Some one got adjusted out of their house? Or adjusted THEMSELVES out of their house? A shark sold someone a mortgage loan they can’t afford? Who borrows tens of thousands of dollars without a lawyer to review things, especially when they know what they don’t know?
Now don’t get me wrong. There were plenty of crooks in the housing bubb…
Some one got adjusted out of their house? Or adjusted THEMSELVES out of their house? A shark sold someone a mortgage loan they can’t afford? Who borrows tens of thousands of dollars without a lawyer to review things, especially when they know what they don’t know?
Now don’t get me wrong. There were plenty of crooks in the housing bubble on Wall Street and in the mortgage brokering business. They should all be in jail. On the other hand, there were loads of people who knowingly took out liar loans and they should be in jail too. You never hear that though. Every borrower was a victim. Not true. It took two to tango. Three in this case - greedy Wall Street bankers, deceptive and dishonest brokers and lying or stupid borrowers.
None should be let off the hook and none should be pitied.
Who borrows thousands of dollars without a lawyer? EVERYBODY. I have purchased a dozen homes in my life and never, not once, has a lawyer talked to me about the type of financial vehicle financing the property.
«Who borrows thousands of dollars without a lawyer? EVERYBODY.»
Only the people who expect that the price of the collateral will balloon, so any problems will be paid for by the next buyer. If they are sure that the price will double in 10-15 years, why worry about the terms and conditions...
You're doing better than most New Yorkers I knew back when I worked the city (up to 2001). They mostly didn't want to eat food sourced in NJ. Too many trips past all those refineries in Linden, I suspect.
No, but I could have gotten any of my lawyers to weigh in on how I was financing. Of course, I never did anything but a bog simple 30y fixed, so...not much to say.
The average house price in the US in May 2020 was 284,600. Nearly 50% of home loans "use" PMI (as of 8/19 - it fluctuates, that's the latest I've seen).
No matter how cheap a lawyer is (or how good of an idea it is to run a serious contract like a note by one) - you can't honestly believe someone borrowing $250k, and unable to scrape together 50k for a down payment, is willingly going to spend $500/$1000 extra?
This isn't a comment on whether they SHOULD or not - just on actual behavior.
A number of states, like NY, Mass, NC, De. and others literally require that a buyer be represented by an attorney. Quite a large number of mortgage lenders insist on it even in states where it is not required.
You would not buy property without an inspection by a professional. If you do you could get something with problems and issues that would cost thousands to correct. Same with complex mortgages and terms of sale. Unless you know the "system" inside and out you would be well advised to consult with a financial professional or an attorney with real estate experience. Just like insurance. If you don't use it okay. But if you need it it is great to have.
Do you talk to lawyers before buying insurance? No you talk to an insurance broker. How about investments? A Stock Broker. Same with Mortgages, you talk to a Mortgage broker, they explain it. But they arent lawyers.
Elizabeth Warren on credit card agreements: "I taught contract law at Harvard University and I can't figure out some of the stuff that's in these agreements - and you expect a mother with 2 kids and an Associate's Degree to understand what it's all about?"
This bullshit of blaming the victim with the "they knew what they were getting into," or my personal favorite, "Hey, nobody forced them to sign that contract!" is tiresome.
This isn't fair. People understand the cost of credit. They just get in situations where they feel they need it or worse so many businesses require a credit card to do anything. It's "not a mother with two kids and an associate's degree" that can't figure it out. That is a disparagement.
This is true. If you do not have a credit card/functional credit you will truly get raked over the coals. I’ll defend the payday loan places-you have to pay for convenience, but Rent to Own places would make a Jersey loan shark blanch in shame with their rates.
And that was the selling point. "There's not really any risk. Look at how prices are rising/have risen!"
Of course, once that ended, the buyers were under water w/ no recourse and the lenders had protected themselves with the "toxic asset tranches" in securities packages.
At least that's my understanding of the (observed) events.
Doodybag? Finance got $29 Trillion from the Fed in 2009, add a few trillion in QE, and another $9.7 T this year.
Why can’t the commons get enough love to live indoors and eat regularly?
I’m so Right Wing I’m flossing with steel wire, and paid my way my whole life. I also understand these people are criminally insane, and need to answer for it. If you invited these Financial Wizards to Dinner you’d have to count the spoons after...some WILL be missing.
Adverse outcomes?
Adversity and outcomes “on the way”...as we say in my trade.
Tell me how much the government lost...or earned...on bailouts to financial companies. We know that they lost money bailing out decrepit car companies in favor of the unions whose unsecured c,aims were elevated above secured claims.
No, what's really tiresome is that hose that complain loudest about "everyone with adverse outcomes in life" are the ones that benefit the most when government steps in to hold the doodybag.
No really. I agree with everything Matt said. There were also plenty of folks flipping houses and building decks, etc with easy money. Until there weren’t.
But they are stupid and/or foolish to trust strangers. It isn't hard to find out the kind of loan you're signing up for. Sorry if you don't like that, but it's obviously true.
Yes, some people knowingly took out "liar loans," probably as a result of lying to themselves, or being convinced that real estate would keep on going up. We were offered one and turned it down. But you're ignoring most of the stories, people who were lied to, getting an ARM when they thought it was a normal mortgage (who can afford a lawyer in such a deal? Bit of privilege showing through, there.) Or who had an affordable mortgage until the whole economy was ripped out from under them - by Wall St., who suffered very little.
In 2008, Wall St., collectively, and a bunch of idiotic economists drove the economy into the ditch. They should all have been left to wait tables for a living, or worse. Some should be inn prison - still. but no, they were bailed out, which was hugely, passionately unpopular at the time. That was one of the big sources of the Tea Parties, for one example. So the whole thing was an exercise in corruption - by Obama's government.
Why is it that so many people ignore the genesis of the housing bubble came from governmental requirements that loans be made to people who couldn’t afford them under penalty of law? The banks who were threatened thst they could open new branches or acquire other banks unless they paid off liberal community organizers? The requirement that Fannie and Freddie make bad loans? The Congressmen who got sweet deals on their own loans to protect predatory lenders?
And if you can’t afford to buy a house without basic advice from a lawyer you probably can’t afford the house anyway. But you WANT it. I want a lot of things - when I was young I wanted to be a MLB right fielder. No one gave it to me. Is it unfair that I couldn’t get my desired occupation? Was I discriminated against?
The most important transaction in your life any some of you demand that a person be justified in relying upon a person on the other side of a commercial deal? Have you lost your minds? Should they be accompanied by the store manager of a grocery to ensure they buy the best deals on offer? Shall we hold McDonalds liable when fools eat their crap twice a day and get diabetes and heart disease?
When are people supposed to stand on their own feet and realize hat they are in over their heads in in such a fundamentally critical financial and life decision??
Here it is people, the most shopworn trope in the post 2008 conservative playbook: the poor widdle wenders were forced -- forced I tell you -- to throw away their underwriting standards and approve those loans, and even resort to fraud. They HAD to lend to the unworthy, or face jail! Because we all know that it's Congress who tells the financial services industry what to do and not the other way around...
I do not understand why you think the bankers tell the regulators what to do.
I work in the DoD and I know about regulatory capture, and the impact of bought congresspeople, but that isn't the same as a regulated industry telling the regulators to shove it and do what they want.
Let's say it were, though. Why are you so insistent on letting the politicians off here? They are certainly culpable.
I'm only insistent on calling bullshit on the charge that the Great Bubble and resulting financial crisis was due to lenders being forced to loan to people who otherwise wouldn't qualify.
As for letting politicians off the hook...no, they were the ones who dismantled the regulatory structure put in place by FDR to prevent chaos and occasional collapse in the financial services industry. Reagan to Clinton, so bipartisan scumbaggery. The question, though, is who is the dog and who is the tail? I think the evidence is clear that the industry is the big dog here. They called the shots on deregulation, as well as the bailout.
Well the CRA related loans - which is what you are talking about - were only 6% of the total, so even if they were higher risk (which some data supports), it only caused a small portion of the problem, which leaves a huge amount to be explained by other means.
With that straw man out of the way, the industry people didn't call the shots, the government people did. They thought it useful to kiss Wall Street's ass, but what is new about that? What would change in the future to make that NOT happen?
My answer is "nothing". Even if you overthrew the government, you'd have the same wealthy shitbags peddling the same crap in this putative new government. With everyone just as susceptible to the filthy lucre as last time.
You may has well have asked,Saul Alinsky to write the paper. Look at these wizards of smart from extremist left wing schools whose learned opinions always fall on the same side of the divide. Always.
I'm not sure I follow this response. Are MIT Sloan and Dartmouth Tuck business schools notably left wing extremist? But regardless of these professors' political leanings, it's not clear to me how anyone would judge their findings politically useful to either side. Their point is a pretty simple one - middle and high income borrowers with above-average FICO scores made up a disproportionately high percentage of defaults during the credit crisis. That's a finding that doesn't really seem to support any particular partisan view. What is supports is the idea that across the income spectrum and among both borrowers and lenders, there was a degree of over-confidence in increasing housing prices. Full stop.
Well, I'm glad we agree it's a straw man -- which was my point.
As for what could change, keep in mind that the regulatory regime put in place during the New Deal era kept the system safe for 50 years. It's not as if we have to overthrow the government, just elect people who aren't captives of Wall Street. It's kind of hard to see now, with both parties competing to do the bidding of the same overlords, but it can happen and has happened.
No not entirely a "straw man". You sound like someone desperate to defend the "good intentions" of those who wanted more poor people to own homes. Which is bullshit.
It wasn't "entirely caused by" regulatory agencies. It isn't a straw man to note how the gov't placed a giant pot of tax money "loan guarantees" in front of the banks and mortgage companies and said "go to it!".
The behavior of the shitty people in finance was entirely predictable. And sure, there were other factors that went into the collapse, including the flipping craze, mortgage lender rapaciousness, local NIMBYism and other inputs pushing housing prices to ever-higher levels.
But it's just plain disingenuous to deny the role of the virtuous in the disaster.
Kind of a side point, but the entire US residential mortgage loan total was something around $8 trillion. A big number, however all the 2008 bank bailouts ended up around $24 trillion. So we could've literally written off every single residential mortgage in America 3x for all the bailing. Leaves a lot of questions as to who/what else was bailed out.
Another point (now that I'm warmed up), Catherine Austin Fitts and Dr. Mark Skidmore have researched funny business in govt debt and mortgage debt. She was Assistant Secretary of Housing-Federal Housing Commissioner under Bush Jr. At one point she was out in an area that had an extremely high rate of fed-backed properties (I think New Mexico). She drove to one of the addresses and...nothing there. Yet another address, not a house. There were many examples. The implication was that *someone* got some money for a mortgage on a place that didn't exist. You tell me, but this sounds like it may be some systemic fraud. More refs on high finance crapola: https://missingmoney.solari.com/
Far from it. I don't defend or attack these "good intentions", as you put it, because they were a drop in the bucket in the ensuing disaster. They were utterly irrelevant, and if you think that's bullshit show some proof. Show proof that home loans to poor people, backed by liberal do-gooder regulations, were a significant factor in threatening the financial system.
This was trillions of dollars in search of a deal, any deal, and most of the losses were on houses owned by middle income and upper middle income people who would have been prime borrowers. Many were prime borrowers until the house prices rose to vastly exceed the conforming loan limits of Fannie/Freddie.
I'm disinclined to blame the people who were taking actions that were logical based on the guidance they were being given. A Paul Volcker would not have let this happen. I am not certain that he would have had the tools to stop the train in 2005 or 2006, but we should make sure that someone does in the future. But Glass-Steagall still remains un-reinstated. So no hope there.
What I was saying is that the government basically led the way in forcing sub prime lending. Of course, Wall Street saw the model and replicated it.
By the way, did you know that the government strong armed the banks that sold to Fannie to buy more stock in it to strengthen its capital due to huge subprime losses before the bubble burst? And those shares went to zero. And then because of the instability of the market, they forced banks to sell into that unstable markets loans that had been on the books for years and were current and paying because “ they were under water” on a loan to value basis. I know of banks whose losses from those two government demands that were forced to take TARP money when they were otherwise healthy and secure.
Why is it that people think everything is an apples to apples comparison-- all neat and linear? Nothing about human behaviour is--ever. As a medical professional it is mind blowing that you think that there is a direct correlation between eating McDonalds and heart disease/diabetes. I have patients that eat similar diets and have none of those illnesses-- must be something else could cause those illnesses right?
You can't compare that to the fraud and corruption done by unregulated practices by banks and their "salespeople" who promise you will get "more cash flow", better rates etc. to unsophisticated buyers aided by levels of govt who ignore (or remove it - Glass Stegal) and look the other way not to jeopardize funding during election time. It is not even remotely comparative.
Thank god I live in a country where there are rules (and recourse for the home owner) about this kind of predatory "salesmanship". And yes we have real bank regulations as well. Banks are not total crap tables here. FYI-- Canadian real estate didn't implode, no bank failures and no bank bailouts-- all due to very basic regulations (Canadian banks do very well--$ billions well all around the world)
Funny my husband the fraud lawyer is dealing with a case where a big company is suing an insurance company for not providing Ponzi scheme insurance thought -- seriously -- and they are "sophisticated buyers" but lost millions of dollars so they get opportunity to get it back. Not the unsophisticated home owners who were lied to, not provided basic information about what they were buying and yet the "company" gets recourse. Nice system!
