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Informed Opinion

Alva, FL

#21 Feb 7, 2013
Lark Roven wrote:
A watermelon is a type of edible fruit. They are 92% water. About six percent of a watermelon is sugar. This makes them very sweet. There are many different types of watermelon. Some have a green rind on the outside and a red-pink flesh on the inside, with black seeds. Some can have yellow flesh, and some can be seedless. The green rind on the outside is not usually eaten, though it can be used as a vegetable. It can also be stewed or pickled. Most watermelons are oblong or spherical. In Japan, watermelons are grown in different shapes. Many people like to eat watermelon in the summer because the fruit is cool and refreshing.

Watermelons are a great source vitamin A, vitamin C, vitamin B6 and vitamin B1. They also contain potassium, magnesium, carotenoid antioxidant, and lycopene. Watermelons are fruits and a vine-like plant, but they are edible
And taste good !!!
Informed Opinion

Alva, FL

#22 Feb 7, 2013
Truth in vents wrote:
It's pathetic when anyone uses the race card to advance their own personal views. The days of hiring the most competent, qualified replaced by being sure you have the correct % of a group.
Years ago I was a mortgage originator and we were required to accept appications, then reject because they couldn't qualify. People who made 12K wanting a home in the 100K range. Then the numbers of rejections spiked in poverty areas and we were accused of racism. Then came the 2/5 loans which put us into the mess that caused the collapse in 2008. Payments starting at @200 monthly spiked to $1400 and "shock" effect can't when they can't afford the home.
Replaced by screams of racism and wanting to reduce the debt to keep these same people in the homes they couldn't afford in the first place.
Lyndon Johnsons "Great Society" program started the ball rolling which sems unstoppable now.
GM is back in the sub-prime loans on new cars. The beat goes on
Agreed, any greedy banksters who loaned money to folks knowing they didn't have the funds to make the payments should be thrown in jail with "Bubba". Of course, they weren't, they stole their money with ink pens and greed, not a cheap Raven Arms .25 pistol.

Even worse, when people could pay traditional loans, they channeled them into "Interest Only", or other subprime loan instruments that assured future homelessness, but hey, the mortgage broker Mage $12,000 more in commission screwing the moron he was "helping".

What kind of sick bastards, in order to increase their own salaries and bonuses, set up morons to be homeless. The children of those morons didn't have any say in the conspiracy of greedy sophisticated banker with the dunces.

How can we trust the loan industry that creates an application the industry itself calls "Liar Loans", promises never to check up on the "Liars",
then is
shocked, shocked, shocked I tell you,
to discover people lied on their "Liar Loans".
Informed Opinion

Naples, FL

#23 Feb 7, 2013
http://nyti.ms/X6zHHc
NYTimes: JPMorgan Knew Of Loan Flaws-

Great story today in the NYTimes online edition of how JP Morgan committed billion dollar frauds on Fannie Mae and Freddie Mac,(read Taxpayers), as well as those to whom it sold worthless loans.

Steal 200 Billion from the a taxpayers and get a Penthouse, Plane, and a $500 million Golden Parachute.

Oops - here comes breakfast.
Oh my

Blairsville, GA

#24 Feb 7, 2013
Truth in vents wrote:
http://www.topix.com/forum/city/blairsville-g...
It's pathetic when anyone uses the race card to advance their own personal views. The days of hiring the most competent, qualified replaced by being sure you have the correct % of a group.
Years ago I was a mortgage originator and we were required to accept appications, then reject because they couldn't qualify. People who made 12K wanting a home in the 100K range. Then the numbers of rejections spiked in poverty areas and we were accused of racism. Then came the 2/5 loans which put us into the mess that caused the collapse in 2008. Payments starting at @200 monthly spiked to $1400 and "shock" effect can't when they can't afford the home.
Replaced by screams of racism and wanting to reduce the debt to keep these same people in the homes they couldn't afford in the first place.
Lyndon Johnsons "Great Society" program started the ball rolling which sems unstoppable now.
GM is back in the sub-prime loans on new cars. The beat goes on
As a "mortgage originator" did you disclose to the applicants that you did not represent them, that in fact they were unrepresented, and that your job was not to help them at all.

As a "mortgage originator" were you a salaried employee, or were you solely commissioned based, or was additional compensation available to you based on volume or type of loan originated. Was this disclosed to the applicants.
..........
"we were required to accept appications, then reject because they couldn't qualify."

