Who is actually responsible for the subprime lending crisis?
Matthew D asked:
Today the band is playing on the deck of our economy, and credit is deadlocked due to sub prime lending.
Is it true that the liberals are responsible, for playing the race card in getting low income persons loans beyond their means?
Or is that just a canard, and are the conservatives actually responsible for cutting interest rates to keep people spending during a declining labor market?
Today the band is playing on the deck of our economy, and credit is deadlocked due to sub prime lending.
Is it true that the liberals are responsible, for playing the race card in getting low income persons loans beyond their means?
Or is that just a canard, and are the conservatives actually responsible for cutting interest rates to keep people spending during a declining labor market?
who pushed for loans to be given to people that could not afford them?
Oh thats right, the democrats
Barney Frank, Chris Dodd, and Bubba Clinton. He was in office when this whole thing started…he wanted his “people” to have big homes they couldn’t afford and decided the government could do this for him. Thus his popularity with the “little ” people. He screwed them with this policy.
it all goes back to bill clinton and his cabinet
Democrats and their CRA.
Barney Frank, Christopher Dodd and a couple other Democrats. Frank was warned of the impeding danger, but he was busy having an affair with the chief of Fannie Mae - Rainey. The Dems. insisted this loans be given to people who couldn’t afford them. They pressured the banks and lending institutions.
Barney Frank, head of the Senate Banking committee, while sleeping with a Fannie Mae exec:
It is a little of everyones fault. The Democrats are somewhat responsible for helping to lower the standards to get these loans, the republicans for not fighting back on them. The real estate agents pushing higher priced homes on people who knew they were beyond their means, the loan companies for pushing so many loans with arm’s. Also the borrowers for having home buying fever.
The collective greed of the system, combined with overenthusiastic borrowers combined to collapse the system.
Pointing the finger will do no good, there is simply too much blame (aka, stupidity) to go around.
There is enough blame to go around. It is time we stop the silly our ‘team’ against ‘their’ team attitude.
Irresponsible lenders and borrowers.
Specially the subprime lending crisis was due to investors that wanted to flip property real quick and decided to dump their loans. You can only get a ’sub prime interest loan’ if you have great credit or other assets to leverage. Everyone that was involved in the process of issuing these loans are responsible.
Greed knows no financial, racial, or political boundaries.
Corruption in our government and people that actually spent and bought more than they could afford. Personal responsibility plays a “big” part in the banking crisis. You know, we have elected officials that think they know what the American people need, when they are totally out of touch with normal life.
The government, period. I blame them all. Forcing banks to give loans to those who wouldn’t ordinarily be approved was the major problem and neither party did a thing about it. My utter disdain for Barney Frank usually forces me to point the finger at him but there is plenty of blame to go around..
Banks who knowingly loaned money to people who had no ability to pay it back and then sold those bogus loans as derivatives to others.
The banks that abused a good system of keeping credit flowing.
They had a situation where they could invest without the risk, even though that wasn’t the intent of the program. It was bank welfare system exploitation at its best.
All they simply had to do was make the loans, make their service fees, and dump the risky loans onto Fannie Mae and Freddie Mac, while keeping the better ones.
The CRA did not force banks to give loans to Pepee who could not afford them. It forced banks to give loans to people who could prove their ability to repay them as long as they were not requesting more than the value of the property, and they fell within certain guidelines.
Banks gave loans outside thoseguideliness and packaged them with the other loans knowing they didn’t have enough regulators to check them all.
So basically what banks did was make the investments they wouldn’t have normally made without the CRA, and others that they shouldn’t have made at all, to make their fees and passed the ones they wouldn’t and shouldn’t have made onto Fannie Mae and Freddie Mac, while holding the ones they where happy to make a guaranteed profit on.
While the banks where making their own fees, the larger ones were creating default swaps on the loans and selling them out, making even more.
These default swaps on mortgage investments would never have occurreded if the Gramm-Leach-Bliley Act wouldn’t have been passed allowing banks to consolidate financial services and investment services under the same roof.
WE ARE RESPONSIBLE!!! That is the answer nobody wants to hear but it is true. We have been living in the fast lane with credit so easy to obtain, there has been no fiscal responsibility on the part of the American consumer.
Banks, and creditors only responded to the growing trend. the simple fact is we became drunk with credit. Americans dont save money anymore, and now that we find we cant pay our bills the banks are losing out and the economy is in shambles.
We started this, and now we must pay the piper!
Ask Carter and Clinton about the Community Reinvestment Act (CRA).
Those who tried to challenge Fannie Mae and Freddie Mac policies in 2003 (republicans)
Rep Richard Baker, Ed Royce, Christopher Shays, and Don Manzullo.
