patrick.net

The CRA "regulators", bullying bankers around and creating this mess is not just ludicrous it's laughable. FedGov may not be YOUR friend or mine, but it's BFF with the BANKSTERS Elvis. Thanks for confirming you do have a reading comprehension issue I am in engaged in a partnership in a small business. Evidence demonstrates FedGov does whatever the bankers want, and any pretense at regulation is just that.

elvis says

Government has no business being in the housing business, or in the lending business, nor should the government enable the Fed to engage in price fixing and interest rate manipulation. The result is the catastrophe in which the country is experiencing. Defend the putrid pile of slop all you want. Go ahead, make my day

That's a different argument altogether. You're wrong about that too, but I think we'd need to start a new post to have that discussion. This post is just showing that the CRA had very little to no affect on the housing bubble.

I'm coming late to this so excuse me if its been mentioned already but it seems to me that a simple way to begin to evaluate the impact of the CRA is to examine the timeline and compare it to the mortgage defaults.

The CRA was enacted in 1995 and its regulations broke down home-loan data by neighborhood, income, and race; it encouraged community groups to complain to banks and regulators by allowing community groups that marketed loans to collect a brokers fee. Fannie Mae was allowed to receive affordable housing credit for buying subprime securities. Then in Sept 1999 Fannie Mae eased the credit requirements to encourage banks to extend home mortgages to individuals whose credit is not good enough to qualify for conventional loans, and in November the Gramm-Leach-Bliley Act "Financial Services Modernization Act" repealed Glass-Steagall Act which deregulated banking, insurance and securities. This deregualtion of the banks allowed them to split up and package & repackage the loans and to maintain balances based on these poorly made loans of a far far thinner margin than what had been generally percieved to be safe. It was the regulation that had up to that point required banks to maintain a balance of reserves in case their loans went bad and required higher percentages of down payments.

I don't believe there was a huge default issue from the years 1996 to 2002 or so, and as the loans didn't begin to default en masse really until a couple of years ago its the loans issued from 2000 or so on - under the rules set out by the Gramm-Leach-Bliley Act - in conjunction with the lack of back-up in the banks that would seem to be the base of the problem, not the early loans made under the CRA rules.

And this next part is not going to be seen as entirely constructive, but anyway - I wonder when will people like you stop trying to blame the poor and the minorities for all the problems in our culture. This housing bubble has been shown over and over again on these forum pages and in book after book after article after article to have been caused by deregualtion of the banks and simple greed on the part of the banks and insurance companies. Stop wasting our time and stop trying to justify your racism and ignorance with false and misleading facts.

Vincente and tatupu,

This link was in my link post and if you would be so kind as to read it I think you will find what you say I have not shared. If you read it close it even says "proving cause and effect is hard to do" concerning CRA. Cmon guys, read the link so I don't have to fill the blog with loads of crap that you will ignore anyways. lol

@tatupu,
Walter Williams .... you really just posted that he is wrong. Do you know who he is?

attention race-baitors ... Mr. Williams is a person of color. Irony rocks!!

Bap33 says

attention race-baitors … Mr. Williams is a person of color. Irony rocks!!

Your point is?

Bap33 says

This link was in my link post and if you would be so kind as to read it I think you will find what you say I have not shared. If you read it close it even says “proving cause and effect is hard to do” concerning CRA. Cmon guys, read the link so I don’t have to fill the blog with loads of crap that you will ignore anyways. lol

So, what you're saying is that your theory doesn't hold water then? Because I reread your links and the majority deal with Barney Frank, Fannie Mae and Freddie Mac. I thought we were discussing the CRA? And none of the links contain any theories as to why the CRA would cause a non-regulated mortgage broker to make a bad loan to an applicant in a non-CRA area. And these loans are the ones that caused the housing bubble.

tatupu70 says

Further, your theory doesn’t bear out with the facts. Foreclosure rates in Compton are in line with what would be expected during a downturn in the economy, whereas foreclosure rates in Granite Bay and other non-CRA areas

And who runs Compton ? Maxine Waters.. thats who...

http://california.realestaterama.com/2009/10/20/congresswoman-maxine-waters-calls-for-more-class-action-lawsuits-to-prevent-foreclosures-ID0492.html

Washington, DC - October 20, 2009 - (RealEstateRama) — Congresswoman Maxine Waters (CA-35), Chairwoman of the Financial Services Subcommittee on Housing and Community Opportunity, recognizing the impact foreclosures are having on the country, called on the attorneys general from the nation’s 50 states to bring suit against lenders in order to force more loan modifications.“We need aggressive action to force lenders to modify the predatory loans that they made. State attorneys general and civil rights groups are taking the lead in preventing foreclosures by filing lawsuits against the originators of these predatory loans, and I commend them for their action,” Chairwoman Waters said."

