More Historical Perspective

[Conan71]

Great cure for partisan amnesia:

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260 (edit: forgot to add link)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES

Published: September 30, 1999

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

http://articles.latimes.com/1999/may/31/news/mn-42807

"In 1992, Congress mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains. It has aimed extensive advertising campaigns at minorities that explain how to buy a home and opened three dozen local offices to encourage lenders to serve these markets. Most importantly, Fannie Mae has agreed to buy more loans with very low down payments–or with mortgage payments that represent an unusually high percentage of a buyer's income. That's made banks willing to lend to lower-income families they once might have rejected."

Nope, not one bit of Democrat meddling in the housing or mortgage market.

[Gaspar]

quote:Originally posted by Conan71



Nope, not one bit of Democrat meddling in the housing or mortgage market.

No.  None at all.  And Obama didn't request a single earmark for 08'.  LOL [}:)]

They believe we are idiots and they treat us that way.  Unfortunately they are correct nearly half the time.

[TheArtist]

Seems to me that much of this isnt about minorities and low income people who couldnt qualify for a home loan before and now could, but is about people who could already afford a home, buying more home than they could afford. Otherwise we would see these foreclosures mainly of the poorest home owners defaulting on the smallest and least expensive homes.  

[USRufnex]

quote:Originally posted by Gaspar

quote:Originally posted by Conan71



Nope, not one bit of Democrat meddling in the housing or mortgage market.

No.  None at all.  And Obama didn't request a single earmark for 08'.  LOL [}:)]

They believe we are idiots and they treat us that way.  Unfortunately they are correct nearly half the time.

Unfortunately the PARTISAN REPUBLICAN HACKS in this forum who pretend to be otherwise... only show one NARROWLY FOCUSED PARTISAN VIEW of the story////... per usual.

... so, wait ... the republican partisan hacks will find a way to blame Clinton in 3 -- 2 -- 1--....

Was Bush so incredibly ineffective in nearly eight years of his presidency as to not address a growing crisis... after all, Bush had a Republican house and senate... where were they???

more history for you..... in 1982, Reagan championed causes that led to the Savings & Loan debacle......

http://www.presidency.ucsb.edu/ws/index.php?pid=41872

fool me once, shame on you... fool me twice-- DEREGULATION....

http://en.wikipedia.org/wiki/Savings_and_Loan_crisis

The savings and loan crisis of the 1980s and 1990s (commonly referred to as the S&L crisis) was the failure of 747 savings and loan associations (S&Ls) in the United States. The ultimate cost of the crisis is estimated to have totaled around USD$160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government—that is, the U.S. taxpayer, either directly or through charges on their savings and loan accounts[1]—which contributed to the large budget deficits of the early 1990s.

The concomitant slowdown in the finance industry and the real estate market may have been a contributing cause of the 1990–1991 economic recession. Between 1986 and 1991, the number of new homes constructed per year dropped from 1.8 million to 1 million, the lowest rate since World War II. [2]

------------------------------------------------

Under financial institution regulation, which had its roots in the Depression era, federally chartered S&Ls were only allowed to make a narrowly limited range of loan types. Late in the administration of President Jimmy Carter, caps were lifted on rates and the amounts insured per account to $100,000. In addition to raising the amounts covered by insurance, the amount of the accounts that would be repaid was increased from 70% to 100%. Increasing Federal Savings and Loan Insurance Corporation (FSLIC) coverage also permitted managers to take more risk to try to work their way out of insolvency so the government would not have to take over an institution.

Carter left office in January 1981, a year in which 3,300 out of 3,800 S&Ls lost money. In 1982, the combined tangible net capital of the industry was $4 billion. The chartering of federally regulated S&Ls accelerated rapidly with the Garn-St. Germain Depository Institutions Act of 1982, which was designed to make S&Ls more competitive and more solvent. S&Ls could now pay higher market rates for deposits, borrow money from the Federal Reserve, make commercial loans, and issue credit cards. They were also allowed to take an ownership position in the real estate and other projects to which they made loans and they began to rely on brokered funds to a considerable extent. This was a departure from their original mission of providing savings and mortgages.

------------------------------------------------

Deregulation

Although the deregulation of S&Ls gave them many of the capabilities of banks, it did not bring them under the same regulations as banks, and the new legislation allowed them to enter new lending businesses with very little oversight. Thrifts could choose to be under either a state or a federal charter. Immediately after deregulation of the federally chartered thrifts, the state-chartered thrifts rushed to become federally chartered, because of the advantages associated with a federal charter. In response, states (notably, California and Texas) changed their regulations so they would be similar to the federal regulations. States changed their regulations because state regulators were paid by the thrifts they regulated, and they didn't want to lose that money.[citation needed].

