U.S. Must Continue Propping Up Mortgage Market Says Bank Execs.

I love this quote S&L. How about you?

"The Obama administration invited banking executives Tuesday to offer advice on changing the governments role in the mortgage market. Their response: DONT REDUCE IT GREATLY". :)

So S&L there you have the great free enterprise bank executives practically begging the govt to stay in the game. Hmmm, maybe you dont know as much as you think about this game huh?

But then i almost forgot, you have a monopoly on the facts. :)


Here is a slightly different version of the above:
http://www.cbsnews.com/stories/2010/...n6780705.shtml

And then there is this:

"We should remember that homeownership's promise was ruined by
Wall Street's recklessness, NOT by federal policy."

Four Ways to Fix Fannie and Freddie

http://www.cnbc.com/id/38736813

Just answer this simple question. If there were no Freddie and Fannie and you were a loan officer and a young couple came in who made an aggregate gross income of $60,000, would you loan them $300,000 for a house?

That honest answer is more likely than not to be "no" and rightfully so. But, we have federal policies in place to promote "yes". Envision the Verizon commercial, but with "do you get it now?"

Dumb question, sorry. I know you too well.

Just answer this simple question. If there were no Freddie and Fannie and you were a loan officer and a young couple came in who made an aggregate gross income of $60,000, would you loan them $300,000 for a house?

That honest answer is more likely than not to be "no" and rightfully so. But, we have federal policies in place to promote "yes". Envision the Verizon commercial, but with "do you get it now?"

Dumb question, sorry. I know you too well.

-------------------------------------------------------

No, "poor people" are not the cause for the housing bubble.

Though I still would like to hear an answer to the hypothetical question, below is a compact summary of the housing bubble.

http://en.wikipedia.org/wiki/Timelin...housing_bubble

I know you won't read it, but I can paraphrase.

The housing bubble was caused by foreclosures. The foreclosures were caused by BANKS lending people money they couldn't pay back (have a bone), BUT the BANKS were incentivized by FEDERAL POLICY, and as you will see if you read the article, FEDERAL POLICY goes back to 1934.

Structurally speaking, the artificial demand created by Federal Policy drove prices up and up to an unsustainable levels.

Quote:

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Originally Posted by SiriuslyLong

Just answer this simple question. If there were no Freddie and Fannie and you were a loan officer and a young couple came in who made an aggregate gross income of $60,000, would you loan them $300,000 for a house?

That honest answer is more likely than not to be "no" and rightfully so. But, we have federal policies in place to promote "yes". Envision the Verizon commercial, but with "do you get it now?"

Dumb question, sorry. I know you too well.

---

Yes that is indeed a dumb question. The answer is: OF COURSE NOT.
But it is a fact that most bad subpar loans came from NON BANK mortgage companies. You really have to look this up. The whole system needed regulating not just Fannie and Freddie.
There was govt policy and then there were private companies doing the same thing. You keep wanting it to be simply Fannie and Freddie that caused all the problems and i keep showing you how someone like William Poole readily admits that "the private market brought on the financial crisis by creating so many subprime mortgages". He goes on to say that Freddie and Fannie joined in and in some cases led the way.

Regarding Wikipedia. Since you said you were having trouble finding something on Bush i thought i would just quote from 2002.
"President G.W. Bush sets goal of increasing minority home owners by at least 5.5 million through billions of dollars in tax credits, subsidies and a Fannie Mae Ccommitment of $440 billion to establish neighborworks America
with FAITH BASED ORGANIZATIONS (remember Bush's push on faith based programs?)

2003-2007: The Federal Reserve under Alan Greenspan (Republican) failed to use its supervisory and regulatory authority over banks, mortgage underwriters and other lenders, who abandoned loan standards (employment history, income, down payments, credit rating, assets, property loan to value ratio and debt servicing ability).

Just a reminder that Bush and Republicans controlled the Congress and the Presidency during most of this time period.

Private Lenders? Who are these companies? A quick search brought on nothing of substance to validate this claim.

There is a lot of blame to go around; I readily admit that, but my point has been and remains that the underlying or "root cause" of the crisis is the longstanding federal policy to make home ownership easy for everyone. You can argue that it is not the root cause, but you cannot argue that the policy afforeded people mortgages they probably shouldn't have received.

I had an accounting professor in the mid 90's who noted that the real estate market is governed by the greater fool theory.

Quote:

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Originally Posted by Havakasha

Regarding Wikipedia. Since you said you were having trouble finding something on Bush i thought i would just quote from 2002.
"President G.W. Bush sets goal of increasing minority home owners by at least 5.5 million through billions of dollars in tax credits, subsidies and a Fannie Mae Ccommitment of $440 billion to establish neighborworks America
with FAITH BASED ORGANIZATIONS (remember Bush's push on faith based programs?)

2003-2007: The Federal Reserve under Alan Greenspan (Republican) failed to use its supervisory and regulatory authority over banks, mortgage underwriters and other lenders, who abandoned loan standards (employment history, income, down payments, credit rating, assets, property loan to value ratio and debt servicing ability).

Just a reminder that Bush and Republicans controlled the Congress and the Presidency during most of this time period.

---

Yes, Bush towed the line. Not that I'm into argueing about Bush (that's your thing), at least he did seek to reform FMFM, but was blocked by the opposing party.

Hold on Bill Gross on Fox News..... Mark Matson vs. Erica Payne commenting - both agree that the government should "decrease it's footprint" in the real estate market. I don't know which is conservative or democratic, but Mark is leaning right. Gross conflict of interest?

I'm glad Fannie Mae and Freddie Mac are on the table. The dialog has been good. We'll see if Obama turns this into big government.

http://www.publicintegrity.org/blog/entry/1664/

From Sept., 2009

"An analysis of federal mortgage data found that fully half of all subprime loans were made by non-bank mortgage companies, subject to little oversight and regulation. Further reporting uncovered that these nonbank lenders were not required to file reports of suspicious activities to the federal gov't, unlike almost every other player in the financials services realm, from banks to casinos to check cashers."

" And one year from the collapse of Lehman, many of the loans that crippled the financial system could still be made today. High-cost, o documentation subprime loans are still perectly legal. But that could be changing, as the proposal for the Consumer Financial Protection Agency and other regulation plans move forward"

Note: The Consumer Financial Protection Agency was proposed and passed by Democrats. Republicans were opposed.

You really are going to have to stop your steady diet of Fox news. You could end up like a lot of those listeners believing all kinds of crazy stories. :)