More bulling and threats by the left. Why were they not concerned about 'predatory loans' in 2002-2007. Why did Congresswoman Waters and the rest of the Demos wait so long to come up with 'predatory loans' when many were aware about the housing bubble?
Everything seemed fine back in 2002 to 2007 from Waters and dems who was defending Fannie Mae and government intervention in pumping homeownership at any cost.

tatupu70 says

Bap33 says

attention race-baitors … Mr. Williams is a person of color. Irony rocks!!

Your point is?

not for you my friend, not for you.

If you go to my very first post you will see I place the blame on people first, and the CRA second. I do feel it is a fact that loans were made to non-qualified buyers due to pressure (both overt and subtle) from the new support given to the CRA by Klinton. You know banks were sued into making loans tp non-qualified buyers ... right? Now, since you know that did happen, and you know Obama himself was one of the masters who made a bank "pay" for not making up different loan rules based solely on someone's skin-color or chosen place of residence (nothing about re-paying the loan was worried about by Obama -- kinda like now) -- then you MUST have some reason as to HOW Obama and ACORN and other activist lawyers were able to hold banks ransom ... You must, must, must give me the reason/law/protocol/base-of-power that allowed that too happen. Since all of my research shows the VEHICLE used by B.Frank, Barry, and ACORN to take such action on banks was the words known as the CRA ... that is my logical conclusion. For my to think otherwise I would need for you to share with me some other VEHICLE to allow the same actions by the activists upon the banks. And since a few banks were forced by lawsuit into granting unqualified loans by racisits and liberal social engineers, you can't pretend that other banks did not act on the rulings placed on the banks that were targeted.

And one last thing, while a bank may have a building in a certian location, THAT should not mean the bank should be forced to lend to non-qualified buyers. Right? Or do you feel that money in a bank in Compton is somehow seperated from all other money and banks? Don't be silly, friend. We both know RE is local, but $$ is global. Making any rule or law based on race/skin tone/facial expression is racist. If you say no, then we will have to find that ruler/gauge I was asking the other fellow about.

tatupu70 says

So, what you’re saying is that your theory doesn’t hold water then? Because I reread your links and the majority deal with Barney Frank, Fannie Mae and Freddie Mac. I thought we were discussing the CRA? And none of the links contain any theories as to why the CRA would cause a non-regulated mortgage broker to make a bad loan to an applicant in a non-CRA area. And these loans are the ones that caused the housing bubble.

yes - most of my points were about people.
yes- the CRA gave social engineers and liberal activists more power against banks
no - there is not any boundry in place. Maybe you mistake lending brokers with banks? You will notice that no little local banks were ever targeted.

Walter Williams sure is smart.

http://www.highbeam.com/doc/1G1-16369608.html

Article: Lenders cry foul over fair lending prosecutions. (Oct 1994)

Back in 1990, alarm swept through the banking industry over the prospect that Community Reinvestment Act ratings might be made public. Individual bank scores had always been confidential, and the fear was that weak ratings, once revealed, would be grist for the headline mill.

That nightmare never materialized; only a tiny percentage of banks, mostly very small ones, have received poor CRA marks, and publicity has been scant. But these days, a nasty headline would be tantamount to a light slap on the wrist. The industry is now convulsed by another CRA issue whose implications are far scarier and more far-reaching: prosecution on charges of lending discrimination. ...

Commentary
A Government-Mandated Housing Bubble
Peter J. Wallison and Edward J. Pinto, 02.16.09, 12:01 AM EST
Subprime enablers: Fannie, Freddie, HUD and Barney Frank.

http://www.forbes.com/2009/02/13/housing-bubble-subprime-opinions-contributors_0216_peter_wallison_edward_pinto.html

Where, then, did all the low-quality loans come from?

From 1994 to 2003, Fannie and Freddie's purchases of mortgages, as a percentage of all mortgage originations, increased from 37% to an all-time high of 57%, effectively cornering the conventional conforming market. With leverage ratios that averaged 75-to-1, and funds raised with implicit government backing, the GSEs were pouring money into the housing market. This in itself would have driven the housing bubble.

