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As usual

fff

Well-known member
The GOP Blames the Victim
Capitalism sure is fragile if subprime borrowers can ruin it.
By THOMAS FRANK

Two weeks ago, I wrote that the breakdown of the nation's financial industry was undeniably a self-induced injury; that it would finally force conservatives to own up to the wrongheadedness of their deregulatory project; that they couldn't possibly blame the disaster on any of their traditional bogeymen.

But I had forgotten about conservatives' extraordinary instincts for blame-evasion. This is a movement, after all, that blandly recasts its greatest idols as traitors once their popularity has crashed; that routinely sloughs off responsibility for . . . well . . . anything since, by its logic, conservatism has never really been tried in the first place. Consider in this respect Mitt Romney's remarkable speech to the Republican convention a few weeks ago, in which he rallied his party against Washington -- a place his party has controlled, to one degree or another, for nearly three decades -- by listing the city's various institutions and crying, "It's liberal!"

Or consider the way the House Republicans torpedoed the bailout bill a few days ago. The real reason they did it was almost certainly to evade responsibility for an unpopular measure but the announced reason seemed designed to convince the nation's 7-year-olds -- because Nancy Pelosi said something mean.

On economic questions the standard exculpatory maneuver is even simpler. When some free-market scheme blows up, one needs only find an institution of government in close proximity to the wreckage and commence accusing.

Thus we hear from some on the right that the disaster on Wall Street was the handiwork not of those with unbridled pecuniary motives but of Fannie Mae and Freddie Mac, which were government-sponsored enterprises and therefore partially exempt from market discipline and of theoretical necessity the sole culprits.

There is no doubt that Fannie and Freddie enabled the subprime neurosis, but for certain conservatives they are virtually the only malefactors worth noting. The dirge goes like this: Fannie and Freddie were buying up subprime mortgages, and they were doing it for (liberal) political reasons. Mortgage originators thus had no choice but to hand out mortgages like candy. Had market forces been in charge, loans would, no doubt, have been administered with a rigor and sternness to make John Calvin blanch.

I asked Bill Black, a professor of economics and law at the University of Missouri-Kansas City and an authority on the Savings and Loan debacle of the 1980s, what he thought of the latest blame offensive. He pointed out that, for all their failings, Fannie and Freddie didn't originate any of the bad loans -- that disastrous piece of work was done by purely private, largely unregulated companies, which did it for the usual bubble-logic reason: to make a quick buck.

Most of the mistakes for which we are paying now, Mr. Black told me, were actually made "by four entities that under conservative economic theory should have exercised effective market discipline -- the appraisers, the originators of the mortgages, the rating agencies, and the investment banking firms that packaged the subprime mortgage-backed securities." Instead of "disciplining" the markets, these private actors "served as the four horsemen of the financial apocalypse, aiding the accounting fraud and inflating the housing bubble." It is they, Mr. Black says, who "turned a crisis into a catastrophe."

Ah, but truth is no ally to a conservative with his back to the wall. So much more helpful are the trusty narratives on which the movement was built. So when we have dispatched this first canard, we learn from other conservatives that it is the sub-prime people who are to blame; that by taking out loans they couldn't possibly pay off, these undesirable borrowers have ruined us all.

There is no way to measure the number of people who took out mortgages they knew they couldn't afford, of course, but for what it's worth, a 2007 report by the Mortgage Bankers Association reports that the FBI estimates "80 percent of all reported fraud losses arise from fraud for profit schemes that involve industry insiders." That means the lenders, not the borrowers.

Just imagine the flights of fancy that the theory of borrower malevolence and Wall Street victimization requires conservatives to take: All these no-account folks, you see, got together and forced investment banks to engineer subprime mortgages into highly leveraged securities. Then they tricked all manner of hedge funds and pension funds and financial institutions into buying these lousy products. Just for good measure, these struggling homeowners then persuaded bond-rating agencies to misrepresent the risk associated with these securities.

