I guess the banks learned from all the deadbeats that charge everything and get overwhelmed in debt only to get a "bailout" (bankruptcy) and then not worry about it! At least the banks paid or are paying the money back ! what about the deadbeats do they pay back the money? NO !! those same idiots complain about a bank acting like they do......
The CRA forced banks to commit nearly $1 trillion for inner-city, low-income, etc. mortgages and most was funneled through left-wing community groups. To say it had nothing to do with later housing problems is tantamount to saying Convertibility is an intelligent, objective thinker.
There is no such thing as making 30 year mortgages "responsibly". Nobody - no individual, no bank, no credit union - nobody - would those kinds of housing loans without a taxpayer backstop. The problem here is that banks and homebuyers have been drinking from the same jug of koolaid - the only real difference is that banks do it in aggregate and therefore reap much larger rewards. The simplest regulatory mechanism to end this foolishness is to simply disband government support of the mortgage secondary market. But that is highly unlikely to happen, unless and until an economic 12 guage is held to the head of every American.
(email comments "It Speaks For Itself", from Dr. Cordell O'Connor) Subject: speaks for itself... Now , after reading this, you will understand what extreme right-wing parties ( i.e. Tea Party (GOP)) are up to . Such as my previous e-mail re; "what the real question should be..." After The 8 Years Of The Bush/Cheney Disaster, Now You Get Mad? You didn't get mad when the Supreme Court stopped a legal recount and appointed a President. You didn't get mad when Cheney allowed Energy company officials to dictate Energy policy and push us to invade Iraq. You didn't get mad when a covert CIA operative got outed. You didn't get mad when the Patriot Act got passed. You didn't get mad when we illegally invaded a country that posed no threat to us. You didn't get mad when we spent over 800 billion (and counting) on said illegal war. You didn't get mad when Bush borrowed more money from foreign sources than the previous 42 Presidents combined. You didn't get mad when over 10 billion dollars in cash just disappeared in Iraq. You didn't get mad when you found out we were torturing people. You didn't get mad when Bush embraced trade and outsourcing policies that shipped 6 million American jobs out of the country. You didn't get mad when the government was illegally wiretapping Americans. You didn't get mad when we didn't catch Bin Laden. You didn't get mad when Bush rang up 10 trillion dollars in combined budget and current account deficits. You didn't get mad when you saw the horrible conditions at Walter Reed. You didn't get mad when we let a major US city... New Orleans... drown. You didn't get mad when we gave people who had more money than they could spend, the filthy rich, over a trillion dollars in tax breaks. You didn't get mad with the worst 8 years of job creations in several decades. You didn't get mad when over 200,000 US Citizens lost their lives because they had no health insurance. You didn't get mad when lack of oversight and regulations from the Bush Administration caused US Citizens to lose 12 trillion dollars in investments, retirement, and home values. Hmmm....You finally got mad when a black man was elected President and decided that people in America deserved the right to see a doctor if they are sick. Yes, illegal wars, lies, corruption, torture, job losses by the millions, stealing your tax dollars to make the rich richer, and the worst economic disaster since 1929 are all okay with you, but helping fellow Americans who are sick... Oh, Hell No!!
even a buzz saw can be harnessed for good instead of just ripping and tearing apart.... America has found a way to harness raw capitalism through severe regulation, otherwise greed really rules, as we have seen in the prior 8 year administration and the irracible attitudes of those who resist regulation and their political representative... (i.e. these midterm election results) your logic is falicy... eliminating the tax preference to home mortgage deductions has and will never have anything to do with national support for the banking industry through the Federal Reserve system... the discussion of home ownership and tax based supports of the mortgage process is far too complicated a conversation to be handled on these threads, let alone a few paragraphs it is falicy to suggest that an equally complicated discussion on modern banking can be reduced to the conclusions your comment made... it is even more midleading to attempt to compare the two topics and suggest that one has no social benefit and needs to end while the other doesn't need regulation just to operate. perhaps try that thesis in a B-School forum and discuss it amongst prepared equals of similar training and see how poor of an arguement it really is....
Wasn't CRA started in the Carter Admin? Why did it take so long for it to blow up the housing market? I still don't see the connection to the actions that were taken. i.e. 1) Banks think CRA is a hindrance to business. 2) Banks take part in illegal practices to gather the means to fulfill the gov't requirement of the CRA. That's like saying 1) Taxes are a hindrance to your business. 2) You sell drugs to gather the means to fulfill the gov't requirement of paying the taxes. Both #1's can be true, but how do you justify the jump to #2?
The number of 30 year loans that go to term is minuscule. These loans roll over about every 7 years on average.
piezoe: Yeah, but that's actually the point. You're talking about a bond that is callable at any time, and which of course would be called at the worst possible time, from the POV of the person holding the mortgage loan. That's why it's so hard to get someone to buy the things. This has always been one of the big problems with mortgages. It's why they were pooled in the first place. I'm not sure about this, but I think pools of mortgages just might have been the very first securitized loans: Lew Rainieri over at Salomon, as I recall, invented these things so that the entity buying them could buy it more like a normal bond that matured in a set number of years.
"Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings."
Well but one thing to remember also is that the issue was the leverage these banks had taken and the government did not force banks to use 10x to 40x leverage on this subprime paper. If I default on a 200K mortgage its not a big deal in the grand scheme of things but wen my 200K mortgage has been inflated to 2 million dollars of gambling chips (and thats only 10x leverage and a lot of institutions had more), now my default starts to become a crisis. If the banks weren't gambling with that kind of leverage then I don't believe that all these foreclosures would have dragged us into such a deep recession. If banks want to get into this kind of crap then let them use private uninsured funds to do so. As long as they have the taxpayer put behind them they'll just keep doing stupid crap over and over.