But it also appears that, perhaps as early as 1993, Fannie Mae began to offer easy financing terms and lowered its loan standards in order to meet congressionally mandated affordable housing goals and fulfill the company's trillion-dollar commitment. For example, in each of the years 2000 and 2001, the first years for which data are available, 18% of Fannie's originations--totaling $157 billion--were loans with FICO scores of less than 660 (the federal regulators' cut-off point for defining subprime loans). There is no equivalent data available for Freddie, but it is likely that its purchases were proportionately the same, amounting to an estimated $120 billion."

BTW, anyone recall how Fannie Mae and Freddie Mac were using using accounting fraud to cover up the losses from loans making them profitable, but were actual loses. It was to the tune of $90B back in before 2003.

"The Community Reinvestment Act gained strength in 1995, when the Clinton administration adopted a series of tougher guidelines that banned noncompliant banks from participating in any mergers, acquisitions or expansion projects."

NYT 2004

http://www.nytimes.com/2004/10/20/nyregion/20bank.html?pagewanted=all&position=

The Clinton administration adopted a series of tougher guidelines that banned noncomplient banks from participating in any mergers, acquisitions or expansion projects...unless they did what? :)

Wow--the propaganda machine is in full force this morning. If I understand your position correctly, you're saying that it's POSSIBLE that the government pressured banks under the CRA to make risky loans. And since it might have happened, then it must be the cause of the housing bubble. Despite all evidence to the contrary.

Still, I haven't seen anyone with a plausible explanation for how the CRA forced a non-regulated mortgage broker to make a risky loan to non-CRA area. Abe? Bap? Elvis? Anyone?

Doesn't it seem more likely that the people just didn't understand the risk? That everyone just assumed real estate prices would just keep rising?

Well .. lets try this another way to avoid traveling the same path redundantly. I will try to list the facts of the bubble the we all might agree on. Then add what you see I missed that is shared fact and point out any fact I list that you disagree with .. just to give us a point of referencs. Lets just try this way, please.
1) The lending standards were reduced from 20% down, to NINJA loans all around between 1995ish and 2005ish. Would you agree? If not, please pin-point the time frame for the reduction in lending standards and why.

2) Before the lending standards were reduced there were fewer possible buyers in the housing pool. Would you agree? If you disagree please share why the buyer pool increased.

3) The increase in pretend "entry level" buyers thanks to the new lower standards created higher demand and accelerated building/flipping/speculation. Would you agree? If you disagree, please explain where the increase in demand came from.

4) A push upwards in all markets due to the upwards push from the bottom was the next step in the bubble. Would you agree? If you feel the bubble was not expanded bottom-first, please give some detail.

Those are just 4 steps of the bubble reduced to very common terms in an effort to find where we do agree. I am not trying to load up on you or put words in your mouth. Would you please share your position on these 4 areas and add any detail that you feel would express your view better. Thank you.

OK--fair enough.

1. Yes, I would agree that lending standards were reduced in the early to mid-2000s
2. I don't know about that. I'd have to research the possible buyers in the housing pool. Are you thinking that because of house prices rising, people were priced out under normal lending standards?
3. I'm not sure I'd agree with that. I think the fact that prices were rising led to a speculative market--people chasing after returns. When you see your friend/neighbor/cousin make good $$ flipping or owning a house, you start asking why you couldn't do it too. The lower lending standards certainly allowed people to buy who had no reason buying though. So I mostly agree.
4. Yep--I'd agree with that.

Bap33 says

yes- the CRA gave social engineers and liberal activists more power against banks

Or conversely maybe CRA just gave the "bad actors" the excuses they needed to commit fraud. You encourage me to lower my lending standards for a few people? Great I'll lower them across the board, clean up in fees, and get out of town before this all blows up. Sounds like a failure in REGULATION which of course will rankle you.

OK, so where did it all start? We're right back to the Community Reinvestment Act...aren't we? The current economic collapse had its roots in the CRA which is the main point. And like a tree, the problems created by CRA didn't happen over night - it took years, even decades for the damage completly manifest itself.

Tax payers will always be better off with less government intervention as opposed to more. Yes, yes, I know...of course we need police, firefighters, teachers and the like but what we don't need is never-ending government intervention, bordering on oppression - thats all. There so many laws now and new laws seem to get enacted every day. Does anyone know how many laws exist in America? I'd like to see some data on that question.