Your " boot strap" comparison is eye-rolling. The world and especially human behaviour is not that linear and direct --ever.
Well then, let’s get everyone assigned a government monitor to make sure that everything they thing they bargained for or are entitled to is delivered. But query, do the monitors get monitors?
I see both sides of this story, Rick. I am ok with losing my house, my business, almost everything I owned. I learned from it. It is a complex story, as Carol has pointed out. I wasn't over-leveraged. I had attorneys. At one point I just let it go, I'd been fighting collapse for over 2 years and realized, I'm not going to survive this because I'm focused on property, lifestyle and $ instead of my mental/physical health. I shrunk my lifestyle to nothing and started over. Here's the problem:
What have we taught major banks / Fintech when they don't get called on their bad bets? I've recovered, took 10 years and am in a better place. But nobody bailed me out. We have, essentially, two classes. One has a get out jail free card, the other does not.
The banking system needed to be bailed out because our entire financial and economic system depends on it. Many didn’t get bailouts. Wachovia, Merrill Lynch, Bear Stearns and Lehman. Those that survived had serious limitations placed upon them. And at the end of the day, the government and hence the people profited from it.
I’m interested to know the circumstances thst caused you to lose your house. Did you buy too much house? Take on too much debt? Use adjustable rate products?
Like many stories, mine was/is complex. I was self-employed, had started a tech company and, at its peak, employed about 60 people. We were well positioned in the market place, good press etc. We had negotiated several Series A investments that would have taken us to cash flow positive in 2009...except all of those investors pulled out in Oct 2008. Long story short, VCs ducked, our investment bank went bankrupt (really) and we lost all funding. We laid off most of our employees and died over a 2 year period. My house was not extravagant by any means (3 bedrooms, 2 car garage not a McMansion) but after negotiating with the bank officers via my atty for 6 months and agreeing to a loan mod reflecting my zero income (I had savings) the bank pulled the offer! After discussion w my attorney we realized the financially prudent thing to do was to walk away from the house. I took my lifestyle down 85% (became a roommate in a house) and started the rebuilding process. I'm good now. Nothing like going from a house in a good neighborhood to renting a room in a basement of a house! I had negative income that year and the year after (alimony, child support)
As regards debt, I've always been a saver. I was able to support my kids and wife (alimony / child support - divorce shortly before the collapse) without ever filing for unemployment (I just thought it was wrong). I borrowed most of my 401k and it took me 10 years to rebuild it.
You have me sincere sympathy. You clearly weren’t one of the guys who gamed the system, but rather got caught up in the consequences of those who did. Many people, sadly. You were unfortunately collateral damaged and its a damned shame. I admire how you handled yourself. You are an individual, not a product to be used by activists.
This is exactly why it was wrong for the real players - on Wall Street, in the loan originating business and the liar loan borrowers - to get off the hook.
All of them should have been prosecuted. The packagers of loans pushed for product to securitize and at some point knew they were pushing crap all over the world. The originators knew that too and in many cases committed outright fraud in doctoring applications and submitting knowingly fraudulent loans. And the borrowers who knew they were lying or had reason to know - for example people buying expensive homes while drawing benefits such as the earned income tax credits and other transfer payments intentionally committed mortgage and/or bank fraud.
What is the difference between a bank robber and someone who essentially steals money to buy a home they know they can’t afford?
Not everyone were victims of deceptive loan practices. And many who were should have known better based upon common sense - they had to know they couldn’t afford the homes and many of the pitches were simply too good to be true.
Yes some of them were ignorant, and thats a poor excuse. In most cases, ignorance of thr law is no defense.
The decay of our society - where people are discouraged by policy to be dependent and thus have poor attitudes towards education, where those who sought educations grew up in a corrupt education system where political correctness has swamped basic educational foundation like math, science, reading interpretively has produced an army of people unprepared to function in a modern society - has produced an army of people who are steadfast in believing that they know it all while knowingly little constructively is a growing problem.
The values produced by the a leftist controlled academia together with politicians who are dedicated to keeping people dumb and dependent has swamped our economy and social conventions.
Prosecutions of large numbers of voters - especially voters who have been gulled into believing that they are victims prevented prosecutions of borrowing fraudsters.
It’s kind of hard to give them a bye since as the fuel for the fire, the whole mess couldn’t have happened while singling out other players for prosecution. And since the Wall Streeters at the top of the pyramid were steadfast supporters of the left with overwhelming support going to the guy in the white house, his lackeys at the GSEs, his own cabinet officials who primed the pump for crappy lending standards and the wingman AG made it impossible to prosecute them.
I believe almost all mortgages made in Canada are "recourse" yes? That is the fundamental reason there wasn't a housing meltdown in Canada. Simply doing the same here in the states would end the threat of a repeat and take bad actors in the mortgage origination process and ignorant consumers off the table.
We do power of sale here- very few foreclosures. Our banking system is very very different than yours. Sorry-- former banking economist-- that's not why there wasn't a meltdown. We have very different holding percentage requirements for bank lending. Both OSFI and the federal Bank Act (banks are regulated by the federal government) have clear basic minimums. So the crap table lending and gambling you get in the US is not part of our system.
Remember your system is heavily private (including regulation)--ours is not-- if private banks want to operate in Canada they have very clear regulations they have to meet- then they get a piece of the pie . We used to have 5 big banks until 1980 when we let some international banks in HSBC, some American ones etc.
BTW I never brag just state the differences. Didnt say it was better, just said we didnt suffer-- I assume you live elsewhere but kept the Citizenship?
Hey Andrew. I was speaking why the 2008 US debacle didnt crash our banking system. Never mentioned the valuation of real estate. Agree-- over valued thanks to Chinese money-- everywhere- New Zealand, Australia, Paris, London etc. That reckoning will come no doubt. BUT it has nothing to do with banks-- it has to do with the standard economic canard-- " Too much money chasing too few goods" add into the money laundering aspects (husband is a fraud and banking lawyer) and voila! a perfect storm.
BTW your characterization of CMHC is incorrect-- our system from day one (we are a baby country after all 😊) was set up like this. Sorry-- Canadian eh?
«almost all mortgages made in Canada are "recourse" yes? That is the fundamental reason there wasn't a housing meltdown in Canada. Simply doing the same here in the states would end the threat of a repeat»
All mortgages in the UK or Ireland (or Spain etc.) are "recourse" and there was a meltdown. What happened in the UK: the government ordered the mortgage lenders to avoid "recourse" because it was politically unacceptable, the speculative middle class would not accept mass repossesions. Some years after the 2008-2009 crash the BoE published a survey showing that 14% of all mortgages were still in "forbearance", and this caused quite a storm, so they stopped publishing such data.
“The Bank of England estimates that as much as 14% of all UK home loans are either delinquent or in some sort of forbearance process. Nobody really talks about this because nobody wants property prices to fall out of bed. Can we handle the truth?”
As in many other cases "recourse" is something that can only happen to a few middle class people, and then their neighbours think "losers", but it cannot happen to many middle class people because then they vote against it at election time. Individually the middle classes are powerless, but collectively they can swing elections, so they are powerful.
Cal, Tx and AZ are the biggest obviously and comprise a significant percentage of underlying loans in most MBS products. You might look up the HARP program that was created in 09 but expired in 18. That program I believe was the one that allowed short sales of properties with no further recourse to borrowers but not positive
In the past, and theoretically still, bankers and other corporate lenders were required, under penalty of law, to deal honestly, precisely because otherwise they had a license to steal. Which they now have, because they've bought off the cops.
Otherwise, ordinary people couldn't buy houses, or even cars, at all.
«Why is it that so many people ignore the genesis of the housing bubble came from governmental requirements that loans be made to people who couldn’t afford them under penalty of law? The banks who were threatened thst they could open new branches or acquire other banks unless they paid off liberal community organizers?»
Can you quote the word of any federal law as to that? The CRA as the name says requires nothing like that:
* examines state member banks to evaluate and rate their performance under the CRA;
* considers banks' CRA performance in context with other supervisory information when analyzing applications for mergers, acquisitions, and branch openings;»
I cannot see any requirement or threat there, never mind related to pay off "liberal community organizers". Is the Federal Reserve a far-left propaganda organization?
«The requirement that Fannie and Freddie make bad loans?»
Can you quote the text of any law that allows Fannie and Freddie to make loans to people, never mind bad ones? AFAIK Fannie and Freddie can only *buy* loans already made by banks and other mortgage lenders. It is up to the banks to make good or bad loans. The banks have however paid Congress to ensure that Fannie and Freddie and the Fed bail them out by buying the bad loans they made, and indeed the Fed has bought trillions of dollars of bad loans ("toxic assets") at "special friends of Congress" prices from the banks.
A 2010 WSJ article which speaks to HUD secretary requiring the two GSEs to hike Their purchase of subprime loans to 50% of the total. And forcing them to degrade lending standards.
Also REGULATORS, whose approval for mergers and branch openings were withheld unless they followed preferred lending guidelines, controlled that process. You want a law - look at other enabling statutes giving them broad authority to regulate mergers and branch openings.
You see, to love the regulatory state. Why demand specific statutes when broad grants of authority work like a charm?
If John Doe or Juan Perez or Laqueesha Brown or Hmong Tet etc can lose their house, then the Hedge funds, CITI and AIG can lose theirs. Paul Krugman can take his Nobel to the pawn shop, and the ratings agencies can go to jail. So can whoever blew it at the SEC.
The problem wasn't adverse outcomes, the problem is the adverse outcomes were 'unequal'. The criminal masterminds can go to jail, certainly mr. mozillo at Countrywide.
Now in truth history suggests that having avoided Jail, they'll now ride the Trumbrels.
Which explains the panic, stealing the election and all the rest.
You are not looking at a government of genuine thugs taking power, no.
We'd be better off under genuine thugs, they understand consequences.
You are looking at spoiled and usually old, privileged all their life over-promoted bourgeois criminals who are terrified, and every response and action, word demonstrates their terror.
They were of course never afraid of Trump, they were afraid of his voters, of a nation that would go against the elites.
How many years is Trump going to be the whipping boy of the unprincipled left? Let me remind you that some moron named Obama was President for 8 years and his “wingman” didn’t prosecute anyone. Bang on him for that. As to Wall Street, they heavily backed both Hillary and Biden over Trump. Hmmm. Wonder why Obama and a holder didn’t go after them?
Rick I was talking about 2008 in the first two paragraphs.
After that I talk about the present govt, Biden's.
The link between 2008 and 2021 being;
"Now in truth history suggests that having avoided Jail, they'll now ride the Trumbrels. Which explains the panic, stealing the election and all the rest."
I'm not leftist, as explained earlier I'm so right wing I floss with steel wire.
Trump was not blamed above by me.
He's gone, he tried, he failed. This govt can't be reformed.
These elites are quite beyond saving.
My only mention of Trump being they're afraid of the voters, and the nation.
I'm not principled at all about politics now, the Constitution is destroyed by counter-party treachery - I hold my Oath...abrogated by counterparty.
Now we can live in a country with oh..a few million, and a few million more like me...noticing the Capitol only stands because of Troops! Whee.
Actually...my Oath nullified... I'm FREE!! NIHLISM HERE WE COME !!
If you don't like government by train wreck neurotic criminals, lets try government by Condottieri ! WHEE !!
1. You need to know you should have a lawyer and then you need to be able to afford one.
2. Mortgages should NOT be so complex you need a lawyer.
3. Part of the problem here is that at the same time this crap was going on the same Wall Street firms were pushing for whole industries to be pushed overseas to China wiping out jobs.
4. The 30 yr mortgage as it is built today is a disaster waiting to happen. The days of working steadily for one or two firms for 30 yrs are gone. People today are going to have ups and downs in income and stretches of months without work as automation takes over. Even lawyers and doctors are soon going to be finding themselves at risk. Already seen a large loss of autonomy and drops in relative income for those professions and it is just going to get worse.
5. It took 2 to tango but the only ones left to suffer were the borrowers. The finance guys were too big to fail or jail as Holder told us. SO, half the dance pair got screwed while the other got richer. We could have just as easily given the money to the borrowers so they could then pay the banks. Oh....THAT would be a moral hazard.
Bottom line, with what is coming, the old way of thinking about the economy is gonna have to change. The reliance on stable incomes and economic growth to solve the issues of sheltering, feeding, educating and providing healthcare to a national population is just going to have to be rethought and that is going to have to include how we view the possession and application of capital. Aging populations. Gig work. Offshoring. Large scale automation whether in the form of robotic process automation or production automation, the decimation of brick and mortar for the internet, expert systems to replace lawyers and doctors, all these are going to massively disrupt the old order and make it much much harder to point to people and say that their circumstances are their own fault when in fact the environment they are coming out into has made their very existence unnecessary.
In our system, people are "human capital stock" or "consumers" or "taxpayers" but never citizens anymore. They are inputs to the economy, not valued simply for being human.
The point of all of our systems, government, law, capitalism etc. is to provide for the most number of people possible the best possible life. BUT..the system is broken and antiquated and it is failing to provide what it did in a different, less technologically advanced, time.