Imprudent real estate lending

In an effort to take advantage of the real estate boom (outstanding US mortgage loans: 1976 $700 billion; 1980 $1.2 trillion)[citation needed] and high interest rates of the late 1970s and early 1980s, many S&Ls lent far more money than was prudent, and to risky ventures which many S&Ls were not qualified to assess. L. William Seidman, former chairman of both the Federal Deposit Insurance Corporation (FDIC) and the Resolution Trust Corporation, stated, "The banking problems of the '80s and '90s came primarily, but not exclusively, from unsound real estate lending."[3]

[iplaw]

quote:Was Bush so incredibly ineffective in nearly eight years of his presidency as to not address a growing crisis... after all, Bush had a Republican house and senate... where were they???

I'm guessing the same place that Dodd and Frank were for the last two years that they've been in charge...

[USRufnex]

Who's really to blame?

How 'bout McCain's buddy and economic guru... Phil "you're all a buncha whiners" Gramm.....

http://losangeles.injuryboard.com/miscellaneous/the-subprime-mess-and-phil-gramm-an-experiment-in-deregulation.aspx?googleid=242468

In 1933, a few years following the stock market crash, Congress passes the Glass-Steagall Act, in hopes that regulating banks will help prevent market instability, particularly amongst Wall Street banks. The purpose of the act is to separate commercial banks that focus on consumers from investment banks, which deal with speculative trading and mergers.

The Glass-Steagall Act provided the proper oversight and entity separation that would prohibit banks and other financial companies from merging into giant trusts (conflict of interests) -- giant trusts or corporations being more powerful, naturally, and having the seemingly limitless capital to lobby their corporate interests, however, with a very myopic scope (particularly when it comes to factoring in potential losses -- most banks, as seen in contemporary times, chose not to anticipate losses in the mortgage market; they presumed home prices would continue to appreciate).

In 1999, former Senator Phil Gramm (who is, incidentally, Senator John McCain's economic adviser and cochairs his presidential campaign) set out to completely gut the Glass-Steagall Act, and did so successfully, replacing most of its components with the new Gramm-Leach-Bliley Act: allowing commercial banks, investment banks, and insurers to merge (which would have violated antitrust laws under Glass-Steagall). Sen. Gramm was the driving force behind the Gramm-Leach-Bliley Act, as he had received over $4.6 million from the FIRE sector (Finance, Insurance and Real Estate donations) over the previous decade, and once the Act passed, an influx of "megamergers" took place among banks and insurance and securities companies, as if they had been eagerly awaiting the passage of Gramm's Act. Everything in between Glass-Steagall and Gramm-Leach-Bliley (i.e. Savings and Loan crisis/bust) was, in large part, the incubation period for what would take place over the nine years that would follow the passage of Gramm's Act: an experiment in deregulation.

Shortly after George W. Bush was elected president, Congress and President Clinton were trying to pass a $384 billion omnibus spending bill, and while the debates swirled around the passage of this bill, Senator Phil Gramm clandestinely slipped a 262-page amendment into the omnibus appropriations bill titled: Commodity Futures Modernization Act. It is likely that few senators read this bill, if any. The essence of the act was the deregulation of derivatives trading (financial instruments whose value changes in response to the changes in underlying variables; the main use of derivatives is to reduce risk for one party). The legislation contained a provision -- lobbied for by Enron, a major campaign contributor to Gramm -- that exempted energy trading from regulatory oversight. Basically, it gave way to the Enron debacle and ushered in the new era of unregulated securities. Interestingly enough, Gramm's wife, Wendy, had been part of the Enron board, and her salary and stock income brought in between $900,000 and $1.8 million to the Gramm household, prior to the passage of the Commodity Futures Modernization Act.

In 2003, Gramm left the Senate to join UBS, which had acquired investment house PaineWebber due to his deregulation bill. At UBS, Gramm lobbied Congress, the Fed and the Treasury Department. During Gramm's tenor at UBS and as a lobbyist, Congress passed the Responsible Lending Act, billed as an anti-predatory-lending measure, but was called the "Loan Shark Protection Act" by consumer advocates, as it was designed to preempt stronger state laws against anti-predatory lending. The Fed largely ignored the underlying and growing problems within the subprime mortgage/housing markets, as Bernanke famously acknowledged the housing market in April, 2007 as, "[showing] signs of softening," but said that a "sharp slowdown," is unlikely. Then, according to Mother Jones magazine, Henry Paulson became the Treasury Secretary in July, 2007, when, "In 2005, [at] Goldman [he] securitized $68 billion in residential mortgages and $23 billion in 'other assets' primarily related to CDOs," (Mother Jones, August, 2008). With such self-interest, and a lack of the nation's interest, we can see how this subprime mess was allowed to escalate to such great proportions.

