Why not lynch the borrowers?

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China: We need to develop. It's getting hard to keep the natives peaceful AND float all of our behinds in comfort on the Central Committee.

USA: Okay, I see your point. We like calm solutions to your problem. How about we invite you into the pool of manufacturing interests that we routinely provide a purpose for? It's pretty crowded ..but..what are we gonna do? We keep the lid on most of the planet in terms of BIG PROBLEMS ..and most behave well enough. It's not a bad deal. It kinda makes your population blame each other for their personal issues ..and gives them a modality to express that distinction in a peaceful ..yet ruthless manner. It's worked here for decades. You put them on the grid with billions of others on the playing field.

China: Sounds good. How are we going to finance the expansion of our infrastructure? That takes serious capital.

USA: No problem. We'll introduce money that's run through an inductive circuit. Just like electricity, the pressure and the current will be out of phase with each other. The world is used to dealing with currency without power factor corrections. They just read "apparent power". By the time they realize that most of the indications on the meters are really hollow ...you'll get what you need and be on your way.

China: Man, you've really got this all packaged and ready to go. How do you come up with such unique ways to manage to land on your feet?

USA: Well, it's not so much that ...it's more like you're a very fast and large speed boat pulling a bunch of skiers. If you stop, they sink ..so they tread water to keep you afloat. If they don't keep you moving forward ...they're dead in the water.

China: Great technique ...and thanks.
 
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the fact that the vast majority of foreclosed homes are not CRA homes or low income slum homes. The vast majority are middle to upper income homes.

Can I get a link for this? I have not been able to find anything to substantiate this.
 
Originally Posted By: MarkC
What's amusing and difficult to understand is how people can(rightly) slam the government as inept, greedy, power-hungry, etc,and yet go on about the "free Market" (should I say MARKET?) as if it were holy, instead of also being made up up ...PEOPLE. Same as the government.
People chasing money. Why the assumption or belief that it's so perfect?

The difference is that a proper market has consequences. If you do bad, you will lose.
That does not apply to the Government as they can decide to stick a gun in your face and take more money or simply print more. No evil company or CEO (private sector) can do that.
That is a fundamental difference.

This can be clearly shown as of late. Bailout? Stimulus? Just spend more money!
 
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placed far more blame on the Wall Street companies that bundled subprime mortgages into pools and sold them as mortgage-backed securities. Global demand for the securities was so high, he said, that Wall Street companies pressured lenders to lower their standards and produce more “paper.”

If there was no government corporation bundling bad paper, there wouldn't have been a market for these things in the first place!!!

This is an admission that Fanny and Freddy are the root cause of the crisis...
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This is like the biggest DUH ever: look at the cities that lead in foreclosures. San Diego, Miami, and Las Vegas. By pure frikkin logic it's obvious. 75% of subprime loans were not made through the CRA. Subprime loans accounted for about 15% to 20% of all mortgages at the subprime peak in 2006. Add to that, a subprime loan doesn't mean a loan to a poor minority, it means a loan to someone with bad credit. The vast majority of big 500K houses in Cali were subprime and foreclosed on people making a lot of income.

http://theeprovocateur.blogspot.com/2008/09/where-were-foreclosures-most.html

http://www.socialfunds.com/news/article.cgi/2570.html
 
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If there was no government corporation bundling bad paper, there wouldn't have been a market for these things in the first place!!!



Isn't that sorta like saying if you didn't have anything to steal ..theft would not be possible?

"It's not the thieves fault that you had something that he wanted. He was doing no more than his calling in life. For crying out loud!! Put the blame where it belongs!"


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Originally Posted By: Drew99GT
The vast majority of big 500K houses in Cali were subprime and foreclosed on people making a lot of income.


Man you really don't know what you are talking about do you?

$600K would barely buy a track shack in many parts of Cali....people who could not afford those shacks still "bought" them. Sort of.

Your sources are a bit....jaded.

But before you get all high and mighty in your defense of the poor allow me to repeat: I have never said poor people caused this mess....but the CRA (along with a host of others) pushing for lowered standards helped open the gates, the gates cannot discriminate, can they?
 
Interesting that those contradict one another:
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In fact, a more appropriate thesis might be that the CRA wound up being detrimental to the very areas it was meant to service.


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Lending by CRA banks has remained one of the bright spots throughout the crisis


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Even though these subprime mortgages account for only one-eighth of total mortgages outstanding, they represent 60 percent of foreclosures, according to the Center for Responsible Lending, a nonprofit and nonpartisan research organization in Durham, N.C. This is not surprising, since the features common to subprime mortgages actually increase the risk of foreclosure, mortgage experts say.

