Okay Richard,

Let’s try this one more time.

Community Reinvestment Act did start the ball rolling. In 1977, where did most loans originate? Commercial banks and Savings and Loans, right?
So what happened to sound business decisions?

The Carter-era Community Reinvestment Act forced banks to lend to uncreditworthy borrowers, mostly in minority areas.
Age-old standards of banking prudence got thrown out the window. In their place came harsh new regulations requiring banks not only to lend to uncreditworthy borrowers, but to do so on the basis of race.

So, we had the industry under pressure to increase home ownership…Flash forward a few years to Clinton:

Despite warnings from GOP members of Congress in 1992, Clinton pushed extensive changes to the rules requiring lenders to make questionable loans.

Lenders who refused would find themselves castigated publicly as racists. As noted this week in an IBD editorial, no fewer than four federal bank regulators scrutinized financial firms’ books to make sure they were in compliance.

Failure to comply meant your bank might not be allowed to expand lending, add new branches or merge with other companies. Banks were given a so-called “CRA rating” that graded how diverse their lending portfolio was.

Notice the law didn’t change greatly, but the way that it was enforced and the pressure to conform came from the federal regulators.

So, how does the GLBA involve in this….when financial companies diversified; didn’t they buy banks? And were not those banks forced to comply with the CRA?

So what did companies do?

In the name of diversity, banks began making huge numbers of loans that they previously would not have. They opened branches in poor areas to lift their CRA ratings.

So, how does Fannie and Freddie get involved; those GSE supported the practices:

Meanwhile, Congress gave Fannie and Freddie the go-ahead to finance it all by buying loans from banks, then repackaging and securitizing them for resale on the open market.

Of course there was greed involved and loose enforcement of regulations:

Wall Street eagerly sold the new mortgage-backed securities. Not only were they pooled investments, mixing good and bad, but they were backed with the implicit guarantee of government.

Lastly:

Warning signals were everywhere. Yet at every turn, Democrats in Congress halted attempts to stop the madness. It happened in 1992, again in 2000, in 2003 and in 2005. It may happen this year, too.

Since 1989, Fannie and Freddie have spent an estimated $140 million on lobbying Washington. They contributed millions to politicians, mostly Democrats, including Senator Chris Dodd (No. 1 recipient) and Barack Obama (No. 3 recipient, despite only three years in office).

The Clinton White House used Fannie and Freddie as a patronage job bank. Former executives and board members read like a who’s who of the Clinton-era Democratic Party, including Franklin Raines, Jamie Gorelick, Jim Johnson and current Rep. Rahm Emanuel.

Collectively, they and others made well more than $100 million from Fannie and Freddie, whose books were cooked Enron-style during the late 1990s and early 2000s to ensure executives got their massive bonuses.

Source

Bob:

To say the CRA “forced” banks to lend money to un-creditworthy persons – minorities or otherwise – is a load of crap and you know it. No bank has ever been “forced” to loan money to anyone, let alone the un-creditworthy.

Richard,

See the bottom of the page. I don’t know of anyone who’s called the Investors Business Daily partisan, you can be the first?

Okay….you want to play that…Bush and Republican

President Bush was receptive to reform. He withheld nominees for Fannie and Freddie’s boards — a presidential privilege. While it would have been valuable politically to use such positions to reward supporters, the president put good policy above good politics.

The administration did not accept half-measures. In 2005, Republican Mike Oxley, then chairman of the House Financial Services Committee, brought up a reform bill, and Fannie and Freddie’s lobbyists set out to weaken it. The bill was rendered so toothless that Card called Oxley the night before markup and promised to oppose it. Oxley pulled the bill instead.

The president’s budget proposals reflected the nature of the challenge. Note the following passage from the 2005 budget: Fannie, Freddie and other GSEs “are highly leveraged, holding much less capital in relation to their assets than similarly sized financial institutions. … A misjudgment or unexpected economic event could quickly deplete this capital, potentially making it difficult for a GSE to meet its debt obligations. Given the very large size of each enterprise, even a small mistake by a GSE could have consequences throughout the economy.”

