’)Running the federal government is, indeed, “hard work”. Republicans, for the past decade or so, have worked hard at getting elected then once in office they think the job is done – mission accomplished. That’s why they argue so strenously against the government we are all a part of. That is why their goal is to privatize as much of it as they can while sending as much money into the hands of their friends, families and other associates. But this great nation didn’t become great by our government sitting back and letting the robber barons belly up to the table. We need the government to mind the store, to referee, to regulate and legislate so we can keep the country running. Bush and his fellow Republicans like McCain fiddled while the mortgage crisis grew and now the fallout is almost daily.
Senior officials from the Bush administration and the Federal Reserve on Friday called in top executives of Fannie Mae and Freddie Mac, the mortgage finance giants, and told them that the government was preparing to place the two companies under federal control, officials and company executives briefed on the discussions said.
The plan, which would place the companies into a conservatorship, was outlined in separate meetings with the chief executives at the office of the companies’ new regulator. The executives were told that, under the plan, they and their boards would be replaced and shareholders would be virtually wiped out, but that the companies would be able to continue functioning with the government generally standing behind their debt, people briefed on the discussions said.
It is not possible to calculate the cost of any government bailout, but the huge potential liabilities of the companies could cost taxpayers tens of billions of dollars and make any rescue among the largest in the nation’s history.
It is interesting how swiftly the Bush-McCain Republicans moved to bail out the millionaires at Bear Sterns but have kept hitting the brakes when the issue of average American mortgages have been in play. It’s like they’re a bunch of rich guys who don’t care about the rest of us.
Or something.
It’s Bear SteArns
So Bear Stearns only holds money for millionaires? Cite please.
But it turns out that the bailout saved a lot of other people too:
“Whether it’s a bailout or not, the Fed’s move benefits taxpayers directly. If you think the housing crunch couldn’t get a whole lot worse, think again. “If the Fed had not stopped this,” says Wachter, “the cost of mortgages would have risen, the values of houses would have declined even more than they already have, and the effect would immediately have hit the pockets of American homeowners.”
http://www.usnews.com/blogs/flowchart/2008/03/25/what-taxpayers-get-from-the-bear-stearns-bailout.html
Of course, cheap mortgages were requested, nay, demanded by the sob-sisters on the left as a method of helping minorities gain part of the “american dream”, home ownership. Demanding that people be able to actually PAY for their loans was secondary to you guys at that point. According to “hispanic pundit” in 2005
“The second big motor of integration is home-ownership, especially important in the second and third generations. This gives people a stake in society, something they can lose. Thanks to cheap mortgages and an advanced banking system, half of Latinos in America own their own homes. ”
I will let you guys google the website yourselves so as not to be moderated off….
I’m sure the CEOs and managers at Bear Sterns who mismanaged their accounts were just a bunch of regular lunch bucket guys. Well, at least you’re not pretending to be a doctor anymore.
ummm duh? how about a link to the moronic free loans attribution you make? Jesus, no wonder we have the problems we do. Perfect gop position to say “well if I point to a relevant source I’ll get kicked so I’ll act like a frightened mouse and not link to any source.” Perfect. poor bastards…
The primary problem (imho) with Bear Stearns and a lot of other Wall Street firms is that they tend to take a short-term view of the market. E.g. if subprime was profitable short-term, everyone piled on without caring about long-term consequences (maybe hoping to get out and dump the problems on smb else). Also, while Bear Stearns was indeed public and owned mostly by mutual funds (and regular folks through them), its management was payed based on short term market performance and thus it was profitable for the management to take the risks now and not worry what happens down the road. They could also repackage mortgages as securities and sell them to smb else so they thought they were not liable for what happens anyway. duh: while liberals welcomed increased homeownership I hope you don’t think that banks actually started subprime mortgages b/c liberals told them to do it. In fact, some form of subprime has been around pretty much forever. Alt-A though is a new (and in hindsight stupid) thing.
“The primary problem (imho) with Bear Stearns and a lot of other Wall Street firms is that they tend to take a short-term view of the market. E.g. if subprime was profitable short-term, everyone piled on without caring about long-term consequences (maybe hoping to get out and dump the problems on smb else). Also, while Bear Stearns was indeed public and owned mostly by mutual funds (and regular folks through them), its management was payed based on short term market performance and thus it was profitable for the management to take the risks now and not worry what happens down the road.”
Exactly. The people in charge only care about short term, because when they shit hits the fan, they will still have all the money they made.
CEOs don’t care about long-term damage, because they can always leave before that happens.
And if the shit hits the fan so fast and in such a huge amount, well, they can always whine to the government and get a bailout. But don’t talk about regulations, that big government socialism.