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If you’re trying to do social engineering, it should be to put people in homes so they can build up equity as a cushion for economic shock,” Mr. Rosner said. “But unless they have significant equity, they are not homeowners; they are renters. We’ve created a society where we love the term homeownership, yet we can’t allow people to understand that they are being taken advantage of by the term.”

http://select.nytimes.com/2007/04/08/business/yourmoney/08gret.html?pagewanted=2&fta=y

As Pablo said, the CRA was the spark, and Fannie and Freddie followed suit.

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Isn't that sorta like saying if you didn't have anything to steal ..theft would not be possible?

The government actively went after these loans. It was a policy enforced by the high ups of the Justice department and higher. Fanny and Freddie (a government corporation) where actively lobbying Congress (no conflict of interest there) to continue these policies as it allowed profits to be driven up with correspondingly higher bonuses to those executives on top.
 
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as it allowed profits to be driven up with correspondingly higher bonuses to those executives on top.


so thieves stole more because it meant more in their pockets? And the victim is still to blame? I understand. If there wasn't anything to gain ..there would be no theft. Thieves would move on to more profitable enterprises ..but since outright theft and low life antisocial activity proved too much of a temptation, what can we expect from low life thieves.

It's not their fault. They're thieves
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It was probably due to their poor upbringing. Lack of ethics and social/civic values. It's their parents fault. The school system ..

Thanks.
 
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The CRA has been around for 3 decades and now it sparked a gobal financial meltdown.

It was more than the CRA and I JUST SAID THAT.
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Fannie and Freddie accounted for 80% of the market, and they were ACTIVELY going after risky loans.
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“The biggest culprit, I think, is the implicit guarantee the government has always issued to Fannie Mae and Freddie Mac,” Richman said. “Something like 80% of the mortgages these days are held or backed by Fannie Mae or Freddie Mac,” he said, and “they get special treatment from the government like no other lender gets.
These factors, particularly the government guarantee, have brought about our current financial crisis, said Richman.

Fannie Mae and Freddie Mac have been able to buy bundles of home mortgages, or mortgage-backed securities, in massive quantities without real-world considerations of financial risk, because they could count on the federal government to bail them out if things went south.

http://www.cnsnews.com/public/content/article.aspx?RsrcID=36048
And of course:
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No loan is exempt, no bank is immune,” “For those who thumb their nose at us, I promise vigorous enforcement

From a senior Justice department official.
 
Originally Posted By: Gary Allan
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as it allowed profits to be driven up with correspondingly higher bonuses to those executives on top.


so thieves stole more because it meant more in their pockets? And the victim is still to blame? I understand. If there wasn't anything to gain ..there would be no theft. Thieves would move on to more profitable enterprises ..but since outright theft and low life antisocial activity proved too much of a temptation, what can we expect from low life thieves.

It's not their fault. They're thieves
21.gif
It was probably due to their poor upbringing. Lack of ethics and social/civic values. It's their parents fault. The school system ..

Thanks.

Then why was Fannie and Freddie buying all this bad paper! Do you contend they didn't know what they were buying? Of course they did because it made the books look good for bonuses! Thieves indeed...and it was on the public dime.
 
Originally Posted By: Pablo
Originally Posted By: Drew99GT
The vast majority of big 500K houses in Cali were subprime and foreclosed on people making a lot of income.


Man you really don't know what you are talking about do you?

$600K would barely buy a track shack in many parts of Cali....people who could not afford those shacks still "bought" them. Sort of.

Your sources are a bit....jaded.

But before you get all high and mighty in your defense of the poor allow me to repeat: I have never said poor people caused this mess....but the CRA (along with a host of others) pushing for lowered standards helped open the gates, the gates cannot discriminate, can they?


I agree. You cannot buy a home outside a slum (East Oakland, East Palo Alto, etc, those homicide districts) for less than $400k. In a normal neighborhood (not good neighborhood), a house of any size is at least $700k. In good school district, a shack is worth $1.1M and so.

My $800k house is only about $200k elsewhere in the nation.
 
Originally Posted By: Tempest
Originally Posted By: Gary Allan
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as it allowed profits to be driven up with correspondingly higher bonuses to those executives on top.


so thieves stole more because it meant more in their pockets? And the victim is still to blame? I understand. If there wasn't anything to gain ..there would be no theft. Thieves would move on to more profitable enterprises ..but since outright theft and low life antisocial activity proved too much of a temptation, what can we expect from low life thieves.

It's not their fault. They're thieves
21.gif
It was probably due to their poor upbringing. Lack of ethics and social/civic values. It's their parents fault. The school system ..

Thanks.

Then why was Fannie and Freddie buying all this bad paper! Do you contend they didn't know what they were buying? Of course they did because it made the books look good for bonuses! Thieves indeed...and it was on the public dime.



So Fannie and Freddie were fences for thieves? A place to off your hot potato booty??

I keep saying that "it's not their fault" and you keep bending over backwards to say the same thing.