BUT..ultimately the PEOPLE are the WHOLE point. Capitalism for its own sake is a waste. Democracy for its own sake is useless. Democratic Capitalism that fails to provide for the needs of the nation is a failure.
If you can’t afford a lawyer, you can’t afford a house.
Mortgages need to be complex for lots of reasons. There are legal consequences to borrowing so much money on a recourse basis secured by your hime. This isn’t a simple process like most other purchases and moreover it represents the largest investment most people will make in life. Most people aren’t financially sophisticated. And loan products have gone from conforming loans to all sorts of options that are highly complex. You can’t simply outlaw all but confirming loans,
Outsourcing is not just a product of evil corporations outsourcing manufacture. It is also a product of government policy. China, the biggest beneficiary uses the equivalent of slave labor salaries to reduce costs. India too. And both countries pollute up the yang yang, but Obama and Biden foolishly allowed them to continue to,do,so,in the Paris accords. That’s just stupid and it reduces loads of costs.
On the other hand American companies are subject to huge and costly regulation, much of which are politically driven rather than otherwise. The left’s alliance with labor unions prevented them from aligning labor costs with competition, to a large degree. Here’s an interesting story - Pittsburgh Plate Glass (PPG) sought to keep their labor costs for legacy employees whole while creating a new tier for new hires. That resulted in a bitter 5 month strike thst still didn’t resolve the issue. Ultimately, the company thst invented modern plate glass and safety glass for cars exited the glass business, selling it to a Mexican company that was free of this kind of nonsense and hyper regulation. Now PLG Imdistriesmsells paints and costings instead.
The US under Clinton responded by granting China MFN status instead of hitting them with equalizing tariffs that would have kept the jobs here. Oh, and they also welcomed them into the WTO. Primarily fo dirty campaign contributions.
And they did that knowing that China was an economic bandit. Clinton had to know what the natural consequences of doing all this was, but he wanted the dirty money. And presidents come and go, but guys like Xi stay for decades. The first guy to call China out and impose realistic policies were banged by domestic political opponents because they want power - regardless of the effect upon the citizens.
And you wonder why any company would not export jobs to the lowest cost provider??
Heel we all do it ourselves. Why do you think that Walmart and then Amazon succeeded? Selling low cost Chinese goods for less, putting small business out of business. Walmart has 265 million people shop in their stores for a reason - Americans want lower costs, just like manufacturers. Amazon has 150 million shoppers and 100 million prime customers for a reason.
The result is while outsourcing labor hurts jobs, shoppers don’t give a shit because they shop on price just like manufacturers.
And how many people say, I’m buying American cars? I walked my dog today for two miles and counted the cars. 184 foreign cars, 71 US cars. Not so long ago, foreign cars were novel in the US. You’d see the VW bug a lot and a few other cars. Repair shops advertised “foreign cars” as a specialty. The first Honda in the early 70s was a shitty little tiny car a bit larger than the crazy Smart car. They and others grew massively. Why? Because they were cheaper at first. Quality came later. But you don’t hear about how the people buying these cars were hollowing out the US manufacturing base and causing massive job exporting.
Because the little guy is always a victim, he can’t be part of the problem,.....
The highs and lows that individuals may experience is a product of many things. But what would you do with mortgages to accommodate that? As a lender, I’d look at a person’s likelihood of job stability and decline offering mortgages to people most likely to have variable and unstable income. Thst is only business sense 101. But if they did thst, something tells me there’d be demonstrations in the streets.
And why is it the government’s job to provide food, healthcare, shelter, etc.? Why isn’t it a person’s individual responsibility to confirm their consumption to their reliable means? The central government was intended to be one of limited powers. And before the middle of last century, none of these things you see, to think are national responsibilities were performed by the Federal government. The growth of these federal programs created more need than they satisfied by telling people that they didn’t have to be primarily responsible for themselves. Now you have people who do the math and determine whether they get more pocket money from handout programs then by working. We have less needy people and more wanty people. And let’s not even get into the resulting devastation to the nuclear family unit thst these programs produced.
The people have become what they want to be. They want equity enforced regardless of effort. You are absolutely correct that the system is broken, but at the end of the day the citizens broke it. DeToquville said that America would lose its character when the citizens realized that they can be bribed by the government.
Now you have inter generational dependency. Not an accident - the left realized that if they are perceived as providing people with their needs and wants, they’ll get their votes. So they’ve kept millions captive in a soft form of slavery, dependent upon them for life’s essentials, trapping them in broken communities filled with violence, drugs and a low interest in education which would allow them to keep up with our changing technological economy and society. Funny how these technological ply challenged people all know how to use their smartphones and organized for more more more that they don’t earn.
Capitalism works when people don’t have socialist infrastructure to cripple them into dependents.
rick.. were you born retarded, or was it all that rotgut whisky and prozac? or are you just a psyop professional, gracing us all with your broken propaganda and anxious, buns up and kneeling, neoliberal boot licking?
Its it so sad-- you see it everywhere-- usually with virtue signalling and self righteous commentary. " I am doing well so I can kick those that didn't do what I did" " I am in the group I don't want this person in, because I won't be special (ie house owner)anymore" Cringe worthy. Standard insecurity and what fuels xenophobia.
It is the worst human trait. I want everyone to do well. I believe everyone deserves opportunity and equal access. What I don't believe in is predatory "salesman" taking advantage of people -- that is where some minimal regulations can come in-- like a cool off period etc . So that 79 yr olds don't get burned, so that undereducated dont get burned.
Rick does have a point, though. The 2008 crisis was exasperated in the legislature where regulations were modified or amended. Many of the loan agents were performing clerical duties, ignorant of the dire consequences. Yes, there were also those that knew it would end up badly for some, but the real culprits were on Wall Street where the risky loans were packaged in derivatives and CDSs and sold to the nearest sucker. The Tarp agreement ensured that the taxpayers bailed them out while the financial executives issued themselves obscene bonuses to add insult to injury. The Obama administration effectively endorsed the agreement by failing to go after the culprits even though Senator Carl Levin's subcommittee on investigations had uncovered considerable evidence toward indictments. https://www.hsgac.senate.gov/imo/media/doc/Financial_Crisis/FinancialCrisisReport.pdf
Actually, as I've read more of Rick's posts, I can see he does NOT hold the lenders, and their governmental non-regulators blameless. He just points out that a LOT of the people who got "hurt" could have seen this was bullshit and avoided their exposure to greater risk than they could afford.
I have posted one anecdotal case where a young black guy called bullshit on a Countrywide offer ON GENERAL PRINCIPLES. And lo, he was not harmed by the crash.
That said, I also see your compassion for those victimized. You guys are both saying "It's not a binary situation!" and then kind of pretending the other is saying that it is. It IS possible for people to be partially blameless and partially responsible for their own bad outcomes. It IS possible that financial institutions were presented with bad incentives by government. It IS possible that politicians looked at positive (for them) outcomes of actions that were going to cause disaster.
I can see both of your rhetorical 'houses', and I'm looking for some pox.
Just look at it pragmatically, though. From the point of view of the new home buyer, even fully assuming that the bank is totally greedy and self serving, why would they approve a loan that they expect to default? They want to make money, so giving a loan to someone who can't afford it would make no sense.
What these home buyers were missing, is that the people making the loans were handing them off as quickly as possible, so they wouldn't be left holding the bag. They repackaged all of these loans into CDOs and sold them off to other suckers. They got their profits and got out before the loans blew up. I suspect that if the people who made the loans had been forced to hold onto them, this whole thing would have looked very different.
It doesn’t take a lot of losses in a financial crisis to sink a lender. Look at JP Morgan Chase. Their tier 1 capital is 11%. That’s much higher than typical capital ratios were in 2008. This, it doesn’t take a very high percentage of loan losses to sink a bank.
That’s why I get a kick out of only 6% of loans were CRA loans. That’s more than enough to sink a bank. Private label mortgage CDOs didn’t start out as subprime generators. They were just competition for Fannie and Freddie. They used the Fannie Freddie lending standards - hence the term “conforming loans”. That made them marketable and fairly highly rated by credit agencies.
The politicians led the race to the bottom by mandating Fannie and Freddie take huge amounts of crappy loans.
Between 2005 and 2007, they acquired few conventional, fixed-interest loans with 20% down. They loaded up on subprime, interest-only, or negative amortization mortgages—loans more typical of banks and unregulated mortgage brokers.
Fannie and Freddie made things worse by their use of derivatives to hedge the interest-rate risk of their portfolios. But as private-sector companies with shareholders to please, they were doing this to remain competitive with other banks. They were all doing the same thing.
Fannie Mae's loan acquisitions were:
62% negative amortization
84% interest-only
58% subprime
62% required less than 10% downpayment
Freddie Mac's loans were even more risky, consisting of:
72% negative amortization
97% interest-only
67% subprime
68% required less than 10% downpayment
These exotic and subprime mortgages made Fannie and Freddie's loan acquisitions toxic.
All this can be placed at the door of politicians like Chris Dodd, Barney Frank and George Bush. Bush mindlessly pushed home ownership. Dodd and Frank - who lost their seats due their complicity in sinking the two GSEs - fought any kind of oversight about the obvious risks that had even become apparent to Bush who asked for tighter oversight of them 17,times only to be rebuffed by a Democrat congress and senate. 17 times.
It is not an oversimplification to state that this financial crisis began, both in time frame and economic ripple effect with the Freddie Mac/Fannie Mae collapse and subsequent bailouts. In fact, AIG, a former blue-chip giant that became 89% publicly-owned after its bailout, still had many highly profitable divisions. Unfortunately, AIG was heavily involved in the insuring of sub-prime mortgage packages- mortgages that were underwritten in large part by Fannie and Freddie.
The left - the media and the Obama administration conveniently forgot that these Government Sponsored Enterprises were run by Democrats- among them Franklin Raines, Jim Johnson, and Jamie Gorelick- all high-ranking members of the Clinton administration. Gorelick had zero banking or housing experience. It was a rich sinecure. People forget that Killer Cuomo, of nursing home virus fame - was the hammer who forced Fannie and Freddie to ramp up making crappy loans.
Even after investigations brought to light bad accounting practices and manipulations of the books of Fannie Mae, prominent Democrats such as Barney Frank, Chris Dodd, Maxine Waters, current Majority Leader Chuck Schumer, and Clay Lacy claimed loudly that there was nothing to worry about- that Fannie and Freddie would be just fine!
This was the context in which the banks jumped in the same way. They started out competing on conforming loans with private label CDOs and traveled down the quality chain in sync with the government.
Sure, there were brokers who knew they were making shit loans and many Wall Streeters off,laced them quickly.
Yes, I completely agree that's what you said. I'm just saying that none of your follow up comment appears to back that claim up. Maybe you didn't mean it to, but then I'm not quite sure why you replied to my comment with something unrelated to it.
I guess I was also replying to the yippers and yappers who treat borrowers as per se victims and the government and business as per se victimizers.
And also how many banks who actually held loans - many performing well, but were under water on a LTV basis because of the economic disruption (most of which have recovered) were forced by the government to sell these performing loans into an artificially depressed market. I know of several banks thst were healthy and performing as such which were forced into TARP as a result of government forced sales.
And as to borrowers being uneducated, it’s really a product of a decayed educational system, where people graduate with great egalitarian values, are greenwise and socially conscious, but actually know very little because the subjects of the oppressors - math, science, a good vocabulary and an appreciation of the arts and sciences are pushed into the background. So they are far less capable of dealing with the increasingly complicated and advanced society of those who came before them.
I bet maybe 10% or so do it old school and those are the people we have advancing the ball now. I promise you they understand mortgages. The problem for the world is that the other 90% believe they know far more than they do about how the world works if it is to succeed, but they are absolutely and militantly willing to question what they do know. Unfortunately for the rest of us, we have to run into these 90% and they vote as well, based upon their defective leftist university experience.
«have you seen the 12 foot, razor wire topped, gun toting military protected fence/wall Nancy Pelosi has had built around the entirety of our Capitol Hill? There is a reason for this.»
“At the vote confirming Brett Kavanaugh to the U.S. Supreme Court on Oct. 6, woman after woman screamed out in protest from the Senate gallery and was carried away by guards. [...] People were pounding in outrage on the closed entrance to the Senate floor. [...] U.S. Capitol Police said a total of 164 people were arrested that day for “crowding, obstructing, or incommoding.” [...] The depth of opposition to Kavanaugh was revealed when on Oct. 4 over a thousand people from throughout the country, mostly women, demonstrated on Capitol Hill. [...] At the Senate Hart Office Building, crowds saying “NO” to sexual assault and to the reactionary agenda that Kavanaugh represents flooded the atrium and every floor. Over 300 chanting, militant protesters were arrested that day. [...] There were too many acts of indignation and outrage at Kavanaugh’s nomination to list them all. [...] Outrage against Kavanaugh broke out initially on July 9 at the Supreme Court on Capitol Hill [...] During Senate Judiciary Committee hearings the first week in September, over 227 demonstrators were arrested.”