I agree with you about how the managers are paid, and the same can be said for almost any corporation. It is an imperfect system these free markets, but to paraphrase Churchill: Its just better than any of the alternatives.
My point, which you recognize, is that if we let these huge financial organizations go into the tank, it is going to take a lot of money away from people that are patently not millionaires. I guess Oliver is willing to let a lot of regular guys lose a lot of money so he can “stick” it to the 15-20 people at the top. Sure, cut off your nose to spite your face.
My main point is that people like Oliver routinely argue both sides, especially in hindsight. The “liar” loans etc were developed because the banks figured they would make money with them, and the liberals squawked if anyone suggested that perhaps not everyone should be eligible for loans. You can’t have your cake and eat it too.
And for the sock puppet “whoisduh”
http://hispanicpundit.com/2005/11/22/europe-vs-usa-in-treatment-of-minorities/
There, now you have beclowned yourself for the day, time to come up with another screen name.
And Oliver, when did I ever declare myself a doctor?
“My point, which you recognize, is that if we let these huge financial organizations go into the tank, it is going to take a lot of money away from people that are patently not millionaires. I guess Oliver is willing to let a lot of regular guys lose a lot of money so he can “stick” it to the 15-20 people at the top. Sure, cut off your nose to spite your face.”
The problem is, the people at the top will make a lot more money than the people at the bottom. It would be better to cover deposits / investments up to an amount instead of essentially given millions to help the people at the top, who are already millionaires.
Shorter duh: I got mine!
duh:
for the record I disagree with Oliver on this: “It is interesting how swiftly the Bush-McCain Republicans moved to bail out the millionaires at Bear Sterns but have kept hitting the brakes when the issue of average American mortgages have been in play.”
I think Fed did ok job in both cases, just the problem Bear Stearns had were more urgent. Fannie and Freddie (due to regulation you seem to hate) didn’t get into the worst of the current mess so they were in better shape. But Oliver’s other point is, imho, quite good. You need reasonable regulation to prevent market failures. Due to short-term nature of the market someone needs to make sure things don’t go completely out of whack. Market can correct itself as well but that will mean more extreme business cycles. Of course, we can argue what degree of regulation is reasonable. Still, a political philosophy “any regulation is bad” leads to more market failures down the road. It seems like we learned this lesson after Great Depression but forgot it now.
About the article you are linking to: I don’t see much relevancy to the issue here. A lot of people (including President Bush) claimed that increased homeownership rates are great. And Alt-A had little to do with minorities, they were extensively used by mostly white middle class in expensive regions of the country (e.g. California). Liberals mostly complained if people were denied loans b/c they lived in a wrong neighborhood. That’s different from being denied loans b/c of low income or credit score.
nader paul kucinich gravel
mckinney ventura
perot charts
rage
Got honesty?
Again LB, I agree with you. The only reason I put out the minority home ownership issue is that lefties like Oliver originally supported it, and unfortunately a great many of the people who took advantage of those loans are minorities and are now hurt by them.
I am not a financier, so I am not entirely sure how you cover the little guy without a true government buy-out, which is not what happened to Bear. Regardless, I think that short of actual criminal misconduct, the top people are always going to be sure that their “golden parachutes” are well funded….but that is more a matter for the stockholders than the federal government.
It’s very simple. If there are no consequences for screwing up, and you can make a lot of money WHILE screwing up, things will get screwed up.
I’m just a silly hippie liberal, but I thought that would be obvious to anyone who has ever raised a child.
It’s like the tree falling in the woods, it’s only a screwup if it costs YOU money, not if it costs a lot of other people money.
So people who had no stake in the consequences of the performance of loans did their best to unload complete turkey loans, collect their commissions, and move on. And the silly fools who ACCEPTED those loans, well, serves them right for falling for such a con job. It’s not the salesperson’s fault that the world is full of rubes who deserve to get fleeced, and the marketplace will correct itself anyway, so there’s no reason to make LAWS about these things.
Of course, that standard is not applied to the banks who bought the worthless loan packages from the con artists with their stockholders’ money. They’re run by really smart people, who DON’T deserve to be fleeced like the rubes taking the loans. Let’s help them out of a situation they had no part in creating.
you silly liberal hippies were screaming for no doc loans all through 04–06 so that everyone could share the “dream of home ownership, not just the rich…”
you silly liberal hippies were screaming for no doc loans all through 04–06 so that everyone could share the “dream of home ownership, not just the rich…”
I’ll accept the liberal hippie label, but of course I never said any such thing. Bankers were asking for relaxed regulations on loan qualification, and they got them. They should have been careful what they wished for.
