Capitalism

[Kirkland Laing]

Just look at their fucking business models, they bough bad loans repackaged them and sold them off....they garunteed money to mortgage bankers and with Clinton demanding banks do more sub-prime loans (under threat of penalty) the banks eventually tried to make money off of F and F by making their commission and then getting money from F and F they KNEW they weren't going to get from the borrower.


But I guess that won't be enough for you....it never is

Your above post makes no sense whatsoever. Your description of the relationship between banks, mortgage companies and Fannie and Freddie is one I've never seen before and as somebody who's worked in the financial industry for decades I can confidently say has no basis in reality. I can't even understand what you're trying to claim there.


Again Lyle, the current crisis originated in a bunch of bad loans made after 2002. Nothing to do with Clinton. Clinton called for banks to lend more to minorities (no penalties were ever threatened, if you claim they were provide facts and evidence) but so has every president since Carter including the current one. lending to monorities is actually good business for banks, very profitable. What happened after 2002 was that regulations on mortgages and what could be done with them were scrapped, resulting in a slew of bad loans.

Bush scrapped laws that made mortgage companies keep the mortgages they made for 30 years and allowed them to sell these mortgages on. This ended the mortgage peoples' need to make safe loans and resulted in an explosion of them. To sell the loans the mortgage companies gave tow or three year teaser rates that meant the mortgage payment was often less than rent money. Once the loans reset to the real rate the mortgagees' defaulted en masse causing the securities contrucrted of these loans to become toxic, worthless, causing the current mess. Here's a graph that explain this nicely. Note that the explosion in resets coincides exactly with the start of the current meltdown.




Here's a picture of the GOP fuckwits using a chainsaw and tree shears in a photo op trumpeting them scrapping mortgage and bank regulations, taken in 2002 :

[El Kabong]

....you want to think the Democrats did nothing to create this go right ahead. Barney Frank, Frank Raines, Christopher Dodd, Chuck Schumer etc.....oh they were all innocent which is why they got so much money out of Fannie and Freddie

[Kirkland Laing]

....you want to think the Democrats did nothing to create this go right ahead. Barney Frank, Frank Raines, Christopher Dodd, Chuck Schumer etc.....oh they were all innocent which is why they got so much money out of Fannie and Freddie

Again, explain exactly what these people did to precipitate the current crisis. Using facts and evidence.

[El Kabong]

Explain what Fannie and Freddie did please will you....all knowing Kirkland

[Kirkland Laing]

They createe more ability for the mortgage market to provide mortgages. They buy them from mortgage companies and banks so that the banks can lend more and so more people can buy homes. They're private companies though implicitly backed by the Federal government. They guarantee half the US mortgage market. But they didn't create this crisis. The crisis was created around them as the mortgage companies actually started avoiding them from about 2003 onwards and selling direct to Wall Street. Fannie lost 56% of her market share of the mortgage market in two years. They were actually prevented from buying the worst of the debt due to some remaining government regulation, but not enough unfortunately.

In 2004 the GOP staged a piece of Kabuki theatre by pretending to get tough on financial excess. While agreeing with Wall Street to allow them to leverage up their asset:debt ratio from a relatively normal 15:1 to levels over double that, half the reason they're all bankrupt and owned by the government now, they cracked down on the only part of Wall Street that don't pay them much campaign contributions, F and F. There was never any danger that the GOP bill demanding tougher regulation would ever pass and in fact Bush blocked it eventually*, but it allowed the GOP to look tough on Wall Street excess while in reality doing the exact opposite.

So F and F were a bit part player in the whole thing which would have happened quite happily if they'd never existed.

*Facts and evidence re. the eventual bill :

H.R. 1461 fails to include key elements that are essential to protect the safety and soundness of the housing finance system and the broader financial system at large. As a result, the Administration opposes the bill.

And:


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.whitehouse.gov/omb/legisl...r1461sap-h.pdf



Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.
Federal Reserve Board data show that:

• More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
• Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
• Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.




McClatchy Washington Bureau | 10/12/2008 | Private sector loans, not Fannie or Freddie, triggered crisis

[El Kabong]

F and F bought up bad loans and repackaged them and then sold them off to investors...plain and simple that's what they were there for yes it provided the banks room to loan more but looking back that too was also bad given how the banks decided to loan out money.

[Kirkland Laing]

F and F bought up bad loans and repackaged them and then sold them off to investors...plain and simple that's what they were there for yes it provided the banks room to loan more but looking back that too was also bad given how the banks decided to loan out money.

That's not exactly what they do, but even if it was what they did it was irrelevant as far as the overall market goes. If F and F had never existed every single bad loan would still have been made and every single bad security would still have still have been created, rated, etc., and we'd still have the current crisis because of it. The only reason the GOP keep talking about them is that it's the only way they can link any of this mess to the Democrats.