This crap has to end.
The Democrats caused almost all of this debacle.
The Community Reinvestment Act. Mark to market.
We must educate the American public to the effect that GOVERNMENT has upon their jobs, their employer, and there well being. Most people wake up and go to work. They may not like their boss, but they have to understand that the government cannot pay anyone anything that they do not take from someone else.
The FREAKING liberals have dumbed down the public so much that they no longer think with anything close to common sense.
I don’t like rich people. Never had. They don’t bowl, drink beer, smoke cigarettes or hang out with people like me. BUT, I don’t hate them either. They start companies. Hire middle class people like me. Pay us well when we contribute to the bottom line. Take the risks that some of us try but might fail at.
The DEMOCRATS have screwed up this country for too long.
Republicans are not GOD but they offer the last hope for this country if they will just get a set of NADS and be directly honest for a change.
Tell people the truth. If you are not willing to go to school or work in a hard profession, you will sit on a street corner with your pants hanging below your ass and wonder why the “man” has been keeping you down for so long.
The passage of Sarbanes Oxley (in reaction to Enron’s failure) caused a massive amount of money to flee the stock market looking for other ways to make money. The rules for Sarbox were not well understood, and the unpredictable penalties of not complying slowed down initial public offerings for new ventures. This made real estate very attractive as an alternative investment.
In the meantime, the CRA generated a portfolio of risky loans that were not truly credit-worthy. Yet with low interest rates from the Fed, the number of risky loans was climbing with low teaser rates. So Congress authorized Fannie and Freddie to lower their standards so the banks could effectively unload their loans onto you and me, and turn around and make more CRA loans. That’s why Frank and Dodd fought against reforming the GSEs - if the CRA program were stopped or slowed down considerably, groups like La Raza and ACORN who were raking in commissions from the sub-prime applications would no longer be funded and it would hamper their ability to campaign for democrat candidates.
The lowered GSE standards opened the door to a bonanza of sub-prime loans that the GSEs bought. The loans made the banks’ books look very profitable and hid the danger of default. Banks made sub-prime loans even when customers could have qualified for regular mortgages, because the loans were rated as AAA and made the banks look profitable. They could always be packaged and sold to Fannie and Freddie. The general idea was that real estate never lost value.
But the banks still weren’t sure they could survive a general downturn in the economy that would lead to loan defaults, so they purchased insurance from companies like AIG, in the form of Credit Default Swaps. These instruments were purported to guarantee the sub-prime loans in case of default, but they weren’t backed by anything! Look up Joseph Cassano if you want to know how AIG went into this market after Hank Greenberg was forced out.
When the recession started, the effect of increased foreclosures was like setting gasoline on fire. Everything undergirding the housing market failed at the same time. The failure of the CDS market brought down Lehman, Bear-Sterns, AIG, JP Morgan, etc. The failure of the financial services companies rippled across the economy, in particular banks who held shares of these companies. Their loan-to-value balance was dramatically reduced, making many banks technically (or actually) insolvent.
At the same time, Sarbanes-Oxley came back with a vengeance, forcing banks to evaluate their assets at fire-sale prices, causing a downward spiral in bank bonds and equities. This hurt all banks because by regulation they had only limited investment options (banks can't buy most stocks, they can only buy financial company's stocks, other bank's stocks, or shares of Fannie and Freddie).
Sound banking principles would have kept this from happening, but the Fed, Fannie and Freddie, Congress and the rating agencies had all fallen prey to the idea of a great “untapped market” in poor areas (formerly called “redlining”) and immigrants (so called NINJA loans). Congress regulated social justice into the banking system, and it became a worldwide disaster.
But you can’t fit all this history on a bumper sticker, so liberals refuse to try to understand it.
Great post!