Tuesday, November 18, 2008

45 days and $700 billion dollars later

It was the government that created this economic crisis, so why would anybody truly expect government to have the solution to fixing it it? A month and a half ago I created a video asking people to call their congress people and demand that the bailout bill go down in flames.





I said that the bill did not address the fixing of the problem. The Community Redevelopment Act was the foundation for the creation of the "sub prime" mortgage market. The bailout bill did not have a provision that would have repealed the act. Without addressing the source of the problem, any bailout bill would just be a waste of money. Well thirty days and seven hundred million dollars later, this is the end result.

15 Comments:

Blogger Jason said...

Amen! Where does this madness end?

2:47 AM  
Blogger conservative brother said...

The madness might end when the U.S government itself is looking for a "bailout" jason, I pray it never ever comes to that, but at this point who knows.

7:30 AM  
Blogger DarkStar said...

It would be nice of you to do research on your own to find out that most of the sub-prime lending that you say caused this mess, was done by companies not under CRA. But don't let facts get in your way.

Also, don't let the fact that 8% of all existing mortgages are in failure. The sub-prime mortgages that are in failure is 2%.

Did you know that 1-A1 loans, loans for people with decent credit, loans a step above sub-prime loans, have a higher default rate than sub-prime and they are next in the pipeline for loan resets?

11:21 PM  
Blogger Kofi Bofah said...

Good points DarkStar.

Jumbo mortgages are also getting hammered.

1:28 AM  
Blogger Kofi Bofah said...

Assist:

Paulson to Detroit: Drop Dead

I am arguing for the bailout of Detroit, actually.

Now, I am hoping that your Anonymous poster does not show up in my blog and type some 1,500 word run-on sentence about the slave trade.

1:32 AM  
Blogger conservative brother said...

Darkstar "It would be nice of you to do research on your own to find out that most of the sub-prime lending that you say caused this mess, was done by companies not under CRA. But don't let facts get in your way."

Nice attempt at sarcasm Darkstar, but next please live it to the expert. When I state something as being my opinion, I normally say so. When I state facts I also state them as such. Here's an idea for you Darkstar, go back into my achieves and you will see that I mentioned in depth the origins of the sub prime market and what I used as my sources. So there is your homework assignment, and next ask before you assume. I can't believe you are that slow Dark, of course it was companies that were forced to lend under the CRA. I might have to do an entirely new story just to bring you up to half speed on this. Here's a brief summary until I do a time line for you later on. Banks were forced to lend to low income and poor credit risk borrowers under the CRA. Banks that refused to make risky loans were accused of "redlining" and were investigated for "discrimination" in lending. Banks sold their risky loans to Fannie Mae and Freddie Mac. Freddie and Fannie then turned around and chopped up those loans to create "MBS" Mortgage Backed Securities to the investment banks such as Bear Stearn, lehman Brothers, Wachovia Securities. Morgan Stanley etc. When those loans started going bad not only did the banks that still held those loans started to get in trouble, the investment banks that held thos MBS started going under as well. AIG and other major insurers got into trouble because they came up with an advanced protection instrument that was marketed to hedge the risks of the sub prime mortages to banks known as a "credit default swaps". It was in it's purist form an insurance policy to protect the banks that held a huge position in sub prime paper from any damage if those loans went south. Well the loans went south and AIG was ok the hook for a huge amount. I'll break it down for you more darkstar later.

6:52 PM  
Blogger conservative brother said...

Darkstar "Also, don't let the fact that 8% of all existing mortgages are in failure. The sub-prime mortgages that are in failure is 2%."

Sure Darkstar, where did you get that information from? Did you notice that the first two companies to go bankrupt was Freddie Mac and Fannie Mae. This is from the New York Times dated September 30th 1999

New York Times "In a move that could help increase home ownership rates among "minorities and low-income consumers", the Fannie Mae Corporation is "easing the credit requirements" on loans that it will purchase from banks and other lenders.

NYT "Fannie Mae, the nation's biggest underwriter of home mortgages, has been under

"increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people"

and felt pressure from stock holders to maintain its phenomenal growth in profits.

This is the siren of the whole story

NYT "In moving, even tentatively, into this "new area of lending", Fannie Mae is taking on "significantly more risk", which may not pose any difficulties during flush economic times. But the government-subsidized corporation

"may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980"

game set and match darkstar, and here is my facts, please provide yours if you can but which I doubt.

http://query.nytimes.com/gst/fullpage.html?res=9c0de7db153ef933a0575ac0a96f958260&sec=&spon=&pagewanted=all

7:37 PM  
Blogger conservative brother said...

