Misplaced blame

There are 65 comments on the TwinCities.com story from Jan 1, 2011, titled Misplaced blame. In it, TwinCities.com reports that:

The headline and lead of the article on Baby Boomers' retirement Dec. 28 implied that baby boomers have only themselves to blame for their uncertain retirements.

Join the discussion below, or Read more at TwinCities.com.

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“REUNITE GONDWANALAND!”

Since: Jun 08

Woodbury

#61 Jan 11, 2011
Path of Reason wrote:
<quoted text>
Government pushed housing for decades and helped build the bubble. Tax incentives, an array of programs for "affordable" housing, taxpayer guarantees in the trillions, favoritism for various politically favored groups like people with brown skin, and very low down payments just begging people to default on taxpayer are part of what government did. The government set the broad backdrop for the housing market which everyone then lent against.
You don't like to admit how the Feds steered lenders towards high risk borrowers, but that mattered too with CRA. It was the "Make a brown person a loan today" program to keep out of trouble with regulators and was the worst form of political extortion to funnel money to a special interest group. Subprime was heralded by liberals as a great innovation that could fulfill their dream of making housing another entitlement.
And now it has all exploded. Thanks government! The next time I vote, I'll throw the lever for the Democrats that might as well be labelled "Make it bigger". They'll do much better with healthcare. LOL.
Leaving aside the fact that the CRA was passed to address the widespread practice of redlining, and leaving aside the fact that nothing in the CRA requires lending institutions to make loans to people who cannot afford them, how do you account for the fact that the vast majority of lending institutions involved in the subprime mortgage mess were NOT subject to CRA regulation?

“REUNITE GONDWANALAND!”

Since: Jun 08

Woodbury

#62 Jan 11, 2011
Four Reel wrote:
<quoted text>
Jeopardy;
Who is Barney Frank and Chris Dodd
I know who Barney Frank and Chris Dodd are; now you, please, try to explain how they forced lending institutions around the world to make risky loans, which they then repackaged as derivatives in order to minimize the risk to themselves and maximize their profits. I'm waiting...

“Freedom and responsibility”

Since: Dec 10

St. Paul

#63 Jan 11, 2011
Darwinian wrote:
<quoted text>
Leaving aside the fact that the CRA was passed to address the widespread practice of redlining, and leaving aside the fact that nothing in the CRA requires lending institutions to make loans to people who cannot afford them, how do you account for the fact that the vast majority of lending institutions involved in the subprime mortgage mess were NOT subject to CRA regulation?
It started with redlining, but then like so many government programs, it spun out of control. It became a political extortion game where banks had to dance to be able to function. Just another little bleed line set by the pols.

There was a credit bubble, that's for sure. A lot of bad decisions were made. But the backdrop was government policy. The government helped stoke housing inflation and that encouraged people to make riskier and riskier loans against rising collateral values, besides what CRA did. Government policy framed housing as the "Dream" with all sorts of subsidy and favoritism, helped build the bubble, had absolute wood for every click higher in the home "ownership" rate, and praised ways to increase leverage. They also financed it, witness the explosions in Fannie, Freddie, and FHA. If even FDR hadn't done what he did, or at least if it hadn't become permanent and wasn't expanded, things could've been different.

Fannie and Freddie were running 100x leverage. Think about that. Bear Stearns was 35x leverage when it broke. Same about for Lehman. FHA right now is about 200x leveraged. When it comes to debacles, the private sector is nothing in size and scope to what the government creates. Think about what the US books would look like if Fannie and Freddie liabilities were shown as liabilities of the United States. Think, the next time you support more government saving us. It always ends in ruins.

“REUNITE GONDWANALAND!”

Since: Jun 08

Woodbury

#64 Jan 12, 2011
Path of Reason wrote:
<quoted text>
It started with redlining, but then like so many government programs, it spun out of control. It became a political extortion game where banks had to dance to be able to function. Just another little bleed line set by the pols.
There was a credit bubble, that's for sure. A lot of bad decisions were made. But the backdrop was government policy. The government helped stoke housing inflation and that encouraged people to make riskier and riskier loans against rising collateral values, besides what CRA did. Government policy framed housing as the "Dream" with all sorts of subsidy and favoritism, helped build the bubble, had absolute wood for every click higher in the home "ownership" rate, and praised ways to increase leverage. They also financed it, witness the explosions in Fannie, Freddie, and FHA. If even FDR hadn't done what he did, or at least if it hadn't become permanent and wasn't expanded, things could've been different.
Fannie and Freddie were running 100x leverage. Think about that. Bear Stearns was 35x leverage when it broke. Same about for Lehman. FHA right now is about 200x leveraged. When it comes to debacles, the private sector is nothing in size and scope to what the government creates. Think about what the US books would look like if Fannie and Freddie liabilities were shown as liabilities of the United States. Think, the next time you support more government saving us. It always ends in ruins.
But, you still have not explained how the CRA is culpable - let me remind you, the vast majority of lending institutions involved in the subprime mortgage debacle were NOT subject to CRA regulation.
The fact is, they saw subprime mortgages as a way to may a quick buck by repackaging those risky mortgages and using derivatives to hide the risk. The CRA had nothing to do with it.

“Freedom and responsibility”

Since: Dec 10

St. Paul

#65 Jan 12, 2011
Darwinian wrote:
<quoted text>
But, you still have not explained how the CRA is culpable - let me remind you, the vast majority of lending institutions involved in the subprime mortgage debacle were NOT subject to CRA regulation.
The fact is, they saw subprime mortgages as a way to may a quick buck by repackaging those risky mortgages and using derivatives to hide the risk. The CRA had nothing to do with it.
Darwin, you wouldn't know a derivative if it walked up and slapped you. Let's at least get that much cleared up.

Yes, industry saw an opportunity to make viable investments. The government engineered a bubble with policy; lenders saw the trend and bet very heavily that housing appreciation would continue. They bet wrong and the bubble exploded. To say that CRA and the broader issue of government policy had nothing to do with it is pure ignorance. Government was housing's biggest pimp and policymakers were among subprime's most enamored cheerleaders. Just another government policy gone wrong on a massive scale. Whew, good thing they'll do better with healthcare, huh?

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