Good morning!
Here’s today’s daily news and politics thread. As always, you decide what to discuss, and what’s news to you.
I just finished (it’s long) reading this. It’s a rather scathing indictment of Obama’s role in the housing crisis and the flawed policies and beliefs of he and others that led to it. Required reading in my mind.
“President Barack Obama was a pioneering contributor to the national subprime real estate bubble, and roughly half of the 186 African-American clients in his landmark 1995 mortgage discrimination lawsuit against Citibank have since gone bankrupt or received foreclosure notices.
As few as 19 of those 186 clients still own homes with clean credit ratings, following a decade in which Obama and other progressives pushed banks to provide mortgages to poor African Americans.
The startling failure rate among Obama’s private sector clients was discovered during The Daily Caller’s review of previously unpublished court information from the lawsuit that a young Obama helmed as the lead plaintiff’s attorney. [RELATED: Learn about the 186 class action plaintiffs]
Since the mortgage bubble burst, some of his former clients are calling for a policy reversal.
“If you see some people don’t make enough money to afford the mortgage, why would you give them a loan?” asked Obama client John Buchanan. “There should be some type of regulation against giving people loans they can’t afford.”
Banks “were too eager to lend to many who didn’t qualify,” said Don Byas, another client who saw banks lurch from caution to bubble-inflating recklessness.”
Read more at http://dailycaller.com/
Wandering Views 
Great article! So I guess now Little Bush can blame Obama for the economic crisis, but he won’t.
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Some time ago, on WV, I reviewed a book I read called Reckless Endangerment. It was about the causes and effects of the housing/banking crisis. It was caused by lots of people, but mostly congress.
A very difficult read because there are no good guys. I’ll see if I still have that review somewhere.
It’s an important book.
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It is a great book, Chas. It details a great truth: Every time the liberals come up with another hare-brained scheme to “help the poor and the minorities”, there are other clever people who figure out a way to make a killing off the scheme while it is damaging the country. I call such people: Democrat campaign contributors.
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I guess this is news/politics. I am almost done reading Cascade’s Fault about a pending earthquake/tsunami in our neck of the woods, probably as large as the Sumatra/Boxing Day earthquake in 2004, which killed 230,000 people or so. What natural disasters do you have in your area, if any? I know a retired cop who worked on the New Orleans police force (Hurrican central). One of my brothers (the one who is bi-polar/schizophrenic) lives in the next town over from Joplin, MO, scene of a large killer tornado. A brother & sister live in Maine and Vermont, and have experienced blizzards and hurricanes. (We are taking a cross-Canada train ride in a month or so to visit them.)
I know WT tends to be libertarian/conservative. Wasn’t Jindal complaining about not getting enough federal relief for LA? I don’t want to use the H word, but the tempation is great. New Orleans is reportedly a charming and lovely place to live; is it an insane one? We now require people to wear safety harnesses and belts. We require automakers to install airbags. These “nanny government” rules almost certainly save many lives.
My wife and I have 500 gallons of water and a generator. We live a couple of miles uphill from the water in a house built recently to earthquake standards. There are people on our island who live in shacks by the beach.
No particular answers or agenda, just throwing this out for discussion.
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Daily Caller. Sigh. Carlson Tucker owned opinion masquerading as a news site.
Here’s something a bit drier:
Click to access Subprime_WP_rev.pdf
This is an article that explores the housing crisis from start to finish and acknowledges the rather larger pool of actors who share blame — including lenders and borrowers, the Fed and Congress. It’s more balanced than the Caller piece. Who among us actually believes that banks were not gleeful to jump into a new lending pool and make yet more money out of it by selling and reselling those bad mortgages to other firms? Many on Wall Street made millions off the housing bubble and burst while only a few paid the price for unwise derivative trading. The housing story is about much more than a lawyer opposing redlining practices.
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My previous review.
