"This housing crisis didn't come out of nowhere. It was not a vague emanation of the evil Bush administration.

"It was a direct result of the political decision, back in the late 1990s, to loosen the rules of lending so that home loans would be more accessible to poor people. Fannie Mae and Freddie Mac were authorized to approve risky loans.

"What is a risky loan? It's a loan that the recipient is likely not to be able to repay.

"The goal of this rule change was to help the poor -- which especially would help members of minority groups. But how does it help these people to give them a loan that they can't repay? They get into a house, yes, but when they can't make the payments, they lose the house -- along with their credit rating.

They end up worse off than before.

"This was completely foreseeable and in fact many people did foresee it. One political party, in Congress and in the executive branch, tried repeatedly to tighten up the rules. The other party blocked every such attempt and tried to loosen them.

"Furthermore, Freddie Mac and Fannie Mae were making political contributions to the very members of Congress who were allowing them to make irresponsible loans. (Though why quasi-federal agencies were allowed to do so baffles me. It's as if the Pentagon were allowed to contribute to the political campaigns of congressmen who support increasing their budget.)

"Isn't there a story here? Doesn't journalism require that you who produce our daily paper tell the truth about who brought us to a position where the only way to keep confidence in our economy was a $700 billion bailout? Aren't you supposed to follow the money and see which politicians were benefiting personally from the deregulation of mortgage lending?

"I have no doubt that if these facts had pointed to the Republican Party or to John McCain as the guilty parties, you would be treating it as a vast scandal. "Housing-gate," no doubt. Or "Fannie-gate."

"Instead, it was Sen. Christopher Dodd and Congressman Barney Frank, both Democrats, who denied that there were any problems, who refused Bush administration requests to set up a regulatory agency to watch over Fannie Mae and Freddie Mac, and who were still pushing for these agencies to go even further in promoting subprime mortgage loans almost up to the minute they failed."

--Orson Scott Card

http://www.linearpublishing.com/orsonscottcard.html

>> ^jake:
Upvoting this because I agree that this is the primary cause for the subprime crisis.
It is ironic that people are proposing more regulation to correct this.
It seems to me, however, that this video tries to place blame in a very skewed way, especially given this comment from the CRA wikipedia article:
"In 2003, the Bush Administration recommended what the NY Times called "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago." [10] This change was to move governmental supervision of two of the primary agents guaranteeing subprime loans, Fannie Mae and Freddie Mac under a new agency created within the Department of the Treasury."
Isn't this exactly what the bill is going to achieve, along with a ton of other affected lenders?
The 2003 act didn't pass because there was no crisis then, so where does that leave us? Is it possible that the Bush administration knew what was going on from the outset, or did they have other intentions? Why would a pro "free market" republican administration want to regulate mortgage lenders in the first place?


I think I see what you're saying. The Bush-proposed agency was just more regulation of the economy? Well, that's true, but what they were attempting to do is regulate the regulations. They wanted to make sure Fannie and Freddie were maintaining some kind of integrity, which they obviously weren't. What they ought to have done is allowed the All-Powerful All-Knowing Free Market to do its thing.

What really chaps my hide is that in the VP debate Biden blamed McCain's deregulation policies for the crisis, and Palin didn't say A WORD to the contrary. Probably because she has no idea how the economy functions.

Why couldn't we have nominated some decent candidates? Does anyone want to hop into my time-machine with me?

"Freddy Mac and Fanny Mae are fundamentally sound." hahaha, famous last words, Barney

Tags for this video have been changed from 'politics, economics, fannie mae, freddie mac, cover up, congress' to 'politics, economics, fannie mae, freddie mac, cover up, congress, diversion' - edited by choggie

The fact that Fannie Mae and Freddie Mac could cook the books enough to get those HUGE bonuses says they knew all along there would be a crash. They were getting what they could out of it first.

Why aren't they up for criminal charges? Hmmm?

http://www.videosift.com/video/In-Their-Own-Words-Dems-Scam-Coverup-Caused-Crisis

^I said that this video was one-sided. I thought that would lead you to believe that I thought that this video was one-sided.

