Obama Complicit In Fannie/Freddie Debacle?

[pmcalk]

quote:Originally posted by iplaw

quote:Conan, you keep harping on FreddieMac/FannieMae, as though that were the entire problem.

If you think Fannie and Freddie aren't the locus of this you simply don't understand what's going on.  

Lehman et al. are ONLY in the mess they are in because they created MBSs, seucrities collateralized by illiquid mortgages.  Companies over leveraged themselves, in some cases 30:1 with these worthless mortgages.

Bottom line is, mortgage lending created this crisis via a string of unintended consequences.

Fannie and Freddie in concert with legislation that essentially allowed lenders to provide mortgages to people who couldn't afford them for a variety of reasons caused this debacle. Period.

So you disagree with Stein, Cox, and countless other economist that fault the unregulated credit swaps as the real culprit?

In theory, an unregulated mortgage industry makes perfect sense.  Why would a bank make a loan to someone who couldn't afford it?  The reason banks made risky loans is because they knew that they could remove the risk through the credit swaps.  Why worry about whether anyone would pay mortgages if they were covered one way or another?  Bear stearn, Lehman, AIG--all that would have happened regardless of any regulation of FreddieMac/FannieMae.  The entire CDS market needed regulating.

Unintended consequences?  How could someone not recognize that the housing bubble burst would affect CDS?  Buffet recognized a long time ago that these were time bombs waiting to explode.

Cox recognizes this is the fault of Gramm:

quote:He faulted the Gramm-Leach-Bliley bank reform law for failing to give regulatory authority over investment bank holding companies and called it a costly mistake.

"No law authorized the SEC to supervise the investment bank holding companies," he said. "There is simply no provision in the law that ... requires investment bank holding companies to compute capital measures, or to maintain liquidity on a consolidated basis, or to submit to SEC requirements regarding leverage."

http://www.forbes.com/reuters/feeds/reuters/2008/09/23/2008-09-23T162236Z_01_N23325727_RTRIDST_0_SEC-COX-UPDATE-2-PIX.html

I never said that FreddieMac/FannieMae weren't part of the problem.  But they are just one piece of the puzzle.  I agree with Stein (of all people)--the subprime mortgage crises, if it would have happened at all, could have been absorbed by the economy.

[iplaw]

I think you're narrowly interpreting Stein's comments.  CDSs aren't standalone investments.  They themselves depend, as do MBSs, on the underlying mortgages backing them.  I would agree with you in priciple if banks were the only ones involved. Unfortunately, Sterns, Lehman and AIG didn't provide mortgages to a single person, so the tinfoil hat theory doesn't work.  They bought bundled mortgages from banks and used them as collateral.

These companies had no idea that the subprimes values would be depressed as low as they are.  Stein said he didn't see it coming.  The Feds didn't either, and neither did the investment banks and security firms.

Here is the text of his article.

http://finance.yahoo.com/expert/article/yourlife/109609

As far as regulation, that would have been wonderful, but as you can see from Stein's explaination, we wouldn't have known what to look for in the first place.  This is the achilles heel of regulation.  Regulation is, by nature, reactive not proactive.  

IOW, without illiquid subprimes the system would have ticked along just fine.

[Conan71]

quote:Originally posted by pmcalk

Conan, you keep harping on FreddieMac/FannieMae, as though that were the entire problem.  Even if the democrats or republicans had put in some regulations on those entities, we would still be in this problem.  The failure of Lehman brothers & bailout of AIG signaled the collapse of the market--not because of subprime mortgages, but because of the deregulation of Credit Default Swaps.  When did McCain ("I favor deregulation") ever attempt to tackle that?

I'm not saying that the Democrats (who barely had a majority--not enough to override a veto) shouldn't have done something.  But it was McCain's economic advisor that slipped in a bill that eroded the very protections that were put into place after the great depression.  He allowed gambling on whether the housing bubble would burst (it always amazes me the stupidity of these companies.  How could you not see that the housing bubble would burst?)

I am mad at both sides of the aisle for this stupid mess.  It was created by lobbyist who corrupt democrats and republicans alike.

But who would I like to fix the mess?  Clearly not the guy who is being advised by the guy that created the mess.  Not the guy who thinks lobbyist are good people.  Not the republicans who constantly scream for less regulation--sometimes regulation is a very, very good thing.

I'm glad to see you haven't been so easily bamboozled as to which political party is or isn't responsible for this.  Now if we can just get you over being bamboozled as to who is best to lead us out []

Still no one has been able to point to a SINGLE proactive solution Obama has attempted to be even a part of during his stay in Washington.  Nothing.

