Lets get this party started: The Bush Mortgage Bubble

Started by Vern, January 26, 2013, 10:53:58 AM

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Vern

So yesterday we learned

Bush stopped 'reform' in late 2003
(Bush told Barney there was nothing wrong with freddie and fannie) 2003
Bush forced freddie and fannie to buy more low income home loans 2004
Bush reversed the clinton rule that 'reined in' freddie and fannie 2004
Bush wanted 5.5 million new minority home owners  2004

and thats just some of Bush's housing polices that encouraged, funded and protected the Bush Mortgage bubble.  But the most toxic of all policies was when the Office of the Comptroller of the Currency preempted all state laws against predatory lending.  The OCC along with the OTS are the two regulators who monitor all banks and thrifts.  They report to the president. Let the OCC explain their goal. Please read it all the way to the end

"Subprime lending has grown rapidly over the past decade. Rising concerns about abusive practices by subprime lenders have been a byproduct of this growth. By early 2004, these concerns prompted Georgia and more than 30 other states to pass laws designed to eliminate abusive or predatory lending practices by the financial services firms, including those with federal charters, operating within their boundaries. 

Acting on a request from a national bank, the OCC in 2003 concluded that federal law preempts the provisions of the Georgia Fair Lending Act (GFLA) that would otherwise affect national banks' real estate lending. At this same time, the OCC also proposed a final rule to clarify the types of state laws that are applicable to national banks. In early 2004

In addition, clarification of the applicability of state laws to national banks should remove disincentives to subprime lending and increase the supply of credit to subprime borrowers. "


http://www.occ.gov/publications/publications-by-type/economics-working-papers/2008-2000/wp2004-4.pdf



kramarat

Quote from: Vern on January 27, 2013, 07:31:48 AM
I'm sorry I dont work the night shift guys.  anyhoo

"This clown is really disappointing. He talks tough though. We call  that "all talk and no trousers"

I clearly articulated my points and I backed them up.  And FYI dont me questions like taxed. I told him the CRA was from 1977 and the Bush Mortgage Bubble started in late 2004.  He keeps harping on "who controlled the house" and it took two posts for him get his point across about "who controlled the house" in 1977.  Make a point.

and kramrat

"It's going to take some real work on your part, to lay the mess in Bush's lap."

mmmmm, remember when the 'narrative' was "bush tried to stop the bubble".  It seems like only yesterday everybody believed it.  Turns out that was just another lying republican 'narrative'.  I've posted some Bush policies and statements that one could easily quantify as "encouraging and funding" and since bush stopped reform doesnt it start in his lap since the Bush Mortgage Bubble started in late 2004? (taxed, thats a rhetorical question, I'm not waiting on an answer to make a point) 

Remember, it only took a 10 second quote on youtube for every con to blame a minority member of congress.

I guess you missed the part where I said that Bush did some really stupid things. If you read the link I provided, you would have a clearer understanding of what led to the housing meltdown. Blaming it on Bush because he happened to be in office when the shit finally hit the fan, makes as much sense as trying to blame it on Obama.

The Bush administration should have made a lot more noise, but they caved.

Timeline shows Bush, McCain warning Dems of financial and housing crisis; meltdown

kramarat

Why are you spreading one subject over more than one thread? Is this an attention getting tactic? :blink:

Vern

"In addition, clarification of the applicability of state laws to national banks should remove disincentives to subprime lending and increase the supply of credit to subprime borrowers. "

wow, talk about a smoking gun.  could you imagine the screams from the right if Barney Frank said that? (again taxed, its a rhetorical question). 

so lets sum up, Georgia and 30 other states passed "laws designed to eliminate abusive or predatory lending practices " and the OCC preempted them.  What did all 50 state banking supervisors and AG's think of the preemption rule? (taxed I asked the question and now I'll answer it)

"Concentrating regulatory control at the OCC ensures that regulatory and consumer protection problems that emerge will be solved with a one-size fits all approach," CSBS President and CEO Neil Milner wrote in his comment letter, adding that the proposed rule would concentrate regulatory power in the hands of a single individual, the Comptroller, with virtually no direct congressional oversight until problems or scandals emerge."

http://www.csbs.org/news/press-releases/pr2003/Pages/StatesUnitetoFightSweepingOCCPreemption.aspx



Vern

"you would have a clearer understanding of what led to the housing meltdown."