What this country badly needs is regulation allright...regulation of government!!! Abe

Honest Abe says

OK, so where did it all start? We’re right back to the Community Reinvestment Act…aren’t we?

No, we're not.

Feds get tough in enforcing banking anti-bias measure

://www.thefreelibrary.com/Feds+get+tough+in+enforcing+banking+anti-bias+measure.-a012288611

Just last month, the Federal Reserve Bank issued a cease and desist order on Farmers & Merchants Bank of Long Beach, ordering the bank to comply with the Community Reinvestment Act. Fed officials said that was believed to be the first such action by their agency.

Financial institutions which violate a cease and desist order issued by a federal financial examination agency can be fined up to $5,000 a day, said Caryl Austrian, spokeswoman for the FDIC. In addition, poor reinvestment act ratings can be used as a reason to deny any application by an institution for anything from opening a branch to merging with another institution, Austrian said.

The two rare enforcement actions by federal regulators could foreshadow a crackdown which could hit hard at Los Angeles area financial institutions which have been receiving less-than-satisfactory reinvestment act grades.

The act was passed by Congress in 1977 to prevent banks from discriminating against making loans in minority and low-income communities. Federal regulators monitor banks' compliance with the reinvestment and regularly issue "report cards" on their performance.

Bankers in Los Angeles have been complaining that recent reinvestment act exams are getting tougher, said Sal Serrantino, president of California Research Corp., a top banking consultant who has instituted reinvestment act compliance programs at more than 40 area banks.

"I would not be surprised if we have more C&Ds (cease and desist orders) brought by regulators against area banks," Serrantino said. He has recently reviewed more than 100 reinvestment act reports for area banks and some "are just shocking" for their non-compliance, he said.

The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities
Howard Husock (Winter 2000)

http://www.city-journal.org/html/10_1_the_trillion_dollar.html

"The Federal Reserve Bank of Dallas had it right when it said—in a paper pointedly entitled "Red Lining or Red Herring?"—"the CRA may not be needed in today's financial environment to ensure all segments of our economy enjoy access to credit." True, some households—those with a history of credit problems, for instance, or those buying homes in neighborhoods where re-selling them might be difficult—may not qualify for loans at all, and some may have to pay higher interest rates, in reflection of higher risk. But higher rates in such situations are balanced by lower house prices. This is not a conspiracy against the poor; it's how markets measure risk and work to make credit available."

PATTERN SHOWS RISE IN MORTGAGE LOANS FOR MINORITIES

http://nl.newsbank.com/nl-search/we/Archives?p_action=doc&p_docid=0F5741D8CC2F6C83&p_docnum=1&s_dlid=DL0109102501285531710&s_ecproduct=SUB-FREE&s_ecprodtype=INSTANT&s_trackval=GooglePM&s_siteloc=&s_referrer=&s_subterm=Subscription%20until%3A%2012%2F14%2F2015%2011%3A59%20PM&s_docsbal=%20&s_subexpires=12%2F14%2F2015%2011%3A59%20PM&s_docstart=&s_docsleft=&s_docsread=&s_username=freeuser&s_accountid=AC0109083112065524669&s_upgradeable=noFebruary 15,

1996 from All Things Considered

"MELISSA BLOCK: With videos like this one, Countrywide has been actively courting these perspective home owners, as have many other lenders. In part, the banks are responding to the pressures of the Community Re-investment Act or CRA, that requires them to lend in poor communities where they take deposits. Disclosure laws also require them to report their home mortgage lending patterns, broken down by race, sex and income. Unlike banks, mortgage companies aren't covered by the CRA, but they too are responding to congressional pressure."

Lenders cry foul over fair lending prosecutions.
US Banker
October 1, 1994
Author:Marshall, Jeffrey
http://www.highbeam.com/doc/1G1-16369608.html

Back in 1990, alarm swept through the banking industry over the prospect that Community Reinvestment Act ratings might be made public. Individual bank scores had always been confidential, and the fear was that weak ratings, once revealed, would be grist for the headline mill.

That nightmare never materialized; only a tiny percentage of banks, mostly very small ones, have received poor CRA marks, and publicity has been scant. But these days, a nasty headline would be tantamount to a light slap on the wrist. The industry is now convulsed by another CRA issue whose implications are far scarier and more far-reaching: prosecution on charges of lending discrimination. ...

Which it did and banks were monitored for compliance to CRA penalized when non-compliance.

All started back in the 90s all happening while we slept...

great .. lets go ahead and settle the #2 issue of an increased buyers pool from the lowered standards right off the bat.

