The NO Rush Limbaugh Show,M-F,12NOONPM-3PM,EDT,WOR AM,April 22,2016

The EIB Network ^ | April 22, 2016 | Rush Limbaugh,And Sub

[Biggirl]

Good Morning, Afternoon, WELCOME To The NO Rush Limbaugh Show With Today's Sub Host. WELCOME To The Sub.

[ExTexasRedhead]

Millions fell for it!!!

[Neidermeyer]

So the banks were forced to lend to people that couldn’t afford to make payments. I believe Rush is correct that this was a contributing cause of the problem.
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This was a separate issue that preceded the major fraud perpetrated on the country by the money center banks.. the inner cities were not the foreclosure epicenter nor were they the areas where valuations were ballooned... it is a parallel issue but it’s so small that it cannot be compared.

[Carriage Hill]

Are you referring to the Dodd-Frank Act?

[VMI70]

Thanks! It will take me a little time to digest it all, but I appreciate your taking the time to enlighten me.

[joesbucks]

But why would some of the most engaged people fall for it?

[Neidermeyer]

Are you referring to the Dodd-Frank Act?
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That was enabling legislation... but the banks took fraud to a whole new level knowing that the fed owned the gov’t and that “too big to fail” essentially meant they were bulletproof from the regulators.

[JudyinCanada]

Is Steyn supporting Trump or Crooze? If he’s a Trumpster, he may have lost his gig on Rush’s show. I haven’t tuned into Rush for a couple of months now - just can’t listen to him, and I used to love him.

[wardaddy]

Community Reinvestment Act I assume

[Carriage Hill]

They sure did.

[wardaddy]

It’s a dead thread but you are wrong to some degree

I sat on a loan committee of a local bank

The CRA most definitely contributed

As did bundling mortgage backed derivatives by the large houses

We were required to carry loans as a result of social engineering in mortgage markets facilitated by the CRA we would not have normally booked

And the default rate was around 40%

[TexasKate]

Did Rush say on Thursday tht he would be gone today?

[TexasKate]

Hopefully he is writing his Cruz endorsement now that Trump has come out as a full throated Democrat.

[JudyinCanada]

I don’t know as I no longer listen to Rush.

[Pelham]

I’m curious if you know if your CRA loans were conforming loans? And did your local bank write the loans or were you purchasing CRA qualifying paper from some outside broker? Conforming paper fared only slightly worse than it normally does. Non-conforming paper defaulted at a staggering rate.

I agree with Neidermeyer on this. I knew some of the original subprime brokers, they all began with Roland Arnall at Ameriquest before splitting off on their own. Ameriquest was the first and largest of the pure subprime lenders, the epicenter of the ensuing bubble.

None of their lending was covered by the CRA. They were shadow banks that didn’t take deposits so they were exempt. They may have sold paper to those of you who had CRA numbers to meet, but they could do anything that they wanted for themselves.

They were financed from Wall Street investment banks and hedge funds that wanted tons of high yield (and therefor high risk) paper to roll into CDOs, CDOs squared, Synthetic CDOs and all the rest of what Warren Buffet derisively called Financial Weapons of Mass Destruction. On this one Buffet was right.

The real money was in packaging high risk paper and derivatives based on it. They not only didn’t care about the quality of the loans, they actively wanted their contract brokers to push the limits and make any loan to anyone who would take one. Ergo strawberry picker Alberto Ramirez getting a $700,000 mortgage in Hollister on a $14,000 annual income.

Why? Maybe because it was possible to bet against the very loans that you had written by the use of credit default swaps.

If you knew that the loans you had written were bad, then you also knew that you could make guaranteed money on swaps when those mortgages defaulted. The sooner the mortgages defaulted the sooner you’d get paid. And you could buy as many swaps as you wanted to.

It’s not hard to see where this led to. It’s as if you could buy a hundred life insurance policies on your neighbor and were allowed to poison him as well.

[wardaddy]

The bank had to keep a certain percentage of loans on the books that were minority sub primes or face fines

So the easiest way was to buy blocks of them on the market to have on the ledgers

That’s not to say banks didn’t make bad loans on their own and ive already spoken on derivatives

The CRA over the years prompted the practice of forcing banks to loan to unworthy clients often with a racial component

Neidermayer said CRA had nothing to do with it....a red herring ...I disagree

Populism in conservatism loves to blame greedy bankers and there were some especially in derivatives etc

And some local banks and mortgage banks like Countrywide or American Century who would loan on over appraised homes with zero down

But what opened those doors wasn’t greed but politics and then it took a life of its in

Politics kept Fannie and Freddie from being reeled in

It was cumulative event that it my minds eye crashed downward after the derivatives collapsed after so many delinquent mortgages ruined those instruments which also resulted in a loosening of home inventories driving home prices down making folks in volatile housing markets upside down on low equity to begin with homes

And where did the notion so many folks who can’t afford homes anyhow begin?

Under Carter.

