Steve Posted October 7, 2008 Report Share Posted October 7, 2008 CS: The CDSs cover default on MBSs. And MBSs are derived from mortgages, a percentage of which are very weak mortgages because they are either subprime, FF or mortgages written pursuant to the CRA. I don't know how much of the crap out there was written by banks trying to comply with CRA, but there is probably a good amount. The problem is government trying to social engineer the markets. The gov should just be engaged in smart regulation and leave the markets to themselves. Then again, I see the role of the fed gov as being extremely limited. The fact that it is not, means that it poses a threat to us all, the mortgage crisis just being the one noticeable at the moment. I had a post saying that 56% of all subprime loans were to white applicants. According to the 60 minutes piece 6% of the outstanding loans are in default. Seems low to me but I'm not a real estate expert so maybe 6% is high. No one knows the default rate broken down by group though but I wouldn't argue that a fair number are minorities. The question also begs is how many of those loans were CRA mandated? Everyone and their grandmother were doing refis a few years ago. There tons of money to be made. Just from personal observance, no stats to back it up, it was just a frenzy for any and all applicants. CRA didn't play a part in it. The loan officers were pushing through anything and everything. I have also yet to see any evidence that the CRA 'forced' banks to make bad loans. It seems that telling them to make loans available in the same manner as they do to other applicants suggests that they had to take any type of loan to meet the program. Maybe they did, but I haven't seen any evidence of that presented. That's all I'm asking. The 60 minutes piece never mentioned the CRA. The ONLY ones mentioning the CRA are conservative bloggers and pundits on all the mediums. They are not mentioning CDSs or other things. Its the CRA as well as what Dems didn't do. Passing the buck and scapegoating. There are many parties in this, the CRA act probably did contribute to it. The problem I have is inferring it was the main cause without any data backing it up. Link to comment Share on other sites More sharing options...
bust Posted October 7, 2008 Report Share Posted October 7, 2008 Lots of discussions about the banks but what role does the borrower play in this? Plenty Can anyone honestly say that most of the defaulters didn't borrow out of their ability to pay the loans in the first place. We all talk about the bank's greed but what about the greed of Mr & Mrs "White Picket Fence" It is the banks that did NOT check the applicants' date=' which they did do in the 20th century. It is the banks that paid HIGHER COMMISSIONS to mortgage brokers to push these ARMs with teaser rates. It is the banks that came up with these interest only loans with a back end bomb. [/quote'] Agree but what ever happened to personal resposibility? Link to comment Share on other sites More sharing options...
.. Posted October 7, 2008 Report Share Posted October 7, 2008 We were talking about the Community Reinvestnment Act. You keep changing the subject because you have no substantive response to the points I make about the current subject. Nope. YOU refuse to answer my questions and blindly cling to this right wing talking point even tho' it has been thoroughly refuted. You are being dishonest, as usual. Regards, SD Link to comment Share on other sites More sharing options...
.. Posted October 7, 2008 Report Share Posted October 7, 2008 Its insurance. Without capital reserves. Yes the game is/will be over but what is the extent of what is over? I do not see how you can say this without blaming the lack of regulation that allowed this to happen in the first place. You cannot blame the mortgages because they would not exist if there were no CDS' to hide them and allow the banks to be able to sell them to suckers. The banks knowingly made bad loans because they knew they would get their money and sell off the risk without oversight. Cheers, SD Link to comment Share on other sites More sharing options...
Faustian Posted October 7, 2008 Report Share Posted October 7, 2008 Today' date=' there are some people who would like to go back to those good all days. [/quote'] Bullshit. Really? It appears you don't know your fellow man/woman well then... Link to comment Share on other sites More sharing options...
.. Posted October 7, 2008 Report Share Posted October 7, 2008 Sounds like trouble to me. Jimmy Carter enacted the CRA to service low income neighborhoods. Interference with the markets, such as trying to provide homeownership to everyone, leads to the banks getting clogged up with these mortgages, or MBSs derived from them. The groups named above are very political and use the money they receive to get a death grip on a block of Congressmen and the existence of both the Congressmen and the groups becomes perpetual. Even in this crisis environment, you will hear them talking about the need to build more affordable housing which is nuts considering the bloated housing inventory. A government on a social mission can be a big factor in precipitating problems in the market. Show me where any law requires any bank to make a bad business decision and give a loan to an unqualified borrower. The CRA simply made banks consider applications from qualified borrowers in undesirable neighborhoods. Low income folks in the ghetto, employed, still want a home too. And some can pay for it (if they can't then no one told the banks to give them money). That property is worth *something*, but not enough for the banks to mess with. The CRA forced them to do so. That's it. Cheers, SD Link to comment Share on other sites More sharing options...
Old Hippie Posted October 7, 2008 Report Share Posted October 7, 2008 http://www.msnbc.msn.com/id/27013906/ Does anyone think that the CEOs and top officials who masterminded this stuff should face criminal charges? FUCK YES!! Give them a fair trial, send them to a reeducation camp, and then execute them and sell their organs. T^hen send their now impoverished family the bill! These people need to to suffer! Link to comment Share on other sites More sharing options...
Faustian Posted October 7, 2008 Report Share Posted October 7, 2008 In the UK the banks did get greedy. It was, for much of my life, impossible to get a mortgage if you didn't have the necessary income. It used to be 2 1/2-3 times your earnings. Then house prices went through the roof. No one could buy. The average wage was approximately 22,000 pounds per annum...the average house price many times that figure. The banks started lending at 5-8 times earnings. There were news stories on this again and again. Getting loans was suddenly possible, as house prices were climbing so rapidly. A lot of people got rich. The lending companies were making a killing. Personal debt was said to be huge. 20,000 per person, plus a mortgage. There were stories everywhere of how this couldn't go on...but no one listened. People were getting rich!!!!!!!!! Mr and Mrs average now had money! Re-mortgaging to pay off any debts....then getting more. Credit card culture. The money has run out now.... The bubble has burst. An economy built on debt will eventually implode. Anyone with even a modicum of intellect knows this. All this was predicted and predictable. My only surprise was it lasted this long, but people were getting rich......... Bush has openly advocated consumer spending to boost the US economy. Tax cuts were made to stimulate the economy. I don't know how the system differs in the USA, but that's what happened over the pond. Policies changed at the banks, no one made them....they just saw an opportunity to make money. They are businesses after all... The government did nothing, they saw the public as appeased and getting fat....and people were getting rich! Now all the fundamentals are shot to shit. It certainly looked like it will be bad for some time. The short term fix is simply that. It removes todays problem. Tomorrows is still to be tackled. Link to comment Share on other sites More sharing options...
.. Posted October 7, 2008 Report Share Posted October 7, 2008 Pretty much the same thing. The banks used the voodoo of the CDS to hide the bad loans and sell them as actual A-rated asset-backed securities to unsuspecting folks globally. Criminal, in my mind. But it wasn't because there were no regulations to cover this. Cheers, SD Link to comment Share on other sites More sharing options...
Bangkoktraveler Posted October 7, 2008 Report Share Posted October 7, 2008 Today' date=' there are some people who would like to go back to those good all days. [/quote'] Bullshit. Really? It appears you don't know your fellow man/woman well then... Problem is, rogie doesn't know himself. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.