““Trump is one of two people - Bin Laden is the other - to have orchestrated a violent attack on the US Capitol Building in the last twenty years. (The Capitol Building is believed to have been Flight 93's target.) Both were acts of war against the United States, although Bin Laden's was a foreign attack and Trump's a domestic one. Trump's attack not only came closer to success - they actually breached the building - but aimed to do far more to destroy our institutions and way of life. Bin Laden's was a raid, meant to terrorize and provoke a response that would feed further escalation of ongoing global conflicts. Trump's was meant to decapitate the legislative branch, with accompanying mass murder and hostage-taking, and to put a permanent end to democratic (small-d) governance in the United States.”
There is something wrong with your software that this stupid comment gets put on top just because a lot of people comment about how stupid it is. Can this be fixed as it seems to me it just foments stupidity and controversy.
Or, you could note the content of the top post, realize what the many replies are likely to be, and move on. A touch of entitlement in demanding that it "be fixed" because you are very slightly inconvenienced.
It was a frenzy of flipping houses too. Everyone wasn’t mortgaging the family home. At one point, a house would go on the market, sell immediately and within weeks be back on the market with no improvements but ten thousands of dollars higher.
It was that and more. People would use their homes to cash out on bubble equity to pay off credit cards (only to run them up again), to put in desperately needed swimming pools and other additions, and more. People were attracted by initials teaser rates and were too stupid to see the cliff they were headed towards a year or two down the road. Others just always wanted a home and were blinded by that want to not look to close. We got the house!!!! There were clearly people who HAD to know better - thousands and thousands of people who were paying no income tax and were getting refunds of the earned income tax credit bought houses with these loans. How in the world did they ever think that they could manage a mortgage?
I really think, despite some formidable posting, you have missed some basics - let me give you the view of a 10+ year corporate collections experience - including GC Services (owned by a family tight with the bushies - and as such a principle industry consultant in drafting the Fair Debt Collections Practices Act in the waining days of Jimmers Carter)
It wasn't a 'housing crises' or bubble - it was a CREDIT CRISES - AND - further - despite my limited experience on the 'goon squad' - I have been mentored by an Uncle who was a second generation Cleveland Banker - who BELIEVED in the kind of investment banking that you seem to believe still exists - when it no longer does.
Credit and credit availability - a recipe concocted via the worship of the libertarian right - from resurrected Ayn Randers to the Milton Friedman post 'free to be/sell me this pencil' influential crowd - to the globalization of central banking - so much so that between the rough parameters of the FDCPA ('78) - and the Reagan years when financial deregulation promoted the reinvigoration of American Capitalism ( and the initial rise of Trump the entrepreneur) - an entire generation grew up with loose - widely available and cheap - credit.
This loose credit built the current edifice REX - a second gilded age in America - extreme wealth - and - the (seemingly) ending of the once great majority striving because of wide opportunities [you Rick imply still widely exists - while MT and his readers here - myself included -disagree emphatically ] ...MIDDLE CLASS - of which -as anyone in collections can tell you - whether they have encountered American Express's BLUE BOX VALUES or not - there is an easily recognized and likewise understood pattern when debtors default - IE - by the choices they make.
1st - low hanging dying fruit - like the sears card or the gas card.
2nd - cell phone or land line...
Orchard credit - then Discover - THEN MASTERCARD/VISA MBNA ECT
LAST - AMERICAN EXPRESS (ALAS)
THEN THE AUTO...
AND LAST BUT NOT LEAST - WHAT USED TO BE THE BEADROCK - ESPECIALLY SINCE FANNIE AND FREDDIE AND A FELLOW BY THE NAME OF Petie Lynch MERGED THE OBSESSION FROM BUSH THE FATHER ON DOWN TO THE CLINTON GLOBAL CRIME FAMILY TO LITTLE SHRUB THE KING OF TEXAS TO OBUMMER TO THE GREAT DISRUPTER AND NOW THE BIDEN CRIME FAMILY ALA OBUMMERS 3RD TERM.
Namely - that home ownership was the key to middle class wealth creation and financial and hence family stability - and clearly Rick you still believe it.
I don't. I don't in part because what Lynch sold was the Mutual fund - and - that owning a home was crucial to the new means of pensioning for middle class America - the 401K - which was supposed to be the win win in American Investment banking - except - ooopsi - that was a crock.
It was sure good for Pettie and his crowd, now wasn't it? Isn't kinda neat the way those two just fit like frick and fartie frack?
The 401K was great for the EDUCATED MANAGERIAL CLASS - and a disaster in comparison with the former defined pension - that was widespread in the whispy by gone days prior to the Savings and Loan crisis in the 80's (and some of the postings on that here - pinning for Glass/Stegall & a Volker rule that never really existed in the first place)- that later bled into the Stock Market crazied Tech era and eventually - once the Techie thing landed and dust settled - the real estate fiasco.
[and is still available in the Government Unions and the Teachers to Boot - who barely teach a thing about actual capitalism - but get the DEFINED PENSION TO DO THE KNOW-NADA]
Loose credit masked declining incomes - and the beauty of it was exponential (and you still SEEM to buy the 'morality argument') - which in turn led to the debt bondage that - like 19th century WASPS viewed as self-induced drunken and libertine self-destructive behavior of the Irish - was now in the 21st 'living beyond their means' - and monetized the screw job after screw job while the hoopleheads just 'keep digging.'
Go back and look at the crushing commodities market (before price supports - a 'New Deal' anachronism the Kochs and Austrian School cool kids have been trying to shutter for decades now - just as they have Social Security via privitization) - and the Gold Vs 'free Silver' political fights - and the toxic views on immigration - and so much more and Today it is Big Tech the global Party of Davos not the Monopolies of Standard Oil or the Railroads.
And I know this is simplistic but bear with me. I believe in capitalism - but with rules Rick.
We are not living through some minor bumps in the road - or some metaphorical 'hair on the wall' hiccups - Taibbi's been on this a long time and it's part of why I'm hooked as a fan boy- he is so much more right than wrong.
MT as a writer sides with those I once viewed as harshly and as cynically as it seems you do - but that was over fifteen years ago - when it was still a literal gold rush in the collections field - and why was it a gold rush - because the credit was still flowing - and now it cant.
American Investment Banking didn't 'blow itself up' in 2008 and we haven't just been screwed by Dodd & Frank and ect - that is really simplistic Rick - and wrong.
American Investment Banking sold us out BECAUSE IT WAS JUST TO *&^(iNG tasty to play Jack Sparrow and go 'a Pirating' the world over {especially with all that money the statist 'hybrid' Chinese were throwing at them - in the loose money world the west created }- making the de-industrialization of America - the ending of widespread opportunity for the next generation - all of it -a deliberate orgy of greed and nothing new - except in scope.
Both parties - until Trump ripped the scab off the great fantasia. Leaving both sides desperate to off him and the populism he recognized and road.
Global financialization is in most respects globally designed and led BY AMERICA - BUT NOT MY AMERICA - it is only now that - since 2008 - an awakened American populism - from the right and the left - just as it did in the late 19th century - has awakened to the threat it poses to both financial and personal freedom.
It's awakened for the same reasons it did before - even if this time its not about child labor and choking on coal dust or brain rot from mercury or lead. Americans do not decline gracefully or willingly - despite such erudite directions from the Kennedy School over Gov or even the Hoover Institute clowns in the Journalism department.
Americans fight back. But first they had to figure out WHO was SCREWING THEM, and how.
The middle class has seriously shrink, betrayed by the left, its so-called protector. The left uses its protectees very much like the coward who puts a woman or child in front of them as a shield from his opposing gunman. They really never cared about the middle class, women, blacks, browns etc. these groups were simply useful tools to a political end.
Globalism is the biggest reason why so many middle class jobs have gone overseas. One is a quirk of fate - only our industrial base wasn’t flattened in WWII. Most of the others had to rebuild from the ground up and did so with modern processes and equipment. More importantly was that Clinton sold out industrial America for dirty campaign money and in exchange, gave a corrupt China MFN status and admitted them to the WTO. He knew they used poverty and slave labor as a trade weapon, that they polluted massively and that they manipulated their currency. He betrayed the middle class. Just as he did in repealing Glass Steagel, making the financial sector a ticking time bomb.
Jobs were exported as a result of lower cost opportunities in China and India. It didn’t have to happen - equalizing tariffs could have legitimately been put in place to take into account their slave labor pay rates and heavy pollution. We didn’t HAVE to over regulate like Big Brother making it unappetizing to do business here. We didn’t HAVE to maintain business income tax rates that were so uncompetitive. The whole tax industry of transfer pricing - shifting revenue overseas - exists only because we have been uncompetitive here.
That is what killed the middle class - a purposeful decision to become incompetitive.
Pensions? I don’t blame business a whit in shifting the investment decisions and risk by shifting to a defined contribution plan from a defined benefit plan. It makes sense to insulate a business from the vagaries of the stock market. That’s not their business. Fort hose who haven’t, they tend to suffer under the unfounded liabilities - government plans being exhibit A.
The family unit? Sure having a HOME helps. But not necessarily a house. It’s about a mom and dad, with at least one of them working and setting an example to children as well as providing discipline in its many aspects. That was destroyed by the left with LBJ and his great society where people were encouraged to become dependent rather then remain independent, to break family units apart because they get paid more with more babies and no man in the house, and by inviting more dependent people from our southern border to cross freely, importing more dependents who will vote for them.
I just got this a you sent it in my inbox because I'm on Am Great - adore VDH - a national treasure (been hooked since 1st reading Mexifornia in '04 or abouts - and I live in AZ). Also - CONRAD BLACK is my boy.
The bank has a fiduciary duty to loan insured deposits to good credit risks. Part of performing this duty is to bring some skepticism when evaluating loan applications. It's the market's job to make people want things we can't afford. It's the bank's job to say f**k no.
When we bought our home in 2003, we chose to buy a home on the less expensive side, even though we “could have qualified for a home worth double that with YOUR incomes” said our bank loan officer at our credit union... We chose a 15 year note, paid it off in 12 years, and are happily retired, early. But people aren’t taught basic financial information in school and often, not at home while growing up either.
I always know that the person opposing my views has acknowledged loss when the wheel out the leftist lingo such as “trope”. I’m just surprised Yu didn’t use “dog whistle” or “gaslight”. Soon you will begin to repeat “equity” ad nauseam
As my mother said to me one time after making an unwise investment, “The nice lady at the bank...”. This is a question of trust, not “stupid borrowers.”
Some one got adjusted out of their house? Or adjusted THEMSELVES out of their house? A shark sold someone a mortgage loan they can’t afford? Who borrows tens of thousands of dollars without a lawyer to review things, especially when they know what they don’t know?
Now don’t get me wrong. There were plenty of crooks in the housing bubble on Wall Street and in the mortgage brokering business. They should all be in jail. On the other hand, there were loads of people who knowingly took out liar loans and they should be in jail too. You never hear that though. Every borrower was a victim. Not true. It took two to tango. Three in this case - greedy Wall Street bankers, deceptive and dishonest brokers and lying or stupid borrowers.
None should be let off the hook and none should be pitied.
Who borrows thousands of dollars without a lawyer? EVERYBODY. I have purchased a dozen homes in my life and never, not once, has a lawyer talked to me about the type of financial vehicle financing the property.
Because that's what this situation needs!
More lawyers!
*gags self to death*
«Who borrows thousands of dollars without a lawyer? EVERYBODY.»
Only the people who expect that the price of the collateral will balloon, so any problems will be paid for by the next buyer. If they are sure that the price will double in 10-15 years, why worry about the terms and conditions...
If wishes were horses, beggars would ride.
I hope you know finance then. Otherwise you are a fool
Man, you must be on the spectrum, I feel so sorry that you lack even basic social skills.
Extreme privilege. HE can afford a contract lawyer, so everybody can.
I think your ideas on how much lawyers cost might be a little out of whack.
My niece is a lawyer, and I can't afford her.
Maybe she justifies an exorbitant rate but in NJ you were compelled to have a lawyer when closing and it never cost much and I got appropriate advice.
Local circumstance. If I were buying a cabbage in New Jersey, I might want legal advice to avoid being scammed.
You're doing better than most New Yorkers I knew back when I worked the city (up to 2001). They mostly didn't want to eat food sourced in NJ. Too many trips past all those refineries in Linden, I suspect.
That sounds like a good provision, but certainly not true in Oregon.
Exactly or he wants us to believe he can
Its called " a self-righteous prig" here where I live. Easy to virtue signal when youre anonymous. Can't you feel the smug smile?
thanks Dad
The vast majority of borrowers are represented by a lawyer at the closing.
Not in many States. I've bought a few properties in Florida without a lawyer within miles of transaction.
The real estate attorney concerns himself with the validity of the title and the transaction, not the financing. He is not a mortgage broker.
No, but I could have gotten any of my lawyers to weigh in on how I was financing. Of course, I never did anything but a bog simple 30y fixed, so...not much to say.
I think that's demonstrably false.
The average house price in the US in May 2020 was 284,600. Nearly 50% of home loans "use" PMI (as of 8/19 - it fluctuates, that's the latest I've seen).
No matter how cheap a lawyer is (or how good of an idea it is to run a serious contract like a note by one) - you can't honestly believe someone borrowing $250k, and unable to scrape together 50k for a down payment, is willingly going to spend $500/$1000 extra?
This isn't a comment on whether they SHOULD or not - just on actual behavior.