Credit swaps would be irrelevant if not for the Pandora's Box of lending stupidity and individual loan defaults which followed banks being blackmailed by the government into making the kinds of loans they learned not to make after the collapse of the thrift and S & L industry.  Risky loans and high default rates is what necessitated the creation of the RTC.  That lesson was short-lived.

Anyone who calls out the Clinton homeowner initiative as being problematic isn't being racist.  You went a little over the top on hyperbole there.  The program was not targeted specifically to blacks, native 'Mercans, and Hispanics, it was also targeted at low-income white families as well.

Banks and the institutions they sell their mortgages to saw they could get a higher yield by making a riskier loan.  In turn, they sought out a quid-pro-quo from the gov't to help securitize their risk, all while making a higher yield on their mortgage products.  They started promoting the lending vehicles most abusive to consumers: ARM's and interest-only balloons.

Once the financial markets and lenders saw the potential, then the push went off into total stupidity, like not having to document income or employment.  Lenders started "over-lending" to people with outstanding credit but who were hedging (and leveraging their future) that their fortunes would improve.  

Incomes would go up with raging investment markets or as they gained seniority in their occupation (ARM's).  

The robust housing market would allow someone to flip their house in a year or two and make a tidy profit (interest-only balloons).

Either way, they lowered the entrance requirements for borrowers, who at standard fixed-rate terms would have been ineligible and with next year's rate adjustment might very well be ineligible.

They also got away from the old wisdom of a house payment could not be any higher than 1/3 of household NDI with total indebtedness of around 50%.  It got stretched to 50% mortgage and, in some cases, 80% total indebtedness.

Credit swaps is a problem, but there wouldn't have been default in that market without the thousands of defaults in our neighborhoods.  Lenders and their investors kept making senseless loans to bolster housing markets and their bottom lines by getting more and more paper out on the street.  If credit swaps had been backed in the first place with viable loans at street level, we wouldn't have this huge debacle.

FWIW, Bill Clinton did have veto power, and he is considered one of the brightest men of the 20th Century.  He didn't have to sign off on the 2000 reauthorization bill.  Any number of people could have put a hold on Gramm's little peach of legislation, any one Democrat or Republican could have done it.  Just like voting for the war in Iraq, it's like cockroaches scattering when the day of reckoning comes.

[Conan71]

quote:Originally posted by waterboy


Answer it for me? No thanks, I've had my experience with legal mood altering drugs and prefer reality.

He was a junior Senator from Illinois who was serving his first year. He hadn't had 24 years futzing around in the Senate like MAC. He didn't have all that great S&L meltdown experience to draw upon, though doubtless he read about Mac's hard earned knowledge. The question might better be phrased as "Why would MaC choose Gramm knowing his leadership in gutting important regulations in place since the Depression? How could he be fooled by moves that even Gramm was quoted as saying would free up the financial markets to operate unfettered? Then you give him credit for trying to "clean up the mess"? He apparently was for dangerous financial deregulation before he was against it. What a maverick.

Okay, nice obfuscation.  I'll answer for you:

NOTHING

Here's why he likely did nothing about it, too busy running for President from the day he hit the ground in DC, acutally from the time he launched his Senate campaign if you look at his actions, inactions and voting record.

http://www.youtube.com/watch?v=teEeRiCkkyk&feature=related

Being a Senator, whether it's Jr. or Sr. you better bring your "A" game with you to Washington.

I keep asking for relevant accomplishments and all you Obama supporters can do is make excuses for him or turn it around into "McCain lied."  or "Well, McCain did this..."  "Phil Gramm did this..."

pancakes has Obama done??

Nothing except collect tainted money.

I don't know where you get that I'm against regulation.  Didn't anything ring a bell with you that I feel we blew two chances at it in '03 and '05?  Or that relaxing of regs which have essentially left the gov't holding the bag is bad?  You are homogenizing rank-and-file Republicans into the culture of corruption in DC that led to this.  I don't know many Republicans on the local level who EVER agreed with these sort of liberal lending and trading policies (not meant from the "political" meaning of liberal) being a good idea.  Many of us saw this debacle coming in the late 1990's.

Bill Clinton was the final signature on the 2000 reauthorization bill.  Saying he had 25 days left in office or that it was 262 pages of deft legislation is no excuse.  He is revered as one of the brightest men of the 20th century and he had a very capable staff.

Ruf is going to kick and scream on this one, but his idol, Dick Lugar, who is also a mentor to Sen. Obama was the sponsor of S. 3283 and introduced this legislation to the Senate. It was co-sponsored by Gramm (R-Tex), another GOP idol of the left- Chuck Hagel (R-Neb), Peter Fizgerald (R-Ill), Tom Harkin (D-Iowa), Tim Johnson (D-SD)

The facts suck.  Democrats were willing accomplices all along.  Everyone who wanted it got greased by Wall Street.

