Was it George or the big banks

[finknottle]

I thought it was banks giving mortgages to people who couldn't afford their mortgages.

 

I thought it was high-earners investing in banks who gave mortgages to people who couldn't afford their mortgages.

[DC Tom]

I thought it was high-earners investing in banks who gave mortgages to people who couldn't afford their mortgages.

 

I thought it was Sarah Palin.

[Magox]

All your pseudo-scientific babble is nonsense; there's serious holes in scientific study of economics, and you can't prove any of it. It's time all you heretics abandon your nonsense theories and embraced the one true economic principle: intelligent finance. The Flying Spaghetti Monster caused the economic collapse, With His Noodly Appendage.

Ya, but the real question is the flying spaghetti monster a spawn of GW?

[GG]

Weak bank underwriting practices coupled with government pressure unto the GSE's for lower income individuals is at the heart of the problem. There is no denying that, Period!

 

The securitization markets, the lack of regulation in certain sectors of it and the ratings agencies is another part of the puzzle.

 

Lack of regulation in the mortgage industry was another part of the problem.

 

Interest rate policies was another issue.

 

I don't see how any informed person can rationally argue these factors. You asked, how is it that "the GLOBAL financial system came undone by residential mortgage troubles in five US states"? Isn't it obvious?

 

Maybe because the top 25 banks in the US held over $180 TRILLION in Derivatives. Many of those in residential mortgages, some of the bonds were leveraged to over a 30/1 ratio. All it takes is a 10% decline in some of these assets to unhinge the entire global economy. Once you enter into this stage of the game, it's a matter of contagion and collateral damage.

 

Is that why the British banks failed first?

 

Low interest rates? I'm assuming you mean the Fed's rates, even though the market doesn't fund itself via Fed, and the really troubled mortages & CDOs came onboard after 2006, two years after Fed started raising its rates. Don't just look at the base rate but at the spreads. The two were going in opposite direction from 2003 onward, indicating that it wasn't Fed's monetary policy, but banks' changing view of the risks they were taking.

 

Your 30/1 leverage ratio also means nothing without context. It actually supports my point. The gross ratio was 30/1, but it was an acceptable ratio because a firm claimed that it hedged away the majority of its exposure via derivatives. That's what I refer to #9 above. I assume you understand the difference between gross leverage and net leverage.

 

CRA contributed to the problem, but that's not where the troubled mortgages are. How can you blame CRA for middle class NJ guys buying & flipping houses in Florida?

 

Fan Fred were pressured to make mortgages, but the worse problem was created when they started buying RMBS to keep up with Wall Street. If Fan Fred were tied to the same capital requirements that the other firms were held to, then none of this would have happened.

 

Don't buy what you read in the paper, do the research on the actual numbers. CRA is a footnote, but a convenient one for somebody needing a villain.

[Magox]

Is that why the British banks failed first?

 

Low interest rates? I'm assuming you mean the Fed's rates, even though the market doesn't fund itself via Fed, and the really troubled mortages & CDOs came onboard after 2006, two years after Fed started raising its rates. Don't just look at the base rate but at the spreads. The two were going in opposite direction from 2003 onward, indicating that it wasn't Fed's monetary policy, but banks' changing view of the risks they were taking.

 

Your 30/1 leverage ratio also means nothing without context. It actually supports my point. The gross ratio was 30/1, but it was an acceptable ratio because a firm claimed that it hedged away the majority of its exposure via derivatives. That's what I refer to #9 above. I assume you understand the difference between gross leverage and net leverage.

 

CRA contributed to the problem, but that's not where the troubled mortgages are. How can you blame CRA for middle class NJ guys buying & flipping houses in Florida?

 

Fan Fred were pressured to make mortgages, but the worse problem was created when they started buying RMBS to keep up with Wall Street. If Fan Fred were tied to the same capital requirements that the other firms were held to, then none of this would have happened.

 

Don't buy what you read in the paper, do the research on the actual numbers. CRA is a footnote, but a convenient one for somebody needing a villain.

Spaghetti Monster

[DC Tom]

Spaghetti Monster

 

Judging by the argument you and GG are having, the subject clearly exhibits irreducible complexity. Therefore, it must be intelligently designed by an outside designer and His Noodly Appendage.

 

It's the only explanation.

[GG]

Spaghetti Monster

 

Or the Flying Burrito Brothers.

