SUBSIM Radio Room Forums - Wall street bailout plan defeated in the House.

SUBSIM Radio Room Forums (https://www.subsim.com/radioroom/index.php)

- General Topics (https://www.subsim.com/radioroom/forumdisplay.php?f=175)

- - Wall street bailout plan defeated in the House. (https://www.subsim.com/radioroom/showthread.php?t=142617)

@ AVGWARHAWK

:oops: Didn't see that post.

It's now all about politics and them covering their A$$E$.:yep:

Quote:

Originally Posted by FIREWALL

@ AVGWARHAWK

:oops: Didn't see that post.

It's now all about politics and them covering their A$$E$.:yep:

Sure is! Sad though in reality. It is like kids for crying out loud.

Quote:

Originally Posted by FIREWALL

Bingo !!! You nailed it. August :up:

I was wondering when someone was going to get around to posting that. :yep:

It sure would be interesting to see how many of those who voted against it are up for re-election this year...

Quote:

Originally Posted by XabbaRus

You know I can't believe you guys had a law that MADE banks give bad loans to people who couldn't pay.

WTF were they thinking?

Yep, it's true and was driven by left-leaning, politically correct ideology. What? You're poor, urban, and you feel the system discriminates against you by requiring a 10% downpayment for a house? We'll that's not fair, let's make it easier for you. No downpayment! Adjustable mortgage rates! Interest only loans! What?? The bank won't lend you $200,000 because you have bad credit? You have a history of not repaying loans? Those meanies!!

This mortgage subprime crash may be a surprise to some but a lot of people have known it has been coming for a decade.

McCain warned about this in 2006.

Quote:

If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I certainly got a first hand look when I applied for a mortgage in 2004. I was divorced a year, money was tight, but I had $10,000 to put down on a $95,000 house (and that's a decent house here in Texas--in California it wouldn't buy a tool shed :roll: ). My mortgage officer tried to convince me to take out an ARM or a loan where I only paid $300 a month for 4 years... pfftt! no thanks, I told her. Give me a straight 30 year mortgage. I imagine a lot of people were foolish and thought they could get a house and some tricky financing to make their life easier. In the end, PC minded people forced artificial constraints on sound lending practices and thousands of loans were made to people who had no business owning a home.

This is not purely the fault of "greedy bankers" (what a cliche), there were many average people who contributed to this problem by trying to take shortcuts.

Quote:

Originally Posted by Neal Stevens

Quote:

Originally Posted by XabbaRus

You know I can't believe you guys had a law that MADE banks give bad loans to people who couldn't pay.

WTF were they thinking?

Yep, it's true and was driven by left-leaning, politically correct ideology. What? You're poor, urban, and you feel the system discriminates against you by requiring a 10% downpayment for a house? We'll that's not fair, let's make it easier for you. No downpayment! Adjustable mortgage rates! Interest only loans!

This mortgage subprime crash may be a surprise to some but a lot of people have known it has been coming for a decade.

McCain warned about this in 2006.

Quote:

My first loan I took as an ARM. It got me in the door. Once in, I paid on time for 12 months. This is when they can zap you with increased interest....and it always increases. I refinanced to a 30 year fixed and never looked back. I knew it was a bad deal but it did get me in the door on my very first house. After that I was able to rent it and purchase another home as my primary dwelling. If you play the cards right, it can work for you. If you play the cards wrong and do not pay attention you end up with foreclosures and credit cards that will never get paid.

BTW, Neals description for the laymen on how this came about is dead on. Without stepping on any toes, the Black Caucus and the left-leaners as Neal puts it (I believe the Clinton Admin) started all of this. It was a plan to get everyone in a home whether they can afford it or not. But it goes further as I stated a few posts back, credit cards filtered in and approved for these new home owners. People bought and bought with credit. The economy looks fantastic. Clap ourselves on the back! Then one day everyone woke up and found they are credited to the hilt and can not make payments on both mortgage and credit cards....add in the car just blew up and we are stuck. But, pehaps refinancing would get these folks out from under the credit cards and car payments. Unfortunate the homes are now appraise less then what they purchased them for. So, refinance and taking some money off the top for credit cards bills is now out. Economics 101.

Quote:

Originally Posted by gimpy117

Quote:

Originally Posted by UnderseaLcpl

Quote:

Originally Posted by gimpy117

That aside, although the bush administration allowed this to happen by not watching over more carefully, the corporations did not have a gun held to their head when they made the decision to use such risky and near-sighted business practices.

Actually, the Carter Administration and every other administration thereafter allowed this after the Community Reinvestment Act was introduced, during his tenure. Clinton strengthened it(the CRA)

And since the law required subrime loans to be made to low-income citizens, the firms actually did kind of have a gun to their head. :dead: That is to say nothing of the power the Federal Reserve and various political concerns that shape corporate decision-making.

well, that aside you can't exactly say the administration did a good job, Besides, how many years has it been since Carter??? if the economy was gonna tank solely because of this law it would have happened in the decades since then. You may be right that the law caused it to some extent, but as much blame lies with the President and his people, because quite frankly, other administrations didn't run the economy into such a pickle for it to even matter. I really wish they would have planed for something like this more when the economy started getting shaky around 911....but it seemed they had other things on their mind to the east...

That isn't how economics works. You're looking at only the short-term, and discounting a lot of other factors.