Now imagine what such a fantastic scheme, if true, would mean for capitalism itself. This economic system, glorified by all, dominates the globe today, bidding prices up and down, forcing entire nations to change their ways to better suit its needs, and yet it is so fragile that when challenged by the weakest members of society and a handful of community organizers it simply crumbles. Thank goodness the Soviets never figured this out.

http://online.wsj.com/article/SB122282690823092989.html
 

Sandhusker

Well-known member
As usual, the libs claim that it is somebody else's fault that people are losing their homes.

How are you a victim when you sign papers acknowledging that your statements are true and it is printed in black and white what your payments are going to be? Who had a gun to these people's heads making them buy that house?

Is this like Oprah's mother being a victim?

PERSONAL RESPONSIBILITY; Such a foreign concept to liberals...
 

TexasBred

Well-known member
Sandhusker said:
As usual, the libs claim that it is somebody else's fault that people are losing their homes.

How are you a victim when you sign papers acknowledging that your statements are true and it is printed in black and white what your payments are going to be? Who had a gun to these people's heads making them buy that house?

Is this like Oprah's mother being a victim?

PERSONAL RESPONSIBILITY; Such a foreign concept to liberals...

fff...to begin with, when you sign a mortgage you, all you know is that you have one payment per month to make for "x' number of years and then the property will be 100% yours. You never know when YOUR note is sold to Fannie, Freddie or anyone else. You keep making your payment to the Local bank and forget about it. These people didn't default on fannie or freddie...they defaulted on the very people who loaned them the money in the first place. The local bank where the loan was originated....99% of them don't have a clue what FNMA or FHLMC even means. Not even after they've been in the news all these weeks adn months and even years.
 

TSR

Well-known member
TexasBred said:
Sandhusker said:
As usual, the libs claim that it is somebody else's fault that people are losing their homes.

How are you a victim when you sign papers acknowledging that your statements are true and it is printed in black and white what your payments are going to be? Who had a gun to these people's heads making them buy that house?

Is this like Oprah's mother being a victim?

PERSONAL RESPONSIBILITY; Such a foreign concept to liberals...

fff...to begin with, when you sign a mortgage you, all you know is that you have one payment per month to make for "x' number of years and then the property will be 100% yours. You never know when YOUR note is sold to Fannie, Freddie or anyone else. You keep making your payment to the Local bank and forget about it. These people didn't default on fannie or freddie...they defaulted on the very people who loaned them the money in the first place. The local bank where the loan was originated....99% of them don't have a clue what FNMA or FHLMC even means. Not even after they've been in the news all these weeks adn months and even years.

Is that not what the author is saying TB?? That there should have been more regulation on the borrowers and the institutions they borrowed from?
In other words NO responsibility from the lending side either, SH? There's always 2 sides to every story. FBI estimates"80% of all reported fraud loses arise from fraud for profit schemes that involve industry insiders." That means the lenders not the borrowers. I think both sides share the blame. Those lenders knew many of their clients were terrible risks but they loaned them money to make the fast buck. Now many of them will walk away with millions knowing full well that at some time in the future the taxpayer will fix everything. Lets get our money now and get the heck out of Dodge.
 

aplusmnt

Well-known member
TSR said:
Is that not what the author is saying TB?? That there should have been more regulation on the borrowers and the institutions they borrowed from?
In other words NO responsibility from the lending side either, SH? There's always 2 sides to every story. FBI estimates"80% of all reported fraud loses arise from fraud for profit schemes that involve industry insiders." That means the lenders not the borrowers. I think both sides share the blame. Those lenders knew many of their clients were terrible risks but they loaned them money to make the fast buck. Now many of them will walk away with millions knowing full well that at some time in the future the taxpayer will fix everything. Lets get our money now and get the heck out of Dodge.

And that is what was tried to be done back in 2005, adding regulation to Fannie and Freddie but it was blocked by a partisan vote by the Democrats. The Democrats even went so far as to scold the republicans and tell them that there was no problem.