I read it. Did you? 

"President Bush had an aggressive housing agenda to "...dismantle the barriers to homeownership..." with Fannie Mae playing a significant role in "financing" this agenda — and perhaps garnering more than a few votes for Bush and those congressmen who hung on to the coattails of this agenda"

Thats exactly the point I will be making by posting Bush's toxic housing policies. If you want to argue that the "govt shouldn't be in the housing business" then thats another thread entirely.  Fannie Mae 'played a signficant role' because bush made them.  He controls their housing goals (he raised them) and he controls what qualifies (he allowed abusive subprime loans)

"The Bush administration should have made a lot more noise, but they caved."

your own link disputes your notion. "aggressive housing agenda " does not equal "caved".  The policies and statements I've posted in this thread alone prove Bush's "aggressive housing agenda "

kramarat

You really don't understand how our government works, do you?

For your next act, I'd like for you to show me how Bush had the power to supercede the US supreme court. :biggrin:

http://en.wikipedia.org/wiki/Cuomo_v._Clearing_House_Association,_L._L._C.

Vern

"Why are you spreading one subject over more than one thread? Is this an attention getting tactic"

Bush's preemption rule deserves its own thread.  When you see subprime loans go from 10 % in 2003 to 40 % in 2006 and No Doc loans go from 4.3 % in 2004 to over 50% in 2006, you'll understand.

"For your next act, I'd like for you to show me how Bush had the power to supercede the US supreme court."

er uh kram, the Scotus overruled bush's preemption in 2009.  Bush preempted all state laws against predatory lending in 2004.  the Bush Mortgage Bubble popped late 2006.  so sadly, bush's unconstitutional preemption rule was thrown out too late to prevent the Bush Mortgage Bubble.

Vern

So we learned what all 50 states thought of Bush's preemption. Thanks to kram we learned what the Scotus thought of preemption. What did banks think of preemption.

"
As illustrated in figure 2, the share of assets divided among federally chartered and state-chartered banks remained relatively steady for a decade; between 1992 and 2003, national banks held an average of about 56 percent of all bank assets, and state banks held an average of about 44 percent. However, in 2004, the share of bank assets of banks with the federal charter increased to 67 percent, and the share of bank assets of banks with state charters decreased to 33 percent.
"

http://www.gao.gov/new.items/d06387.pdf

Wow, banks change their charters to be 'regulated' by Bush. Thats almost a 25 % jump in assets going to national regulators in one year.  mmmm, 2004? isnt that when the Bush Mortgage Bubble started?


kramarat

Federal Housing Enterprises Financial Safety and Soundness Act of 1992

http://www.ccc.unc.edu/FannieFreddie.php

There's plenty of blame to go around, and you won't find any Bush groupies around here, but the house of cards really got started with this bill. It's the one where the government forced lenders to loan money to people that couldn't afford to pay it back.

To ignore the entire history and say that Bush did it on his own, shows a real lack of understanding on your part. You never answered my question. Do you believe that home ownership is a right?

http://www.freedomworks.org/crisis

Vern

kram your video said (and I paraphrase)

"many financial analysts say if only freddie and fannie were effectively regulated the mortgage bubble would have never happened"

doesnt that put it in Bush's lap? He stopped 'reform' in 2003. And guess what he stopped actual reform in 2005.  How strange your video doesnt mention that or bush's policies or Bush stopping actual reform in 2005.  Here's what Bush thought of actual reform in 2005 (this is the reform bill that you often here referred to as "McCain tried to reform freddie and fannie)

STATEMENT OF ADMINISTRATION POLICY
The Administration strongly believes that the housing GSEs should be focused on their core housing mission, particularly with respect to low-income Americans and first-time homebuyers. Instead, provisions of H.R. 1461 that expand mortgage purchasing authority would lessen the housing GSEs' commitment to low-income homebuyers.

http://www.presidency.ucsb.edu/ws/index.php?pid=24851

how do you spin that away? you cant. thats why its never mentioned along with Bush's other housing policies.

kramarat

Quote from: Vern on January 27, 2013, 08:57:06 AM
kram your video said (and I paraphrase)