A number of states, like NY, Mass, NC, De. and others literally require that a buyer be represented by an attorney. Quite a large number of mortgage lenders insist on it even in states where it is not required.
You would not buy property without an inspection by a professional. If you do you could get something with problems and issues that would cost thousands to correct. Same with complex mortgages and terms of sale. Unless you know the "system" inside and out you would be well advised to consult with a financial professional or an attorney with real estate experience. Just like insurance. If you don't use it okay. But if you need it it is great to have.
Do you talk to lawyers before buying insurance? No you talk to an insurance broker. How about investments? A Stock Broker. Same with Mortgages, you talk to a Mortgage broker, they explain it. But they arent lawyers.
"... lying or stupid borrowers."
Elizabeth Warren on credit card agreements: "I taught contract law at Harvard University and I can't figure out some of the stuff that's in these agreements - and you expect a mother with 2 kids and an Associate's Degree to understand what it's all about?"
This bullshit of blaming the victim with the "they knew what they were getting into," or my personal favorite, "Hey, nobody forced them to sign that contract!" is tiresome.
This isn't fair. People understand the cost of credit. They just get in situations where they feel they need it or worse so many businesses require a credit card to do anything. It's "not a mother with two kids and an associate's degree" that can't figure it out. That is a disparagement.
This is true. If you do not have a credit card/functional credit you will truly get raked over the coals. I’ll defend the payday loan places-you have to pay for convenience, but Rent to Own places would make a Jersey loan shark blanch in shame with their rates.
Average people were flipping houses and living large.
Credit was flowing. Valuations were insane.
And that was the selling point. "There's not really any risk. Look at how prices are rising/have risen!"
Of course, once that ended, the buyers were under water w/ no recourse and the lenders had protected themselves with the "toxic asset tranches" in securities packages.
At least that's my understanding of the (observed) events.
What’s really tiresome is that everyone with adverse outcomes in life looks for someone else to hold the doodybag for them
Doodybag? Finance got $29 Trillion from the Fed in 2009, add a few trillion in QE, and another $9.7 T this year.
Why can’t the commons get enough love to live indoors and eat regularly?
I’m so Right Wing I’m flossing with steel wire, and paid my way my whole life. I also understand these people are criminally insane, and need to answer for it. If you invited these Financial Wizards to Dinner you’d have to count the spoons after...some WILL be missing.
Adverse outcomes?
Adversity and outcomes “on the way”...as we say in my trade.
Tell me how much the government lost...or earned...on bailouts to financial companies. We know that they lost money bailing out decrepit car companies in favor of the unions whose unsecured c,aims were elevated above secured claims.
Gracious! The government never loses a cent!
It just creates how ever many Trillions or Tens of Trillions it needs!
I guess you never heard of MMT!
Modern Monetary Theory, which is of course actual practice.
I can also guess we may have a different idea of what 'government' means... really, it's 2021.
And I am guessing someone believed in 'secure claims'.
In political economy and all economics are political the only Security is POWER.
Sir.
Ok everyone (including me!) lets not feed the troll anymore
yes, wilco
'I recall you on the telephone/I recall when you get mad
I will still love you to death/And I won't ever forget how
And I know that it won't be/The easiest to set free
And I know that I won't be the last/Cold captain tied to the mast...'
Ah...the old resort....ad hominem. You go girl
No, what's really tiresome is that hose that complain loudest about "everyone with adverse outcomes in life" are the ones that benefit the most when government steps in to hold the doodybag.
No really. I agree with everything Matt said. There were also plenty of folks flipping houses and building decks, etc with easy money. Until there weren’t.
Low to no down payments and interest only loans.
As someone with part Cherokee lineage, I find this admission by Warren humiliating.
But they are stupid and/or foolish to trust strangers. It isn't hard to find out the kind of loan you're signing up for. Sorry if you don't like that, but it's obviously true.
For sure, I mean I fully choose to "sign" the T&C for every online account I am ceaselessly begged to create by corporations.
hear hear-- just ignore self-righteous Rick-- he doesn't realize that he isn't a better person just because he says he is.
I believe Elizabeth Warren as,far,as,I can throw the building I’m in.
Yes, some people knowingly took out "liar loans," probably as a result of lying to themselves, or being convinced that real estate would keep on going up. We were offered one and turned it down. But you're ignoring most of the stories, people who were lied to, getting an ARM when they thought it was a normal mortgage (who can afford a lawyer in such a deal? Bit of privilege showing through, there.) Or who had an affordable mortgage until the whole economy was ripped out from under them - by Wall St., who suffered very little.
In 2008, Wall St., collectively, and a bunch of idiotic economists drove the economy into the ditch. They should all have been left to wait tables for a living, or worse. Some should be inn prison - still. but no, they were bailed out, which was hugely, passionately unpopular at the time. That was one of the big sources of the Tea Parties, for one example. So the whole thing was an exercise in corruption - by Obama's government.
Why is it that so many people ignore the genesis of the housing bubble came from governmental requirements that loans be made to people who couldn’t afford them under penalty of law? The banks who were threatened thst they could open new branches or acquire other banks unless they paid off liberal community organizers? The requirement that Fannie and Freddie make bad loans? The Congressmen who got sweet deals on their own loans to protect predatory lenders?
And if you can’t afford to buy a house without basic advice from a lawyer you probably can’t afford the house anyway. But you WANT it. I want a lot of things - when I was young I wanted to be a MLB right fielder. No one gave it to me. Is it unfair that I couldn’t get my desired occupation? Was I discriminated against?
The most important transaction in your life any some of you demand that a person be justified in relying upon a person on the other side of a commercial deal? Have you lost your minds? Should they be accompanied by the store manager of a grocery to ensure they buy the best deals on offer? Shall we hold McDonalds liable when fools eat their crap twice a day and get diabetes and heart disease?
When are people supposed to stand on their own feet and realize hat they are in over their heads in in such a fundamentally critical financial and life decision??
The people who sold them, like the people who sold opioids should take some responsibility.
No doubt. Couldn’t agree more. But the borrowers weren’t angels and stupid is as stupid does.
One of the worst vices is self-righteousness-- sigh. You must be perfect!
According to whom? Are you familiar with the other vices and their effects?
Here it is people, the most shopworn trope in the post 2008 conservative playbook: the poor widdle wenders were forced -- forced I tell you -- to throw away their underwriting standards and approve those loans, and even resort to fraud. They HAD to lend to the unworthy, or face jail! Because we all know that it's Congress who tells the financial services industry what to do and not the other way around...
I do not understand why you think the bankers tell the regulators what to do.
I work in the DoD and I know about regulatory capture, and the impact of bought congresspeople, but that isn't the same as a regulated industry telling the regulators to shove it and do what they want.
Let's say it were, though. Why are you so insistent on letting the politicians off here? They are certainly culpable.
I'm only insistent on calling bullshit on the charge that the Great Bubble and resulting financial crisis was due to lenders being forced to loan to people who otherwise wouldn't qualify.
As for letting politicians off the hook...no, they were the ones who dismantled the regulatory structure put in place by FDR to prevent chaos and occasional collapse in the financial services industry. Reagan to Clinton, so bipartisan scumbaggery. The question, though, is who is the dog and who is the tail? I think the evidence is clear that the industry is the big dog here. They called the shots on deregulation, as well as the bailout.
Well the CRA related loans - which is what you are talking about - were only 6% of the total, so even if they were higher risk (which some data supports), it only caused a small portion of the problem, which leaves a huge amount to be explained by other means.
With that straw man out of the way, the industry people didn't call the shots, the government people did. They thought it useful to kiss Wall Street's ass, but what is new about that? What would change in the future to make that NOT happen?
My answer is "nothing". Even if you overthrew the government, you'd have the same wealthy shitbags peddling the same crap in this putative new government. With everyone just as susceptible to the filthy lucre as last time.
Anyone trying to pin all of the blame on Fannie/Freddie, CRA, sub-prime borrowers or any other single thing would benefit from reading this paper:
https://www.nber.org/system/files/working_papers/w20848/w20848.pdf
The common perception of the credit crisis being fueled by predatory lenders making loans to uncreditworthy borrowers is almost certainly incorrect.
You may has well have asked,Saul Alinsky to write the paper. Look at these wizards of smart from extremist left wing schools whose learned opinions always fall on the same side of the divide. Always.
I'm not sure I follow this response. Are MIT Sloan and Dartmouth Tuck business schools notably left wing extremist? But regardless of these professors' political leanings, it's not clear to me how anyone would judge their findings politically useful to either side. Their point is a pretty simple one - middle and high income borrowers with above-average FICO scores made up a disproportionately high percentage of defaults during the credit crisis. That's a finding that doesn't really seem to support any particular partisan view. What is supports is the idea that across the income spectrum and among both borrowers and lenders, there was a degree of over-confidence in increasing housing prices. Full stop.
Well, I'm glad we agree it's a straw man -- which was my point.
As for what could change, keep in mind that the regulatory regime put in place during the New Deal era kept the system safe for 50 years. It's not as if we have to overthrow the government, just elect people who aren't captives of Wall Street. It's kind of hard to see now, with both parties competing to do the bidding of the same overlords, but it can happen and has happened.
No not entirely a "straw man". You sound like someone desperate to defend the "good intentions" of those who wanted more poor people to own homes. Which is bullshit.
It wasn't "entirely caused by" regulatory agencies. It isn't a straw man to note how the gov't placed a giant pot of tax money "loan guarantees" in front of the banks and mortgage companies and said "go to it!".
The behavior of the shitty people in finance was entirely predictable. And sure, there were other factors that went into the collapse, including the flipping craze, mortgage lender rapaciousness, local NIMBYism and other inputs pushing housing prices to ever-higher levels.
But it's just plain disingenuous to deny the role of the virtuous in the disaster.
Kind of a side point, but the entire US residential mortgage loan total was something around $8 trillion. A big number, however all the 2008 bank bailouts ended up around $24 trillion. So we could've literally written off every single residential mortgage in America 3x for all the bailing. Leaves a lot of questions as to who/what else was bailed out.
Another point (now that I'm warmed up), Catherine Austin Fitts and Dr. Mark Skidmore have researched funny business in govt debt and mortgage debt. She was Assistant Secretary of Housing-Federal Housing Commissioner under Bush Jr. At one point she was out in an area that had an extremely high rate of fed-backed properties (I think New Mexico). She drove to one of the addresses and...nothing there. Yet another address, not a house. There were many examples. The implication was that *someone* got some money for a mortgage on a place that didn't exist. You tell me, but this sounds like it may be some systemic fraud. More refs on high finance crapola: https://missingmoney.solari.com/
https://home.solari.com/dr-mark-skidmore-catherine-austin-fitts-discuss-21-trillion-on-operation-freedom-with-dr-dave-janda/
I do understand that there were definitely those who took advantage of liar loans. I don't defend that.
Far from it. I don't defend or attack these "good intentions", as you put it, because they were a drop in the bucket in the ensuing disaster. They were utterly irrelevant, and if you think that's bullshit show some proof. Show proof that home loans to poor people, backed by liberal do-gooder regulations, were a significant factor in threatening the financial system.
This was trillions of dollars in search of a deal, any deal, and most of the losses were on houses owned by middle income and upper middle income people who would have been prime borrowers. Many were prime borrowers until the house prices rose to vastly exceed the conforming loan limits of Fannie/Freddie.
The bubble was fueled by flippers. At an insane rate towards the crash
I'm disinclined to blame the people who were taking actions that were logical based on the guidance they were being given. A Paul Volcker would not have let this happen. I am not certain that he would have had the tools to stop the train in 2005 or 2006, but we should make sure that someone does in the future. But Glass-Steagall still remains un-reinstated. So no hope there.
Sigh...Glass Steagall is irrelevant. Mortgage securitization was always a section 20 eligible securities activity of bank BD affiliates.
http://faculty.msmc.edu/hossain/grad_bank_and_money_policy/did%20the%20repeal%20of%20glass%20steagall_wallison.pdf
What I was saying is that the government basically led the way in forcing sub prime lending. Of course, Wall Street saw the model and replicated it.
By the way, did you know that the government strong armed the banks that sold to Fannie to buy more stock in it to strengthen its capital due to huge subprime losses before the bubble burst? And those shares went to zero. And then because of the instability of the market, they forced banks to sell into that unstable markets loans that had been on the books for years and were current and paying because “ they were under water” on a loan to value basis. I know of banks whose losses from those two government demands that were forced to take TARP money when they were otherwise healthy and secure.
Why is it that people think everything is an apples to apples comparison-- all neat and linear? Nothing about human behaviour is--ever. As a medical professional it is mind blowing that you think that there is a direct correlation between eating McDonalds and heart disease/diabetes. I have patients that eat similar diets and have none of those illnesses-- must be something else could cause those illnesses right?
You can't compare that to the fraud and corruption done by unregulated practices by banks and their "salespeople" who promise you will get "more cash flow", better rates etc. to unsophisticated buyers aided by levels of govt who ignore (or remove it - Glass Stegal) and look the other way not to jeopardize funding during election time. It is not even remotely comparative.