And as for making bad loans, yes some were made for the sake of greed, but many were made and the process of allowing them to make these loans started when the Liberals put pressure on banks to make these kind of loans or else.

Groups like ACORN would even go to bank officers homes and harass them, some of which were trained by Obama who did work for ACORN.
 

VanC

Well-known member
TSR said:
I think both sides share the blame.

I think you are absolutely correct, but we didn't hear that from the author. He seems to think that all the blame rests with the lending institutions, not to mention capitalism in general. Funny how he writes a column castigating people for playing the blame game, but turns around and does the same thing himself. He also failed to mention that many, if not most, of these lenders were forced by law to loan money to people that were bad credit risks.

Oh, and just for the record, I haven't seen where anyone has put all the blame on the borrowers. That would be political suicide.
 

backhoeboogie

Well-known member
Sandhusker said:
PERSONAL RESPONSIBILITY; Such a foreign concept to liberals...

Sandhusker, It is not that Pelosi or Obama are bright. It is more of a matter of the libs being so dim.

Can congress fix the problem that got us here in the first place please? We'll be throwing out another 7 billion down the road if it doesn't get fixed.
 

TSR

Well-known member
VanC said:
TSR said:
I think both sides share the blame.

I think you are absolutely correct, but we didn't hear that from the author. He seems to think that all the blame rests with the lending institutions, not to mention capitalism in general. Funny how he writes a column castigating people for playing the blame game, but turns around and does the same thing himself. He also failed to mention that many, if not most, of these lenders were forced by law to loan money to people that were bad credit risks.

Oh, and just for the record, I haven't seen where anyone has put all the blame on the borrowers. That would be political suicide.

I guess I side more with the author on this issue because anyone who lends money knows a bad risk. But the lenders overlooked those risks to stuff their own pockets. Not much difference than big business selling those tainted foods, dangerous toys, etc. Nobody was holding a gun to their head making them dish out those loans. Hey they were making money loaning that money. Again they knew that if anything went wrong the gov. (taxpayers) would step in. I laugh when farmers talk about how terrible Jimmy Carter was to agriculture but I can't hardly think of a single farmer who was in business during Carter's tenure that didn't get that 2% money he handed out.
You won't see much blame on the borrowers and they do deserve some blame as I have previously stated. Many should have been turned down. But in our society who isn't going to take what they see as a good deal if they can get it? Especially those that finally "think" they see a chance to have a home.
 

fff

Well-known member
Sandhusker said:
As usual, the libs claim that it is somebody else's fault that people are losing their homes.

How are you a victim when you sign papers acknowledging that your statements are true and it is printed in black and white what your payments are going to be? Who had a gun to these people's heads making them buy that house?

Is this like Oprah's mother being a victim?

PERSONAL RESPONSIBILITY; Such a foreign concept to liberals...

No, it's about greed and lack of government oversight. From the link above

2007 report by the Mortgage Bankers Association reports that the FBI estimates "80 percent of all reported fraud losses arise from fraud for profit schemes that involve industry insiders." That means the lenders, not the borrowers.
 

aplusmnt

Well-known member
fff said:
No, it's about greed and lack of government oversight. From the link above

You are correct, we needed the oversight that was blocked by the Democrats back in 2005 and proposed by the Republicans!

And greed of people trying to get more than they can afford in homes led to this mess!

Proof is pretty simple, if these people paid the mortgages that the agreed to pay then we would not be talking about this right now. All these people had to do was pay their payments and it saved Americans Billions of dollars in taxes!

Pay their payments and we do not have to pay so much taxes! Simple answer!
 

fff

Well-known member
aplusmnt said:
fff said:
No, it's about greed and lack of government oversight. From the link above

You are correct, we needed the oversight that was blocked by the Democrats back in 2005 and proposed by the Republicans!

REPUBLICANS! What happened to the maverick John McCain. I thought he, personally, took on his own party and the entire Senate to get this thing passed! And now it was the "Repbulicans." Shocking, I say, shocking. :lol:
 

TexasBred

Well-known member
TSR said:
TexasBred said:
Sandhusker said:
As usual, the libs claim that it is somebody else's fault that people are losing their homes.

