Puterbac News Network and Political Discussion Thread

[Owlman]

allowing the feds to implement the plan will actually take the country closer to a single payer system. The states will still have issues because the uncompensated care dollars will also end making an even bigger hit on the states if they don't decide to go forward. The states that get his the most are the ones that have the worst coverage for medicaid, Texas, Louisiana, Mississippi among the states that would have gotten the most money.

[innocentbystander]

Oh yes they do. I picked up three in foreclosure and flipped them.

yeah, the idea that the poor caused the housing crisis is a fallacy. The banking industry easily could have handled every dollars worth of the cost of the poor who defaulted on their loans.

(exasperated)

Owl, the housing crisis was cased by welchers. Those individuals who walked away from their homes, they are the reason for the housing crisis. Some of the welchers (some, not all) were wealthier people (dumping the McMansions.) Some had very, very little money (the poor), and still some where middle class. But the goal for all of them was the same, get out from under this house that I most certainly am not interested in paying for and had no intension of keeping.

When you walk away, typically the worst that will happen to you is your lender will destroy your credit rating. The lenders can do far worse (they can go after all your assets if they thought you had any) but the policy was usually just wreck the person's credit rating and write off the loss. Now, for those who were poorer, the had the least to lose. Their credit rating might have already been lousy. (Its not a big drop going from 520 to 380, not like going from 708 to 408.) So of course, if poorer people had no intension of keeping a house they could no longer re-finance or flip, then welch.

By the by, lenders could not handle all those losses, not at the magnitude with which they were hit. This was just too severe. I don't know where you got the idea that they could (or even that they should.)

[Owlman]

No, Banks could have easily accounted for the poor defaulting on their loans. Everyone of their loans, the banks had enough collateral to account for loans to the poor. Everyone of them could have walked away from their mortgage and without the banks repackaging the securities, there NEVER would have been a crisis.

Naming the poor as the cause? No. Especially since most of the more foreclosures the past 2 years and those at risk now are not the poor. Giving AAA rating to housing securities based on the poor, reselling mortgages multiple times each time for much greater than the property is worth? That's a house of cards that will grow with more and more perceived money (as it did) but will eventually collapse.

Look at the facts and draw a collusion as opposed to creating a theory and jamming the facts (even those that don't fit) into that theory.

[THE_WIZARD_]

Whilst the "welchers" helped to cause the housing/banking crisis...the underlying problem was GREED. Greed of the lenders (most of whom were on commission and making loans that NEVER should have been made)...yes the "welchers" should have known they were getting into a high risk situation...but as IB points out...most of them had little to lose. When a lender tells you that you can get into a much nicer house and even secure your future by building equity fast due to the "boom" of course you want to believe it. Most of these people have no idea that the whole "bubble" was built on a false premise...that home values were going to continue to rise. Most of these "lenders" were selling these loans off anyway and many were "repackaged" to make a shit sandwich look edible too.

Greed was the underlying factor here. On many levels. Of course the banking rules and guidelines were a joke also.

[hedge]

"If uncertainty isn't removed, he said, "people will sit on their war chests of cash and return it to shareholders."

If uncertainty isn't removed?? LMAO. Uncertainty is a part of life. If you want certainty, go into the mathematics field. Investment is all about risk. Always has been, always will be. Kinda funny listening to all these supposedly anti-government "conservatives" whine about the government not providing "certainty". So now the government it supposed to be the Final Insurer against all "uncertainty"?? And this from people who ostensibly were against all the bailouts? Again, LMFAO. Grow a pair or get out of the game....

[Toemeesleather]

..the idea that the poor caused the housing crisis is a fallacy. The banking industry easily could have handled every dollars worth of the cost of the poor who defaulted on their loans. Two bigger issues though were and are present. One was the packaging of high risk housing loans and the inexplicable rating of these "securities" much higher than they should have been and the sale of these for multiple values of the actual costs of the loans. It wasn't the housing loans but the securitization of these loans that were the problem.


This starts out w/a true statement, but then steers away from truth to put all the blame on the banks...expected....the source of the problem (Community Reinvestment Act) simply did what most gubment programs do, that is morph to something else...like "every American has the right to buy/own a house." People, poor/rich/middle made bad decisions by overextending themselves w/waaaaay too easy credit, thanks to the CRA and our fearless leaders, both Dem and Repub, in congress. Some folks didn't even buy a house, they used (what turned out to be overinflated) equity in their current home to buy BMWs, swimming pools, vacations....whatever. Also poor/rich/middle income folks were allowed to over borrow, based on stated income and put practically nothing down, thus leaving them w/minimal skin in the game....it is truly a lesson we have repeated over and over since the New Deal....gubment makes a mess, blames somebody else, then have the audacity to say...We'll fix it.