If there were already buyers making loans at 20%, why make the changes brought forth by gov action ... just for an example, the CRA idea?
If the change was made to allow unqualified buyers into the market, those new buyers were ADDITIONAL buyers to the current system. I'm intentionally skipping over the details of those buyers, and the loans, I'm just hoping to express the increased buyers pool from easier qulification in such a manner that you agree that it is a fact.

I think words such as "exclusive" are used for country clubs and spas with really high access rates. They do not have to put a cap on membership, becasue the price does so automaticly. That's why Vegas hotels have 800 regular rooms for every penthouse. But, if easy money was made available to anyone wanting to visit Vegas, there would be alot more penthouses ... (I know, crappy example, but I'm trying!! lol)

Anyways, lets work through the issue of an increased pool of buyers to move things along ... please share some detail on why you would not feel an increase in the buyer pool would be an effect from easy lending. Thank you.

Vicente says

Bap33 says
yes- the CRA gave social engineers and liberal activists more power against banks
Or conversely maybe CRA just gave the “bad actors” the excuses they needed to commit fraud. You encourage me to lower my lending standards for a few people? Great I’ll lower them across the board,

if you were to have different lending standards for different people based on anything but credit scores and ability to repay a loan ... what then would you base these new standards on? The answer is known, and doing so would result in lawsuits from anyone not in a protected class that was denyed a loan, so banks had to follow the laws of equal treatment without regard to race or sex and open the flood gates to everyone ... can't have it both ways folks. Just my opinion.

tatupu70 says

Are you thinking that because of house prices rising, people were priced out under normal lending standards?

sorry, I missed this point before. No, I do not feel there is any such thing as "priced out". I feel that is a REwhore term for "we want prices to stay high". There was never a home built before 1995 in my county that did not have a buyer before it even started to be built. never. And houses were getting built all the time. So, in my opinion, "priced out" is a REwhore term to make an excuse to manipulate the market. But, we can discuss it more if you have an issue with this area.

Bap33 says

If there were already buyers making loans at 20%, why make the changes brought forth by gov action … just for an example, the CRA idea?

I believe it was to ensure that banks wouldn't discriminate against minorities and lower income applicants.

Bap33 says

please share some detail on why you would not feel an increase in the buyer pool would be an effect from easy lending. Thank you.

I would agree with that. But that's not really what you asked. Here's your question from before:Bap33 says

Before the lending standards were reduced there were fewer possible buyers in the housing pool. Would you agree?

I just don't know if I agree about the timing. ie, fewer buyers led to reduction in lending standards.

so, changes were made to make banks loan to low-income people. Would this create more buyers? As an aside, would it expose the banks to more defaults? And as a further aside, would a little wink between gov and banks saying "don't worry, we will make Fanny and Freddy buy them all" make the whole stockmarket derivities crap take off?? ( I know, off subject, but I think I read where you said something like this already so we already agree. .. lol)

ok, back to our discussion: so, changes were made to make banks loan to low-income people. Would this create more buyers?

tatupu70 says

Bap33 says

please share some detail on why you would not feel an increase in the buyer pool would be an effect from easy lending. Thank you.

I would agree with that. But that’s not really what you asked. Here’s your question from before:Bap33 says

Before the lending standards were reduced there were fewer possible buyers in the housing pool. Would you agree?

I just don’t know if I agree about the timing. ie, fewer buyers led to reduction in lending standards.

ok .. I may be not keeping up here ... are you suggesting that lending standards were lowered to create more buyers, or are you suggesting that fewer buyers made lower standards needed? Just clairifing.

Bap33 says

ok .. I may be not keeping up here … are you suggesting that lending standards were lowered to create more buyers, or are you suggesting that fewer buyers made lower standards needed? Just clairifing.

Sure, no problem. Neither actually. I'm obviously not doing a very good job of explaining. I'm trying to say that lending standards may have been lowered independently of # of buyers.

No doubt that once lending standards are lowered, it will lead to more qualified buyers, though.

@BAP33

Anyways, my post was in answer to a post from a person who in the discussion had been more left in view, and who made their point by suggesting that blaming the CRA for any bubble stuff was going back too far in history … put in that context my post puts a person with a more liberal view in an odd position with respect to reperations. But, knowing world history, we all know that all peoples have been slaves … and we don’t keep reaching back there for reference. I very carefully avoided placing any race, color, creed, or nationality on my subject. And 4X’s agreesive position that my subject must be a person of color, or African heritage, and living in America is racist.

