I don't know the exact time frame, but the main push was from 3 senators--Barrack Obama, Chris Dodd, & Barney (a.k.a. Boy Barney) Frank. Not one of them was ever held accountable.
Capitalism is held in check by risk. When risk is removed the problems start, and the risk was removed by the knowledge that the banks could be make risky loans and the government would back them up. It's foolish to think that banks where not involved in the writing of these laws, and if research was done you would probably see much lobbing for them. We are about to see this again with student loans.
It was done way before Obama was anywhere.
Typical rig wing responmse. Easy to forget facts and timelines listening constantly to teh usually blow hards. Real estate martket crash happened in The summer of 2008... more than 6 months before obamas term started. The ground work was a combination of too much and too little regulation the prior 30 years creating and entire cultrue with the lending industry and markets. All sides can share blame. Borowers, lender, realtors, underwriters, builders, feds, state gov, local gov, investors.
Originally Posted by exreo
I agree risk can control, greed. But risk was allowed to be hidden and as we saw banks were able to defer their risk to taxpayers in bailouts. Amazing that a bank can nearly fail, then 12 months later post solid profits. The bailouts needed more long term strings or some method to weaken the banks so that the smaller banks that didnt take the big risks could advance... as capitalism prefers.
Ultimtely banks should be held accountable for the loans they made...and many of them were not forced...far from. It. It was easy money, priced to reflect therisk, then resold as a lower risk. Like reselling flooded cars or used condensers as new.
I do wonder
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Socialism for the banks, capitalism for the people.
Or another way of putting it would be privatized profits and socialized losses.
Our government has been complicit and co-conspiratory all along. Well, at least since 1980.
I heard it on the 6 o-clock news (at that time, in the 90s), that banks were told that if they did NOT accept these loans, they would be investigated by the government and prosecuted for discrimination against minorities.....
Originally Posted by geerair
This is about as close the correct factor that took place back then. The rest of you guys can continue to argue about who is right or wrong.
Originally Posted by cehs
This factor did start in the Clinton Administration & it was actually a well meaning program to help inner citys stabilize and grow, which we certainly could use.
The Federal Government basically told any lenders, mortgage bankers who were existing FHA, VA or any other sort of government insured or guaranteed loans ( the federal government itself has never been in the loan or mortgage business for single family homes) that the lenders of those loans could not check the mortgage loan qualifications of the buyers.
It was that simple.
So banks and mortgage lenders did make a lot of money, of course. All the guards were put down by our Federal Govenment and that let the fox into the chicken coup.
The sad part of this is that lenders, not all lenders which is a fact overlooked, knew that and in a lot of cases encouraged borrowers to fill out the lenders forms to fit the house they wanted to buy. In normal days this would have been purgery but no more since the Federal Government allowed this and encouraged this to happen.
So borrowers purchased anything they wanted. And single family house prices went through the roof since sellers were now having bidding wars to get their home by people who could not afford them.
Anyway, some of you guys will even argue with this. So if your mind is open enough to deal with facts, look up who sponsored this program. They are the ones who took a well meaning program and turned it into a nightmare for, mainly, the responsible tax paying citizens of this nation who have and will continue to pay for this childishness by a few of our elected leaders of the time.
Thoser were cra loans... thosed edidnt casuse the collapse. Mcmansions on arms to stated incomes were not forced. They made a killing reselling these high risk loans as low risk.
Whats riskier, a poor guy with a stable income with a real w2 to back it up or a broker filling out stated income for clients to make the numbers work. Cra loans still had the risk priced in, the others didnt
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The banks put the people in the loans they could not afford. They manipulated the system to accommodate them (The banks)
The banks were partners in crime with the backing and goading by the federal government. My question is, why hasn't Congress screamed bloody murder for hearings into who the crooks were in this mess and who has absconded with all the billions of dollars first from investors then again from gov't bailouts? This has been a free for all for certain high end money people facilitated by politicians as kickbacks for getting them elected.