I’ve just finished
RECKLESS ENDANGERMENT by Grechen Morgenson and Joshua Rosner
If your objective is to relax with a good book, this isn’t it. It took me almost two weeks to read it. I would read a few pages till my blood reached its boiling point, then I put it down a while.
An important book. But a very difficult read because the intricate and interwoven players. And not enjoyable because there are no good guys. It seems, the biggest culprit is a guy I’d never heard of before: James A. Johnson, “chief executive of Fannie Mae during its critical expansion in the 1990’s.” The book names names, multitudes of them; almost all of them bad guys and many of whom you know. e.g. Gerthner, Frank, Rubin, etc.
It’s about the background and causes of the present housing crisis. Not only discussing at length Fannie Mae, but Congress and the various lending institutions. Nobody comes out looking good. (Except Some mid-level government workers in the agencies, (Congressional Budget Office) who sounded warnings.)
Too many quotes to address. Something to underline on every page.
Can it be fixed? Not likely, given the track record, everyone involved; the Fed, Congress, Fannie/Freddie, HUD, the banks, none of them are motivated to do anything beyond get the issue off their respective backs. I have never seen, in the media, a discussion of the cause of the crisis. –It started with the Community Reinvestment Act in 1977, Then, A 1991 program called “An Open Door to Affordable Housing” adopted by Clinton and continued by Bush. Give every American the opportunity to fulfill the American Dream. Can you believe ACORN had a hand in this?
And nobody suffers. Almost everybody who manipulated the creation of this disaster has retained his benefits.
e.g. James Johnson, who got $5.1 million compensation from Fannie in 1995, is presently a trustee emeritus of the Brooking Institute and on the boards of Target and Goldman Sachs. And Angelo Mozilo, of Countrywide Financial, who was fined $67.5 million for malfeasance had his fine paid by Countrywide. It’s a close-knit group.
There are evil people out there. Some of them wear spiffy ties and cuff links.
An important book, but if you don’t have an interest in the subject, it can be very tedious and distressing. If you’re really interested in the subject, it’s likely to drive you nuts. But it contains lots of information you’ll never see elsewhere.
Very well written, good index, but cries out for the glossary that is missing.
To illustrate my last remark about none of the players sleeping on grates tonight, the last paragraph of Chapter 14 reads:
”And more than six years after Raines and his colleagues were thrown out of the company, the government was still paying their legal bills. In early 2011, it came out that taxpayers had paid $24.2 million to legal cost so that Raines, Howard, and Spencer could defend themselves in shareholder suits. It was an insult added to a decidedly grievous injury.”
And Chapter 15 starts:
“Of all the partners in the homeownership push, no industry contributed more to the corruption of the lending process than Wall Street.”
They tell how the innocent people on each side, the purchaser (not always innocent) and investor who was sold bad loans were scammed by the Companies (Goldman Sach, etc.)
They used such instruments as: Refinancing, Interest-only mortgages, and negative amortization loans to keep the pot boiling.
I’ve just finished
RECKLESS ENDANGERMENT by Grechen Morgenson and Joshua Rosner
If your objective is to relax with a good book, this isn’t it. It took me almost two weeks to read it. I would read a few pages till my blood reached its boiling point, then I put it down a while.
An important book. But a very difficult read because the intricate and interwoven players. And not enjoyable because there are no good guys. It seems, the biggest culprit is a guy I’d never heard of before: James A. Johnson, “chief executive of Fannie Mae during its critical expansion in the 1990’s.” The book names names, multitudes of them; almost all of them bad guys and many of whom you know. e.g. Gerthner, Frank, Rubin, etc.
It’s about the background and causes of the present housing crisis. Not only discussing at length Fannie Mae, but Congress and the various lending institutions. Nobody comes out looking good. (Except Some mid-level government workers in the agencies, (Congressional Budget Office) who sounded warnings.)
Too many quotes to address. Something to underline on every page.