Do you feel that people should be prohibited from making application, how will they know they are not qualified until they make application?
..........
"People who made 12K wanting a home in the 100K range. Then the numbers of rejections spiked in poverty areas and we were accused of racism."

I doubt it's a simple as you portray.
Bored

Dawsonville, GA

#25 Feb 7, 2013
Informed Opinion wrote:
<quoted text>
Agreed, any greedy banksters who loaned money to folks knowing they didn't have the funds to make the payments should be thrown in jail with "Bubba". Of course, they weren't, they stole their money with ink pens and greed, not a cheap Raven Arms .25 pistol.
Even worse, when people could pay traditional loans, they channeled them into "Interest Only", or other subprime loan instruments that assured future homelessness, but hey, the mortgage broker Mage $12,000 more in commission screwing the moron he was "helping".
What kind of sick bastards, in order to increase their own salaries and bonuses, set up morons to be homeless. The children of those morons didn't have any say in the conspiracy of greedy sophisticated banker with the dunces.
How can we trust the loan industry that creates an application the industry itself calls "Liar Loans", promises never to check up on the "Liars",
then is
shocked, shocked, shocked I tell you,
to discover people lied on their "Liar Loans".
Boring.
everyone gets a home

Macedonia, OH

#26 Feb 7, 2013
Community Reinvestment Act. Started by Carter continued by Clinton lowered the standards for buying a home so that you could now make unsafe loans. You were not forced to but you did have to meet quotas. So, it comes to semantics.

http://en.wikipedia.org/wiki/Community_R
Oh my

Blairsville, GA

#27 Feb 7, 2013
everyone gets a home wrote:
http://www.topix.com/forum/city/blairsville-g...
Community Reinvestment Act. Started by Carter continued by Clinton lowered the standards for buying a home so that you could now make unsafe loans. You were not forced to but you did have to meet quotas. So, it comes to semantics.
http://en.wikipedia.org/wiki/Community_R
No, it is not a matter of semantics.

Please provide a reference to support your claim that quotas were required.

From the very link you have supplied...
http://en.wikipedia.org/wiki/Community_Reinve...

...The Act instructs the appropriate federal financial supervisory agencies to encourage regulated financial institutions to help meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation (Section 802.)

...The Act mandates that all banking institutions that receive Federal Deposit Insurance Corporation (FDIC) insurance be evaluated by Federal banking agencies to determine if the bank offers credit (in a manner consistent with safe and sound operation as per Section 802(b) and Section 804(1)) in all communities in which they are chartered to do business.

...The law, however, emphasizes that an institution's CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution.[3][4] An institution's CRA compliance record is taken into account by the banking regulatory agencies when the institution seeks to expand through merger, acquisition or branching.
Lender

Dawsonville, GA

#28 Feb 7, 2013
Oh my wrote:
<quoted text>
No, it is not a matter of semantics.
Please provide a reference to support your claim that quotas were required.
From the very link you have supplied...
http://en.wikipedia.org/wiki/Community_Reinve...
...The Act instructs the appropriate federal financial supervisory agencies to encourage regulated financial institutions to help meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation (Section 802.)
...The Act mandates that all banking institutions that receive Federal Deposit Insurance Corporation (FDIC) insurance be evaluated by Federal banking agencies to determine if the bank offers credit (in a manner consistent with safe and sound operation as per Section 802(b) and Section 804(1)) in all communities in which they are chartered to do business.
...The law, however, emphasizes that an institution's CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution.[3][4] An institution's CRA compliance record is taken into account by the banking regulatory agencies when the institution seeks to expand through merger, acquisition or branching.

A percentage is the same as a quota when it comes to government rules.
Initial goal by HUD for Freddie Mac and Fannie Mae was affordable housing for low and medium income to be 30%, went to 55% by 2007, which in addition to Clinton repealing the Glass-Steagall Act,(which allowed the banks to go on a frenzy of loans outside Freddie Mac and Fannie Mae), brought about the mortgage collapse.
http://www.huduser.org/Publications/PDF/gse.p...

