Barney Franks the chairman of the banking comittee is the one that allowed the money to be loaned to people that did not meet the criteria as a morgage buyer. Others made money manipulating the loans from there but Barney Franks the democratic member that "said he didn;t know there was a male call service operating from his basement set the stage for this disaster.. its a fact. (oh by the way, he knew it would all come crashing down on the republicans about this time too..what a coincidence. It willcost the taxpayers billions

I agree with everything that was said but i think there is one thing that was NOT said the needs to be covered.

Greed Greed and more Greed. Everyone, the loan originator the bank branch manager the bank CEO the wall street gurus all got a piece of the action. Didnt matter if it was an impossibility to repay the loan they got their piece (%) and screw the next guy in the chain. When i see a 20 something living in 4 bedroom house and 3 rug rats under 5 and 2 SUV in driveway something is wrong with the system Well we found out The big house was forclosed. Knowing where he worked id guess he would have a hard time supporting momma and kids let alone a giant mortgage. But he got his mortgage Bsnkers are supposed to have common sense and use it, not just be driven by greed greed greed.

Barney Franks did not allow anything. He's a congressman.

The system worked just fine until the 2000s - the administration of GWB, the worst administration in history.

His goal was to buy off minority voters by giving them lots and lots of houses. The Republicans had visions of a 100-year reign by seducing away the minority vote from the Democrats. Whatever happened to Alphonso Jackson, GWB's token yard person here in Dallas? How many palaces did old swifty Bob Perry build for this scam?

The vast majority of the executives in the banking and investment industry are Republicans.

You think Barney Frank is going to push them around - LMAO. Franks tried to prevent red lining. How horrible.

Also, in the late 1970s almost every S&L in the nation was losing money. Borrowing money for a house from Jimmy Stewart was dead on arrival.

A replacement system had to be created.

Carter deregulated the S&Ls. There was no other choice. He set the insurance for accounts to $100,000, but in 1980 old man Potter got his man, Raygun, and the theft ring was back in business. In 1982 they made it possible for S&Ls to get "drunk".

Same crowd, first act.

Now with Sarah I guess we'll give these miserable lowdown scumbags a 3rd act.

Please tell me that everyone...everyone who took the time to post here has contacted their representative about this massive fraud!!!

This is not really a political issue unless you realize that the regulation begun by the Great Criminal FDR is responsible.

Take away the regulation of the 1930s, take away the half-assed regulation from the Wilson era, and prevent ALL government intervention. The markets will have to police themselves with no expectation of help from the government. That's why we are in this mess. The "FI"s knew they would probably get saved because they were too big and interconnected to fail. LEH made that bet and lost, but it's the only one of the big ones to fail.

Let the FIs take care of themselves; they will go out of business if they make such bets in the future. Let the people who bought their securities lose their money. Let Joe Six-Pack lose his house.

It is poetic Social Darwinism; it will work.

Hilarious. What regulation by the great criminal allowed mortgaged-back securities?

How many times did the Republicans attempt to repeal Glass? Through the decades, probably 50 times.

They finally succeeded in 1999. This thing starts showing itself by 2004 - 2006, and you brilliantly figure out that it was FDR's regulation of the industry in the 1930s, the 1940s, the 1950s, the 1960s, the 1970s, the 1980s, and the 1990s that caused thousands and thousands of the houses sold during GWB's administration to go into foreclosure.

Wowsa, that some fantastic deducin' and correlatin'.

It was political; it was Rove. They did this for a voting block.

How did we get to this point? Liberal Democrats. Socialism. Activism. Government interference.

The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law that requires banks and savings and loan associations to offer credit throughout their entire market area and prohibits them from targeting only wealthier neighborhoods with their services, a practice known as "redlining." The purpose of the CRA is to provide credit, including home ownership opportunities to underserved populations and commercial loans to small businesses.

The CRA was passed into law by the 95th United States Congress in 1977 as a result of national grassroots pressure for affordable housing, and despite considerable opposition from the mainstream banking community.

In 1995, as a result of interest from President Bill Clinton's administration, the implementing regulations for the CRA were strengthened by focusing the financial regulators' attention on institutions' performance in helping to meet community credit needs.

The CRA has little to nothing do with this. Banks that are covered the CRA issued a minority percentage of the subprime. Why, because their, the CRA banks', standards were higher than the free market's - the non-CRA mortgage institutions.

In other words, the mortgage bankers who were free to not invest in poor communities were doing so in an extremely aggressive and reckless manner, and the CRA does not apply to them. Somebody was telling them to do it. It was a grand strategy. Who is the grand strategist? His name is Karl Rove, and every single thing the man does is to gain political advantage.

He was buying votes.