Some justice was served, however, this spring, as UBS became one of the subprime debacle's biggest losers, having to write down $37 billion -- the same amount as their previous four years of profits combined. UBS also made the public aware that two-thirds of its losses were due to reckless investing in collateralized debt obligations (CDOs).

Now, Gramm has a second chance of extending his out-of-touch and ill-performing policies, as Senator John McCain appointed Gramm to be his "economic expert" and cochair of his presidential campaign, last year. Also, it is likely that if Senator McCain were to win in November, Gramm would be our next Treasury Secretary, which means more of the same deregulatory mess and the continuation of failed and insidious economic policies.

[waterboy]

Ha! Even though previous administrations way back wanted low income and minority home ownership encouraged for a variety of good reasons...I watched on CNBC as it was noted that 65% of the bad subprime loans made by Freddie/Fannie would have qualified for better rates! So much for blaming the poor and minorities for this crash. Seems they actually preferred to make the sub-primes out of greed and lack of oversight. Time for the buck to land somewhere.

[waterboy]

quote:Originally posted by iplaw

quote:Was Bush so incredibly ineffective in nearly eight years of his presidency as to not address a growing crisis... after all, Bush had a Republican house and senate... where were they???

I'm guessing the same place that Dodd and Frank were for the last two years that they've been in charge...

Wow! Two years! We should be out of Iraq, out of this financial mess that took decades to form, driving electric cars and happy as little children. After all, Bush, the stubborn republicans like Coburn & Inhofe have made it all so easy. Bush to cronies in congress- "you guys gut it...I'll vetoe it".

[pmcalk]

To blame it on Clinton's efforts to stop banks from redlining districts, and actually provide minorities with opportunities to own houses, is not only wrong, it's racist.

The subprime mortgages are a drop in the bucket compared to the incomprehensible amount of money being lost in the Credit Default Swaps.  How much?  No one really knows, since Phil "we are in a mental recession" Gramm eliminated regulation on that industry.  Some estimates have it up to $45 trillion--almost 4X the US GDP.  As Warren Buffet said, they are instruments of mass financial destruction.  Even that ultra-liberal, Ben Stein says that our economy could have absorbed the $250 billion in defaulted loans; it was the credit swaps that are causing the meltdown.

[Conan71]

Barney Frank and some of his bretheren did everything they could to block Bush's reform proposals of 2003, saying there was no impending crisis.

That's fine Waterboy, keep supporting idiots like Barney Frank by saying "Congress was controlled by Republicans.  We've had the GOP in the White House for the last 8 years."

There's blame for everyone, but heaping it all on Bush while ignoring the borrowing orgy Clinton was advocating is total revisionism.

I've reprinted the old NYT and LAT articles not out of partisanship, but to get the most partisan of you on here to wake up and realize you are getting ripped off by everyone in DC- with few exceptions, not just Republicans, not just Democrats.

There ARE verifiable initiatives supported by McCain and Bush in '05 and '03.  Fact is, Democrats in Congress heavily opposed new regulations along with the home builders and mortgage companies in 2003.  Fact is, Obama has no record of having anything to do with McCain's sponsored legislation in '05.  There were Republicans trying to ward off this mess and they were met with challenges or apathy at best.

"Barney Frank 'Fesses Up on Financial Crisis
September 23, 2008 10:35 AM ET | Sam Dealey | Permanent Link


Over the past few weeks I've been skeptical of claims by Rep. Barney Frank, chairman of the House Financial Services Committee, that he's been a consistent and leading voice for reform of Fannie Mae and Freddie Mac, the two government-sponsored home-lending giants whose fall is the immediate cause of the current financial turmoil. The Massachusetts Democrat and I went at it here and here and here. Now, finally, Frank acknowledges that he dismissed ample warnings about Fannie and Freddie shenanigans five years ago.

Here's an exchange with CNN's John Roberts yesterday:

ROBERTS: Congressman, you know, a lot—big question that people asking is, how do we get to this point here. And minority leader John Boehner there in the House has pointed fingers at Senator Chris Dodd and you four years ago opposing reform of entities like Fannie Mae and Freddie Mac.