CRA was passed by the Carter administration, but it's not all their fault. Neither is Clinton wholly at fault. Remember that Congress passes the laws, and within either party there is a great degree of variance. A surge of illegal immmigration, as well the .com bubble and subsequent burst, 9/11, rising gas prices.......all these are factors. I know it's fun to jump on the Bush-bashing bandwagon, but this little spatz was just waiting to happen, and would have happened with just about anyone in power. And Carter did preside over a nice little pickle himself in the gas crunch:yep: . And that WAS the fault of a single administration, his, for trying to regulate gas prices, destroying the dynamics of supply and demand.

But it is your last sentence that worries me most. Everyone wishes the government would plan for things, or plan for them better, or whatever. What amazes me is that you would have enough faith in any lawmakers to suppose that they might have been able to prevent this crisis at any point. The State simply cannot do such a thing. It is inherently at odds with the market, and the more it interferes, the more it disrupts the economic cycle. It disrupts prices, and often hurts competition. Show me any economic crisis since Woodrow Wilson and I will show you how the state caused it or significantly contributed to it.

And before anyone says something about it, yes I realize some regulation is necessary, but it is a lot less than most people think, imo.

edit- damn, now that I look at this, it seems rather preachy and condescending. That wasn't my intent at all. Try to read it in the friendliest possible tone.

The CRA is absolutely a non-issue. To quote one of my favorite economist bloggers:

Quote:

• Did the 1977 legislation, or any other legislation since, require banks to not verify income or payment history of mortgage applicants?
• 50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision; another 30% were made by banks or thrifts which are not subject to routine supervision or examinations. How was this caused by either CRA or GSEs ?
• What about "No Money Down" Mortgages (0% down payments) ? Were they required by the CRA? Fannie? Freddie?
• Explain the shift in Loan to value from 80% to 120%: What was it in the Act that changed this traditional lending requirement?

• Did any Federal legislation require real estate agents and mortgage writers to use the same corrupt appraisers again and again? How did they manage to always come in at exactly the purchase price, no matter what?
• Did the CRA require banks to develop automated underwriting (AU) systems that emphasized speed rather than accuracy in order to process the greatest number of mortgage apps as quickly as possible?
• How exactly did legislation force Moody's, S&Ps and Fitch to rate junk paper as Triple AAA?
• What about piggy back loans? Were banks required by Congress to lend the first mortgage and do a HELOC for the down payment -- at the same time?
• Internal bank memos showed employees how to cheat the system to get poor mortgages prospects approved that shouldn't have been: Titled How to Get an "Iffy" loan approved at JPM Chase. (Was circulating that memo also a FNM/FRE/CRA requirement?)
http://bigpicture.typepad.com/commen...declines_2.png
• The four biggest problem areas for housing (by price decreases) are: Phoenix, Arizona; Las Vegas, Nevada; Miami, Florida, and San Diego, California. Explain exactly how these affluent, non-minority regions were impacted by the Community Reinvesment Act ?
• Did the GSEs require banks to not check credit scores? Assets? Income?
• What was it about the CRA or GSEs that mandated fund managers load up on an investment product that was hard to value, thinly traded, and poorly understood
• What was it in the Act that forced banks to make "interest only" loans? Were "Neg Am loans" also part of the legislative requirements also?
• Consider this February 2003 speech by Countrywide CEO Angelo Mozlilo at the American Bankers National Real Estate Conference. He advocated zero down payment mortgages -- was that a CRA requirement too, or just a grab for more market share, and bad banking?

The answer to all of the above questions is no, none, and nothing at all.

Rest of the post here: http://bigpicture.typepad.com/commen...erstandin.html

*EDIT: Font color

There we go with the black font again :nope:

Neal,

Did i read reading correctly??

Did you say that you bought a house in texas for $95,000?????

jeeeeeeeeeeeeeeeeeeeeeeebus!

My fiancee and I are looking to buy, we have $25k saved up now, but we'll needa save for another 12 months before we'll have enough for a 10% deposit! Places we're looking at cost between $365,000 and $400,000!

Maybe I should try convince her to move to the states... I hear you yanks like aussies?

@ mookiemookie

expect a reply edited in here within a few hours. I don't agree with your (favorite blogger's) assessment entirely but it made me think and compelled me to do some research. Thanks for that:up:

Quote:

Originally Posted by baggygreen

Maybe I should try convince her to move to the states... I hear you yanks like aussies?

Love 'em!

Grilled with mushrooms is best, but roasted in a good sauce works almost as well.

Quote:

Originally Posted by baggygreen

Maybe I should try convince her to move to the states... I hear you yanks like aussies?

Yeah the general feeling is that Aussies are sort of like Texans with funny accents.

Amended bill has been passed and President Bush to sign soon

Quote:

Originally Posted by August

Quote:

Originally Posted by baggygreen

Maybe I should try convince her to move to the states... I hear you yanks like aussies?

Yeah the general feeling is that Aussies are sort of like Texans with funny accents.

:lol: But back home we also have our fair share of San Francisco/Hollywood type Aussies too in some parts of Sydney and Melbourne.

By the way Congress has just approved the amended bill.

http://news.bbc.co.uk/1/hi/business/7651060.stm

I guess this makes some people happy and many people totally peeved.

Quote:

Originally Posted by Konovalov

Quote:

Originally Posted by August

Quote:

Originally Posted by baggygreen

Maybe I should try convince her to move to the states... I hear you yanks like aussies?

Yeah the general feeling is that Aussies are sort of like Texans with funny accents.

It certainly split the politicians for a while.