The reason for no inquiries is they would immediately point back at the politicians sitting on the bench. Self incrimination. They don't need an inquiry because they see the crooks in the mirror every day and there are plenty on both sides of the aisle in this scam. Then you have the Trial Lawyers and other special interest groups running cover for them. Have you asked yourself why no calls for Tort Law reform? Because Congress is full of trial lawyers who make their fortunes off ridiculous tort laws. They are all a bunch of crooks and creeps.
Pull the chain and flush.
The banks didn't want CRA initially because it forced them to make loans to poor people in areas that they historically had flagged as high risk, or quite frankly (given the time period) contained monorities. THey had whole maps with location they refused to lend too irregardless of income, loan to value, etc. To correct that that inequity, the feds passed cra and I believe fair lending acts as well (not sure on the time frame). I know I know, all of that warm and fuzzy liberal stuff...who cares about discrimination. To support this Fannie and Freddie were formed. Tiem went by, and pretty soon some one realized they could take advantage of this system and increase lending volumes and margins by selling off more and more loans (traditionally banks placed more mortgages in their local portfolios.) NExt thing you know ther are mortgage brokers popping up ot meet the demand created by falling rates. Falling rates created building boom and the whole system took off.
I bet you find that after 2000, banks were actualyl lobbying hard to protect all of this "forced lending" because they were making som mcuh money on all sides. Both in origination and by selling them off to investors. The systme hit it's peak and became unstable, when demand from the investors started outstripping suppyl. Meaning rather than selling off what you generated to control your risk, it became a profit center and orginators are being pressed hard ot push paper at all costs. They in turn push hard on appraisers, realtors and pressure borrowers for both refinances and purchases. They went where hte moeny was good. Not on CRA, FHA, rurla housing... oh no, those are chicken feed.... they wanted the 200k+ loans. That's where the money was.
Hers' how it went:
ORIGINATOR - "can you afford $$$$ per month?" (note they aren't asking for W2 or actual verifiable income)
BORROWER - "Ya we can swing that... besides it's going ot keep gaining 10% in value and we can just refinance when the rates changes or baloon expires... right?"
ORIGINATOR - "absolutely, you can't lose... rates will rpobably keep going down too. Now, I jsut need you to fill this out stating the most you could amke with bonuses, tips and any investment income you have, you'll need $$$,$$$ to qualify for this loan. Don't worry it's just a piece of paper, you can afford thsoe payments right?"
BORROWER - "Oh, OK"
ORIGINATOR - "enjoy your new home. IF you excuse me I have my next appointment comming in".
IF the borrower was lucky, they might have known it was a ARM or a balloon and what that meant 3-5 years later.
I will agree that government corruption allowed this to all get ignored then swept under the rug. All sides had a hand.
You want it to stop. How about strict open meeting laws with serious pentalties? No closed door strategy sessions. If tax payer dollars are impacted and there are more than 2 elected officials are discussing anything, there needs to be a 24 hour notice of a meeting, an agenda published, and notes taken with the opportunity for the public to attend. The exception would be national secturity specific issues. But a independant member of the judicial branch should be in attendance to make sure that's what is discussed.
As for lobbyists. I'm not sure if there is a law now, but the daily schedule of congressmen should be published as legal record (meaning lying is perjury) and it includes who they will meet with. Any deviations get filed as amendments within 48 hours.
Term limits are another nice strategy too. Finally, lets, just keep more programs and tax dollars at the state level. Now I know I'm biased because I'm in one of the few states that has a balanced budget (actually had a large surplus last year). W'ed probaby get involved in a let fewer wars si more military was were national guard and you needed permission from that state Govener to use them, and if mobilized for more than 6 months, it would require approval form the state legislature. The exception being an act of war being declared.
Many things happened. But make no mistake, the banks were in control. They put us in this jam. They manipulated the system and their lobby professionals help change some key laws which favored them. The banks new exactly what they were doing.......for a bunch to come up with such a scheme, you would think they would have saw the mess they created coming, but they all were to busy counting money.
Originally Posted by motoguy128
With golden parachutes and senators in their pockets.... they had nothing to lose and everything to gain manipulting the system. If nothing else, once your ultra wealthy, You just do things because you can.
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