Is there an example of a CRA bank running three-hour radio shows hosted by mortgage bankers who were singing the praises of no money down, no income verification, interest only mortgages, and ARMs when the prime was ultra low (about as a dumb as a rock gets.)

Allayn GreenRandspam, when told the Federal Reserve should step in and act - to use its regulatory authority to stop the insanity in the mortgage market, simply said that the brainless free market knew better than him. He had, after all, sung the praises of the ARM.

Just heard Mr.Cohan on a local Boston Radio station give his analysis on how the Mortgage/Banking Industry went down the toilet over the past 10-15 years through the creation of CMO's/CDO's, etc. ABSOLUTELY BRILLIANT! This man is a Genius; looking forward to reading his insight/opinion on this Website!

Bill Clinton and Andrew Cuomo creted the problem at fannie and freddie that created the current mess by allowing those agencies to approve no income verification loans to increase minority home ownership. Ceck it out at Investor Business Daily

How A Clinton-Era Rule Rewrite Made Subprime Crisis Inevitable
By TERRY JONES
INVESTOR'S BUSINESS DAILY | Posted Wednesday, September 24, 2008 4:30 PM PT

One of the most frequently asked questions about the subprime market meltdown and housing crisis is: How did the government get so deeply involved in the housing market?

The answer is: President Clinton wanted it that way.

Fannie Mae and Freddie Mac, even into the early 1990s, weren't the juggernauts they'd later be.

While President Carter in 1977 signed the Community Reinvestment Act, which pushed Fannie and Freddie to aggressively lend to minority communities, it was Clinton who supercharged the process. After entering office in 1993, he extensively rewrote Fannie's and Freddie's rules.

In so doing, he turned the two quasi-private, mortgage-funding firms into a semi-nationalized monopoly that dispensed cash to markets, made loans to large Democratic voting blocs and handed favors, jobs and money to political allies. This potent mix led inevitably to corruption and the Fannie-Freddie collapse.

Despite warnings of trouble at Fannie and Freddie, in 1994 Clinton unveiled his National Homeownership Strategy, which broadened the CRA in ways Congress never intended.

Addressing the National Association of Realtors that year, Clinton bluntly told the group that "more Americans should own their own homes." He meant it.

Clinton saw homeownership as a way to open the door for blacks and other minorities to enter the middle class.

Though well-intended, the problem was that Congress was about to change hands, from the Democrats to the Republicans. Rather than submit legislation that the GOP-led Congress was almost sure to reject, Clinton ordered Robert Rubin's Treasury Department to rewrite the rules in 1995.

The rewrite, as City Journal noted back in 2000, "made getting a satisfactory CRA rating harder." Banks were given strict new numerical quotas and measures for the level of "diversity" in their loan portfolios. Getting a good CRA rating was key for a bank that wanted to expand or merge with another.

Loans started being made on the basis of race, and often little else.

"Bank examiners would use federal home-loan data, broken down by neighborhood, income group and race, to rate banks on performance," wrote Howard Husock, a scholar at the Manhattan Institute.

But those rules weren't enough.

Clinton got the Department of Housing and Urban Development to double-team the issue. That would later prove disastrous.

Clinton's HUD secretary, Andrew Cuomo, "made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis," the liberal Village Voice noted. Among those decisions were changes that let Fannie and Freddie get into subprime loan markets in a big way.

Other rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks.

Since they could borrow at lower rates than banks due to implicit government guarantees for their debt, the government-sponsored enterprises boomed.

With incentives in place, banks poured billions of dollars of loans into poor communities, often "no doc" and "no income" loans that required no money down and no verification of income.

By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market — a staggering exposure.

Worse still was the cronyism.

Fannie and Freddie became home to out-of-work politicians, mostly Clinton Democrats. An informal survey of their top officials shows a roughly 2-to-1 dominance of Democrats over Republicans.

Then there were the campaign donations. From 1989 to 2008, some 384 politicians got their tip jars filled by Fannie and Freddie.

Over that time, the two GSEs spent $200 million on lobbying and political activities. Their charitable foundations dropped millions more on think tanks and radical community groups.

Did it work? Well, if measured by the goal of putting more poor people into homes, the answer would have to be yes.

From 1995 to 2005, a Harvard study shows, minorities made up 49% of the 12.5 million new homeowners.

The problem is that many of those loans have now gone bad, and minority homeownership rates are shrinking fast.

Fannie and Freddie, with their massive loan portfolios stuffed with securitized mortgage-backed paper created from subprime loans, are a failed legacy of the Clinton era.






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For the dittoheads parroting the line about the CRA and minority lending being the cause of the meltdown, re-read the article.

But of course, you've proven yourselves impervious to facts and reason. Still lookin' for that WMD in Iraq, are ya?