The Wall Street Journal says in the year 2000 when Representative Richard Baker proposed Fannie Mae and Freddie Mac reform you dismissed it. New York Times reports that an administration proposal in 2003 to reform Fannie Mae and Freddie Mac was met by response from you where you said, "I do not believe that we're facing any kind of crisis." Were you responsible for the delay—

FRANK: Of course not. Can I make a point here?

ROBERTS: Yes.

FRANK: In 2000 and 2003, who was in control of Congress? The Republicans—Mr. Boehner. The Democrats were in the minority. And yes, I did not think we were facing a crisis in 2003. But that didn't mean we didn't have to have reforms. Here's the deal. ...

Frank then goes on to his now standard lament that a Republican-controlled Congress failed to produce reform and that it was only under his Democratic stewardship that the siblings were reined in. Leaving aside that the 2007 reforms were hardly the stuff that was needed, Frank shows uncharacteristic modesty. While the White House was unable to push through meaningful reforms five years ago, that's in good part because Frank did his best to thwart them.

Still, while Frank has a lot to answer for concerning Fannie, Freddie, and the larger housing debacle, it would be unfair to attribute the problems to Frank alone. Congressional Republicans neglected to do their duty as well. Just as with Social Security and other entitlements, Congress as a whole consistently fails to avert obvious crises.

I'm not particularly fond of strong executive branches, and the Bush administration has pushed that line further than most. But as the Fannie and Freddie failures demonstrate, Congress hardly makes the case for the resistance."

http://www.usnews.com/blogs/sam-dealey/2008/09/23/barney-frank-fesses-up-on-financial-crisis.html

[FOTD]

Frank sees the congress doing this deal before Friday.

"Since it costs a lot to win, and even more to lose,
You and me bound to spend some time wondrin what to choose.
Goes to show, you dont ever know,
Watch each card you play and play it slow,
Wait until that deal come round,
Dont you let that deal go down, no, no.

I been gamblin hereabouts for ten good solid years,
If I told you all that went down it would burn off both of your ears.
Goes to show you dont ever know
Watch each card you play and play it slow,
Wait until that deal come round,
Dont you let that deal go down, no, no.

Since you poured the wine for me and tightened up my shoes,
I hate to leave you sittin there, composin lonesome blues.
Goes to show you dont ever know
Watch each card you play and play it slow,
Wait until that deal come round, dont you let that deal go down.

Wait until that deal come round, dont you let that deal go down,
Wait until that deal come round, dont you let that deal go down,
Dont you let that deal go down, dont you let that deal go down." (Garcia/Hunter)

[Gaspar]

Well finally the MSM news networks are starting to give credit where credit is due.  They are beginning to talk about Frank, Dodd, and Clinton's involvement in the mess.  They can't skirt it for much longer.  Too many documented facts and speeches.  I don't even think Clinton can rewrite this one.

They're trying to villinize Greenspan but he too warned Clinton about this publicly on several occasions.  He also warned congress in 03' and 04'.

Here come the books.  You know each person involved is going to write one.

[Conan71]

quote:Originally posted by Gaspar

Well finally the MSM news networks are starting to give credit where credit is due.  They are beginning to talk about Frank, Dodd, and Clinton's involvement in the mess.  They can't skirt it for much longer.  Too many documented facts and speeches.  I don't even think Clinton can rewrite this one.

They're trying to villinize Greenspan but he too warned Clinton about this publicly on several occasions.  He also warned congress in 03' and 04'.

Here come the books.  You know each person involved is going to write one.

This is rich:

Two of Ruf's GOP idols, Dick Lugar and Chuck Hagel were in on this as well, but MSM keeps connecting the dots to Phil Gramm because Gramm works on the McCain campaign.

Ruf has taken great pleasure in pointing out that Dick Lugar is Obama's "mentor" in the Senate.  Lugar introduced S.3283 to the Senate in 2000.  Gramm was a co-sponsor along with Fitzgerald, Harkin, and Johnson.

Sen. Richard Lugar [?-IN]

Cosponsors [as of 2006-07-17]
Sen. Peter Fitzgerald [R-IL]
Sen. Phil Gramm [R-TX]
Sen. Charles Hagel [R-NE]
Sen. Thomas Harkin [D-IA]
Sen. Tim Johnson [D-SD]

Not absolving Gramm of any part in this stupidity, but Democrats keep thinking they can shake off any of their own complicity.  