President Bush publicly called for GSE reform 17 times in 2008 alone before Congress acted. Unfortunately, these warnings went unheeded, as the President’s repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems.

So next item for me to knock down?

Bob:

Produce evidence that banks were “forced” to loan money to uncreditworthy people.

Interesting to see apologists for a two term President, still trying to scapegoat their two term dunce by blaming the dunce’s predecessor. Denial? Deceit?

The banks have been trying for years to eliminate CRA, even while they were earning record profits. Banks also have worked tirelessly to reduce competition from Credit Unions, mortgage brokers, etc. Government regulation or no, the bulk of the problem wasnt CRA loans, but highly speculative sub-prime loans that were made on not low-income houses, but larger, more expensive homes, all under the guise that they would continue to increase invalue, therefore securing atleast the collateral for the lender.

There are many financial institutions that share blame. Government regulation can stop certain abuses, but ultimately, a business makes the risk/reward decisions and they do so based upon probably future outcomes. The financial geniuses who walked away with their golden parachutes, loaned money on the basis of assumptions that didn’t pan out for them. They didn’t hedge their bets, They didn’t look at various scenarios using appropriate ALM (asset liability management) techniques and it cost them. And now they want us to bail them out for their bad business decisions.

Back to the CRA act, there are alot of solvent banks out there who also met the requirements of regulators under the CRA. Blaming this on CRA, is just bankers trying to make lemonade out of lemons, because their antipathy for CRA has been long-term, even when profits were at an all time high.

Combating the ugly practice of red lining is not the same a forcing a bank to make a bad loan. Encouraging lending to minorities is not the same as forcing banks to make subprime loans. When was a single bank FORCED to make a bad loan?

The sub-prime mortgages were not limited to poor neighborhoods or to poor people. The banks, and more importantly, the rest of the credit industry, began making bad bets when they thought they could get away with it. Credit cards were being pushed to anyone with a postal address. Mortgages were being pushed to anyone who could fog a mirror. Why? Because they were making money doing it in an unregulated market. And who loved deregulated markets more than the GOP?

What made the problem really uncontrollable was that the deregulated banking system turned bad loans into bonds that were peddled around the world. No one has yet been able to unravel the CDO, credit swap, and derivative mess that turned a housing bubble into a world-wide meltdown.

Okay to all those who deny the obvious (sorry, channeled the liberal in me for a minute)

If the Republicans (Bush) didn’t try to fix it, if CRA and it’s revisions aren’t to blame, If federal regulations and regulators aren’t at fault;

If all those things aren’t at fault,
1.) Why didn’t the Democrats do anything to stop it….and if you claim they tried to stop it…show evidence?

2.) If those things aren’t at fault, are you blaming on it only on the Republicans…..if so, show the evidence of how the Republicans forced this to happen. Don’t just tell me they “got the democrats to go along”….show me chapter and verse how the Republicans are to blame and the Democrats are absolutely purely frakking spotless.

3) Show how the financial sector was deregulated….show exactly what regulations were removed, revised, not enforced.

JD, I and others have provided chapter and verse, repeatedly. Only to be told the Republicans did it.

Bob:

And I notice you have not yet identified a single instance where a bank was “forced” to loan money to an un-creditworthy individual.

Bob,

Where were you on this issue a year and a half ago?

On March 22, 2007 Senator Obama wrote Chairman Bernanke and Secretary Paulson:

”There is grave concern in low-income communities about a potential coming wave of foreclosures. Because regulators are partly responsible for creating the environment that is leading to rising rates of home foreclosure in the subprime mortgage market, I urge you immediately to convene a homeownership preservation summit with leading mortgage lenders, investors, loan servicing organizations, consumer advocates, federal regulators and housing-related agencies to assess options for private sector responses to the challenge.