Why are you arguing? The low life thieves did nothing that they weren't raised to do. It's not their fault. It's their parents ..the way they were educated ...surely the neighborhoods that they grew up in.

Cut them a break ..will ya??
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Originally Posted By: Pablo
Originally Posted By: Drew99GT


Here's what I think: your side has failed miserably and you're looking for a scapegoat.
wink.gif



Which side would that be?


It's right under your nose.
 
Originally Posted By: Tempest
Then why was Fannie and Freddie buying all this bad paper! Do you contend they didn't know what they were buying? Of course they did because it made the books look good for bonuses! Thieves indeed...and it was on the public dime.


Fannie and Freddie didn't have the riskiest of the loan. The ones that are riskiest are the 2nd mortgage, ARM, and CDO with high leverages. Those are the ones that even if it drop 10% in value, would wipe out the entire worthiness of the investment vehicles.

If you think government regulation is bad, look at Singapore and Hong Kong. The "mini bonds" that Lehman issued are sold as "safe" and "insured (via CDS)" investments and were actively marketed to seniors who put most of their savings in CD, money markets, and regular savings. Many of them are illiterate, some are 60-90 years old, and some have mental illnesses or living off work related accident insurance settlements.

Last week a few of the investment holders are attempting to commit suicide in the banks' HQ lobby to make a statement. The police interfered and saved them in time, and they ended up in hospitals for only a day or two.

The banks (27 of them) and the central bank chief got into serious trouble because 3-5 years ago they assure the senators that these investments should not be regulated for the fear of restricting the market, and can cost the city state its financial free market reputation.

The government did nothing even after the fiasco. Is this the kind of government you want? If so Singapore and Hong Kong is for you.

p.s. They have very low tax rate too, around 17%
 
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Fannie and Freddie didn't have the riskiest of the loan. The ones that are riskiest are the 2nd mortgage, ARM, and CDO with high leverages. Those are the ones that even if it drop 10% in value, would wipe out the entire worthiness of the investment vehicles.


That's the catch. Fannie and Freddie, government entities (with the perks that go along with it), were INTENTIONALLY SELLING BAD paper to PRIVATE investors...all so the top execs could make a killing on the inflated numbers.

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Fannie Mae, Freddie Mac, and Ginnie Mae raise money by going to Wall Street. They sell mortgage-backed securities (Fannie Mae), mortgage-backed bonds (Freddie Mac) and pass through certificates that generate monthly payments for investors (Ginnie Mae).

The money raised on Wall Street is then used to buy packages of local mortgages.
The end result is that no matter where you live dollars to finance your real estate purchase are available at largely the same rates and terms nationwide.

The catch is that while Ginnie Mae remains a government entity, Fannie Mae and Freddie Mac are owned by private shareholders and yet have unique marketplace privileges stemming from their government days. The result is that the two companies share characteristics that one might relate to a government agency (that's good for borrowing at cheap rates) plus the dynamics that one might find with huge private companies (such as making profits).

In practice, investors believe that because of their size and history, if Fannie Mae or Freddie Mac have financial troubles the federal government will step in and bail them out. That means there is little down-side risk for investors. Meanwhile, profits generated by Fannie Mae and Freddie Mac go to shareholders, not government vaults. If you're an investor, you win in either case.

The problem is that Fannie Mae and Freddie Mac were not established to further the interests of either shareholders or executive bonus plans. The idea was to assure low mortgage rates across the country so that opportunities for homeownership would be expanded. But under the current system, every dollar in profit paid to shareholders and every cent in multi-million dollar bonuses pools means fewer dollars available to reduce mortgage costs.

http://realtytimes.com/rtpages/20060228_fanniemae.htm

From a 2004 hearing in congress with Franklin Raines (CEO Fanny Mae):
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Congressman: Why should banks have to set aside between 6 percent and 8 percent of their portfolio and you guys are in the range of about 3 percent?

RAINES: Banks should do that because they have much more risky portfolios. Banks are allowed to invest in a wide range of assets. We can only invest in single-family and multifamily homes.

Congressman: So it is your testimony that you do not need to have more because you do not feel any of your investments potentially could go sour?

RAINES: If none of them would go south...

Congressman: No, no, no, no. No, you set aside a certain sum in case the market starts to go bad, and the residential marketplace is very volatile, and you have about 3 percent of your portfolio set aside. If a bank gets below 4 percent, they're in deep trouble. So I just want you to explain to me why I should be satisfied with 3 percent.

RAINES: Because banks do not -- there are not any banks who only have multifamily and single-family loans. I think if you check, banks are now arguing that their capital for those loans should only be 2 percent or less. I mean, that is the argument they're making right here in Washington today, that these assets are so riskless that their capital for holding them should be under 2 percent.
 
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