Peter, nothing worth mentioning happened 100 years ago!
The 1909 banking fiasco was solved promptly and deftly by J.P. Morgan. As a matter of fact, the economy was on the road to recovery in 1910.

I also see that the comments blame everyone from FDR forward - gee, but #1 has the correct party. Dear old Barney. Anyone who does not believe this should have tuned in when Benny boy was telling them his side. The whole damn committee never asked about housing. Since I know everyone on the Senate & House finance and banking committees can read, I know they had to see all of the ads for "0" down, no income/credit check, 100-120 financing. As they all had to see this and not feel that anything was wrong I conclude - yes they can read, however I doubt that any could screw in a light bulb.
By the way, the Chinese finance and banking minister pointed this out - publicly! There gloating, but I think that they too will be getting a surprise. They forgot about Lenin and Armand Hammer and Mao and ? They are here deeper than they think.
In any case, Congress approved the doom package. Monday the market goes up, but so does oil. The price of oil will finish what housing and finance started. Watch the dollar sink.

STOP THE BS AND DO SOMETHING LIKE SHOULD HAVE BEEN DONE! 10 YEARS AGO AND GET OUT OF THE WAR!

It's a sad day for the Free Enterprise system, when Big Government thinks they "must" (and CAN ) step in and Bail it out. That speaks volumes for the present national state-of-mind. Here's what I think happened:
1. We elected Bush 2. He was and is uniquely unqualified, but he had the political wherewithal (like Rove) to get in and stay in for two terms.
2. During his memorable tenure, the congress was running amok, with their many VERY wasteful practises--which don't need to be listed; they are legendary and on the tip of the tongue of any good reader and thinker...Bush ( the warrrior ) was (and is) totally out-of-touch with reality... He hasn't EVER lived in the real world, but lived always in one where "bailouts" are normal. He Failed to use the veto to rein in this totally shameful pattern of corruption by Congress. (Compare his vetos with ALL his predecessors records)
3. Bush, not cerebral, always "shot from the hip" , instead of getting some real straight thinking, straight talking, self made types to figure out what was wrong, and fix it from time to time. ( If you want some insight on that, read "Bush on the Couch" .).(Remarkable!!)
4. Along the way, Bush made some remarkable, Expensive Blunders, to wit:
a. Bushes War. It has consumed our nation in many ways, without any demonstrable Payback.
b. Medicare part D coverage. which will cost the taxpayer about 18 Trillion, in its 75 year time frame..( the Bush administration "sold it" to Congress as a $396 Billion package , over 5 years--in order to keep the "package" under a Procedural limit of $400 Billion)...--a long sad story, ..read about it in Bruce Bartletts book "IMPOSTER"...
c. And now, a bailout of his cronies in the financial industry.. If he puts this one over, they owe him Big Time. I think he will. Finally:
5. After Eight years, the proud old Ship-of-state is practically wrecked...and we Americans are looking more and more foolish to the rest of the world. I'm embarrassed, and Mad---aren't you?

All we needed was a commitment from the govt. that they will purchase the lousy mortgage assets cheap and and sell them on the open market for a profit. We can either believe it and invest... or sit on the sidelines and watch others reap.



Here's the deal.... a $200,000 ... 30 Year mortgage... at today's rate of 6% pays about $180,000 in interest over the life of the loan... 30 years later. That is why the mortage securities in the past few years were sold on the open market to the big investors. There is (was to be) a ton of money to be made from the interest on these investments. That is why FRE and FNM were able to make millions in the past and will in the future.



The government who has put these entities under their control recently... will still be here in 30 years.... so they are not in a hurry to get the interest windfall. They will get it as it comes in.... time after time.



However... Recently.... The investors didn't factor in the losses they would take on the sub-prime stuff that was killing the market. There are essentially no new sub prime loans being written right now becuase they cannot be sold on the secondary market. People refinacing or purchasing a new home actually have to qualify on credit scores, debt , assests and income to get a home loan. These are the loans Freddie and Fannie are backing right now. They will not even look at the marginal stuff.



I bought these stocks at 75 cents and 90 cents. I think the bailout will send Fannie and Freddie Skyward, But don't be greedy... if it goes to $5 .... $10.... remember my post. :-)



TimT

VP

I like your thinking TimT... will follow up on that.

As to whose at fault - aren't we a "government of, by, and for..."??? So we, the American People are at fault - for taking out loans over our heads and for being careless for many, many, many years about our voting franchise! So we either pay the piper or start the long and possibly slow process toward warming up the WW audience for the much cliched 'fat lady'... Loan adverts are just that - adverts! Just because someone says we can carry an extra credit load don't make that true.

if you get 15% of the net, who cares if
you just sell it and dont own it. 2Trillon
thanks