In 1999 the Congress enacted and President Clinton signed into law the Gramm-Leach-Bliley Act, also known as the Financial Services Modernization Act. This law repealed the part of the Glass–Steagall Act that had prohibited a bank from offering a full range of investment, commercial banking, and insurance services since its enactment in 1933. http://en.wikipedia.org/wiki/Community_Reinve...


continued.
Lender

Dawsonville, GA

#29 Feb 7, 2013
continued.

http://en.wikipedia.org/wiki/Fannie_Mae
In 1992, President George H.W. Bush signed the Housing and Community Development Act of 1992.[15] The Act amended the charter of Fannie Mae and Freddie Mac to reflect Congress' view that the GSEs "... have an affirmative obligation to facilitate the financing of affordable housing for low- and moderate-income families in a manner consistent with their overall public purposes, while maintaining a strong financial condition and a reasonable economic return;"[16] For the first time, the GSEs were required to meet "affordable housing goals" set annually by the Department of Housing and Urban Development (HUD) and approved by Congress. The initial annual goal for low-income and moderate-income mortgage purchases for each GSE was 30% of the total number of dwelling units financed by mortgage purchases[17] and increased to 55% by 2007.
In 2000, because of a re-assessment of the housing market by HUD, anti-predatory lending rules were put into place that disallowed risky, high-cost loans from being credited toward affordable housing goals. In 2004, these rules were dropped and high-risk loans were again counted toward affordable housing goals.[25]
The intent was that Fannie Mae's enforcement of the underwriting standards they maintained for standard conforming mortgages would also provide safe and stable means of lending to buyers who did not have prime credit. As Daniel Mudd, then President and CEO of Fannie Mae, testified in 2007, instead the agency's underwriting requirements drove business into the arms of the private mortgage industry who marketed aggressive products without regard to future consequences: "We also set conservative underwriting standards for loans we finance to ensure the homebuyers can afford their loans over the long term. We sought to bring the standards we apply to the prime space to the subprime market with our industry partners primarily to expand our services to underserved families.
"Unfortunately, Fannie Mae-quality, safe loans in the subprime market did not become the standard, and the lending market moved away from us
The mortgage crisis from late 2007
Following their mission to meet federal Housing and Urban Development (HUD) housing goals, GSEs such as Fannie Mae, Freddie Mac and the Federal Home Loan Banks (FHLBanks) have striven to improve home ownership of low and middle income families, underserved areas, and generally through special affordable methods such as "the ability to obtain a 30-year fixed-rate mortgage with a low down payment... and the continuous availability of mortgage credit under a wide range of economic conditions." (HUD 2002 Annual Housing Activities Report) Then in 2003-2004, the subprime mortgage crisis began.[33] The market shifted away from regulated GSE's and radically toward Mortgage Backed Securities (MBS) issued by unregulated private-label securitization conduits, typically operated by investment banks.
As mortgage originators began to distribute more and more of their loans through private label MBS's, GSE's lost the ability to monitor and control mortgage originators. Competition between the GSEs and private securitizers for loans further undermined GSEs power and strengthened mortgage originators. This contributed to a decline in underwriting standards and was a major cause of the financial crisis.[34]
http://en.wikipedia.org/wiki/Fannie_Mae
Oh my

Blairsville, GA

#30 Feb 7, 2013
Lender wrote:
<quoted text>
http://www.topix.com/forum/city/blairsville-g...
A percentage is the same as a quota when it comes to government rules.

Initial goal by HUD for Freddie Mac and Fannie Mae was affordable housing for low and medium income to be 30%, went to 55% by 2007, which in addition to Clinton repealing the Glass-Steagall Act,(which allowed the banks to go on a frenzy of loans outside Freddie Mac and Fannie Mae), brought about the mortgage collapse.
No, a percentage is not the same as a quota.

Are you suggesting that ALL of the Freddie and Fannie loans for low and middle income home buyers originated at CRA institutions?

http://en.wikipedia.org/wiki/Community_Reinve...
...According to Federal Reserve Governor Randall Kroszner, the claim that "the law pushed banking institutions to undertake high-risk mortgage lending" was contrary to their experience, and that no empirical evidence had been presented to support the claim.[115] In a Bank for International Settlements (BIS) working paper, economist Luci Ellis concluded that "there is no evidence that the Community Reinvestment Act was responsible for encouraging the subprime lending boom and subsequent housing bust", relying partly on evidence that the housing bust has been a largely exurban event.[116] Others have also concluded that the CRA did not contribute to the financial crisis, notably, FDIC Chairman Sheila Bair,[117] Comptroller of the Currency John C. Dugan,[118] Tim Westrich of the Center for American Progress,[119] Robert Gordon of the American Prospect,[120] Ellen Seidman of the New America Foundation,[121] Daniel Gross of Slate,[122] and Aaron Pressman from BusinessWeek.[123]