Can it be fixed? Not likely, given the track record, everyone involved; the Fed, Congress, Fannie/Freddie, HUD, the banks, none of them are motivated to do anything beyond get the issue off their respective backs. I have never seen, in the media, a discussion of the cause of the crisis. –It started with the Community Reinvestment Act in 1977, Then, A 1991 program called “An Open Door to Affordable Housing” adopted by Clinton and continued by Bush. Give every American the opportunity to fulfill the American Dream. Can you believe ACORN had a hand in this?
And nobody suffers. Almost everybody who manipulated the creation of this disaster has retained his benefits.
e.g. James Johnson, who got $5.1 million compensation from Fannie in 1995, is presently a trustee emeritus of the Brooking Institute and on the boards of Target and Goldman Sachs. And Angelo Mozilo, of Countrywide Financial, who was fined $67.5 million for malfeasance had his fine paid by Countrywide. It’s a close-knit group.
There are evil people out there. Some of them wear spiffy ties and cuff links.
An important book, but if you don’t have an interest in the subject, it can be very tedious and distressing. If you’re really interested in the subject, it’s likely to drive you nuts. But it contains lots of information you’ll never see elsewhere.
Very well written, good index, but cries out for the glossary that is missing.
To illustrate my last remark about none of the players sleeping on grates tonight, the last paragraph of Chapter 14 reads:
”And more than six years after Raines and his colleagues were thrown out of the company, the government was still paying their legal bills. In early 2011, it came out that taxpayers had paid $24.2 million to legal cost so that Raines, Howard, and Spencer could defend themselves in shareholder suits. It was an insult added to a decidedly grievous injury.”
And Chapter 15 starts:
“Of all the partners in the homeownership push, no industry contributed more to the corruption of the lending process than Wall Street.”
They tell how the innocent people on each side, the purchaser (not always innocent) and investor who was sold bad loans were scammed by the Companies (Goldman Sach, etc.)
They used such instruments as: Refinancing, Interest-only mortgages, and negative amortization loans to keep the pot boiling.
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CB, As Chas indicated, Reckless Endangerment tells the whole story. However, it all started with hare-brained schemes/lawsuits to help “the poor and minorities”, and it turns out young Obama was a pioneer in such efforts. Businessmen build up; community organizers tear down.
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I thought I had deleted that last copy of the same thing. I see it didn’t work.
Random, you seem to be prepared for the emergencies of this life.
Are you prepared for the interview you will have with God?
It’s more likely to happen than any earthquake tsunami.
In fact, you can count on it.
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And now the banks want delay a foreclosure so that you can get a short sale through. A short sale dings you credit a couple of hundred points but is something you can recover from. A foreclosure keeps you from even trying to get a mortgage to purchase another house for at least 7 years.
The banks are now taking over these properties, making repairs and trying to sell them at retail prices. Consumers have cleared to steer clear of a short sale if they are trying to buy a primary home because that is an emotional decision. You see a house, fall in love, start placing your furniture and 5 or 6 months later the bank still hasn’t approved the sale.
These leaves only “investors” who have no emotional attachment to the property in the market. There are some REO agents out there that want to be on both sides of the transaction and won’t even return a buyers agents call.
I was recently handed a short sale from an asset management company. They wanted me to do a BPO, tell them what all to do to the property, market it, etc and they would pay me 1.5% of the sales price while requiring me to pay the buyer’s agent 3% so I can see why these agents would want to try to be on both sides to try to make a little more money. The whole thing is a GIANT MESS!!!!
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CB,
That is a good piece. But I didn’t see Obama mentioned at all. We’ve all heard plenty about Romney and Bain. But can you honestly tell me you already knew this stuff about Obama’s past job and the role he played in the Housing Crash? I’ve never seen it anywhere, until Tucker Carlson posted this. If Romney’s former job matters, so does Obama’s.
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MP, I was involved in the tornadoes that hit Alabama just before the Joplin Tornado. I know what to do in case of tornadoes. If I had to pick a natural disaster to survive it would be a tornado. The is reason is that a tornado affects a fairly narrow, though often long, area. No matter how bad off you are, there is someone less than a mile away who can help you. Very often you next door neighbor is fine and can help. With a hurricane or an earthquake or a tsunami, everyone around you for miles is in the same fix. Not only is help far away but you may have to stand in line for a while.