Decreased Standards of Credit Checks = Fannie Mae and Freddie Mac eased their requirements and started buying loans with less strict underwriting. Primary lenders started selling whatever Fannie and Freddie would guarantee. Why wouldn't they?

Housing Bubble = People who couldn't afford homes were buying them because Fannie and Freddie let them, thus rapidly inflating the price of homes. Simple supply and demand.

Loans repackaged in various forms? You think Fannie, Freddie, and the Fed were fooled? They knew what was going on all along. Those other financial entities were just along to ride the wave that Fannie and Freddie started.

Refresh my memory: What percentage of residential (1-4 unit) loans did Fannie and Freddie back? Nobody else comes close to having any influence over the secondary mortgage market like they do. What they decide, the rest must follow -or fail.

Upvoting this because I agree that this is the primary cause for the subprime crisis.

It is ironic that people are proposing more regulation to correct this.

It seems to me, however, that this video tries to place blame in a very skewed way, especially given this comment from the CRA wikipedia article:

"In 2003, the Bush Administration recommended what the NY Times called "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago." [10] This change was to move governmental supervision of two of the primary agents guaranteeing subprime loans, Fannie Mae and Freddie Mac under a new agency created within the Department of the Treasury."

Isn't this exactly what the bill is going to achieve, along with a ton of other affected lenders?

The 2003 act didn't pass because there was no crisis then, so where does that leave us? Is it possible that the Bush administration knew what was going on from the outset, or did they have other intentions? Why would a pro "free market" republican administration want to regulate mortgage lenders in the first place?

"...a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry."

I don't understand how anybody can look at what George W. Bush has done to this country over the course of the past eight years and think that he would do anything for its benefit.

I've been trying to find the specifics of the proposed Bush plan from 2003, and I can't find anything that goes into the nuts and bolts.

Just that the Treasury Department, a.k.a. whoever was there before Henry "give me $700 billion and trust me" Paulson took charge, would assume oversight of F-May and F-Mac.

I don't have the links in front of me, but I found something that suggested that Wall Street considered F-May and F-Mac as a sort of competition that was cutting in on their profits, and Bush was, in a sense, trying to reduce their competitiveness with the private sector.

Tags for this video have been changed from 'sarah palin, katie couric, economy, crisis, bailout' to 'sarah palin, katie couric, economy, crisis, bailout, freddie mac, rick davis, ceo' - edited by my15minutes

You guys can have your government bailouts, and your fake candidates.

Ill shove the constitution down some ones throat before I give up any more of my liberties, for some bullshit security that doesn't do me any good.

The two current parties did the US wrong, AIG, lehman brothers, Indie Mac, Freddie Mac, fanny mae, and the whole host of others.


EDIT: I post this because I don't know if this thread is a satire.

If it is! LOLOLOLOLOLOLOLOLOL....
Deregulation, and now privatization, guess what! Socialism!

>> ^imstellar28:
>> ^Januari:
Best view of the economy?... from what i saw last night in almost the same line she said... And i'm paraphrasing here but i'm sure most of you will know it...
"We have to get better regulation so government can get out of the way"...
I'm sorry how is that a grasp of reality let alone the economy...


Let us not forget that she said last week that Fannie Mae and Freddie Mac had become too big of a burden on the taxpayers so they had to be bailed out. Which only makes sense if... lemme see, carry the 1 and multiply...WTF is she talking about?!? That is not a firm grasp on anything, let alone economics.



Yeah but think about it--how can she old a stance which is in opposition to her running mate's? She can't. Even if she opposes the government bailouts she has to say whatever McCain tells her to. Just like McCain says whatever anyone tells him to.


I also think that the 'star' treatment she is getting has been going to here head. McCain can't draw a crowd unless he brings the dog and pony show (i.e., Palin) out on stage with him. She even slipped and called it a Palin/McCain administration. So, who's really following whose lead?

