wall Street” should also be on your list, and at least it’s short.
In my opinion the gov’t was walking in the direction of the housing bubble but Wall Street was stampeding there all on their own and didn’t need any encouragement. The people who like to blame the CRA are people who never saw the bubble coming in the first place. Those who did warn about it as it grew were well aware of Wall Street’s role in growing it, and unlike retail banks Wall Street wasn’t subject to the CRA or any other requirement that they write mortgages. They were in it for the money and the money was so big they allowed themselves to ignore any risk until too late.
Let’s not forget Obama’s favorite billionaire, Warren Buffet, fraudulently A-rated the bundled mortgage securities. Quite coincidentally, he was able to leverage his real estate holdings exponentially during and after the crash he helped engineer. The entire Washington/Wall Street Industrial Complex is corrupt, and that is why they fear this election. They literally stole the country; it’s time we take down their empires.
Buffet owned 20% of Moody’s during the bubble but that’s just one of the three rating agencies. They were all doing the same thing so I don’t think that we can put the blame for the mis-rating on him.
I don’t recall seeing an explanation for why Moody’s, Fitch and S&P were all rating what turned out to be toxic paper as investment grade but I suspect it was a result of them embracing David X Li’s Gaussian copula function as a means of pricing CDOs.
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