How are you a victim when you sign papers acknowledging that your statements are true and it is printed in black and white what your payments are going to be? Who had a gun to these people's heads making them buy that house?

Is this like Oprah's mother being a victim?

PERSONAL RESPONSIBILITY; Such a foreign concept to liberals...

fff...to begin with, when you sign a mortgage you, all you know is that you have one payment per month to make for "x' number of years and then the property will be 100% yours. You never know when YOUR note is sold to Fannie, Freddie or anyone else. You keep making your payment to the Local bank and forget about it. These people didn't default on fannie or freddie...they defaulted on the very people who loaned them the money in the first place. The local bank where the loan was originated....99% of them don't have a clue what FNMA or FHLMC even means. Not even after they've been in the news all these weeks adn months and even years.

Is that not what the author is saying TB?? That there should have been more regulation on the borrowers and the institutions they borrowed from?
In other words NO responsibility from the lending side either, SH? There's always 2 sides to every story. FBI estimates"80% of all reported fraud loses arise from fraud for profit schemes that involve industry insiders." That means the lenders not the borrowers. I think both sides share the blame. Those lenders knew many of their clients were terrible risks but they loaned them money to make the fast buck. Now many of them will walk away with millions knowing full well that at some time in the future the taxpayer will fix everything. Lets get our money now and get the heck out of Dodge.

Sure there was fraud in the industy....but I bet there was almost zero of it happening on the local lending level. Those people originate and sell loans. The greed came much farther up the secondary market chain. Fact remains....John Customer signed a note, knew the facts and agreed to them. He should be held responsible.
 

aplusmnt

Well-known member
fff said:
aplusmnt said:
fff said:
No, it's about greed and lack of government oversight. From the link above

You are correct, we needed the oversight that was blocked by the Democrats back in 2005 and proposed by the Republicans!

REPUBLICANS! What happened to the maverick John McCain. I thought he, personally, took on his own party and the entire Senate to get this thing passed! And now it was the "Repbulicans." Shocking, I say, shocking. :lol:

Are you totally retarded? What you say above makes no sense!

A bill by the Republicans that was Co Sponsored by McCain to regulate Fannie and Freddie was shot down by the Democrats a couple years ago. Come on follow along, I am not going to draw you a picture, if you want to sit with the grown ups at the table you will have to act like a grown up!
 

VanC

Well-known member
TSR said:
VanC said:
TSR said:
I think both sides share the blame.

I think you are absolutely correct, but we didn't hear that from the author. He seems to think that all the blame rests with the lending institutions, not to mention capitalism in general. Funny how he writes a column castigating people for playing the blame game, but turns around and does the same thing himself. He also failed to mention that many, if not most, of these lenders were forced by law to loan money to people that were bad credit risks.

Oh, and just for the record, I haven't seen where anyone has put all the blame on the borrowers. That would be political suicide.

I guess I side more with the author on this issue because anyone who lends money knows a bad risk. But the lenders overlooked those risks to stuff their own pockets. Not much difference than big business selling those tainted foods, dangerous toys, etc. Nobody was holding a gun to their head making them dish out those loans. Hey they were making money loaning that money. Again they knew that if anything went wrong the gov. (taxpayers) would step in. I laugh when farmers talk about how terrible Jimmy Carter was to agriculture but I can't hardly think of a single farmer who was in business during Carter's tenure that didn't get that 2% money he handed out.
You won't see much blame on the borrowers and they do deserve some blame as I have previously stated. Many should have been turned down. But in our society who isn't going to take what they see as a good deal if they can get it? Especially those that finally "think" they see a chance to have a home.

I agree with most of what you say except the highlighted part. On the ground floor of this whole mess the original lending institutions DID have a gun to their heads in the form of the Community Reinvestment Act. They were required, by law, to make high risk loans to high risk borrowers that they might not otherwise have made.