While these DEMOCRATS defended these policies on making subprime loans to those who could not afford those loans.
the bad
Maxine Waters, Gregory Meeks, Lacy Clay, Artur Davis, and Barney Franks.
There are others, and their role in the housing collapse should have gotten them prosecuted.
Have you ever seen a fish tank when someone just puts in some food how all the fish fight to eat. Is like that but with politicians and the housing industry.
Democrats are primarily responsible for modifying the Community Reinvestment Act. This modification increased subprime lending, decreased regulations surrounding it, and kicked off the rising house prices. This happened between 1993 and 1995 while Bill Clinton was president with a Democrat majority congress.
On October 2002, President Bush brought forward a plan to help minority people to afford homes.
He directed Fanni Mae to make no down payment loans available to all, increasing home ownership by 5.5 million families.
Allen Greenspan, former head of the Federal Reserve just last week said he was as surprised as anyone that after deregulation of the financial institutions, banks didn’t use common sense in giving loans to poor people.
Republican Presidential candidate, John Mccain, bragged that he was always a fan of deregulation for his whole term in Congress.
Republicans have had a majority in Congress for most of Bush’s Presidential term, so to blame Democrats for the situation we have today is disingenuous. The last election shows most American citizens have put the blame exactly where it belongs by not voting for Republicans to continue down the path of national destruction, and depression of our economy.
You can not blame any political persuasion for this problem, but rather the people who control our money. This is not a liberal or conservative problem, but rather a greed and power problem that does not have the American peoples interest in mind.
It starts here and the more you know, the more you WILL get pizzzed off.
Look at the back of a dollar bill
It says Federal Reserve System
How many of you know that system is privately owned?
How many of you know that the Federal Reserve System is controlled by a few banks and a handful of very rich people?
How many of you know that the chairman of the Federal Reserve System is probably the most powerful man on the planet?
The Federal Reserve System controls our money supply
Prints our money
Interest rates
encourages you to be in debt
lends money to our government while you the tax payer are paying interest on that debt.
That our money is not backed by anything tangible, such as gold or silver, but only backed with a promise.
In short, they control just about every aspect of your life, your money, your credit cards, your mortgage, your car loan, student loans, your retirment, etc.
Including having their hands in getting us involved in money making wars.
The smartest thing I ever did was chose to live debt free about 20 years ago. It is amazing how much of our money is eaten up by the Federal Reserve System, and how much more disposable income I had because I made the right choice.
And more information about the federal reserve system:
And this audio from Senator Ron Paul
And video
Other prespectives
For more information about this and other important issues, download this:
TVU Player
Then I would tune into:
Channel 68078
Exposing 9/11, police state and tyranny
Documentaries about 911 and other social issues over and over again.
The sub-prime lending would have only been a small problem not a crisis if the banks and not bundled them into securities, sold them to investors, and then also sold them insurances against the homeowners defaulting. We do not have a would wide financial crisis because poor people got too much money anymore than we have a 10 trillion dollar debt because of welfare to unwed mothers.
The real culprit is the Federal Reserve. Grab any financial magazine since before the new millenium, and you will read about their expansionist policy that led to cheap money (i.e low interest rates). Low interest is good, but the expansion of money supply leads to currency devaluation and high inflation (no such thing as a free lunch!)
Now, you have to realize that banks borrow from the Fed. With cash so cheap, banks soon had a huge surplus. The banks make money by lending (or investing in ’safe’ assets), so they don’t like to have lots of cash sitting around. So what do they do? They lower requirements for loans, and invest in all sorts of creative crap products, because if the money just sits there, it will be devalued by the high inflation caused by-the expansionist policy!
The Fed’s distortions of the money market are the problem. A decade of artificially cheap money will be paid back somehow.
Franklin Raines, Maxine Waters and Barney Frank who boasted of 100% approval rate in getting people homes without a down payment and received bonuses that were double their salary for achieving this goal and at the same time beating up federal regulators that were trying to stop them in Congress.
It isn’t the loans that were written back in the 1990’s that are going bad today, it’s the ones from the last five years, so I have to wonder if those blaming Clinton, Dodd, et al are serious.
I blame our greed for the unraveling of the credit market. For decades we have been deluged with offers of credit, and most of us have used borrowed money to pay our bills at times–the definition of living beyond our means.
Eventually, our incomes didn’t keep up with our debt, and the whole thing ground to a halt as people stopped paying their bills. It’s bigger than the subprime segment–the crisis is spreading into commercial real estate, auto loans, and credit card debt.
We talked ourselves into believing that home prices would rise rapidly forever, and that that would provide us with virtually limitless funds through refi’s and lines of credit. Investors jumped at the prospect of double-digit returns, and poured their money in without considering whether it is possible for something to only ever go up in price.
Here is a really interesting slide show tells the story of Subprime Crisis:
Here is a very interesting slide show about subprime: