7 Comments Add your own

• 1. Peter Gunn  |  September 23rd, 2008 at 9:51 pm

  Oh, But think of where our Social Security
  would be now had we not listened to those damned Democrats

• 2. DingDong  |  September 23rd, 2008 at 10:54 pm

  Pat, this is stupid. We all know McCain was for more regulation of Freddie and Fannie. The necessary amount of regulation depends on the industry.

• 3. MDH  |  September 24th, 2008 at 6:36 am

  The key is not necessarily to have more regulation, but the right regulation. For example, Fred and Fran (in cohorts with Countrywide and others) should never have been able to give loans with less than 3% buy-in. ARM’s should have limits on escalation. And people should prove that they have limited exposure to other credit debts (car loans, credit cards, etc.)
  The ‘fix’ is simple. Reasonable terms on loans to persons whom have produced strong credit history and have the ability to pay it back. Please don’t tell me that we need a whole new government regulatory system…….just go back to the basics.

• 4. DingDong  |  September 24th, 2008 at 8:50 am

  This started years ago when they forced banks to start loaning money to people who could not afford homes. They called it red lining. So the loan restrictions got progressively less until we got to this point. Not everyone can afford or deserves to own a house.

• 5. bannernews  |  September 24th, 2008 at 6:49 pm

  Actually redlining refers to refusal to loan on or insure a house because of its location. Bad part of town blah. blah ,blah. No one forced anyone to give loans. The standards for getting a loan were gutted and Fannie/and Freddie were off and running.

• 6. DingDong  |  September 24th, 2008 at 7:41 pm

  Bannernews: better read up on your history. Community Reinvestment Act required banks to loan to low income people. Signed originally under Carter in 1977 and strengthened under Clinton in 1995 and relaxed the rules even more. Bush tried to overhall it in 2003 but was blocked.

• 7. Milton Waddams  |  September 25th, 2008 at 11:57 am

  I pulled this from Wikipedia (not necessarily a good source, but interesting none the less…) my comments on it follow.

  –Economists claim that the CRA encouraged risky lending and the development of the subprime debacle, but this is disputed, as Robert Gordon has pointed out that approximately half of the loans were made by independent mortgage companies which were not regulated by CRA at all, and thus had no government obligation to offer credit to minorities. These companies made subprime loans at twice the rate of CRA banks. Another third of the major subprime lenders had very little CRA involvement. Further, the weakening of the CRA in 2004 was followed by intensified subprime lending. In favor of the idea that CRA encouraged the mortgage crisis, however, economics professor Stan Liebowitz expressed his opinion that banks were forced to loan to un-credit worthy consumers with “no verification of income or assets; little consideration of the applicant’s ability to make payments; no down payment.” The chief executive of Countrywide Financial, the nation’s largest mortgage lender, is said to have “bragged” that to approve minority applications “lenders have had to stretch the rules a bit”, suggesting that Countrywide was responsible for relaxing its standards rather than the other way around.

  In other words, the CRA banks engaged in more risky loans to compete for the bottom feeders the secondary ( non-cra) lenders were tripping over themselves for. The reason they were tripping over themselves was that they bundled those crappy loans with no hope of being repaid into securities and resold the securities, laughing all the way to the bank, until it became time to start paying the piper. By then the CEOs had gotten their $100 million bonuses and golden parachutes, leaving the taxpayers holding the bag.
  GREED, pure unmitigated GREED is what drove this crisis.
  Those loans should have never been approved, the people taking out the loans aren’t innocent in all this, but the lenders approved them anyway, because they would never have to deal with the defaults.

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