The CRA was passed by the 95th United States Congress and signed into law by President Jimmy Carter in 1977 as a result of national pressure for affordable housing, and despite considerable opposition from the mainstream banking community.The CRA mandates that each banking institution be evaluated to determine if it has met the credit needs of its entire community. That record is taken into account when the federal government considers an institution's application for deposit facilities.

The Financial Institutions Reform Recovery and Enforcement Act of 1989 (FIRREA) was enacted by the 101st Congress and signed into law by President G. H. W. Bush in the wake of the savings and loan crisis of the 1980s. As part of a general reform of the banking industry, it increased public oversight of the process of issuing CRA ratings to banks. It required the agencies to issue CRA ratings publicly and written performance evaluations using facts and data to support the agencies' conclusions. It also required a four-tiered CRA examination rating system with performance levels of "Outstanding," "Satisfactory," "Needs to Improve," or "Substantial Noncompliance."[5]

According to Ben S. Bernanke, Chair of Federal Reserve System, this law greatly increased the ability of advocacy groups, researchers, and other analysts to "perform more-sophisticated, quantitative analyses of banks' records," thereby influencing the lending policies of banks.

Further, Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 repealed restrictions on interstate banking, beginning a wave of bank mergers. This gave advocacy groups such as the Association of Community Organizations for Reform Now (ACORN), power to demand more loans to their constituents because CRA allowed them to charge noncompliance and stop such mergers.
He states that over time community groups and nonprofit organizations established "more-formalized and more-productive partnerships with banks."[2]

In early 1993 President Clinton proposed new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities.[7] The new rules went into effect on January 31, 1995 and featured: requiring numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to targeted groups to collect a fee from the banks.[5]

Howard Husock, vice-president of the market-oriented conservative Manhattan Institute for Policy Research and author of a book on American housing policy, writes that the new rules substantially increased the number and aggregate amount of loans to low- and moderate-income borrowers for home loans. The Senate Banking Committee estimated that as of 2000, as a result of CRA, such groups had received $9.5 billion in services and salaries. As of that time such groups also had received tens of billions of dollars in multi-year commitments from banks to loan to local communities, including ACORN Housing $760 million; Boston-based Neighborhood Assistance Corporation of America $3 billion; a New Jersey Citizen Action-led coalition $13 billion; the Massachusetts Affordable Housing Alliance $220 million.[8]

According to a United States Department of the Treasury study of lending trends in 305 U.S. cities between 1993 and 1998, 467 billion dollars in mortgage credit flowed from CRA-covered lenders to CRA-eligible borrowers. The number of CRA mortgage loans increased by 39 percent. Other loans increased by only 17 percent.[9]

http://en.wikipedia.org/wiki/Community_Reinvestment_Act#Original_Act

I'm not saying that the CRA is the sole cause of this whole mess, but that's where it started and then one thing led to another, etc. The real fun started with the secondary market. Folks like Fannie Mae and Freddie Mac made a fortune, knowing full well that if their high risk ventures failed, the government would step in and bail them out, and that's where we are today. The thing that bothers me the most is all the finger pointing. Many people had a hand in all this, and how anyone (not pointing at you) can try to blame any one person or group of people boggles my mind.
 

Sandhusker

Well-known member
fff said:
Sandhusker said:
As usual, the libs claim that it is somebody else's fault that people are losing their homes.

How are you a victim when you sign papers acknowledging that your statements are true and it is printed in black and white what your payments are going to be? Who had a gun to these people's heads making them buy that house?

Is this like Oprah's mother being a victim?

PERSONAL RESPONSIBILITY; Such a foreign concept to liberals...

No, it's about greed and lack of government oversight. From the link above

2007 report by the Mortgage Bankers Association reports that the FBI estimates "80 percent of all reported fraud losses arise from fraud for profit schemes that involve industry insiders." That means the lenders, not the borrowers.

I don't speak libebonics, so help me out here. What do you call it when an individual willingly signs a document that states that all information that individual has given is the truth even when they know full well it isn't? What do liberals call that action?
 
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