But you will be able to cite a “liberal hippie” on the subject, because otherwise you would be exposed as a liar.
Right?
“you silly liberal hippies were screaming for no doc loans all through 04–06 so that everyone could share the ‘dream of home ownership, not just the rich…’”
Proof?
duh: ‘liar loans’ were primarily used by people who had some income but had either little documentation to prove income (e.g.small businessmen) or wanted to borrow more than they made. They were not primarily used by low income people as you are saying.
http://www.freddiemac.com/sell/factsheets/alt_stated_income.htm
http://en.wikipedia.org/wiki/Stated_income_loan
http://money.cnn.com/2007/03/19/news/economy/next_subprime/index.htm
A quote from the CNN report: “The loans were very popular with buyers seeking investment property rather than a home to live in.” Does it sound like low income borrowers?
Gosh, not to rain on Duh’s powerful argument that it’s the liberal hippies and the brown people’s fault, but it seems that the actual cause(s) of Fannie Mae’s and Freddie Mac’s downfall were the same CDO’s and other shitty investment vehicles peddled on Wall Street.
In an unexpected twist, it seems many rich white executives profited handsomely from these extremely high risk investments, leaving the bill for us stupid hippies, brown folkses, and other un-”duh”-sirables.
It’s not the banks that were screaming for the NO DOC loans. It’s the liberals who wanted everyone to share in the american dream of home ownership reglardless of the fact that the individual could not afford it. We need some personal responsibility here. Something the liberals seem to forget. You learn that while raising cchildren as well. Maybe what is needed is to build affordable housing so that the folks who need the No Doc loans can qualify for the American Dream. Former hippie who grew up.
It’s not the banks that were screaming for the NO DOC loans. It’s the liberals who wanted everyone to share in the american dream of home ownership reglardless of the fact that the individual could not afford it.
As you can see, several here are asking for those making this claim to support it by citing or quoting one or more of the “liberals” you are referring to.
I noticed that Duh ran and hid, but now you are carying his water. Where is your link or citation? How do you KNOW this?
Jane: again a stupid argument that liberals forced banks to issue certain kinds of loans. If banks didn’t think they would make money, they wouldn’t do it and no one (liberal or not) could force them to. Unless of course there was legislation forcing them to do it. If you know about such legislation, cite it. It was simply a miscalculation by the banks promoted by the short term outlook of the markets and not prevented by regulators.
“well sourced previous replies”
Your mom coming down to the basement and telling you you’re a “Cool Dude” doesn’t count duh.
What about the Federael Housing Enterprise Regulatory Reform Act of 2005 which McCain help write to regulate financial institutions but the Dems refused to vote for.
The following summary was written by the Congressional Research Service, a well-respected nonpartisan arm of the Library of Congress. GovTrack did not write and has no control over these summaries.
1/26/2005–Introduced.
Federal Housing Enterprise Regulatory Reform Act of 2005 – Amends the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to establish: (1) in lieu of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development (HUD), an independent Federal Housing Enterprise Regulatory Agency which shall have authority over the Federal Home Loan Bank Finance Corporation, the Federal Home Loan Banks, the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac); and (2) the Federal Housing Enterprise Board.
Sets forth operating, administrative, and regulatory provisions of the Agency, including provisions respecting: (1) assessment authority; (2) authority to limit nonmission-related assets; (3) minimum and critical capital levels; (4) risk-based capital test; (5) capital classifications and undercapitalized enterprises; (6) enforcement actions and penalties; (7) golden parachutes; and (8) reporting.
Amends the Federal Home Loan Bank Act to establish the Federal Home Loan Bank Finance Corporation. Transfers the functions of the Office of Finance of the Federal Home Loan Banks to such Corporation.
Excludes the Federal Home Loan Banks from certain securities reporting requirements.
Abolishes the Federal Housing Finance Board.
This paragraph mentions the pressure from the Clinton Administration, (the democrats) … as well as pressure from stockholders to keep up the profits.
“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.”
If anyone wants the 2nd page, I would be happy to copy/paste that too.
Now, looking at the full article, and keeping it in context of this debate, I don’t think anyone is saying that minorities should not buy homes. But, staying with a theme of taking responsibility, no one, regardless of their color/nationality, etc, should be allowed to buy a home they can not afford. And financial institutions should have actuaries that analyse financial risks, and have the power to deny unacceptable loans (with full autonomy from outside pressures including the government). They are not in the business of being “equal opportunity” anything…
Just to be comprehensive…here is the 2nd page of that article.
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.
Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.
In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.
The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.