I just don’t cotton to all this big banks are bad rhetoric. I trust bankers far more than I do govt

We did not loan anyone a 700,000 dollar home on 14,000 income

Very few local banks hold their mortgages themselves

They get bundler in high volume with teenies clipped off or fees

Some banks just dealt with the punishment for having not enough CRA mandated loans

Most just bought them as I previously stated

We did not operate in a market conducive to minority lending but that didn’t matter

You could have a bank in the Utah desert 100 miles from any low income minorities and under the right auditors be fined

Hence that created the secondary markets and on it went and they were not by default high interest comparatively

That would be more common with a mortgage lender like I mentioned above who existed almost exclusively for sub primes

[George Varnum]

I’ve cooled off on Rush quite a bit over the past couple of years.

Lately when I tune in out of curiosity I usually get an ad or some diatribe about football or golf, or whichever team sport is in season.

Fine; it’s his show, he can talk about pudding recipies in between 80% “profit breaks” for all I care; I’ll just go listen to something else or surf the internet in stead. There are plenty of options out here.

Id really like to see him hand the whole show over to Mark Stein who subs for him occasionally, has an actual sense of humor instead of a list of trite memes, and is as enertaining and informative as Rush used to be back in the day.

[Pelham]

“So the easiest way was to buy blocks of them on the market to have on the ledgers”

That’s what I suspected. Buying loans made by independent brokers got banks into big trouble. The conforming loan standard of Fannie and Freddie is what everyone was used to. That was the industry standard for many decades. A seasoned down, proof of income, a low loan to income ratio.

What banks were buying from F&F’s private sector competition was something entirely different. Your in house loan officers would never have made the loans that you were purchasing, not because they were subprime but because the loans didn’t conform to traditional lending standards, often wildly diverging from them. Subprime doesn’t mean non-conforming but that’s what people were buying on the market because the yield was much better. And the rating agencies were vastly misrepresenting the quality of those loans.

CRA may well have pushed banks towards the easy route of buying those outside loans but it didn’t make them do that. It didn’t force anyone to make risky loans- had they stuck to conforming subprime paper they would have weathered the storm much better. Moreover a CRA loan doesn’t have to be a mortgage, it could be a business loan as well.

I’m not defending the CRA, I just don’t want to see us falling for a convenient but false explanation of the financial crisis. The CRA was headed in the same direction and contributed to the crisis but it didn’t cause it. The driving force really came from quants in Wall Street who were hunting for yield in Greenspan’s ultra low interest rate environment, for reasons having nothing to do with CRA.

There had always been a cottage industry of high interest consumer loans, funded by groups of doctors and dentists. And small loans offered by the likes of Household Finance Corporation. Wall Street would have loved to get those high rates but consumer loans were much too small for their purposes. Those loans were in the hundreds of dollars. Wall Street was looking to lend hundreds of thousands.

In the late 90s one firm hit on the bright idea of lending to those who couldn’t qualify to buy a house. A potentially large undeveloped market of high interest rate borrowers. Oddly enough this firm dropped the practice early on but not before the concept spread all through Wall Street. The world of non-conforming subprime lending was born in a big way and it started eating Fannie and Freddies lunch. Wall Street’s shadow banks were investor financed, they didn’t take deposits, so they were immune from the CRA. They developed that market because the profits were huge, until the game blew up.

[Neidermeyer]

Local banks holding loans they made were never the problem. They maintained standards. If your bank was in a CRA area then that would have been a problem for you but generally those areas were not a widespread issue and the “borrowers” would have gone with a wall street backed NINJA loan after about 2002/2003 and CRA lending would have dried up.

[Neidermeyer]

Thanks for bringing sanity to the subject... my major concern is that we have put banks above the law and that their antics have made damn near every deed that was connected with a new mortgage or a refi from 1998ish to 2008 a “wild deed” that shows ownership or an interest in the names of banks that have no connection with the actual money trail. I don’t know anyone that has received an actual cancelled note in response to a satisfaction as they should have.. not in at least 10 years. ALL THE PAPERWORK IS FAKED. Title companies will not guarantee anything touched by wall street from that timeframe ,, they’ll issue a “special warranty deed” only ... it only covers the property for the brief time the banks hold it and the coverage dies upon issuance of a new mortgage/note. What do they know?

[Pelham]

Your concern about title transfer is one that I’ve seen discussed but I don’t know much about. I’ll defer to you.

I lived near the epicenter of the subprime mortgage industry at the time it was taking off. I used to pick the brains of friends who were in the business, partly because the numbers made no sense to me. We blew past the affordability index number that marks a market top in 2003 and just kept going.

My friends mostly learned subprime lending at Ameriquest and then struck out on their own. Hired a bunch of people off the streets to write loans- a far cry from your pre-bubble professional loan officers- and paid them $10k or $15k for each loan they wrote. They had warehouse loans from Wall Street which they used to write mortgages. When the warehouse money was used up the Wall Street firm would take those mortgages, bundle and securitize them, and reload the warehouse loan. Wash, rinse, repeat. The Wall Street end was looking for high yield paper, not safe paper. They didn’t pay much attention who you lent to. And there was plenty of fraud.