We cannot sit on the sidelines while increasing numbers of American families face the risk of losing their homes. And while neither the government nor the private sector acting alone is capable of quickly balancing the important interests in widespread access to credit and responsible lending, both must act and act quickly.”
Full text here.

Senator Obama had the foresight to see what Bernanke, Paulson, Bush, and McCain did not see at the time or perhaps did see but did little or nothing about.

But what can one man do, if the administration does nothing? Maybe he can run for president.

Care to comment about Obama being a tool for corporate power, and McCain being the savior to organized labor? Oh, wait…..

Bob:

Stop pretending you are Sarah Palin and answer the question being posed (for the third time now):

Can you identify a single instance where a bank was “forced” to loan money to an un-creditworthy individual?

Bob:

Show me an instance where a bank was “forced” to loan $ to someone not credit-worthy!

You cannot do it, can you? The entire premise to your argument is in shambles.

Cliff,

If you smell a racist it’s coming from where ever you are sitting. Not from I.

I’ve stated many times multiple reasons why I don’t want to vote for Obama.

Why is it that is one of the first slurs thrown against anybody who disagrees with Obama’s policies?

Leo,

Yes, the administration should have stopped the excesses and the problems.

Question, what would have the press said when Bush required financial institutions to reduce sub prime loans or implement higher criteria?
You and I know he would have been pilloried for being against “the poor getting houses”.
Even with that, he’s tried, can you deny that?
Did he try hard enough, no.

Given the “blame ” both sides, wouldn’t be just as much moral hazard to elect the democrats?

Deregulation has it’s place, but it really isn’t the primary problem here. The problem is that we’ve accepted calling changing the regulations deregulation. It’s not. The administration and congress has made changes to force social programs into the law. That isn’t deregulation.
There is a limit on what regulations are required and there is a limit on how little regulation is required, wouldn’t you agree? The trick is to find the balance and that hasn’t been the case here. The government is a sledgehammer, forcing moves to the extremes instead of being moderate.

If I listed anything about ACORN, it wouldn’t be believed. I’ve posted information over and over again without it being believed…so I’ll ask you to search for lawsuits against financial institutions by ACORN. See how of those were filed, how many were settled and what they were settled for.

I agree that when new instruments are created they need to be regulated. Tell me how soon after they are created should that legislation be created?
There are dangers in innovation, should we remove all dangers? To do that we limit innovation, wouldn’t you agree?

Part of the biggest problem I see with the liberal approach is to wrap everything in cotton so no one can possible be “hurt”. I disagree, people should have the freedom to take the risks….those innovated new financial instruments and gain the rewards. To take the rewards, the people have to accept the risks.

The last statement was me.

Bob:

Clearly with all the excitement re the debate, you overlooked your task:

Show me an instance where a bank was “forced” to loan $ to someone not credit-worthy!

You cannot do it, can you? The entire premise to your argument is in shambles.

The Republicans are trying to appeal to Jerrry Springer people. Unapologetic white trash. My favored company for gittin all F^*&’d up.

Finally – shouldn’t you Libs be discussing the resignation of Nancy Pelosi?

What were you thinking?

“Hey, I’ve an idea, let’s elect a shrill San Francisco latte Liberal to the Speakership. It’s a position where she’ll have to get folks from both sides of the aisle to cooperate to pass legislation. She’ll be awesome. She’ll castigate Republicans and lay the sins of the world on their shoulders – and shame them into voting with us! It’s so crazy, it HAS to work!”

Really, has she accomplished ANYTHING?

Wrong again, Richard. But I do applaud your consistency.

Two things, though? Are you going to stick by your pledge to NOT vote Obama because he crawfished on the Telecommunications act?

Are you ever going to answer my question where I asked for you to show me, specifically, where the Republicans deregulated the financial sector which directly led to the mortgage meltdown.

What particular piece of legislation? Can you point to it? Quote it?

How long can you dodge the question, Richard?

Richard, telling me to “look it up” does not demonstrate a specific instance where the Republicans deregulated the financial sector which directly led to the mortgage meltdown.