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CB, If Carlson has set up an opinion site masquerading as news, why don’t NBC, ABC, CBS, Wash. Post, and NYT sue him for patent design enfringement? Oh, I forgot: With NPR, I guess the government owns the right to that design.
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Fair enough AJ, if the argument is blame Obama for the housing crisis because he successfully argued a re lining case before the court, then its pretty well attenuated. Obama was not the reason for deregulating banks and investment firms; that happened on Clinton’s watch and had bipartisan support. The excesses of all the mortgage firms, including Fannie and freddie happened under Bush’s watch with bipartisan ignoring of the issue.
Bain, Olympics and so forth – with large infusions of federal cash to the Olympics and to steel dynamics, those ventures were successful. Bain was saved by FDIC. What I most object to with respect to Romney’s campaign and supportive super pacs is the total whitewashing.
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Lol Ricky. At least those traditional sites label opeds as opeds…
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CB,
My point wasn’t necessarily to blame Obama for it, but he did have a part in exploiting those failed policies to his own financial advantage and to the detriment of those he supposedly sought to help. This clearly demonstrates that. Also, he continues to exploit these things for political gain, and at the expense of our economy and housing market. He’s still pushing many of these same flawed ideas. He’s not helping make things better. That’s relevant. And yes, so is Bain.
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It wasn’t Obama so much ad Dodd & Frank. They had this mantra, “Every American should own a home.” Hard to refute.
I Instinctively knew that banks don’t like to loan money to people who can’t repay.
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I mentioned the other day that I was reading Marco Rubio’s autobiography. I’ve finished it now. I enjoyed it very much. It was interesting how God used the 2010 campaign to work in his life, especially in the area of pride and trust when the race looked impossible during the spring/summer of ’09 because of the popularity of his opponent Charlie Crist. In fact he nearly dropped out and ran for another office but as his wife told him, that would show that he just wanted another title. If he truly believed in the cause that he was fighting for, then she did as well and was willing to make sacrifices that would allow him to campaign full-time and be away from the family; but not if he just wanted any political office.
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Fannie Mae contributed $126,349 to Obama. When the Bush administration in 2005 proposed serious reform of Fan and Fred, Obama was among the Democrats who quashed the reform. In my view Fan and Fred were far more influential than Wall Street in causing the housing debacle.
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From “The Death of Liberalism” by R. Emmett Terrell, p. 157f.
Terrell is describing the housing crisis but is really talking about Dodd-Frank.
”As mentioned previously, the financial crisis began not with Wall Street but with a real estate bubble. Pursuant to government policy to get low income individuals into the real estate market, first the Clinton administration and then the Bush administration created what grew to be 27 million subprime mortgages (by 2008, half of all mortgages), which were bundled in with healthy mortgages, and the resulting indigestible sausages were sold through the American financial system and eventually around the world. That is where Wall Street came in. When the bubble popped and such firms as Fannie Mae, Freddie Mac, Bear Sterns, and Lehman Brothers suffered the consequent stress. An additional problem was the accounting practice of “mark to market”, which caused such institutions to be forced to come up with more collateral when their established collateral’s value was marked down according to book value, whether the collateral was sold or not. Some institutions went down in flames, and the government backed institutions, Fannie and Freddie went with hat in hand to the taxpayer.”
“Government regulators had failed in their duties. Now Dodd-Frank envisages a vast extension of their duties.” ……
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FLASH
Big news, the Treasury Dept. has announced that the national debt is now $16 trillion.
That is the total resources of 16,000 billionaires.
Or, 16,000,000 millionaires.
Or 16 billion thousandaires. Or some combination thereof.
Bottom line: That much money doesn’t exist in the real world.
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And it takes $240 billionaires per year to pay the interest in that debt.