Thank god I live in a country where there are rules (and recourse for the home owner) about this kind of predatory "salesmanship". And yes we have real bank regulations as well. Banks are not total crap tables here. FYI-- Canadian real estate didn't implode, no bank failures and no bank bailouts-- all due to very basic regulations (Canadian banks do very well--$ billions well all around the world)
Funny my husband the fraud lawyer is dealing with a case where a big company is suing an insurance company for not providing Ponzi scheme insurance thought -- seriously -- and they are "sophisticated buyers" but lost millions of dollars so they get opportunity to get it back. Not the unsophisticated home owners who were lied to, not provided basic information about what they were buying and yet the "company" gets recourse. Nice system!
Your " boot strap" comparison is eye-rolling. The world and especially human behaviour is not that linear and direct --ever.
Well then, let’s get everyone assigned a government monitor to make sure that everything they thing they bargained for or are entitled to is delivered. But query, do the monitors get monitors?
I see both sides of this story, Rick. I am ok with losing my house, my business, almost everything I owned. I learned from it. It is a complex story, as Carol has pointed out. I wasn't over-leveraged. I had attorneys. At one point I just let it go, I'd been fighting collapse for over 2 years and realized, I'm not going to survive this because I'm focused on property, lifestyle and $ instead of my mental/physical health. I shrunk my lifestyle to nothing and started over. Here's the problem:
What have we taught major banks / Fintech when they don't get called on their bad bets? I've recovered, took 10 years and am in a better place. But nobody bailed me out. We have, essentially, two classes. One has a get out jail free card, the other does not.
Exactly-bailing out the Wall St types is like giving a problem gambler an unlimited line of credit at the casino.
However, such an idiotic prescription certainly solves HIS problem, don't it?
The banking system needed to be bailed out because our entire financial and economic system depends on it. Many didn’t get bailouts. Wachovia, Merrill Lynch, Bear Stearns and Lehman. Those that survived had serious limitations placed upon them. And at the end of the day, the government and hence the people profited from it.
I’m interested to know the circumstances thst caused you to lose your house. Did you buy too much house? Take on too much debt? Use adjustable rate products?
Like many stories, mine was/is complex. I was self-employed, had started a tech company and, at its peak, employed about 60 people. We were well positioned in the market place, good press etc. We had negotiated several Series A investments that would have taken us to cash flow positive in 2009...except all of those investors pulled out in Oct 2008. Long story short, VCs ducked, our investment bank went bankrupt (really) and we lost all funding. We laid off most of our employees and died over a 2 year period. My house was not extravagant by any means (3 bedrooms, 2 car garage not a McMansion) but after negotiating with the bank officers via my atty for 6 months and agreeing to a loan mod reflecting my zero income (I had savings) the bank pulled the offer! After discussion w my attorney we realized the financially prudent thing to do was to walk away from the house. I took my lifestyle down 85% (became a roommate in a house) and started the rebuilding process. I'm good now. Nothing like going from a house in a good neighborhood to renting a room in a basement of a house! I had negative income that year and the year after (alimony, child support)
As regards debt, I've always been a saver. I was able to support my kids and wife (alimony / child support - divorce shortly before the collapse) without ever filing for unemployment (I just thought it was wrong). I borrowed most of my 401k and it took me 10 years to rebuild it.
You have me sincere sympathy. You clearly weren’t one of the guys who gamed the system, but rather got caught up in the consequences of those who did. Many people, sadly. You were unfortunately collateral damaged and its a damned shame. I admire how you handled yourself. You are an individual, not a product to be used by activists.
This is exactly why it was wrong for the real players - on Wall Street, in the loan originating business and the liar loan borrowers - to get off the hook.
All of them should have been prosecuted. The packagers of loans pushed for product to securitize and at some point knew they were pushing crap all over the world. The originators knew that too and in many cases committed outright fraud in doctoring applications and submitting knowingly fraudulent loans. And the borrowers who knew they were lying or had reason to know - for example people buying expensive homes while drawing benefits such as the earned income tax credits and other transfer payments intentionally committed mortgage and/or bank fraud.
What is the difference between a bank robber and someone who essentially steals money to buy a home they know they can’t afford?
Not everyone were victims of deceptive loan practices. And many who were should have known better based upon common sense - they had to know they couldn’t afford the homes and many of the pitches were simply too good to be true.
Yes some of them were ignorant, and thats a poor excuse. In most cases, ignorance of thr law is no defense.
The decay of our society - where people are discouraged by policy to be dependent and thus have poor attitudes towards education, where those who sought educations grew up in a corrupt education system where political correctness has swamped basic educational foundation like math, science, reading interpretively has produced an army of people unprepared to function in a modern society - has produced an army of people who are steadfast in believing that they know it all while knowingly little constructively is a growing problem.
The values produced by the a leftist controlled academia together with politicians who are dedicated to keeping people dumb and dependent has swamped our economy and social conventions.
Prosecutions of large numbers of voters - especially voters who have been gulled into believing that they are victims prevented prosecutions of borrowing fraudsters.
It’s kind of hard to give them a bye since as the fuel for the fire, the whole mess couldn’t have happened while singling out other players for prosecution. And since the Wall Streeters at the top of the pyramid were steadfast supporters of the left with overwhelming support going to the guy in the white house, his lackeys at the GSEs, his own cabinet officials who primed the pump for crappy lending standards and the wingman AG made it impossible to prosecute them.
yup its called govt here-- less influenced by big corporate money then the US
I believe almost all mortgages made in Canada are "recourse" yes? That is the fundamental reason there wasn't a housing meltdown in Canada. Simply doing the same here in the states would end the threat of a repeat and take bad actors in the mortgage origination process and ignorant consumers off the table.
We do power of sale here- very few foreclosures. Our banking system is very very different than yours. Sorry-- former banking economist-- that's not why there wasn't a meltdown. We have very different holding percentage requirements for bank lending. Both OSFI and the federal Bank Act (banks are regulated by the federal government) have clear basic minimums. So the crap table lending and gambling you get in the US is not part of our system.
Remember your system is heavily private (including regulation)--ours is not-- if private banks want to operate in Canada they have very clear regulations they have to meet- then they get a piece of the pie . We used to have 5 big banks until 1980 when we let some international banks in HSBC, some American ones etc.
Sorry one other thing-- most Cdns have 10 yr mortgages-- my RBC banking friend's info
BTW I never brag just state the differences. Didnt say it was better, just said we didnt suffer-- I assume you live elsewhere but kept the Citizenship?
Hey Andrew. I was speaking why the 2008 US debacle didnt crash our banking system. Never mentioned the valuation of real estate. Agree-- over valued thanks to Chinese money-- everywhere- New Zealand, Australia, Paris, London etc. That reckoning will come no doubt. BUT it has nothing to do with banks-- it has to do with the standard economic canard-- " Too much money chasing too few goods" add into the money laundering aspects (husband is a fraud and banking lawyer) and voila! a perfect storm.
BTW your characterization of CMHC is incorrect-- our system from day one (we are a baby country after all 😊) was set up like this. Sorry-- Canadian eh?
«almost all mortgages made in Canada are "recourse" yes? That is the fundamental reason there wasn't a housing meltdown in Canada. Simply doing the same here in the states would end the threat of a repeat»
All mortgages in the UK or Ireland (or Spain etc.) are "recourse" and there was a meltdown. What happened in the UK: the government ordered the mortgage lenders to avoid "recourse" because it was politically unacceptable, the speculative middle class would not accept mass repossesions. Some years after the 2008-2009 crash the BoE published a survey showing that 14% of all mortgages were still in "forbearance", and this caused quite a storm, so they stopped publishing such data.
http://pragcap.com/you-cant-handle-the-truth-2
“The Bank of England estimates that as much as 14% of all UK home loans are either delinquent or in some sort of forbearance process. Nobody really talks about this because nobody wants property prices to fall out of bed. Can we handle the truth?”
As in many other cases "recourse" is something that can only happen to a few middle class people, and then their neighbours think "losers", but it cannot happen to many middle class people because then they vote against it at election time. Individually the middle classes are powerless, but collectively they can swing elections, so they are powerful.
All Home mortgages in the US are personal recourse, secured by the home, but liable for any shortfall upon sale
Here are the 12 states where mortgages are non recourse: https://www.forbes.com/advisor/loans/recourse-loans-vs-non-recourse-loans/#:~:text=Home%20mortgages%E2%80%94though%20generally%20recourse%E2%80%94are%20non-recourse%20in%2012%20states%3A,Carolina%2C%20North%20Dakota%2C%20Oregon%2C%20Texas%2C%20Utah%20and%20Washington. Home mortgages—though generally recourse—are non-recourse in 12 states: Alaska, Arizona, California, Connecticut, Idaho, Minnesota, North Carolina, North Dakota, Oregon, Texas, Utah and Washington. If a homeowner defaults in one of these states, the lender can foreclose on the collateralized home but cannot go after the borrower’s other assets.
Cal, Tx and AZ are the biggest obviously and comprise a significant percentage of underlying loans in most MBS products. You might look up the HARP program that was created in 09 but expired in 18. That program I believe was the one that allowed short sales of properties with no further recourse to borrowers but not positive
In the past, and theoretically still, bankers and other corporate lenders were required, under penalty of law, to deal honestly, precisely because otherwise they had a license to steal. Which they now have, because they've bought off the cops.
Otherwise, ordinary people couldn't buy houses, or even cars, at all.
«Why is it that so many people ignore the genesis of the housing bubble came from governmental requirements that loans be made to people who couldn’t afford them under penalty of law? The banks who were threatened thst they could open new branches or acquire other banks unless they paid off liberal community organizers?»
Can you quote the word of any federal law as to that? The CRA as the name says requires nothing like that:
https://www.federalreserve.gov/consumerscommunities/cra_about.htm
«the Federal Reserve
* examines state member banks to evaluate and rate their performance under the CRA;
* considers banks' CRA performance in context with other supervisory information when analyzing applications for mergers, acquisitions, and branch openings;»
I cannot see any requirement or threat there, never mind related to pay off "liberal community organizers". Is the Federal Reserve a far-left propaganda organization?
«The requirement that Fannie and Freddie make bad loans?»
Can you quote the text of any law that allows Fannie and Freddie to make loans to people, never mind bad ones? AFAIK Fannie and Freddie can only *buy* loans already made by banks and other mortgage lenders. It is up to the banks to make good or bad loans. The banks have however paid Congress to ensure that Fannie and Freddie and the Fed bail them out by buying the bad loans they made, and indeed the Fed has bought trillions of dollars of bad loans ("toxic assets") at "special friends of Congress" prices from the banks.
Prosecutor, Charge Thyself
A 2010 WSJ article which speaks to HUD secretary requiring the two GSEs to hike Their purchase of subprime loans to 50% of the total. And forcing them to degrade lending standards.
Also REGULATORS, whose approval for mergers and branch openings were withheld unless they followed preferred lending guidelines, controlled that process. You want a law - look at other enabling statutes giving them broad authority to regulate mergers and branch openings.
You see, to love the regulatory state. Why demand specific statutes when broad grants of authority work like a charm?
It doesn’t fit in to talk reality. It makes what I assume are otherwise reasonable people nutso cuckoo. To wit, I will read the replies.
What a strong man does then is quit trying and drink.
If John Doe or Juan Perez or Laqueesha Brown or Hmong Tet etc can lose their house, then the Hedge funds, CITI and AIG can lose theirs. Paul Krugman can take his Nobel to the pawn shop, and the ratings agencies can go to jail. So can whoever blew it at the SEC.
The problem wasn't adverse outcomes, the problem is the adverse outcomes were 'unequal'. The criminal masterminds can go to jail, certainly mr. mozillo at Countrywide.
Now in truth history suggests that having avoided Jail, they'll now ride the Trumbrels.
Which explains the panic, stealing the election and all the rest.
You are not looking at a government of genuine thugs taking power, no.
We'd be better off under genuine thugs, they understand consequences.
You are looking at spoiled and usually old, privileged all their life over-promoted bourgeois criminals who are terrified, and every response and action, word demonstrates their terror.
They were of course never afraid of Trump, they were afraid of his voters, of a nation that would go against the elites.
How many years is Trump going to be the whipping boy of the unprincipled left? Let me remind you that some moron named Obama was President for 8 years and his “wingman” didn’t prosecute anyone. Bang on him for that. As to Wall Street, they heavily backed both Hillary and Biden over Trump. Hmmm. Wonder why Obama and a holder didn’t go after them?
Rick I was talking about 2008 in the first two paragraphs.
After that I talk about the present govt, Biden's.
The link between 2008 and 2021 being;
"Now in truth history suggests that having avoided Jail, they'll now ride the Trumbrels. Which explains the panic, stealing the election and all the rest."
I'm not leftist, as explained earlier I'm so right wing I floss with steel wire.
Trump was not blamed above by me.
He's gone, he tried, he failed. This govt can't be reformed.
These elites are quite beyond saving.
My only mention of Trump being they're afraid of the voters, and the nation.
I'm not principled at all about politics now, the Constitution is destroyed by counter-party treachery - I hold my Oath...abrogated by counterparty.
Now we can live in a country with oh..a few million, and a few million more like me...noticing the Capitol only stands because of Troops! Whee.
Actually...my Oath nullified... I'm FREE!! NIHLISM HERE WE COME !!
If you don't like government by train wreck neurotic criminals, lets try government by Condottieri ! WHEE !!
