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We debunked this one quite a while ago, so I see no reason rehashing it again.
As the University of Michigan's Michael Barr points out, half of sub-prime loans came from those mortgage companies beyond the reach of CRA. A further 25 to 30 percent came from bank subsidiaries and affiliates, which come under CRA to varying degrees but not as fully as banks themselves. (With affiliates, banks can choose whether to count the loans.) Perhaps one in four sub-prime loans were made by the institutions fully governed by CRA.
Most important, the lenders subject to CRA have engaged in less, not more, of the most dangerous lending. Janet Yellen, president of the San Francisco Federal Reserve, offers the killer statistic: Independent mortgage companies, which are not covered by CRA, made high-priced loans at more than twice the rate of the banks and thrifts. With this in mind, Yellen specifically rejects the "tendency to conflate the current problems in the sub-prime market with CRA-motivated lending.? CRA, Yellen says, "has increased the volume of responsible lending to low- and moderate-income households."
Additionally, AIG, as an insurer and Goldman Sachs, Lehman Bros, Merril-Lynch, as investment brokers, in short the very Wall Street firms that required the greatest attention, didn't write mortgages to begin with, but instead lost money through mortgage back securities. So as I asked previously, what did the government do to force Wall St. to invest in sub-prime mortgaged backed securities?
We debunked this one quite a while ago, so I see no reason rehashing it again.
As the University of Michigan's Michael Barr points out, half of sub-prime loans came from those mortgage companies beyond the reach of CRA. A further 25 to 30 percent came from bank subsidiaries and affiliates, which come under CRA to varying degrees but not as fully as banks themselves. (With affiliates, banks can choose whether to count the loans.) Perhaps one in four sub-prime loans were made by the institutions fully governed by CRA.
Most important, the lenders subject to CRA have engaged in less, not more, of the most dangerous lending. Janet Yellen, president of the San Francisco Federal Reserve, offers the killer statistic: Independent mortgage companies, which are not covered by CRA, made high-priced loans at more than twice the rate of the banks and thrifts. With this in mind, Yellen specifically rejects the "tendency to conflate the current problems in the sub-prime market with CRA-motivated lending.? CRA, Yellen says, "has increased the volume of responsible lending to low- and moderate-income households."
Additionally, AIG, as an insurer and Goldman Sachs, Lehman Bros, Merril-Lynch, as investment brokers, in short the very Wall Street firms that required the greatest attention, didn't write mortgages to begin with, but instead lost money through mortgage back securities. So as I asked previously, what did the government do to force Wall St. to invest in sub-prime mortgaged backed securities?
Freddie and Fannie were underwriting the loans so it was the implicit guarantee that no loan would be rejected that spurred everyone, including the independent mortgage companies, to lend. I'm not sure, but I think the independents made a ton of money on the deal.
This is just socialism and greed and unintended consequences.
As usual we get spin rather than facts. The Republicans believe that "reform" should protect the taxpayer. For that reason they are proposing to once again put a wall of separation between banking and investment. Bank deposits should be insured by the FDIC. Investments, on the other hand, should be separate and the risks of investment should not be borne by the taxpayer. We got in trouble because the line between banking and investment was blurred, allowing for the privatizing of profit but the socializing of risk.
The other burr under the Republican saddle is that the Dodd bill leaves Fannie and Freddie virtually unregulated. If there are two institutions that almost single-handedly caused the real estate bubble it's those two. The Dems don't want to regulate them because they want to continue using them to further their goal of home ownership by minorities at the expense of the taxpayers. Financial reform is indeed needed but, as always, when the Dems talk reform they are really looking out for their political fortunes.
I love loaded questions. That's like asking "Do you still smoke pot?" or "Do you still beat your wife?" Being opposed to a "version" of finance reform is not the same as being against finance reform. The way the question is asked suggests that if you do not agree with the way the Democrat's proposal, you are obviously against finance reform all together. Loaded questions are fun aren't they?
Fannie and Freddie...where does one even start listing the malfeasance of those two entities (and of course the politicians behind them). The American people also need to take a long look at themselves as well. Why are you buying homes you cannot actually afford?
If 0bama's idea of health care reform is to take it over, and put the secretary of HHS in full control, and his idea of GM and Chrysler reform was to take government control of them and put the car czar and the EPA in control, then why would his reform our financial sector be any different?
When 0bama and Pelosi/Reid display a policy other then government needs to take over control, then we may be open to some reforms under their leadership, until then, they should be opposed.
Freddie and Fannie were underwriting the loans so it was the implicit guarantee that no loan would be rejected that spurred everyone, including the independent mortgage companies, to lend. I'm not sure, but I think the independents made a ton of money on the deal.
This is just socialism and greed and unintended consequences.
Mortgages weren't the only problems in the financial market. Derivatives, which were completely unregulated, were a major part of the problem, especially with AIG. Do you think derivatives should go on being unregulated? Because the Republicans opposed to this bill certainly think that.
not sure as to the "gop" but conservatives, understand that 'reform' will just get us more of the same....its government that caused the problem to begin with
not sure as to the "gop" but conservatives, understand that 'reform' will just get us more of the same....its government that caused the problem to begin with
Mortgages weren't the only problems in the financial market. Derivatives, which were completely unregulated, were a major part of the problem, especially with AIG. Do you think derivatives should go on being unregulated? Because the Republicans opposed to this bill certainly think that.
Thats not at all what they think. Do you understand that banks can invest in derivatives and have them currently insured by the FDIC (by way of a bank failure?) The proposed bill does nothing to limit this from taking place, it just charges banks a fee and allows the federal government to take over the institutions putting the liability on the government.
Investment institutions should go OUT OF BUSINESS if they fail, not be bailed out, and the bill is the cration of a perminant bailout platform for the government.
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