Thats all you had to say in the first place, I deleted the post earlier this morning. I am not a racist nor liberal/conservative, my concern is with the betterment of the USA. Policies that I support only focus on what is right for American Workers, Businesses and Citizens.....regardless of race. There are 299 million immigrants in this country, lets not forget that fact. Foreign issues that are not relevant to our country should not be of concern to us as Americans, but we empathize with policies that ensure other receiving countries economies grow while ours continue to shrink. I never accused you of racism, I accused you of denying you were speaking of a Black American mother on crack, 6 generations removed from slavery. That does not indicate you as a "racist" (your words). I just think you want to deny ever have made those comments however you can, if my previous posts seem a bit pointed then I would like for you to start realizing that America can no longer afford to wait for action. We need real change in the form of less government spending, lower taxes for businesses, incentives for businesses to keep jobs local, tougher laws on crime, and increased reform of social welfare policies like Universal Healthcare, no child left behind, welfare to work and FHA, Fannie Mae, etc.

These are neither liberal or conservative views.

Crazy Laws I would support:
1. If 1 gangbanger commits a crime, then they all commit a crime. Charge them all with murder for the one individuals crime
2. Cancel all welfare, healthcare for illegal immigrants
3. Place the military at the CA and TX borders, gun down anyone attempting to cross illegally
4. Legalize any illegal immigrants willing to pursure a Masters Degree in college and learn extremely fluent ENGLISH
5. Cut off welfare benefits for anyone after 18 mos, if you havent found a job after 18 mos then you just aint trying
6. Setup a tent city in Mexico for the lowlifes who refuse to work or pursue higher education in our country
7. Demilitarize Russia, China and any other country that is a immediate threat to the security of the United States.
8. I would bomb these countries back into the middle ages because they are not free markets where we can sell American products.
9. Round up all Crips, Bloods, KKK, Mexican Mafia and send them to live in the tent cities of Mexico.
10. Shutdown all drug trafficking by bombing Columbia, Mexico and France as necessary, then legalize Marijuana for the tax and license profits.

Education - No child left behind is nice in theory but in reality without the receiving the same funding as we did with Iraq, the program will fail. I was happy to see Bush Jr. kick off this program but it still needs funding else we should prepare to watch it fail. We must UP our investment in education and lower our investment in WAR. We need to kick the parents in the butts to make this program successful, there needs to be less TV and more time spent reading, studying the various subjects provided.

War Against Terror - There were no weapons of mass destruction, therefore, we are fighting for unknown reasons and spending unnecessarily to protect a nation that we destroyed. 50B per year to fund this war, and Obama is continuing the same policies. This leads me to believe once he got into office he found out we have other long term interests at play with the region….”interests” that the American public have not been made aware. We need to refocus our efforts on what is going on in America, Obama needs to act on what he said he would and get our troops out of these failed states. Yes, we should leave a residual force to prevent any of our enemies from interferring in local matters. Yes, we should reap the benefits of the oil profits…we own these countries. Invest that 1.2billion in innovations of weapon technologies and FBI agents.

Economics - This is not a partisan issue. Plain and simply, George Bush Sr., Bill Clinton, George Bush Jr. did not push for any regulations on businesses or the financial sector. They were too busy reversing the S&L and DOT com downturns. The Gramm-Leach act repealed regulations put forth after the crash of 1929 leaving the gates wide open for creative loans. Bush Sr.-Clinton-Bush Jr. in their attempts to ward off the S&L Crisis of 1989 and the DOT com crash of 1999 had no other choice. It worked for a little while but as with all gimmicks it did not last. We cannot fund GDP with the equity in the housing market, we have to bring jobs back to America and allow the markets to reset. Prices of products, real estate must drop to a point where they are in line with salaries. New industries must be created and dominated by American businesses, trickling down to the American Worker, then to the products that we buy.

Offshoring/Foreign Products - Toyota employs 7,000 Americans and 70,000 japanese nationals. GM used to employ 68,000 Americans and that is down to 34,000.
You do the math and tell me whom benefits the American worker more so?

Immigration - Harsh, you say? The below laws belong to the immigration laws of
MEXICO!

1. If you migrate to this county, you must speak the native language

2. You have to be a professional or an investor. No unskilled workers
allowed.

3. There will be no special bilingual programs in the schools, no
special ballots for elections, all government business will be
conducted
in our language.