Further, I requested that you point to a specific piece of legislation.

You’ve done neither.

You’re dodging the question.

And Obama’s failed to honor lots of his promises.

Public financing.
Immediate withdrawal from Iraq.
Talks with hostile foreign powers without precondition.

It seems his policies become more “nuanced” with the advance of the campaign.

Richard,

Let’s take on your disasters :

1) Worst terrorist attack ever on American soil, more U.S. citizens killed than at Pearl Harbor. Bush was warned more than a month ahead of time,

What was the exact warning that Bush received? Was it that Al-Qaeda on 9/11 is going to hijack planes and fly them into World Trade Center Tower 1 & 2, the Pentagon and Try for the White House!! Heck, No!!
The warning was along the lines of Al-Qaeda is up to something— like we didn’t know that all the way back to the 1st WTC attack under Clinton — and it might involve planes. Of course under the Clinton administration, the restrictions on sharing information between intelligence agencies was enforced by Jamie Gorelick.

stayed on vacation.

What do you expect him to do? Rush to the White House and order an immediate attack on a foreign country ? Were appropriate steps taken, no but I’m not sure that anything could have prevented it without wholesale changing of the regulations and rules that NOTHING that had happened so far justified.

On September 11, 2001 he fled to an underground bunker in Nebraska.

Again, what do you expect him to do? Fly to the Trade Center and climb stairs trying to get people out? Or should he move to a place where communications are secure. Many of the policies and procedures are in place prior to Bush or Clinton, those are automatic and should be done to protect the president, regardless of who is in the office.

After 7 years, Al-Qaeda, the terrorist organization that attacked us, is a greater threat than ever before.

The both true and untruth in that statement, in my opinion. Al-Qaeda is an umbrella organization; I will agree that more groups have joined that organization. I disagree they are stronger then before and a greater threat. I do think they are more desperate then every but if they could have attacked on American soil successfully they would have. Attempts have been made and blocked.

2) Worst foreign policy blunder in U.S. history.

I might actually agree with you on this, but had it worked out it would have been one of the most successful decisions. Of course, Iraq is in complete collapse, Ba’ath Loyalist have taken over……(What, nothing like that has happened yet?)….strike that.
How about we let it play out before we declare it the worst?

Bush planned it and lied to the nation to get support for it.

I agree that he planned it and the planning didn’t cover the post invasion and regime change scenarios as well as it should have. That is the biggest blunder. I think the Defense and State Departments didn’t plan together and that is Bush’s fault.
I disagree that he lied, based on the evidence at the time he stated what we truly believed. What many other countries in the world believed.

Fighting in Iraq has continued for five and a half years so far (only the Revolutionary War, Vietnam and the War in Afghanistan have been longer).

So, your point is what? Times change, combat scenarios change. There has never been a war like this one. The other combats were against countries with defined borders, following (mostly) established rules of conduct. This is a war against an enemy that does not follow the Geneva Convention. Get them to agree to that and meet in the field, then we’ll see how long the fighting lasts.

Hundreds of thousands dead, four million refugees and homeless. Total cost estimated at $3 trillion. Has crippled our national security and severely damaged America’s reputation in the world.

War is hell, this war is no different. I feel sorry for the refugees and the families that lost loved ones. The people I talk to that have been there all say the same thing. Most of the people on the streets in Iraq are glad we came and took out Hussien.

As far our reputation, I would like America to be respected but will settle for being feared.

3) Most costly natural disaster in U.S. history. A major American city almost wiped out.

I always like this one…each bigger and worse disaster is called this, until the next one. A city almost wiped out. Of course Bush was at fault for not recognizing the corruption in the Corp of Engineer, Louisiana, New Orleans, etc; that happened prior to his administration and rooting it out. Of course, that corruption lead to most of the problems with the levee system that failed, but it’s still Bush’s fault, right?

Again, Bush was warned ahead of time and was vacationing

Yawn, heard it before…guess people haven’t heard of modern communications, right? So Bush was absolutely isolated from the world, nope.