As a final bit of trivia, the 2,000 acres in ANWR that she is talking about only counts the actual drilling platforms. The amount of piping and other industrial infrastructure required to maintain and operate those platforms and rigs would cover at least 10 times that amount of area. More bullshit Republican propaganda from the wind-up puppet that is Sarah Palin.

Now to the subject of Obama's contributions. Those contributions make up about 0.02% of his total fundraising effort. Also the manner by which he has recieved these funds is not listed. If they are funds by individual employees of these companies it would be impossible to determine intent.

And the numbers from OpenSecrets.org, A site you yourself listed, (http://www.opensecrets.org/pres08/summary.php?cycle=2008&cid=N00009638) seem to agree with this statement. Total PAC contributions $1,635, far less than the reported $105,000 listed on the same site.

To further support this allow me to quote the site (under Obama's Top Contributors.)
"This table lists the top donors to this candidate in the 2008 election cycle. The organizations themselves did not donate , rather the money came from the organization's PAC, its individual members or employees or owners, and those individuals' immediate families. Organization totals include subsidiaries and affiliates."

Finally if you mean to imply that Obama recieved funds that lead him to approve a bailout of this company, then explain why Lehman Brothers didn't get bailed out and their contributions are about 3x that of Fannie Mae and Freddie Macs.

Maybe he just didn't get the message...

I guess no one told her about Fannie May/Freddie Mac being nationalized by *gasp* taxpayer money. Nor the sweetening of the buyout deal on Bear Stearns by JP Morgan in the realm of $30 billion.

Funny hearing her use catch phrases like "change", "politics as usual." I guess they're banking on the poor undecided swing voters who pick someone when they're standing in the booth to confuse who had that slogan that sounded so catchy and pick McCain ...

"... and the networks of lobbyists and special interests that used to run things up there, well whatever they're running now, I know it's not the state of Alaska!"

Heh, yeah and they sure did reel in the big fish when they scored an advisory role in the McCain campaign.

Hey, if you promise to vote Obama, you can call me anything you like.

Force of habit on the Phil Gramm swipe. I think that story is absolute gold for showing anyone who's paying attention just what kind of economic advisers McCain has surrounded himself with. But that's negative-campaigning kind've stuff, not an issues-based conversation.

I don't think all Democrats have been perfect, and I disagreed with Clinton on several of his deregulation moves. Usually I bitch about telecomm deregulation (it needed it, but he went too far), but the bill I accuse Phil Gramm of writing, Bill Clinton signed into law. Same with the Enron loophole; Phil Gramm wrote it, Bill Clinton signed it.

I hadn't heard that Clinton had eroded the standards on lending, but I doubt that was the main/only factor in the mortgage failures we're seeing now. I do think without the deregulation of Phil Gramm, companies wouldn't have been able to massively overextend themselves like this, and turn the U.S. mortgage problem into a global financial crisis.

As for where were the Democrats in 2004? Not the White House, in the minority of both chambers of Congress, and with little support in the Supreme Court.

As for Congress now, I think their 9% approval is well-earned. If I were polled on my approval of Congress, I'd say I disapprove -- ask me why and I'd say "because my party is caving". Ask the average Republican, and it's because they haven't been able to utterly silence Democrats. Ask the average Independent, and they'll say "because all they do is bicker, and nothing gets done".

I know I'm sappy about Obama, but he's very much trying to get politics back to the point where people like you and I have more opportunities to see balanced proposals passed, without everything turning into a mortal battle for supremacy between the two parties/ideologies.

Democrats, especially under Obama, are not absolutists -- we're just arguing from the position that some government meddling is necessary, and that there should be some equalizing pressure on the market (e.g. public education, progresive taxes, universal healthcare) keeping things from getting too lopsided.

In reply to this comment by deedub81:
Forget all these loser politicians! You and I should start our own country! CommonSenseville.
I'll be the King, you can be the Queen.