...In the February 2008 House hearing, law professor Michael S. Barr, a Treasury Department official under President Clinton,[63][126] stated that a Federal Reserve survey showed that affected institutions considered CRA loans profitable and not overly risky. He noted that approximately 50% of the subprime loans were made by independent mortgage companies that were not regulated by the CRA, and another 25% to 30% came from only partially CRA regulated bank subsidiaries and affiliates. Barr noted that institutions fully regulated by CRA made "perhaps one in four" sub-prime loans, and that "the worst and most widespread abuses occurred in the institutions with the least federal oversight".[127] According to Janet L. Yellen, President of the Federal Reserve Bank of San Francisco, independent mortgage companies made risky "high-priced loans" at more than twice the rate of the banks and thrifts; most CRA loans were responsibly made, and were not the higher-priced loans that have contributed to the current crisis.[128] A 2008 study by Traiger & Hinckley LLP, a law firm that counsels financial institutions on CRA compliance, found that CRA regulated institutions were less likely to make subprime loans, and when they did the interest rates were lower. CRA banks were also half as likely to resell the loans.[129] Emre Ergungor of the Federal Reserve Bank of Cleveland found that there was no statistical difference in foreclosure rates between regulated and less-regulated banks, although a local bank presence resulted in fewer foreclosures.[130]
Informed Opinion

Alva, FL

#31 Feb 7, 2013
Oh my wrote:
<quoted text>No, a percentage is not the same as a quota.

Are you suggesting that ALL of the Freddie and Fannie loans for low and middle income home buyers originated at CRA institutions?

http://en.wikipedia.org/wiki/Community_Reinve...
...According to Federal Reserve Governor Randall Kroszner, the claim that "the law pushed banking institutions to undertake high-risk mortgage lending" was contrary to their experience, and that no empirical evidence had been presented to support the claim.[115] In a Bank for International Settlements (BIS) working paper, economist Luci Ellis concluded that "there is no evidence that the Community Reinvestment Act was responsible for encouraging the subprime lending boom and subsequent housing bust", relying partly on evidence that the housing bust has been a largely exurban event.[116] Others have also concluded that the CRA did not contribute to the financial crisis, notably, FDIC Chairman Sheila Bair,[117] Comptroller of the Currency John C. Dugan,[118] Tim Westrich of the Center for American Progress,[119] Robert Gordon of the American Prospect,[120] Ellen Seidman of the New America Foundation,[121] Daniel Gross of Slate,[122] and Aaron Pressman from BusinessWeek.[123]

...In the February 2008 House hearing, law professor Michael S. Barr, a Treasury Department official under President Clinton,[63][126] stated that a Federal Reserve survey showed that affected institutions considered CRA loans profitable and not overly risky. He noted that approximately 50% of the subprime loans were made by independent mortgage companies that were not regulated by the CRA, and another 25% to 30% came from only partially CRA regulated bank subsidiaries and affiliates. Barr noted that institutions fully regulated by CRA made "perhaps one in four" sub-prime loans, and that "the worst and most widespread abuses occurred in the institutions with the least federal oversight".[127] According to Janet L. Yellen,.... of Cleveland found that there was no statistical difference in foreclosure rates between regulated and less-regulated banks, although a local bank presence resulted in fewer foreclosures.[130]
Always seem that:

when people's own avarice and greed causes them to destroy the lives of others, they blame the government, that highly efficient, incredibly effective, all knowing entity that cannot be repelled. In other words - if they hadn't let me, or made me, I wouldn't have done it;

but

when they want to avoid regulation that would otherwise prevent their avarice and greed from destroying the rest of us, why then, the government is a inefficient, ineffective, impotent force that cannot be counted on to regulate them.

On a tangent:

Remember when the government regulated 401ks limiting their use to high earners and companies funded them, because everyone knew they were supplements to real pensions

2/3 of Americans had pensions, funded by employers, sufficient to retire on.

Ronnie Ray-Gun deregulated 401Ks to replace pensions - who needed employers to fund them, when we could save employers all that money that would increase profits.

What a deal !

Profits explode, Bankers make another killing on management costs and fees, and 1/2 of American workers lost their pensions.