More than 1,125 dead (the official count is considered conservative). Many could have been saved by prompt action from FEMA and other federal agencies.

This one really gets me ticked off….most of those people would have been saved with prompt action from the City and State officials.

Did Nagin follow the city’s own evacuation plan? NO

Did the city adequately plan for refugees and those seeking shelter? NO
The failure doesn’t lie solely with the Federal government. FEMA isn’t a first response agency and shouldn’t be.

Reconstruction has lagged, promised federal help again failed to materialize. New Orleans only has 3/4 of its pre-Katrina population.

I’ll agree with portions of this, but again it’s not all Bush’s fault. Is the federal government moving as fast as they should, no. But to blame it solely on Bush ignores the city, parish and state roles and that is simply wrong.

#4 – We just finished arguing this, I’ll not repeat myself.

Richard,

It wasn’t modern communications that failed Bush and Chertoff, it was people.

I notice that out of all the fisking that is the only point you can bring up.

Let’s face it, the Bush administration hasn’t been the complete disaster you and the other liberals here have made it out to be. Yes, it’s been bad enough, but if someone sneezes in Timbuktu, it’s not all Bush’s fault.

Let’s focus on the number of senators, including to my disappointment the two from Texas, who voted for the Pork laden bail out plan. Let’s get them out of office if they don’t learn who they are supposed to be serving.

Richard – you didn’t answer the question. GLBA and CFMA weren’t solely Republican bills. GLBA passed with 90% of the Senate and was signed by a Dem president. There weren’t 90 Republican Senators in 1999.

You FAIL.

CFMA was first introduced in the House. It was introduced in the Senate by Richard Lugar, NOT Phil Gramm.

FAIL AGAIN

President Clinton signed that one, too.

Triple FAIL.

Would you like to try again, Richard?

Oh – and can you give me a brief explanation of the CFMA, what it did and how it related to Mortgages, Richard?

I’m terribly interested.

But the trading of financial instruments was already allowed through the CFTC. Why was the CFMA needed, Richard?

Absolutely GLBA was needed. If you disagree, please explain why.
And CFMA resolved an SEC/CFTC conflict.
And Lugar presented the bill, not Gramm.

Amendments to bills are often debated. A $1/hr minimum wage increase was debated when introduced by Rep. Traficante. Rep. Vitter tried to add a bill increasing special ed funding by over $1 billion. It was briefly debated and failed.

You’re ludicrous assertion that CFMA was “snuck” into the Consolidated Appropriations Act is devoid of reality. Unless, of course, you are claiming that the Democrats in Congress are so vapid as to not pay attention when they vote on things. And the President was equally stupid. Are you?

Presidents have vetoed “must pass” appropriations bills before. GW vetoed one that had one itty bitty line regarding troop withdrawal timelines.

Geez, Richard. Demand some backbone from these folks.

The Dems are finger pointing weasels?

(Not to let the Repubs off the hook – they like to cry and point fingers, too)

Ah, yes. Krugman. He’s really quite good at hindsight.

But, I don’t quite recall him sounding the alarm more than a year ago. Nothing beyond the same old partisan bitching.

Of course, he wasn’t such a whiner when he was happily pocketing money consulting for Enron, was he?

And yes, Bob and I do point fingers at Dems, because if we didn’t folks like you would get away with promoting absolute falsehoods. We’re just trying to help out, Richard.

We care. We really do.

Leo – I’m with you most of the way here – but the following statement confuses me…

You haven’t explained how ACORN managed to bring down banks in Europe. But somehow conservatives believe it must all be the fault some liberal group somewhere, especially a little group they don’t like, when the conservatives have been running the show since President Reagan.

The European markets are pretty highly regulated (more than they are here) – and last time I checked, the Republicans can’t vote in European legislatures (though Barack apparently believes that European citizens can vote in US elections) –

So – if the European banks failed – how was this the fault of the Republicans?

Just wonderin’.