You're quick to point the finger at Phil Gramm. He's not without fault, but neither are many of the Democrats (including Papa Clinton).

http://ibdeditorial.com/IBDArticles.aspx?id=306370789279709

Take that with a grain of salt. I'm simply pointing out that this hasn't been a one-sided mistake. I agree with the "bit of fine tuning" that you talk about, but Clinton practically took away the ability of Fannie and Freddie to turn down "bad loans." It's not like he twisted their arm, but still.

I used to work as a loan officer in CA. Did so for 4 years starting in 2000 (right after the Clinton years). Even I saw it coming. I could fit almost anybody with a job a mortgage program that would get approved (and purchased on the secondary market). The other LO's and the Branch Managers would talk about how awesome Bill Clinton was for forcing the secondary market to buy riskier loans. We were all reaping the benefits (little did we know...). I'm no economist, but like I said, I started to realize that it wasn't headed in the right direction back in 2004.

Where were the democrats then?

http://politics.videosift.com/talk/The-OLD-Bush-Plan-for-Fannie-Mae-and-Freddie-Mac-Oversight

There is a reason that Congress has a 9% approval rating and it's not only the Republican's fault. The Dems have had the majority since the last election, remember?


I do want to let you know that I think you're mostly right about what the next step should be.

Forget all these loser politicians! You and I should start our own country! CommonSenseville.
I'll be the King, you can be the Queen.


You're quick to point the finger at Phil Gramm. He's not without fault, but neither are many of the Democrats (including Papa Clinton).

http://ibdeditorial.com/IBDArticles.aspx?id=306370789279709

Take that with a grain of salt. I'm simply pointing out that this hasn't been a one-sided mistake. I agree with the "bit of fine tuning" that you talk about, but Clinton practically took away the ability of Fannie and Freddie to turn down "bad loans." It's not like he twisted their arm, but still.

I used to work as a loan officer in CA. Did so for 4 years starting in 2000 (right after the Clinton years). Even I saw it coming. I could fit almost anybody with a job a mortgage program that would get approved (and purchased on the secondary market). The other LO's and the Branch Managers would talk about how awesome Bill Clinton was for forcing the secondary market to buy riskier loans. We were all reaping the benefits (little did we know...). I'm no economist, but like I said, I started to realize that it wasn't headed in the right direction back in 2004.

Where were the democrats then?

http://politics.videosift.com/talk/The-OLD-Bush-Plan-for-Fannie-Mae-and-Freddie-Mac-Oversight

There is a reason that Congress has a 9% approval rating and it's not only the Republican's fault. The Dems have had the majority since the last election, remember?


I do want to let you know that I think you're mostly right about what the next step should be.



In reply to this comment by NetRunner:
I think on this count, you're in agreement with me, and the Democratic party.

However, I think we're looking at more than a lull right now. The Democrats would prefer our actions be focused on putting money into the bottom of the economy, instead of the top, but I think that something needed to be done to bail out Fannie and Freddie at this point. I just don't think preserving the executives' bonus compensation packages should have been part of the deal.

I'd rather Phil Gramm and the Republicans hadn't deregulated the finance markets in the first place -- that's what opened the door for this kind of unchecked expansion into an area where no one was being honest about the risks.

Now those risks everyone denied or concealed are turning out to be real, and they're turning to the taxpayers to keep them solvent.

I think a modern-day leftie like me would say that so long as we had unemployment insurance for everyone, universal healthcare, and fair bankruptcy laws, we don't need to bail any company out -- let the downturn happen, and rely on the social safety net to keep people from starving or dying.

I also think that once it becomes clear what the root cause of the market failure was, we should add some regulation (as little as possible) to reduce the likelihood of a similar catastrophe from happening in the future.

I think the biggest misconception people have of Democrats is that they think we don't believe in the benefits of a free market -- we absolutely do -- we just think it needs a bit of fine tuning from time to time to keep it healthy.

In reply to this comment by deedub81:
I do think the eonomy thrives when most things are left up to the market. The gov't doesn't need to pour money into the economy every time there is a lull.