4. Foreigners will NOT have the right to vote no matter how long they
are here.

5 Foreigners will NEVER be able to hold political office.

6. Foreigners will not be a burden to the taxpayers. No welfare, no
food
stamps, no health care, or other government assistance programs.

7. Foreigners can invest in this country, but it must be an amount
equal to 40,000 times the daily minimum wage.

8. If foreigners do come and want to buy land that will be okay, BUT
options will be restricted. You are not allowed waterfront property.
That is reserved for citizens naturally born into this country.

9. Foreigners may not protest; no demonstrations, no waving a foreign
flag, no political organizing, no badmouthing our president or his
policies, if you do you will be sent home.

10. If you do come to this country illegally, you will be hunted down
and sent straight to jail.

On Rhetoric
Who cares is Bush held hands with another leader?
Who cares if Bush kiss him on the cheek?
Who cares if Obama has Muslim heritage?
Who cares if Obama doesnt have the long format birth certificate?
Who cares if Obama deserves the Nobel Prize?
Who cares if Obama bowed to another leader?
Who cares if Clinton inhaled or not?
Who cares if Clinton slept around?

On Obama Nobel Peace Prize

1. For those of you who question his birth rights, I say that you should leave your rural neighborhoods to become a part of the rest of society, stop dating your cousins and pursue an education higher than the 3rd grade level. Even my 3 year old can read through the rhetoric of his birth rights.

2. For those of you who doubt his qualifications for the Nobel Prize, remember, he is the leader of the free world…something that you or I will never accomplish. He has brought many together under one single cause with just a few inspirational speeches, something many of your pastors have yet to accomplish. Relish this moment in history, grow your families and stop being anti-Obama for the simple fact the entire world was anti-BUSH.

3. For those of you that hold his articulation in disdain, try reading a book. He is the most articulate canidate we have ever seen…I wouldnt pass on him for a job interview and couldnt pass on his run for President.

4. For those of you who tout him as a Socialist, see patricks pledge against socialism. If you are nuts enough to stop contributing to any of the following programs then please feel free to exit left to Mexico. Mexico does not have any of these public services, so feel free to be a proud Mexican.

4X, I agree with 99% of your points.

tatupu,
Great, we are getting someplace. If the lending standards were changed without regard to increasing the number of buyers, (I agree that is possible) then I'm guessing your point would be that it was a done to change the demografic of buyers? (CRA-ish and possible) Outside of those two things, I don't think the reduced standards did much else with regard to buyers. So, we have agreed that the popualtion and demographic of sub-standard buyers increased from the reduced standards, and the reason the standards were reduced were actually buyer specific, but the exact focus of the action can be a point of discussion ... Meaning there were more buyers created from lower standards, but the standars could have been lowered for reasons "X" and/or "Y" and/or "Z". Right? If this is correct then we can cross off #1, #2, and #3 and move to #4 for clarifiaction. Since the discussion is about bubble creation I think I can move from here, but if I am still missing your point, please continue. Thanks.

Bap33 says

So, we have agreed that the popualtion and demographic of sub-standard buyers increased from the reduced standards, and the reason the standards were reduced were actually buyer specific, but the exact focus of the action can be a point of discussion …

Crap--I must have mess up with my last post. Let me try again:

Bap33 says

So, we have agreed that the popualtion and demographic of sub-standard buyers increased from the reduced standards, and the reason the standards were reduced were actually buyer specific, but the exact focus of the action can be a point of discussion

I agree with the first half of your statement, but have a small quibble with the latter part. I think that lending standards were reduced because the RE industry (mortgage brokers, banks, even Wall St.) didn't understand the risk of the loans and was trying to increase profits. Free market at work.

OK--please continue

Ok, I think we should smooth out this area a little bit more. You put mortagage brokers, banks, and Wall Street all in one SuperGroup, and figure that they found a way to have lending standards changed(1), and these new lower standard loans/buyers would result in higher profits (2).
I'll just ask my questions as if the above is correct, and if I messed up I'll re-shoot again ... lol
(1) How did/would the SuperGroup exact their desire for lower standards? Where do the protected roups come into this process?
(2) How did/would banks and mortgage folks feel easy lending to folks that are of a higher default risk equate to higher profits? Would that happen after they were told that Fanny and Freddy would buy bad debts? If "yes", then who was it that told the banks the bad debt would be bought? Finally, buying bad debt cant happen until a bad note is wrote ... and a bad note cant be wrote withour lose lending standards ... so we are kinda back at the point of how/why those standards were loosed.