When Fannie talked about the "new area of lending", the new area was "THE SUB PRIME MARKET!

7:40 PM  
Blogger Kofi Bofah said...

Edit your last line from million to billion.

$700 Million is nothing. I figure you meant Billion.

The Havana Chronicles: Exposing Boom Time McCarthyism

I await your rebuttal...

8:41 PM  
Blogger conservative brother said...

kofi "I am arguing for the bailout of Detroit, actually.Now, I am hoping that your Anonymous poster does not show up in my blog and type some 1,500 word run-on sentence about the slave trade."

kofi, are you seriously arguing for a bailout of Detroit? Detroit is like the American auto industry, it's a bloated incompetent money pit. The same can be said for most cities. I say let them all go under.

8:50 PM  
Blogger DarkStar said...

Sure Darkstar, where did you get that information from? Did you notice that the first two companies to go bankrupt was Freddie Mac and Fannie Mae. This is from the New York Times dated September 30th 1999

Did you know both had already cut thee percentage of subprimes to under 50% when they did? Did you know both had accounting irregularities of the type that caused S/OX to be created?

I can't believe you are that slow Dark, of course it was companies that were forced to lend under the CRA.

I repeat, most institutions (banks and S&Ls) under CRA did not produce most of the sub-prime loans. I've done my homework instead of just believing the fluff.

Right in the area you live in, there are advertisements on the radio of banks who proudly state they never got involved in sub-prime loans. How is that possible under your belief in the idea of banks didn't loan, they were sued?

Next CB, AIG or investment houses weren't forced to buy the subprimes bundles nor was AIG forced to insure the bundles. They made a business decision to do it, ignoring the fundamentals, and over leveraged themselves in the process.

Show me the regulations that forced AIG to insure the mortgage bundles. And, BTW, the same bundling strategy is used for car loans, student loans, and believe it or not, CREDIT CARD LOANS.

What does CRA have to do with that?

8:44 AM  
Blogger Kofi Bofah said...

When I say 'Detroit' I am using it as a synonym for the U.S. Auto Industry, not the Detroit municipal government.

Although the Fate of the two is largely intertwined, of course.

1:39 PM  
Blogger conservative brother said...

kofi "When I say 'Detroit' I am using it as a synonym for the U.S. Auto Industry, not the Detroit municipal government"

I knew that kofi, but I still say that Detroit should not be bailed out either.
Your right, they both are similar in their problems, and problems that can't be fixed should not be throw life lines. It will only delay the inevitable.

4:46 PM  
Blogger conservative brother said...

Darkstar "
Right in the area you live in, there are advertisements on the radio of banks who proudly state they never got involved in sub-prime loans. How is that possible under your belief in the idea of banks didn't loan, they were sued?"

Please tell me you don't believe everything you hear, read or see in an advertisement Darkstar. How do you know those banks are telling the truth Darkstar. Cigarette companies for the longest time said their product didn't cause cancer. Was that true? Evertying that glitters like gold isn't always gold you know.

http://pajamasmedia.com/rogerkimball/2008/09/29/who-caused-the-biggest-financial-crisis-since-the-great-depression/

Darkstar "I repeat, most institutions (banks and S&Ls) under CRA did not produce most of the sub-prime loans. I've done my homework instead of just believing the fluff."

There were banks that followed the lead of other banks and orignated risky loans. There were also shady mortgage brokers that duped not only the banks but the buyer as well by putting them into adjustable rate mortgages they knew they couldn't afford. Banks will not make risky loans if they can help it. That is why banks normally have safe guards such as requiring a certain percent down, decent credit, a stable employment history and an acceptable debt to income ratio in order to grant a person a loan. There was just too much risk vs reward for banks to deviate from their strict ending criteria unless provoked. You can't deny the New York Times story I posted Darkstar, That is my proof and it has all come true.

5:55 PM  
Blogger DarkStar said...

There were banks that followed the lead of other banks and orignated risky loans.

The link I provided showed that most sub-prime loans were not made by institutions that fall under CRA, but by companies that didn't fall under CRA.

Here's something for you. The biggest private failure for the mortgage industry was Countrywide Financial. They were heavily involved in sub-prime loans. Guess what?

Countrywide Financial WASN'T UNDER the CRA rules.

10:19 PM  

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