I think we all can agree, at least the more open-minded, that both campaigns have some troubling fleas inside them.

Again, what has Obama offered as a proactive approach to the collapse- Nothing.

Care to say it again?  Nothing

More excuses for his inaction in 3-2-1....

[waterboy]

Sorry, Conan, your credibility and readability is slipping as fast as McCain's polling numbers. I had pegged you for somewhat objective though conservative. I can deal with that. George Will fits that bill. Chris Matthews fits it on the other side. The people in between are soldiers.

Ruff nailed you. You just like to choose up sides and debate. And your side is always a republican or a DINO like Lieberman. The truth doesn't so much matter to you as the battle. That's a new Rovian republican view, that politics is war and you're not taking prisoners or listening to your opponent. So you quote other soldiers and ignore non conforming views even if they're logical and well founded. McCain lacks discipline and integrity. That's obvious to anyone but the partisan soldiers. Doesn't matter to them, at least he's not Democratic or Liberal.

I thought George Will was spot on this past weekend, if not blunt enough. McCain's temperament is unfit for the presidency. Period. He's reckless, untrustworthy and unfocussed. His point was that Obama may be less experienced but that deficit can be overcome. McCain's deficit cannot.

[Conan71]

quote:Originally posted by waterboy

Sorry, Conan, your credibility and readability is slipping as fast as McCain's polling numbers. I had pegged you for somewhat objective though conservative. I can deal with that. George Will fits that bill. Chris Matthews fits it on the other side. The people in between are soldiers.

Ruff nailed you. You just like to choose up sides and debate. And your side is always a republican or a DINO like Lieberman. The truth doesn't so much matter to you as the battle. That's a new Rovian republican view, that politics is war and you're not taking prisoners or listening to your opponent. So you quote other soldiers and ignore non conforming views even if they're logical and well founded. McCain lacks discipline and integrity. That's obvious to anyone but the partisan soldiers. Doesn't matter to them, at least he's not Democratic or Liberal.

I thought George Will was spot on this past weekend, if not blunt enough. McCain's temperament is unfit for the presidency. Period. He's reckless, untrustworthy and unfocussed. His point was that Obama may be less experienced but that deficit can be overcome. McCain's deficit cannot.

One more time?

NOTHING!!

More obfuscation because you cannot point to one thing your candidate offers as a solution.  Did you read my last post, or are you really such a partisan simp?

[iplaw]

Do you honestly expect him to answer your question?

[guido911]

Here's a report on the Democrats involvement in the Fannie/Freddie mess.

http://www.youtube.com/watch?v=VgctSIL8Lhs&eurl=http://hotair.com/archives/2008/09/25/video-fox-news-hammers-democrats-again-for-fanniefreddie-mess/


Yes, it's Faux news, so the damning statements by Schumer and Frank are clearly taken out of context.

[guido911]

quote:Originally posted by waterboy

Sorry, Conan, your credibility and readability is slipping as fast as McCain's polling numbers.

Uh, okay:

http://gallup.com/Home.aspx

[swake]

quote:Originally posted by guido911

quote:Originally posted by waterboy

Sorry, Conan, your credibility and readability is slipping as fast as McCain's polling numbers.

Uh, okay:

http://gallup.com/Home.aspx

Um, yes

CBS: 5 point Obama lead:
http://www.cbsnews.com/sections/opinion/polls/main500160.shtml

ABC: 9 point Obama lead:
http://abcnews.go.com/PollingUnit/

NBC: 2 point Obama lead:
http://firstread.msnbc.msn.com/archive/2008/09/24/1443011.aspx

Fox: 6 point Obama lead:
http://www.foxnews.com/story/0,2933,427241,00.html

[waterboy]

quote:Originally posted by guido911

quote:Originally posted by waterboy

Sorry, Conan, your credibility and readability is slipping as fast as McCain's polling numbers.

Uh, okay:

http://gallup.com/Home.aspx

Try these:
http://politicalwire.com/

I'll summarize. McCain slipping in all but one. Even Fox poll shows 45/39 Obama.

Much concern over whether cell phone polls are being correctly determined. Most traditionals, like Gallup, do landline and try to correct but cell phone only polls show an error of 3% gain for Obama and 2% loss for McCain.

Haven't you guys noticed a smaller variety of responders to your stuff? And fewer responses in total lately? Your credibility is evaporating as your sources, logic and "facts" are called to task. 21% of American voters think the debate should be postponed. That's where you guys are parked.

Any one and any media that dares disagree or exposes the hypocrisy of McCain/Palin is unpatriotic, unfair, biased, ignorant or tin hat wearing sheeple. Time, Newsweek, Washington Post, NY Times, Tulsa World, George Will, Katie Couric, Letterman, NBC, ABC, CBS, MSNBC, etc. are all biased, unfactual or sloppy journalists. The list is neverending and suddenly...you guys start to look a little crazy paranoid.