Yep, let's deregulate banks even more, they've earned our trust.
Lender

Dawsonville, GA

#32 Feb 7, 2013
Oh my wrote:
<quoted text>

No, a percentage is not the same as a quota.

Are you suggesting that ALL of the Freddie and Fannie loans for low and middle income home buyers originated at CRA institutions?

“No, a percentage is not the same as a quota.”
Maybe you can convince these Texas State Troopers that “goals” and “percentages’ are not quotas.

http://web.reporternews.com/1998/texas/dps050...

On page 3 of the link at the end of this post.

Note paragraph 1 sets a minimum of 50%, note paragraph 2 where it sets a quota of at least 20% and paragraph 3 where it sets a quota of at least 31%.

The goals increased after the 2001-2003 period. Using the word goals belies the quotas as an out for those who make up these numbers and those who implement them, the same way those in charge of the Texas State Troopers above say “it’s not a quota, it’s a goal.” But if the goal is not met, Troopers get the info put into their personnel file. Guess who gets the next raise and promotion?


In March 2000, HUD issued a proposed rule, significantly increasing the GSEs’ affordable housing goals for the post-2000 period, and this rule was finalized in October. For each year from 2001 through 2003, the goals are:3

Low- and moderate-income goal. At least 50 percent of the dwelling units financed by each GSE’s mortgage purchases should be for families with incomes no greater than area median income (AMI), defined as median income for the metropolitan area or nonmetropolitan county. The corresponding goal was 42 percent for 1997-2000.

Special affordable goal. At least 20 percent of the dwelling units financed by each GSE’s mortgage purchases should be for very low-income families (those with incomes no greater than 60 percent of AMI) or for low-income families (those with incomes no greater than 80 percent of AMI) in low-income areas. The corresponding goal was 14 percent for 1997-2000.

Underserved areas goal. At least 31 percent of the dwelling units financed by each GSE’s mortgage purchases should be for units located in underserved areas. Research by HUD and others has demonstrated that low-income and high-minority census tracts have high mortgage denial rates and low mortgage origination rates, and this forms the basis for HUD’s definition of underserved areas.

The corresponding goal was 24 percent for 1997-2000.

http://www.huduser.org/Publications/PDF/gse.p...



“Are you suggesting that ALL of the Freddie and Fannie loans for low and middle income home buyers originated at CRA institutions?”

No, if you had read my entire post you would have read the following:

The intent was that Fannie Mae's enforcement of the underwriting standards they maintained for standard conforming mortgages would also provide safe and stable means of lending to buyers who did not have prime credit. As Daniel Mudd, then President and CEO of Fannie Mae, testified in 2007, instead the agency's underwriting requirements drove business into the arms of the private mortgage industry who marketed aggressive products without regard to future consequences: "We also set conservative underwriting standards for loans we finance to ensure the homebuyers can afford their loans over the long term. We sought to bring the standards we apply to the prime space into the subprime market with our industry partners, primarily to expand our services to underserved families.
"Unfortunately, Fannie Mae-quality, safe loans in the subprime market did not become the standard, and the lending market moved away from us.
Bored

Dawsonville, GA

#33 Feb 7, 2013
Informed Opinion wrote:
<quoted text>
Always seem that:
when people's own avarice and greed causes them to destroy the lives of others, they blame the government, that highly efficient, incredibly effective, all knowing entity that cannot be repelled. In other words - if they hadn't let me, or made me, I wouldn't have done it;
but
when they want to avoid regulation that would otherwise prevent their avarice and greed from destroying the rest of us, why then, the government is a inefficient, ineffective, impotent force that cannot be counted on to regulate them.
On a tangent:
Remember when the government regulated 401ks limiting their use to high earners and companies funded them, because everyone knew they were supplements to real pensions
2/3 of Americans had pensions, funded by employers, sufficient to retire on.
Ronnie Ray-Gun deregulated 401Ks to replace pensions - who needed employers to fund them, when we could save employers all that money that would increase profits.
What a deal !
Profits explode, Bankers make another killing on management costs and fees, and 1/2 of American workers lost their pensions.
Yep, let's deregulate banks even more, they've earned our trust.
Boring.
The Jokes on You

Blairsville, GA

#34 Feb 7, 2013
Bored wrote:
<quoted text>
Boring.
I'm even getting pretty bored with how bored you are... liven up, please, or else we'll all doze off...
Informed Opinion

Alva, FL

#35 Feb 9, 2013
Great article about real power, real money and the real welfare in America.