I agree with you to a point.
1. You need to know you should have a lawyer and then you need to be able to afford one.
2. Mortgages should NOT be so complex you need a lawyer.
3. Part of the problem here is that at the same time this crap was going on the same Wall Street firms were pushing for whole industries to be pushed overseas to China wiping out jobs.
4. The 30 yr mortgage as it is built today is a disaster waiting to happen. The days of working steadily for one or two firms for 30 yrs are gone. People today are going to have ups and downs in income and stretches of months without work as automation takes over. Even lawyers and doctors are soon going to be finding themselves at risk. Already seen a large loss of autonomy and drops in relative income for those professions and it is just going to get worse.
5. It took 2 to tango but the only ones left to suffer were the borrowers. The finance guys were too big to fail or jail as Holder told us. SO, half the dance pair got screwed while the other got richer. We could have just as easily given the money to the borrowers so they could then pay the banks. Oh....THAT would be a moral hazard.
Bottom line, with what is coming, the old way of thinking about the economy is gonna have to change. The reliance on stable incomes and economic growth to solve the issues of sheltering, feeding, educating and providing healthcare to a national population is just going to have to be rethought and that is going to have to include how we view the possession and application of capital. Aging populations. Gig work. Offshoring. Large scale automation whether in the form of robotic process automation or production automation, the decimation of brick and mortar for the internet, expert systems to replace lawyers and doctors, all these are going to massively disrupt the old order and make it much much harder to point to people and say that their circumstances are their own fault when in fact the environment they are coming out into has made their very existence unnecessary.
In our system, people are "human capital stock" or "consumers" or "taxpayers" but never citizens anymore. They are inputs to the economy, not valued simply for being human.
The point of all of our systems, government, law, capitalism etc. is to provide for the most number of people possible the best possible life. BUT..the system is broken and antiquated and it is failing to provide what it did in a different, less technologically advanced, time.
BUT..ultimately the PEOPLE are the WHOLE point. Capitalism for its own sake is a waste. Democracy for its own sake is useless. Democratic Capitalism that fails to provide for the needs of the nation is a failure.
If you can’t afford a lawyer, you can’t afford a house.
Mortgages need to be complex for lots of reasons. There are legal consequences to borrowing so much money on a recourse basis secured by your hime. This isn’t a simple process like most other purchases and moreover it represents the largest investment most people will make in life. Most people aren’t financially sophisticated. And loan products have gone from conforming loans to all sorts of options that are highly complex. You can’t simply outlaw all but confirming loans,
Outsourcing is not just a product of evil corporations outsourcing manufacture. It is also a product of government policy. China, the biggest beneficiary uses the equivalent of slave labor salaries to reduce costs. India too. And both countries pollute up the yang yang, but Obama and Biden foolishly allowed them to continue to,do,so,in the Paris accords. That’s just stupid and it reduces loads of costs.
On the other hand American companies are subject to huge and costly regulation, much of which are politically driven rather than otherwise. The left’s alliance with labor unions prevented them from aligning labor costs with competition, to a large degree. Here’s an interesting story - Pittsburgh Plate Glass (PPG) sought to keep their labor costs for legacy employees whole while creating a new tier for new hires. That resulted in a bitter 5 month strike thst still didn’t resolve the issue. Ultimately, the company thst invented modern plate glass and safety glass for cars exited the glass business, selling it to a Mexican company that was free of this kind of nonsense and hyper regulation. Now PLG Imdistriesmsells paints and costings instead.
The US under Clinton responded by granting China MFN status instead of hitting them with equalizing tariffs that would have kept the jobs here. Oh, and they also welcomed them into the WTO. Primarily fo dirty campaign contributions.
And they did that knowing that China was an economic bandit. Clinton had to know what the natural consequences of doing all this was, but he wanted the dirty money. And presidents come and go, but guys like Xi stay for decades. The first guy to call China out and impose realistic policies were banged by domestic political opponents because they want power - regardless of the effect upon the citizens.
And you wonder why any company would not export jobs to the lowest cost provider??
Heel we all do it ourselves. Why do you think that Walmart and then Amazon succeeded? Selling low cost Chinese goods for less, putting small business out of business. Walmart has 265 million people shop in their stores for a reason - Americans want lower costs, just like manufacturers. Amazon has 150 million shoppers and 100 million prime customers for a reason.
The result is while outsourcing labor hurts jobs, shoppers don’t give a shit because they shop on price just like manufacturers.
And how many people say, I’m buying American cars? I walked my dog today for two miles and counted the cars. 184 foreign cars, 71 US cars. Not so long ago, foreign cars were novel in the US. You’d see the VW bug a lot and a few other cars. Repair shops advertised “foreign cars” as a specialty. The first Honda in the early 70s was a shitty little tiny car a bit larger than the crazy Smart car. They and others grew massively. Why? Because they were cheaper at first. Quality came later. But you don’t hear about how the people buying these cars were hollowing out the US manufacturing base and causing massive job exporting.
Because the little guy is always a victim, he can’t be part of the problem,.....
The highs and lows that individuals may experience is a product of many things. But what would you do with mortgages to accommodate that? As a lender, I’d look at a person’s likelihood of job stability and decline offering mortgages to people most likely to have variable and unstable income. Thst is only business sense 101. But if they did thst, something tells me there’d be demonstrations in the streets.
And why is it the government’s job to provide food, healthcare, shelter, etc.? Why isn’t it a person’s individual responsibility to confirm their consumption to their reliable means? The central government was intended to be one of limited powers. And before the middle of last century, none of these things you see, to think are national responsibilities were performed by the Federal government. The growth of these federal programs created more need than they satisfied by telling people that they didn’t have to be primarily responsible for themselves. Now you have people who do the math and determine whether they get more pocket money from handout programs then by working. We have less needy people and more wanty people. And let’s not even get into the resulting devastation to the nuclear family unit thst these programs produced.
The people have become what they want to be. They want equity enforced regardless of effort. You are absolutely correct that the system is broken, but at the end of the day the citizens broke it. DeToquville said that America would lose its character when the citizens realized that they can be bribed by the government.
Now you have inter generational dependency. Not an accident - the left realized that if they are perceived as providing people with their needs and wants, they’ll get their votes. So they’ve kept millions captive in a soft form of slavery, dependent upon them for life’s essentials, trapping them in broken communities filled with violence, drugs and a low interest in education which would allow them to keep up with our changing technological economy and society. Funny how these technological ply challenged people all know how to use their smartphones and organized for more more more that they don’t earn.
Capitalism works when people don’t have socialist infrastructure to cripple them into dependents.
rick.. were you born retarded, or was it all that rotgut whisky and prozac? or are you just a psyop professional, gracing us all with your broken propaganda and anxious, buns up and kneeling, neoliberal boot licking?
Its it so sad-- you see it everywhere-- usually with virtue signalling and self righteous commentary. " I am doing well so I can kick those that didn't do what I did" " I am in the group I don't want this person in, because I won't be special (ie house owner)anymore" Cringe worthy. Standard insecurity and what fuels xenophobia.
It is the worst human trait. I want everyone to do well. I believe everyone deserves opportunity and equal access. What I don't believe in is predatory "salesman" taking advantage of people -- that is where some minimal regulations can come in-- like a cool off period etc . So that 79 yr olds don't get burned, so that undereducated dont get burned.
Rick does have a point, though. The 2008 crisis was exasperated in the legislature where regulations were modified or amended. Many of the loan agents were performing clerical duties, ignorant of the dire consequences. Yes, there were also those that knew it would end up badly for some, but the real culprits were on Wall Street where the risky loans were packaged in derivatives and CDSs and sold to the nearest sucker. The Tarp agreement ensured that the taxpayers bailed them out while the financial executives issued themselves obscene bonuses to add insult to injury. The Obama administration effectively endorsed the agreement by failing to go after the culprits even though Senator Carl Levin's subcommittee on investigations had uncovered considerable evidence toward indictments. https://www.hsgac.senate.gov/imo/media/doc/Financial_Crisis/FinancialCrisisReport.pdf
Yes. Virtue signaling is a pain. Please stop doing it.
Actually, as I've read more of Rick's posts, I can see he does NOT hold the lenders, and their governmental non-regulators blameless. He just points out that a LOT of the people who got "hurt" could have seen this was bullshit and avoided their exposure to greater risk than they could afford.
I have posted one anecdotal case where a young black guy called bullshit on a Countrywide offer ON GENERAL PRINCIPLES. And lo, he was not harmed by the crash.
That said, I also see your compassion for those victimized. You guys are both saying "It's not a binary situation!" and then kind of pretending the other is saying that it is. It IS possible for people to be partially blameless and partially responsible for their own bad outcomes. It IS possible that financial institutions were presented with bad incentives by government. It IS possible that politicians looked at positive (for them) outcomes of actions that were going to cause disaster.
I can see both of your rhetorical 'houses', and I'm looking for some pox.
Just look at it pragmatically, though. From the point of view of the new home buyer, even fully assuming that the bank is totally greedy and self serving, why would they approve a loan that they expect to default? They want to make money, so giving a loan to someone who can't afford it would make no sense.
What these home buyers were missing, is that the people making the loans were handing them off as quickly as possible, so they wouldn't be left holding the bag. They repackaged all of these loans into CDOs and sold them off to other suckers. They got their profits and got out before the loans blew up. I suspect that if the people who made the loans had been forced to hold onto them, this whole thing would have looked very different.
It doesn’t take a lot of losses in a financial crisis to sink a lender. Look at JP Morgan Chase. Their tier 1 capital is 11%. That’s much higher than typical capital ratios were in 2008. This, it doesn’t take a very high percentage of loan losses to sink a bank.
That’s why I get a kick out of only 6% of loans were CRA loans. That’s more than enough to sink a bank. Private label mortgage CDOs didn’t start out as subprime generators. They were just competition for Fannie and Freddie. They used the Fannie Freddie lending standards - hence the term “conforming loans”. That made them marketable and fairly highly rated by credit agencies.
The politicians led the race to the bottom by mandating Fannie and Freddie take huge amounts of crappy loans.
Between 2005 and 2007, they acquired few conventional, fixed-interest loans with 20% down. They loaded up on subprime, interest-only, or negative amortization mortgages—loans more typical of banks and unregulated mortgage brokers.
Fannie and Freddie made things worse by their use of derivatives to hedge the interest-rate risk of their portfolios. But as private-sector companies with shareholders to please, they were doing this to remain competitive with other banks. They were all doing the same thing.
Fannie Mae's loan acquisitions were:
62% negative amortization
84% interest-only
58% subprime
62% required less than 10% downpayment
Freddie Mac's loans were even more risky, consisting of:
72% negative amortization
97% interest-only
67% subprime
68% required less than 10% downpayment
These exotic and subprime mortgages made Fannie and Freddie's loan acquisitions toxic.
All this can be placed at the door of politicians like Chris Dodd, Barney Frank and George Bush. Bush mindlessly pushed home ownership. Dodd and Frank - who lost their seats due their complicity in sinking the two GSEs - fought any kind of oversight about the obvious risks that had even become apparent to Bush who asked for tighter oversight of them 17,times only to be rebuffed by a Democrat congress and senate. 17 times.
It is not an oversimplification to state that this financial crisis began, both in time frame and economic ripple effect with the Freddie Mac/Fannie Mae collapse and subsequent bailouts. In fact, AIG, a former blue-chip giant that became 89% publicly-owned after its bailout, still had many highly profitable divisions. Unfortunately, AIG was heavily involved in the insuring of sub-prime mortgage packages- mortgages that were underwritten in large part by Fannie and Freddie.
The left - the media and the Obama administration conveniently forgot that these Government Sponsored Enterprises were run by Democrats- among them Franklin Raines, Jim Johnson, and Jamie Gorelick- all high-ranking members of the Clinton administration. Gorelick had zero banking or housing experience. It was a rich sinecure. People forget that Killer Cuomo, of nursing home virus fame - was the hammer who forced Fannie and Freddie to ramp up making crappy loans.
Even after investigations brought to light bad accounting practices and manipulations of the books of Fannie Mae, prominent Democrats such as Barney Frank, Chris Dodd, Maxine Waters, current Majority Leader Chuck Schumer, and Clay Lacy claimed loudly that there was nothing to worry about- that Fannie and Freddie would be just fine!
This was the context in which the banks jumped in the same way. They started out competing on conforming loans with private label CDOs and traveled down the quality chain in sync with the government.
Sure, there were brokers who knew they were making shit loans and many Wall Streeters off,laced them quickly.
But never forget how this started
Sure, but none of that seems to really address what I wrote, which itself was a response to your claim that the home buyers deserve the blame.
I never said that they deserved THE blame. Just a healthy portion of it.
Yes, I completely agree that's what you said. I'm just saying that none of your follow up comment appears to back that claim up. Maybe you didn't mean it to, but then I'm not quite sure why you replied to my comment with something unrelated to it.
I guess I was also replying to the yippers and yappers who treat borrowers as per se victims and the government and business as per se victimizers.
And also how many banks who actually held loans - many performing well, but were under water on a LTV basis because of the economic disruption (most of which have recovered) were forced by the government to sell these performing loans into an artificially depressed market. I know of several banks thst were healthy and performing as such which were forced into TARP as a result of government forced sales.