I only ask those questions to see what you have placed together in your view, and do not intend to argue any point about your view, just curious.

Ok, lets re-cap,

tatupu70 says

OK–fair enough.
1. Yes, I would agree that lending standards were reduced in the early to mid-2000s
2. I don’t know about that. I’d have to research the possible buyers in the housing pool. Are you thinking that because of house prices rising, people were priced out under normal lending standards?
3. I’m not sure I’d agree with that. I think the fact that prices were rising led to a speculative market–people chasing after returns. When you see your friend/neighbor/cousin make good $$ flipping or owning a house, you start asking why you couldn’t do it too. The lower lending standards certainly allowed people to buy who had no reason buying though. So I mostly agree.
4. Yep–I’d agree with that.

And I can agree with your points, so here we are. We agree the standards changed (1). Those changes resulted in more buyers(2). More buyers drive prices up(3). From there the monster grew(4). So, we agree.

The devil is in the details though where CRA, Frank, Barry, ACORN, and Fanny are concerned, so if you agree, we can detail each step in order.

Deatils of #1) I think the changes in the standards came as a result of activists and social engineer types that forced lower standards upon banks for no reason other than to give non-qualified buyers (most are "of color" but not exclusive) a loan... while you feel banks(and other money movers) acted on their own out of greed, with no result wanted other than higher profits. Is that right? Please correct me as needed and contiue your point about #1.

Read this article.

http://www.rollingstone.com/politics/story/29127316/the_great_american_bubble_machine

I present this one because its very comprehensive and well laid out. I cold offer a ton more but thats a good place to start.

It seems pretty well documented that "activists and social engineer types", liberal elitist lefty latte drinkers no doubt, were not so much the cause of the shift as the amazingly high profits that could be generated by selling packaged securitizing mortgages and charging related fees after the CAsey-Stengal act was dropped.

"activists and social engineer types that forced lower standards upon banks for no reason other than to give non-qualified buyers (most are “of color” but not exclusive) a loan…" Honestly, I don't know where you get this stuff or why you continue to believe it. According to your version the poor banks - currently making Billions in profit - are the victims here. Amazing.

Bap33 says

(1) How did/would the SuperGroup exact their desire for lower standards? Where do the protected roups come into this process?

Very easily. As Kent said, by repackaging the mortgages as securities with AAA ratings, they created an artificial demand for them. Artificial because noone understood the risk of default. It's as if Wall St. was suddenly able to give junk bonds AAA ratings. The demand would obviously be greater than if the junk bonds had their realistic BBB- or whatever rating.

Bap33 says

(2) How did/would banks and mortgage folks feel easy lending to folks that are of a higher default risk equate to higher profits? Would that happen after they were told that Fanny and Freddy would buy bad debts?

Could be two answers to that depending on how smart the banker and mortgage folk were. Mostly they felt easy because they thought RE only went up and that it didn't matter if a small percentage defaulted, because the property would be worth more down the road anyway. Others, who were smarter, simply made the loans because they knew there was a guaranteed market for the loans and they would be easy to resell. Fanny and Freddy were certainly part of the problem. But the amount of bad debt at banks and Wall St. would seem to indicate that it was far from a Freddy and Fanny problem. F and F just got caught up in the prevailing attitude everywhere...

ok .. I see your process now ... and Kent's is close, only angrier .. lol

In the #1 above, I meant "protected groups", as in the targeted population for gov actions such as CRA. Where they just pawns of the banks?

By the way .. the demand for those crappy bundles of loans was very real, not artificial. lol. The money behind them was fake, the buyer worked at a fake job, and those HELOCS were backed by fake equity ... but that dang paper on WallStreet enjoyed actual demand. lol. I Hate Banksters.

ok .. back on track --- I do understand what you are saying about the re-branding of loans to market them on WallStreet .... but we both say that happened AFTER the new loan standards were created .... so, are you saying the SuperGroups laid a plan to allow loose lending to unqualified buyers to then take the loans and market them? Is that close? If that is close then my only questions are these:
1) Why didn't the banks do the same bundleing with the loans made under the pre-CRA system, and if they did do that already - did the good loans not make as much money for some reason?
2) If banks "wanted" to do this, why were they sued by Barry and ACORN for not granting the types of loans you are suggesting they really wanted to be writing already? This point here is an important one so please take time and do not be offended as we move through this part. I will try to not be abusive or arguementitive. Thanks.