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Facts leading up to the housing bubble that broke our economy; "Just the facts ma'am just the facts"
Topic Started: Dec 21 2013, 04:04 AM (1,982 Views)
Mountainrivers
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Pat
Dec 21 2013, 11:51 PM
In your back and forth arguments you guys ignored an important point. The lenders were packaging the loans and selling them to larger bankers who were in turn packaging them and selling them as A rated investments backed by property. There was not interest in the loan originator as to whether the loan would be solid or default, they in many cases had already sold the loans in the secondary market before the buyer took possession of the homes. The loan officers, appraisers, and loan sale force wanted to churn as many loans as possible and extract a much commission as possible.
Yes, the ultimate lenders were the hedge funds and other large investors. The fact that those entities didn't check to see if the loans were valid was because they were able to get credit default swaps ( considered to be insurance, but was not) from companies like AIG, which is an insurance company and insurance is regulated, but credit default swaps are not. When the loans defaulted enmasse, AIG was incapable of covering the losses and, in order to save AIG, the big banks and Fannie and Freddie, the government had to bail them out.
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Mountainrivers
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Dec 21 2013, 11:58 PM
Fannie and Freddie were government backed, it's amazing how some either did not know what went on or refuse to admit the facts. The Bush admin warned them several times about the housing bubble and they would do nothing.
The government was not obligated to back Fannie and Freddie because they are private corporations. The government bailed them out anyway because not doing so would have been catastrophic for the economy.
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Pat
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Mountainrivers
Dec 22 2013, 12:03 AM
Pat
Dec 21 2013, 11:51 PM
In your back and forth arguments you guys ignored an important point. The lenders were packaging the loans and selling them to larger bankers who were in turn packaging them and selling them as A rated investments backed by property. There was not interest in the loan originator as to whether the loan would be solid or default, they in many cases had already sold the loans in the secondary market before the buyer took possession of the homes. The loan officers, appraisers, and loan sale force wanted to churn as many loans as possible and extract a much commission as possible.
Yes, the ultimate lenders were the hedge funds and other large investors. The fact that those entities didn't check to see if the loans were valid was because they were able to get credit default swaps ( considered to be insurance, but was not) from companies like AIG, which is an insurance company and insurance is regulated, but credit default swaps are not. When the loans defaulted enmasse, AIG was incapable of covering the losses and, in order to save AIG, the big banks and Fannie and Freddie, the government had to bail them out.
And once AIG became such a large insurer, they became too big to fail. If I remember one of the arguments against arresting the managers of that company, it was because the company needed stability to keep from a complete collapse. I know some here would like to clear Bush of any responsibility but I think you need to re-read my OP and do some more research.
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Mountainrivers
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Pat
Dec 22 2013, 12:07 AM
Mountainrivers
Dec 22 2013, 12:03 AM
Pat
Dec 21 2013, 11:51 PM
In your back and forth arguments you guys ignored an important point. The lenders were packaging the loans and selling them to larger bankers who were in turn packaging them and selling them as A rated investments backed by property. There was not interest in the loan originator as to whether the loan would be solid or default, they in many cases had already sold the loans in the secondary market before the buyer took possession of the homes. The loan officers, appraisers, and loan sale force wanted to churn as many loans as possible and extract a much commission as possible.
Yes, the ultimate lenders were the hedge funds and other large investors. The fact that those entities didn't check to see if the loans were valid was because they were able to get credit default swaps ( considered to be insurance, but was not) from companies like AIG, which is an insurance company and insurance is regulated, but credit default swaps are not. When the loans defaulted enmasse, AIG was incapable of covering the losses and, in order to save AIG, the big banks and Fannie and Freddie, the government had to bail them out.
And once AIG became such a large insurer, they became too big to fail. If I remember one of the arguments against arresting the managers of that company, it was because the company needed stability to keep from a complete collapse. I know some here would like to clear Bush of any responsibility but I think you need to re-read my OP and do some more research.
Bush was complicit in it for sure, but there are many characters who were involved and I think blaming any one of them misses the big picture. I often wonder why we, the people, continue to allow these money guys to get away with causing such chaos. We hear you cons bitch constantly about illegals, yet hardly ever complain about the real criminals which, I suspect, have cost the taxpayers considerable more money than the illegals.
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Neutral
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The banks were forced to make bad loans by the Clinton admin, another fact that is ignored.
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Mountainrivers
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Dec 22 2013, 12:14 AM
The banks were forced to make bad loans by the Clinton admin, another fact that is ignored.
Prove it!
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Neutral
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I think I already did, you refused to read it.
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Pat
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Dec 22 2013, 12:14 AM
The banks were forced to make bad loans by the Clinton admin, another fact that is ignored.
Yep, after decades of red lining practices where they refused to lend money in minority communities. But to be more specific, nobody forced the banks to lend to unreliable borrowers with bad credit and sketch work history, the red lining issue had to do with lending to qualified people who were just as credit worthy as anybody else. The problem being the banks didn't want to do business in those areas.
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Yes they did.
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Mountainrivers
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Pat
Dec 22 2013, 12:23 AM
Neutral
Dec 22 2013, 12:14 AM
The banks were forced to make bad loans by the Clinton admin, another fact that is ignored.
Yep, after decades of red lining practices where they refused to lend money in minority communities. But to be more specific, nobody forced the banks to lend to unreliable borrowers with bad credit and sketch work history, the red lining issue had to do with lending to qualified people who were just as credit worthy as anybody else. The problem being the banks didn't want to do business in those areas.
You have it right, Pat. Neut is wrong, as usual, but will never admit it, regardless of the facts.
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