And as to borrowers being uneducated, it’s really a product of a decayed educational system, where people graduate with great egalitarian values, are greenwise and socially conscious, but actually know very little because the subjects of the oppressors - math, science, a good vocabulary and an appreciation of the arts and sciences are pushed into the background. So they are far less capable of dealing with the increasingly complicated and advanced society of those who came before them.
I bet maybe 10% or so do it old school and those are the people we have advancing the ball now. I promise you they understand mortgages. The problem for the world is that the other 90% believe they know far more than they do about how the world works if it is to succeed, but they are absolutely and militantly willing to question what they do know. Unfortunately for the rest of us, we have to run into these 90% and they vote as well, based upon their defective leftist university experience.
No, I was replying to Rick
Look itmup
Show me your numbers and sources
https://www.thebalance.com/did-fannie-and-freddie-cause-the-mortgage-crisis-3305659
Yeah. They just made it up. Of course. It doesn’t fit yiur narrative
«have you seen the 12 foot, razor wire topped, gun toting military protected fence/wall Nancy Pelosi has had built around the entirety of our Capitol Hill? There is a reason for this.»
This reason?
https://edition.cnn.com/2018/10/04/politics/kavanaugh-protests-us-capitol/
https://www.workers.org/2018/10/39345/
“At the vote confirming Brett Kavanaugh to the U.S. Supreme Court on Oct. 6, woman after woman screamed out in protest from the Senate gallery and was carried away by guards. [...] People were pounding in outrage on the closed entrance to the Senate floor. [...] U.S. Capitol Police said a total of 164 people were arrested that day for “crowding, obstructing, or incommoding.” [...] The depth of opposition to Kavanaugh was revealed when on Oct. 4 over a thousand people from throughout the country, mostly women, demonstrated on Capitol Hill. [...] At the Senate Hart Office Building, crowds saying “NO” to sexual assault and to the reactionary agenda that Kavanaugh represents flooded the atrium and every floor. Over 300 chanting, militant protesters were arrested that day. [...] There were too many acts of indignation and outrage at Kavanaugh’s nomination to list them all. [...] Outrage against Kavanaugh broke out initially on July 9 at the Supreme Court on Capitol Hill [...] During Senate Judiciary Committee hearings the first week in September, over 227 demonstrators were arrested.”
Or this?
http://danshaviro.blogspot.com/2021/01/trump-and-bin-laden.html
““Trump is one of two people - Bin Laden is the other - to have orchestrated a violent attack on the US Capitol Building in the last twenty years. (The Capitol Building is believed to have been Flight 93's target.) Both were acts of war against the United States, although Bin Laden's was a foreign attack and Trump's a domestic one. Trump's attack not only came closer to success - they actually breached the building - but aimed to do far more to destroy our institutions and way of life. Bin Laden's was a raid, meant to terrorize and provoke a response that would feed further escalation of ongoing global conflicts. Trump's was meant to decapitate the legislative branch, with accompanying mass murder and hostage-taking, and to put a permanent end to democratic (small-d) governance in the United States.”
There is something wrong with your software that this stupid comment gets put on top just because a lot of people comment about how stupid it is. Can this be fixed as it seems to me it just foments stupidity and controversy.
PS: Matt rules!
It's a good example of a Wall St. reply.
Or, you could note the content of the top post, realize what the many replies are likely to be, and move on. A touch of entitlement in demanding that it "be fixed" because you are very slightly inconvenienced.
It was a frenzy of flipping houses too. Everyone wasn’t mortgaging the family home. At one point, a house would go on the market, sell immediately and within weeks be back on the market with no improvements but ten thousands of dollars higher.
It was a lot like the overvaluation of GME.
It was that and more. People would use their homes to cash out on bubble equity to pay off credit cards (only to run them up again), to put in desperately needed swimming pools and other additions, and more. People were attracted by initials teaser rates and were too stupid to see the cliff they were headed towards a year or two down the road. Others just always wanted a home and were blinded by that want to not look to close. We got the house!!!! There were clearly people who HAD to know better - thousands and thousands of people who were paying no income tax and were getting refunds of the earned income tax credit bought houses with these loans. How in the world did they ever think that they could manage a mortgage?
I really think, despite some formidable posting, you have missed some basics - let me give you the view of a 10+ year corporate collections experience - including GC Services (owned by a family tight with the bushies - and as such a principle industry consultant in drafting the Fair Debt Collections Practices Act in the waining days of Jimmers Carter)
It wasn't a 'housing crises' or bubble - it was a CREDIT CRISES - AND - further - despite my limited experience on the 'goon squad' - I have been mentored by an Uncle who was a second generation Cleveland Banker - who BELIEVED in the kind of investment banking that you seem to believe still exists - when it no longer does.
Credit and credit availability - a recipe concocted via the worship of the libertarian right - from resurrected Ayn Randers to the Milton Friedman post 'free to be/sell me this pencil' influential crowd - to the globalization of central banking - so much so that between the rough parameters of the FDCPA ('78) - and the Reagan years when financial deregulation promoted the reinvigoration of American Capitalism ( and the initial rise of Trump the entrepreneur) - an entire generation grew up with loose - widely available and cheap - credit.
This loose credit built the current edifice REX - a second gilded age in America - extreme wealth - and - the (seemingly) ending of the once great majority striving because of wide opportunities [you Rick imply still widely exists - while MT and his readers here - myself included -disagree emphatically ] ...MIDDLE CLASS - of which -as anyone in collections can tell you - whether they have encountered American Express's BLUE BOX VALUES or not - there is an easily recognized and likewise understood pattern when debtors default - IE - by the choices they make.
1st - low hanging dying fruit - like the sears card or the gas card.
2nd - cell phone or land line...
Orchard credit - then Discover - THEN MASTERCARD/VISA MBNA ECT
LAST - AMERICAN EXPRESS (ALAS)
THEN THE AUTO...
AND LAST BUT NOT LEAST - WHAT USED TO BE THE BEADROCK - ESPECIALLY SINCE FANNIE AND FREDDIE AND A FELLOW BY THE NAME OF Petie Lynch MERGED THE OBSESSION FROM BUSH THE FATHER ON DOWN TO THE CLINTON GLOBAL CRIME FAMILY TO LITTLE SHRUB THE KING OF TEXAS TO OBUMMER TO THE GREAT DISRUPTER AND NOW THE BIDEN CRIME FAMILY ALA OBUMMERS 3RD TERM.
Namely - that home ownership was the key to middle class wealth creation and financial and hence family stability - and clearly Rick you still believe it.
I don't. I don't in part because what Lynch sold was the Mutual fund - and - that owning a home was crucial to the new means of pensioning for middle class America - the 401K - which was supposed to be the win win in American Investment banking - except - ooopsi - that was a crock.
It was sure good for Pettie and his crowd, now wasn't it? Isn't kinda neat the way those two just fit like frick and fartie frack?
The 401K was great for the EDUCATED MANAGERIAL CLASS - and a disaster in comparison with the former defined pension - that was widespread in the whispy by gone days prior to the Savings and Loan crisis in the 80's (and some of the postings on that here - pinning for Glass/Stegall & a Volker rule that never really existed in the first place)- that later bled into the Stock Market crazied Tech era and eventually - once the Techie thing landed and dust settled - the real estate fiasco.
[and is still available in the Government Unions and the Teachers to Boot - who barely teach a thing about actual capitalism - but get the DEFINED PENSION TO DO THE KNOW-NADA]
Loose credit masked declining incomes - and the beauty of it was exponential (and you still SEEM to buy the 'morality argument') - which in turn led to the debt bondage that - like 19th century WASPS viewed as self-induced drunken and libertine self-destructive behavior of the Irish - was now in the 21st 'living beyond their means' - and monetized the screw job after screw job while the hoopleheads just 'keep digging.'
Go back and look at the crushing commodities market (before price supports - a 'New Deal' anachronism the Kochs and Austrian School cool kids have been trying to shutter for decades now - just as they have Social Security via privitization) - and the Gold Vs 'free Silver' political fights - and the toxic views on immigration - and so much more and Today it is Big Tech the global Party of Davos not the Monopolies of Standard Oil or the Railroads.
And I know this is simplistic but bear with me. I believe in capitalism - but with rules Rick.
We are not living through some minor bumps in the road - or some metaphorical 'hair on the wall' hiccups - Taibbi's been on this a long time and it's part of why I'm hooked as a fan boy- he is so much more right than wrong.
MT as a writer sides with those I once viewed as harshly and as cynically as it seems you do - but that was over fifteen years ago - when it was still a literal gold rush in the collections field - and why was it a gold rush - because the credit was still flowing - and now it cant.
American Investment Banking didn't 'blow itself up' in 2008 and we haven't just been screwed by Dodd & Frank and ect - that is really simplistic Rick - and wrong.
American Investment Banking sold us out BECAUSE IT WAS JUST TO *&^(iNG tasty to play Jack Sparrow and go 'a Pirating' the world over {especially with all that money the statist 'hybrid' Chinese were throwing at them - in the loose money world the west created }- making the de-industrialization of America - the ending of widespread opportunity for the next generation - all of it -a deliberate orgy of greed and nothing new - except in scope.
Both parties - until Trump ripped the scab off the great fantasia. Leaving both sides desperate to off him and the populism he recognized and road.
Global financialization is in most respects globally designed and led BY AMERICA - BUT NOT MY AMERICA - it is only now that - since 2008 - an awakened American populism - from the right and the left - just as it did in the late 19th century - has awakened to the threat it poses to both financial and personal freedom.
It's awakened for the same reasons it did before - even if this time its not about child labor and choking on coal dust or brain rot from mercury or lead. Americans do not decline gracefully or willingly - despite such erudite directions from the Kennedy School over Gov or even the Hoover Institute clowns in the Journalism department.
Americans fight back. But first they had to figure out WHO was SCREWING THEM, and how.
That is Trumps real legacy.
The middle class has seriously shrink, betrayed by the left, its so-called protector. The left uses its protectees very much like the coward who puts a woman or child in front of them as a shield from his opposing gunman. They really never cared about the middle class, women, blacks, browns etc. these groups were simply useful tools to a political end.
Globalism is the biggest reason why so many middle class jobs have gone overseas. One is a quirk of fate - only our industrial base wasn’t flattened in WWII. Most of the others had to rebuild from the ground up and did so with modern processes and equipment. More importantly was that Clinton sold out industrial America for dirty campaign money and in exchange, gave a corrupt China MFN status and admitted them to the WTO. He knew they used poverty and slave labor as a trade weapon, that they polluted massively and that they manipulated their currency. He betrayed the middle class. Just as he did in repealing Glass Steagel, making the financial sector a ticking time bomb.
Jobs were exported as a result of lower cost opportunities in China and India. It didn’t have to happen - equalizing tariffs could have legitimately been put in place to take into account their slave labor pay rates and heavy pollution. We didn’t HAVE to over regulate like Big Brother making it unappetizing to do business here. We didn’t HAVE to maintain business income tax rates that were so uncompetitive. The whole tax industry of transfer pricing - shifting revenue overseas - exists only because we have been uncompetitive here.
That is what killed the middle class - a purposeful decision to become incompetitive.
Pensions? I don’t blame business a whit in shifting the investment decisions and risk by shifting to a defined contribution plan from a defined benefit plan. It makes sense to insulate a business from the vagaries of the stock market. That’s not their business. Fort hose who haven’t, they tend to suffer under the unfounded liabilities - government plans being exhibit A.
The family unit? Sure having a HOME helps. But not necessarily a house. It’s about a mom and dad, with at least one of them working and setting an example to children as well as providing discipline in its many aspects. That was destroyed by the left with LBJ and his great society where people were encouraged to become dependent rather then remain independent, to break family units apart because they get paid more with more babies and no man in the house, and by inviting more dependent people from our southern border to cross freely, importing more dependents who will vote for them.
This is what has decimated the middle class.
https://amgreatness.com/2021/02/07/our-animal-farm/
I just got this a you sent it in my inbox because I'm on Am Great - adore VDH - a national treasure (been hooked since 1st reading Mexifornia in '04 or abouts - and I live in AZ). Also - CONRAD BLACK is my boy.
Ya!!! Fuck everyone!
The bank has a fiduciary duty to loan insured deposits to good credit risks. Part of performing this duty is to bring some skepticism when evaluating loan applications. It's the market's job to make people want things we can't afford. It's the bank's job to say f**k no.
So, the Congress is as guilty of having being stormed as the protesters, since it takes two to tango
Couldn’t you have been more creative
When we bought our home in 2003, we chose to buy a home on the less expensive side, even though we “could have qualified for a home worth double that with YOUR incomes” said our bank loan officer at our credit union... We chose a 15 year note, paid it off in 12 years, and are happily retired, early. But people aren’t taught basic financial information in school and often, not at home while growing up either.
Oh fuck, this trope again.
I always know that the person opposing my views has acknowledged loss when the wheel out the leftist lingo such as “trope”. I’m just surprised Yu didn’t use “dog whistle” or “gaslight”. Soon you will begin to repeat “equity” ad nauseam
As my mother said to me one time after making an unwise investment, “The nice lady at the bank...”. This is a question of trust, not “stupid borrowers.”