[DC Tom]

Or the Flying Burrito Brothers.

 

Ah, but who created them? The Flying Spaghetti Monster.

[erynthered]

No it was the Marx Brothers:

 

"The party of of the first part..." is hereinafter called: "the party of the first part..." and "The party of of the second part..." is hereinafter called: "the party of the second part...Groucho and Chico in Fannie and Freddie does Wall Street.

[Magox]

Senator Chris Dodd's account of what happened.

 

This is an interview he did with Ezra Klein.

 

EK: And to ask about the other dimension to that question: What actually happened to cause this? Not just how did the government respond, but literally what created the problem? What, when we talk about the financial regulation and Wall Street, are we attempting to fix?

 

CD: The first thing that happened was that you had a lot of unregulated entities…

 

EK: Shadow banks.

 

CD: Yeah. You need securitization, but the failure to have underwriting standards, the fact that they could go out and just lure people in, the no-doc loans, the fabrication of information. When you go to the Web sites of these brokers they said that the first thing you as a broker should do is convince the borrowers you're their financial adviser. I put that up in my first hearing. And of course they were anything but your financial adviser. , But then the bank was selling the loans off in eight to 10 weeks, so they were out of the game, and of course the rating agencies don't conduct due diligence. So it was just a series of dominoes that created this huge bubble and there was nothing underneath it. That's why so much of what this bill is designed to do is make sure that there's no one again in the financial services sector that can escape regulation.

 

Not that I agree with everything he says, I just thought it was an interesting interview of his account of how things unfolded.

[pBills]

that caused the economic meltdown? For months we were told by our Dear Leader and his minions that the Bush Administration policies were the fount of all economic evil. Now, we're being told that the Wall-Street-mega-bank cabal is the true source of the problem, and that the precipitating event was institutional greed. The only thing we can be sure of, according to the 'mocrats, is that none of the fear of economic excess germinated from fear of a 'mocrat win in 2008, nor the spending practices that followed.

 

Could it be that the current administration is practicing situational honesty in an attempt to curry favor in November? Was George Bush the puppetmaster behind the economic evil empire, feigning the doofus persona while manipulating the world economy? Did Laura Bush's economic acumen corrupt the banking industry? Is Robert Gibbs a Tea Party plant? Is Rohm Emanuel ...Oh, never mind.

 

 

It was probably a mixture of both policies from Bush Administration and people taking advantage or exploiting loop holes. Who knows.

[Magox]

It was probably a mixture of both policies from Bush Administration and people taking advantage or exploiting loop holes. Who knows.

Specify which Bush administration "policy" that led us to the crisis.

[Chef Jim]

It was probably a mixture of both policies from Bush Administration and people taking advantage or exploiting loop holes. Who knows.

 

Obviously you don't.

[erynthered]

Specify which Bush administration "policy" that led us to the crisis?

 

 

This should be good. (grabs popcorn )

[3rdnlng]

Specify which Bush administration "policy" that led us to the crisis.

 

 

It's when Carter Bush created the CRA and then again when Clinton Bush expanded it.

[Magox]

It's when Carter Bush created the CRA and then again when Bill Bush expanded it.

Bush didn't create the CRA.

 

And

 

On September 10, 2003, the Bush Administration recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis. Under the plan, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae. The new agency would have the authority, which now rests with Congress, to set capital-reserve requirements for the company and to determine whether the company is adequately managing the risks of its portfolios. The New York Times reported that the plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac is broken. The Times also reported Democratic opposition to Bush's plan: "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.

[3rdnlng]

Bush didn't create the CRA.

 

And

 

Read my post again. A little sarcasm maybe? I'm surprised you didn't pick up on that.

[Magox]

Read my post again. A little sarcasm maybe? I'm surprised you didn't pick up on that.

Your sarcasm bullhorn is inaudible.

[Pine Barrens Mafia]

All your pseudo-scientific babble is nonsense; there's serious holes in scientific study of economics, and you can't prove any of it. It's time all you heretics abandon your nonsense theories and embraced the one true economic principle: intelligent finance. The Flying Spaghetti Monster caused the economic collapse, With His Noodly Appendage.

 

 

[Chef Jim]

Your sarcasm bullhorn is inaudible.

 

I heard it. Are you stoned again? Or is that still?