[hedge]

"thanks to the CRA and our fearless leaders, both Dem and Repub, in congress."

Cogent...

[hedge]

I wonder who lobbied for the CRA? Hard to believe that congress could've come up with it (or anything else) all by themselves...

[Professor Tiger]

I'm sure uncertainty has something to do with it. But I think that the bigger reason for the current situation of high unemployment and whopping corporate profits is a simple, good old fashioned employer's market. Big businesses know they can work their current labor force like dogs. The workers won't quit or demand higher wages because they are just grateful to have a job at all. And if they do quit, employers know there will be 20 applicants who will happily work 70 hours a week for low pay and no benefits.

When Obamacare and other new taxes and regulations kick in, no problem. Make your workers work 100 hours a week, cancel lunch breaks, and bring in a bunch of Mexicans who will work below minimum wage. Or better yet, bring in student interns who will work for free. No problem.

[10ac]

Then we will just pass another law to fix it. No problem.

[Toemeesleather]

...after they form a blue ribbon committee.

[innocentbystander]

I wonder who lobbied for the CRA? Hard to believe that congress could've come up with it (or anything else) all by themselves...

This was originally the work of President Jimmy Carter (and followed up by President Clinton after Reagan began to dismantle it.) Prior to CRA, most (almost all) banks would simply "redline" a region or area they had no intension of lending money into because it was too risky. That was their policy since they were taking the risk. Carter hated this because these redlined areas were mostly black neighborhoods (with extremely low levels of married people and high levels of illegitimacy and unemployment.) So he lobbied a very Democratic Congress in the late 1970s to start CRA. The idea being, if a bank can take money in from those communities in bank savings then the bank should be compelled (by government) to loan (ie: re-invest) the money back out into those same communities.

Banks were still free to redline, but the penalty was that they were no longer allowed to expand by acquiring branches from other lending institutions. That was the punishment. Some banks pay this penality (not happily, but they pay it.)

In truth, there really was no such thing as redlining. If you really wanted a loan in these redlined areas and all that was available to you was a bank that refused to take on that kind of risk (and these restrictions no longer apply as a mortgage broker deals with ALL lenders), then (as the borrower) you had to do more to lower the risk for the bank. Much of this could be fixed by applying for a mortgage of a much shorter duration, with a much higher down payment (30 to 40%) and with a higher interest rate. Make the loan deal so attractive to the bank (where their risk is almost entirely mitigated) that they would have no reason to say no. When Carter (and later Clinton) was approached with this alternative, they scoffed at that idea because they didn't believe the people that wanted to buy in these communities should have to do more/pay more to get their loans.

[hedge]

" If you really wanted a loan in these redlined areas and all that was available to you was a bank that refused to take on that kind of risk"

I thought that was what Fannie Mae was for...

[Owlman]

there was no such thing as redlining

of course not

[Professor Tiger]

IB, you kept blaming Carter and Clinton, but you ignore a vital fact. After Clinton, the R's controlled the White House for 8 years, the Senate for 8 years, and the House for 6 years. They had everything they needed to stop the madness, but chose not to. They are at least as culpable as the Dem's for the housing/lending disaster and ensuing recession, and probably more so.

That's a HUGE reason voters didn't rush back into GOP's arms last election.

[Toemeesleather]

and probably more so..

Just like gubment, you go too far and lose all credibility.

[Owlman]

Didn't blame it on the banks. Only pointed out that the banks could have handled every dollar that was defaulted on by the poor. There would have been no crisis if were just a bunch of people defaulting on their loans. The blame belongs to the securitization of these loans and the loans to both the middle class and rich, (who also used adjustable rate mortgages to buy homes bigger than their income indicated) to levels that were massively more than the worth of the actual property led to the crisis. Why were the securities given such high ratings? This has never been explained.

the idea that low credit was due to the CRA and that poor people were buying BMW's with their home equity??? The CRA was about not redlining and providing loans to qualified low and low-moderate income people. Housing for the poor could never have triggered the collapse.

[Toemeesleather]

..poor people were buying BMW's with their home equity???

Where'd you get that?


Housing for the poor could never have triggered the collapse.

Of course not, and was never stated....It can be argued the CRA was the genesis of the collapse.

[hedge]

"Where'd you get that?"

IB...

[hedge]

I'm not advocating the government getting involved in the banking business (not that it matters what I think, they already are involved in pretty much every business in a big way), but if the government is going to guarantee bank deposits then I guess they felt like they should have some say-so, at least in a general way, about banks' lending practices. You don't get something (in this case, a very large something) for nothing...