[Conan71]

Your first poll cited is from 9/18, second one from 9/22, third one comes with the following caveat:

"Obama up 2 in NBC/WSJ poll Posted: Wednesday, September 24, 2008 5:08 PM by Mark Murray
Filed Under: 2008, McCain, Obama, Polls
From NBC's Mark Murray
According to the latest NBC/Wall Street Journal poll, Obama leads McCain, 48-46 percent, which is virtually unchanged from our poll released after the political conventions, when Obama was ahead by one point, 47-46 percent.

This two-point Obama lead is a much different result than what we saw in another recent poll, which had the Illinois Democrat up by a larger margin. The McCain campaign argued today that Democratic respondents outweighed Republican ones by 16 points in that poll's sample. By comparison, the NBC/Journal poll has Democrats leading in party identification by just seven points.  

Note: The 6:30 pm ET release for the poll was moved up due to today's news on the campaign trail. We'll have more on the poll shortly on MSNBC.com.

*** UPDATE *** Per Cillizza, the Washington Post's polling director responds "that the actual party ID numbers among likely voters had Democrats plus six points. It was only when people who offer no original party ID were asked whether they leaned one direction or the other that the number jumped to Democrats +16."

Your fourth one comes from Fox which is not a valid source, according to most of the Dims on TNF.  [}:)]

Only poll results which are relevant will be released on Nov. 5th.

[iplaw]

quote:Originally posted by waterboy

quote:Originally posted by guido911

quote:Originally posted by waterboy

Sorry, Conan, your credibility and readability is slipping as fast as McCain's polling numbers.

Uh, okay:

http://gallup.com/Home.aspx

Try these:
http://politicalwire.com/

I'll summarize. McCain slipping in all but one. Even Fox poll shows 45/39 Obama.

Much concern over whether cell phone polls are being correctly determined. Most traditionals, like Gallup, do landline and try to correct but cell phone only polls show an error of 3% gain for Obama and 2% loss for McCain.

Haven't you guys noticed a smaller variety of responders to your stuff? And fewer responses in total lately? Your credibility is evaporating as your sources, logic and "facts" are called to task. 21% of American voters think the debate should be postponed. That's where you guys are parked.

Any one and any media that dares disagree or exposes the hypocrisy of McCain/Palin is unpatriotic, unfair, biased, ignorant or tin hat wearing sheeple. Time, Newsweek, Washington Post, NY Times, Tulsa World, George Will, Katie Couric, Letterman, NBC, ABC, CBS, MSNBC, etc. are all biased, unfactual or sloppy journalists. The list is neverending and suddenly...you guys start to look a little crazy paranoid.

Someone's painting with an awfully broad brush today.  Did I hear you complaining about logic?

[waterboy]

There were 10 polls on that site. Some were in battleground states, some were in key states. One might think you cherry picked. All showed that McCain had slipped from his post convention numbers. That is a trend. Even the Gallup poll showed a graph to show the trend. Some of the polls showed him slipping in strongholds like New Hampshire and Wisconsin. You guys continue to ignore or demonize the MSM unless you can use them to buttress your positions.

But its okay. You're right, the final poll is the important one. Though it may not be accurate either. Other warriors in your clan are busy making sure the under 25 demographic who would vote for change are not counted. READ THE FINE PRINT COLLEGE STUDENT VOTERS!!You have to send a copy of your drivers license with your absentee ballot otherwise we just throw it in the trash but we forgot to tell you or put it on the ballot. Oh, well..And you defend them by referring to Joe Kennedy's crookedness 50 years ago! That is why you guys are losing credibility.

[guido911]

quote:Originally posted by swake

quote:Originally posted by guido911

quote:Originally posted by waterboy

Sorry, Conan, your credibility and readability is slipping as fast as McCain's polling numbers.

Uh, okay:

http://gallup.com/Home.aspx

Um, yes

CBS: 5 point Obama lead:
http://www.cbsnews.com/sections/opinion/polls/main500160.shtml

ABC: 9 point Obama lead:
http://abcnews.go.com/PollingUnit/

NBC: 2 point Obama lead:
http://firstread.msnbc.msn.com/archive/2008/09/24/1443011.aspx

Fox: 6 point Obama lead:
http://www.foxnews.com/story/0,2933,427241,00.html

And again:

McCain +2

http://www.zogby.com/

Zogby & Gallup today.

I have repeatedly said that polls are meaningless. When Waterboy links decreasing polls numbers to decisions made by candidates, he is ignoring the inherent volatility in this very close race.