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What seeems to be uniformly true of the republican analysis (I won’t call it coservative because there are conservatives who don’t ignore the role of Wall Street), is the insistence that the derivatives market which is responsible for a large portion of the collapse is somehow blameless and that Wall Street did not play a significant role. My mind boggles at the convenient dismissals so that fannie and freddie become the main culprits. Did the two quangos play a role? Yes. Was it the principal lead in the drama of fiscal disaster? The vast majority of economists say no.
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My brain is fried and is on information overload. When I get this system up and running it is going to be great…I just have to get my head wrapped around it and get it going,
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CB, No one is saying Wall Street is blameless.
Until there was pressure from the federal government, there weren’t subprime mortgages. There is no evidence that these bad loans would have ever been made had not the federal govt. pressured the lenders and then used Freddie and Fannie to create the mortgage-backed securities (MBSs) to take the horrible loans off the hands of the original lenders. In typical government fashion, the MBSs mixed the bad with the good , creating a huge amount of toxic securities. All agree that without Fannie and Freddie, there would have been no MBSs.
Wall Street’s role was to keep packaging, selling and worst of all buying these securities when it became clear the government was creating toxic, and near worthless, securities. Dem’s blame lack of regulation on Wall Street. What was the regulation supposed to say? Do not buy or sell MBSs because your government is by carrot and stick creating hundreds of billions of dollars of worthless loans?
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“My brain is fried and is on information overload. When I get this system up and running it is going to be great…I just have to get my head wrapped around it and get it going,”
I hear you Sister! On a much smaller scale, but I hear ya’.
You feel..
😯
And 🙂
at the same time right? Just ride it out. You’ll get where ya’ need to be.
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I’m gonna have to figure out how to fix that smiley problem.
That was supposed to be you feel (bug eyed smiley) and (smiley smiley) at the same time. That way just looks all wrong.
Let’s see if this one cooperates.
😦
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Wall Street played a significant role in the housing debacle, mainly due to selling dodgy collateralized bonds on the assumption that the government would in the long run find a way to fund these loans. The assumption proved only partly correct. As to derivatives, they serve a valuable purpose to hedge stock and bond investments. The problem with derivatives had to do with transparency; that has been corrected.
By far, the largest cause of this debacle had to do with the govrnment’s desire to increase home ownership through sub-prime and alt A loans in large part backed by Fan and Fred. Those who regard Wall Street as the prime culprit don’t know what they are talking about.
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Ricky and Sails
There are a couple of things about the notion that Fannie and Freddie caused the financial meltdown.
Loans that came from for private-label securitization defaulted at about six times the rate of Fannie and Freddie loans. There was a concurrent and similar issue in the commercial market and in the overseas markets.
Here’s an article from 2008 that goes through it. http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html
I do realize that conservative commentators from AEI and CATO went to work in late 2008 to write a narrative that would blame government and loans to minorities for the fiasco. But there is more to it than that and AEI and CATO would blame the government for the weather, if they thought they could get away with it.
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That McClatchey article is dubious on the proportion of Wall Street to Fan and Fred loans. The 84% of subprime loans is asserted but hardly proved. It, also, assumes Fan and Fred figures that have been proven wrong by the SEC.
A far more reliable source is Peter Wallison’s WSJ articlr The Financial Crisis on Trial The SEC fingers the government-backed mortgage buyers, not Wall Street greed. including the following:
For the first time in a government report, the complaint has made it clear that the two government-sponsored enterprises (GSEs) played a major role in creating the demand for low-quality mortgages before the 2008 financial crisis. More importantly, the SEC is saying that Fannie and Freddie—the largest buyers and securitizers of subprime and other low-quality mortgages—hid the size of their purchases from the market. Through these alleged acts of securities fraud, they did not just mislead investors; they deprived analysts, risk managers, rating agencies and even financial regulators of vital data about market risks that could have prevented the crisis.
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The above post is directed to CB.
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Thanks, Sails. I can always count on you as our Rapid Response Team.
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