"many financial analysts say if only freddie and fannie were effectively regulated the mortgage bubble would have never happened"

doesnt that put it in Bush's lap? He stopped 'reform' in 2003. And guess what he stopped actual reform in 2005.  How strange your video doesnt mention that or bush's policies or Bush stopping actual reform in 2005.  Here's what Bush thought of actual reform in 2005 (this is the reform bill that you often here referred to as "McCain tried to reform freddie and fannie)

STATEMENT OF ADMINISTRATION POLICY
The Administration strongly believes that the housing GSEs should be focused on their core housing mission, particularly with respect to low-income Americans and first-time homebuyers. Instead, provisions of H.R. 1461 that expand mortgage purchasing authority would lessen the housing GSEs' commitment to low-income homebuyers.

http://www.presidency.ucsb.edu/ws/index.php?pid=24851

how do you spin that away? you cant. thats why its never mentioned along with Bush's other housing policies.

How many different ways do you want me to say that Bush screwed up? :glare:

Go to the 1:40 mark on the video. That's the real Barney Frank, (in 2003), saying that there is no crisis. I don't know WTF I can do to get you to acknowledge that.

Anyway, I'm done here. Have fun. Maybe I'll go find someone that wants to argue that the sky is green. It would be an equal waste of my time. Do your parents know that you're playing around on the computer again? :rolleyes:

Bye.

TowardLiberty

#41
The housing bubble was part of an even larger credit bubble in the derivatives market.

And I have yet to see a single post address the real causal forces that enabled the bubble. Not a word has been said on it.

But much has been said about the CRA and Fannie and Freddie- which are interventions that distorted the housing market, but did not create the bubble as much as they steered it.

Credit bubbles are rooted in monetary manipulations, specifically, credit expansion and artificially low interest rates.

And the shadow banking conduits of repurchase agreements and re-hypothecation, which effectively are the creation of a banking system with no deposits, much larger than the traditional one, is the arena where 21st century credit bubbles play out.

The boom and bust we saw in the housing market was merely a symptom of the boom and bust in leveraged credit "money," or what has been referred to as the "churn."


Solar

You claim it is Bush's fault yet neglect where this all started.
In 1995, the Clinton Administration changed the law governing GSEs' mission the Community Reinvestment Act to encourage more lending in poor neighborhoods. Previously, the CRA directed government to monitor banks' lending practices to make sure they did not violate fair lending rules in poor neighborhoods. With the 1995 change, the government published each bank's lending activity and started giving bank ratings based primarily upon the amount of lending it performed in poor neighborhoods. These changes empowered community organizations, such as ACORN, to pressure banks to increase lending activities in poorer neighborhoods — which involved reducing mortgage loan standards.

Then fast forward where Bill Clinton admits their party is to blame.

"I think that the responsibility that the Democrats had may rest more in resisting any efforts by Republicans in the Congress, or by me when I was President, to put some standards and tighten up a little on Fannie Mae and Freddie Mac."

Though he said nothing about Democrats' role in actively causing the system crash.

On September 30, 2008, Representative Artur Davis (D-AL), who had vehemently defended Fannie Mae against regulatory efforts in 2003-2004, echoed President Clinton's sentiments. 

"Like a lot of my Democratic colleagues I was too slow to appreciate the recklessness of Fannie and Freddie. I defended their efforts to encourage affordable homeownership when in retrospect I should have heeded the concerns raised by their regulator in 2004. Frankly, I wish my Democratic colleagues would admit when it comes to Fannie and Freddie, we were wrong." 

So tell me again how all this is Bush's fault?
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Solar

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Solar

Quote from: TowardLiberty on January 27, 2013, 09:14:03 AM
The housing bubble was part of an even larger credit bubble in the derivatives market.

And I have yet to see a single post address the real causal forces that enabled the bubble. Not a word has been said on it.

But much has been said about the CRA and Fannie and Freddie- which are interventions that distorted the housing market, but did not create the bubble as much as they steered it.

Credit bubbles are rooted in monetary manipulations, specifically, credit expansion and artificially low interest rates.

And the shadow banking conduits of repurchase agreements and re-hypothecation, which effectively are the creation of a banking system with no deposits, much larger than the traditional one, is the arena where 21st century credit bubbles play out.

The boom and bust we saw in the housing market was merely a symptom of the boom and bust in leveraged credit "money," or what has been referred to as the "churn."
Well said, messing with the free mkt as in manipulation to help an industry succeed over another, always has an equal reaction, as evidenced by the green energy movement over night boom and bust.
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