[Hoss]

quote:Originally posted by Conan71

quote:Originally posted by Gaspar

Well finally the MSM news networks are starting to give credit where credit is due.  They are beginning to talk about Frank, Dodd, and Clinton's involvement in the mess.  They can't skirt it for much longer.  Too many documented facts and speeches.  I don't even think Clinton can rewrite this one.

They're trying to villinize Greenspan but he too warned Clinton about this publicly on several occasions.  He also warned congress in 03' and 04'.

Here come the books.  You know each person involved is going to write one.

This is rich:

Two of Ruf's GOP idols, Dick Lugar and Chuck Hagel were in on this as well, but MSM keeps connecting the dots to Phil Gramm because Gramm works on the McCain campaign.

Ruf has taken great pleasure in pointing out that Dick Lugar is Obama's "mentor" in the Senate.  Lugar introduced S.3283 to the Senate in 2000.  Gramm was a co-sponsor along with Fitzgerald, Harkin, and Johnson.

Sen. Richard Lugar [?-IN]

Cosponsors [as of 2006-07-17]
Sen. Peter Fitzgerald [R-IL]
Sen. Phil Gramm [R-TX]
Sen. Charles Hagel [R-NE]
Sen. Thomas Harkin [D-IA]
Sen. Tim Johnson [D-SD]

Not absolving Gramm of any part in this stupidity, but Democrats keep thinking they can shake off any of their own complicity.  

I think most sane people know that there is alot of responsibility from both sides of the aisle, but Gramm is front/center for this.  His remarks about America being in a 'mental recession' and us being 'a nation of whiners' won't bode well for him.

[USRufnex]

Dick Lugar is a Republican from Indiana... he was Richard Nixon's favorite Mayor back in the day....

I never, ever idolized Dick Lugar.  I've never supported him for office in the past.  I simply pointed out that Obama chose Lugar as a mentor on foreign policy issues.  They are far apart on economic issues...  

I have friends who worked for Dick Lugar's 1996 presidential campaign in Illinois.

http://www.4president.org/brochures/dicklugar1996brochure.htm

THE LUGAR VISION

"The things we must do demand serious leadership and all the integrity, courage, competence and self-discipline at our command.

First, we must have real growth in jobs and personal income. To achieve real growth, we must get control of Government spending and the deficit and abolish the Federal income tax system that is choking off savings and investment.

Second, America's prosperity requires American leadership in the world. There can be no domestic policy agenda without security from our enemies. There can be no economic growth without exports of American goods and services. We must again have a President who understands and knows how to deal with the world around us -- a President who can and will act decisively to use American power and influence.

And third, American prosperity and security, if they are to last and have meaning, require American spiritual renewal. We must rediscover and recommit to the values of faith and family, of integrity and personal responsibility. We must teach these to our children by what we say and by how we live. The President must lead the way, by his own words, by his own commitment, and his own example.

These are the things we must do. These are the reasons I run."

-Dick Lugar

------------------------------------------------

I think Conan's trying to re-write history in a way that flatters republicans, yet again...

http://www.realchange.org/lugar.htm

"Perversely, the press -- which gets so incensed at the minor scandals they dig up -- seems to be ignoring Lugar in part because he is so squeaky clean. He won't make good news copy, and so reporters spend more time with Forbes, or Buchanan, or Gramm."

------------------------------------------------

I think that even with the inclusion of all his political brou haha about dismantling the IRS, Dick Lugar would have made a slightly worse president than Bill Clinton, a slightly better president than Bob Dole, and a markedly better president than George W Bush.

I never mentioned Lugar's economic policies-- policies I've never agreed with... in fact, I do remember Illinois senator Peter Fitzgerald for being a really really lousy replacement for the disaster that was dem Carol Moseley-Braun.

http://www.ontheissues.org/Senate/Peter_Fitzgerald.htm

------------------------------------------------

I compare the McCain from 2000 to his 2008 campaign, and don't see much in common...
 
I am NOT A FAN of anybody who has any kind of respect for Phil Gramm, let alone put him in any kind of leadership position as part of his campaign...

I remember Gramm-Rudman.  I guess it taught me "personal responsibility" since it cut my Pell Grants and loans in such a draconian way that it forced me to work graveyard shifts at Village Inn while going to college full-time and fulfilling scholarship obligations.... but then again, I guess that makes me a "whiner" in Phil Gramm's alternative universe...

I will not vote for a presidential candidate who supported a minimum wage freeze for ten friggin years...