Jesse better step up his game.

The sports-industrial complex is bleeding America dry

February 08, 2013 11:14 AM | DAVID SIROTA
View full article at Salon.com
Lewphole

Dawsonville, GA

#36 Feb 9, 2013
Informed Opinion wrote:
Great article about real power, real money and the real welfare in America.
Jesse better step up his game.
The sports-industrial complex is bleeding America dry
February 08, 2013 11:14 AM | DAVID SIROTA
View full article at Salon.com
was it the obama familey playing in the snow or Monopoly creating vulture capilaists you wanted us to see?
Informed Opinion

Alva, FL

#37 Feb 9, 2013
Lewphole wrote:
<quoted text>was it the obama familey playing in the snow or Monopoly creating vulture capilaists you wanted us to see?
I never read about playing in the snow - bet it was fascinating - I was attempting to provide a link to the story of how the sports-industrial complex is bleeding the American taxpayer.

As a computer illiterate, I do the best I can- obviously in this instance my best just wasn't good enough to link you directly to the story.

Sorry.

But hey, the snow story sounds fun.
Oh my

Blairsville, GA

#38 Feb 13, 2013
No, Marco Rubio, government did not cause the housing crisis
Posted by Mike Konczal on February 13, 2013 at 8:58 am
http://www.washingtonpost.com/blogs/wonkblog/...

...For obvious reasons, this argument is very popular on the right, but there’s precious little to back it up. The core claim can be a bit slippery, but it tends to go something like this: the existence and affordability goals of Fannie Mae and Freddie Mac (the GSEs) and the Community Reinvestment Act (CRA) were a major reason we had a subprime-driven housing bubble and then a crash. The only problem? Pretty much all the evidence on the housing crisis shows that that’s not true.

1. Private markets, rather than the GSEs, created the subprime mortgage boom.

The subprime mortgage boom and the subsequent crash are very much concentrated in the private market, not the public market. Subprime is a creature of the private label securitization channel (PLS) market, instead of the Government-Sponsored Entities (GSEs, or Fannie and Freddie). The fly-by-night lending boom, slicing and dicing mortgage bonds, derivatives and CDOs, and all the other shadiness of the mortgage market in the 2000s were Wall Street creations, and they drove all those risky mortgages.

2. The Community Reinvestment Act and the GSE’s affordability mission didn’t cause the crisis.

...argues that the CRA couldn’t have been behind the subprime and housing bubbles.”The very small share of all higher-priced loan originations that can reasonably be attributed to the CRA makes it hard to imagine how this law could have contributed in any meaningful way to the current subprime crisis.” Only six percent of higher-priced loans (their proxy for subprime loans) were extended by CRA-covered lenders to lower-income borrowers or CRA neighborhoods.

3. There’s a lot of research to back this up and little against it.

...Did Fannie and Freddie buy high-risk mortgage-backed securities? Yes. But they did not buy enough of them to be blamed for the mortgage crisis. Highly respected analysts who have looked at these data.. have all rejected the Wallison/Pinto argument that federal affordable housing policies were responsible for the proliferation of actual high-risk mortgages over the past decade.

4. Conservatives arguments tend to blur the definition of subprime.

...Private label loans “have defaulted at over 6x the rate of GSE loans, as well as the fact that private label securitization is responsible for 42 percent of all delinquencies despite accounting for only 13 percent of all outstanding loans (as compared to the GSEs being responsible for 22 percent of all delinquencies despite accounting for 57 percent of all outstanding loans).” The issue isn’t this fake “high risk” category, it is subprime and private label origination.

5. The government policy that likely made an impact were deregulatory actions.

In 2000, Congress passed the Commodity Futures Modernization Act, which deregulated the derivatives market, in a lame duck session as a rider to an 11,000 page omnibus appropriation bill. A banking capital “recourse rule” in 2001 allowed the ratings agencies and private bank risk modelers to decide what banks should hold against risk. In 2003 the OCC preempted and overruled Georgia’s new anti-predatory lending laws. Alan Greenspan refused to enforce regulations on, or even investigate the wrongdoing of, the new subprime market during the 2000s. The 2005 bankruptcy reforms in BAPCPA, widely viewed as friendly if not written by the financial industry, codified the market practice of letting derivatives go to the front of the line in bankruptcy, helping create the conditions for shadow banking runs.

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