The Atlantic By Heather Boushey May 21, 2014 2:25 PM
Why are nearly 10 million people still out of work today? Was it because in September 2008, the U.S. government failed to bail out the insolvent investment bank Lehmann Brothers? Was it because the two U.S. housing finance giants Fannie Mae and Freddie Mac guaranteed too many mortgages securitized by Lehman and other Wall Street firms to low-income borrowers in the run up to the housing and financial crises? Or does blame rest with the Federal Reserve’s too-easy-money policies in the wake of the brief dotcom recession in the early 2000s?
Princeton University professor Atif Mian and University of Chicago Booth School of Business professor Amir Sufi pin the blame squarely on policymakers, but not for any of these three reasons, all of which are variously popular with policymakers on different sides of the political divide in Washington. Instead, in their just-released book, House of Debt, they argue that the Great Recession was the result of a sharp fall-off in consumption due to the unevenly accumulated household debt in the first six years of the 21st century. In that period, mortgage-credit grew more than twice as fast in neighborhoods with low credit scores than in neighborhoods with high credit scores, a marked departure from the experience of previous decades. When the housing bubble popped, the economic consequences were sharply magnified by the way debt was distributed across households and communities.How did this happen? Why did lenders suddenly shower less-creditworthy borrowers with trillions of dollars of credit? Mian and Sufi demonstrate this was enabled by the securitization of home mortgages by investment banks that did not seek federal guarantees from Fannie and Freddie—so called private-label securities, made possible by financial deregulation and the glut of cash in world markets in the wake of the Asian financial crisis of the late 1990s. That private-label mortgage-backed securities were at the core of the housing meltdown is no longer in doubt, but what Mian and Sufi bring to the debate is how an unequal distribution of debt magnified the economic risks—based on their path-breaking microeconomic research—and a new framework for considering who is to blame among policymakers for the still reverberating debacle.
Unfortunately, the two authors don’t provide answers for why so many households took on so much debt, but they do paint a cautionary tale. This is a critically important contribution to the policy debate now raging over what Congress and the Obama administration should do in the way of reforms to the housing-finance industry. And, it’s important to our understanding of whether and how inequality affects economic growth and stability. What they demonstrate is that as the U.S. housing bubble burst and home prices began to fall in late 2006, the unequal distribution of debt amplified the decline in consumer spending and the consequence was an economic disaster. Mian and Sufi’s research leads them to conclude that the crisis was avoidable if only economists had used the right framework to see what was happening around them at the time.
“Economic disasters are man-made,” they write in the opening pages, “and the right framework can help us understand how to prevent them.” By the end of the book, the reader cannot but be left appalled at the sheer enormity of the policy failures. It’s not just that 7.4 million workers lost their job during the years of the Great Recession of 2007-2009 but also that the employment crisis continues to this day. While jobs are no longer being shed at the rate of 20,000 a day, the share of the U.S. population with a job fell to a low of 58.2 percent in November 2010 from a high of 63.4 percent in December 2006, but has only increased by a fraction of a percentage since then, hitting just 58.9 percent in April 2014.
Missing the housing bubble was a massive failure on the part of policymakers. As a result, our new normal is one where there are nearly 10 million fewer people at work. This book's contribution helps us understand the important mechanisms through which this occurred.
* * *
I watched the housing and financial crises unfold from my perch as staff for the U.S. Congressional Joint Economic Committee. By the time Lehman Brothers failed, the mantra on Capitol Hill had been articulated by former Treasury Secretary Lawrence Summers, who said that any recovery package had to be “timely, targeted, and temporary.” But the stimulus that emerged was not specifically targeted at homeowners in foreclosure. If Mian and Sufi are correct, the biggest failure was—and continues to be—leaving families struggling with mortgages they cannot afford because of the fall in home prices.
The federal government has provided assistance to a paltry 940,000 struggling homeowners through the Homeowners Assistance Mortgage Program, in a nation where 5 million homes have been foreclosed on. This lack of help hasn’t just hurt those homeowners. Also caught in the downdraft are now destroyed neighborhoods, ruined communities, and thwarted lives of far too many. Protecting banks does not necessarily make the economy strong. So, how did we get here? That’s the focus of House of Debt. Mian and Sufi spent the past decade compiling and analyzing microeconomic data to test theories about how the macroeconomy works. They conclude that inequality in wealth and debt combined with greater availability of credit to marginal borrowers are a toxic macro-economic combination. They call this the “levered losses” view, arguing that severe recessions occur when “asset prices collapse and households sharply pull back on spending,” even with “no obvious destruction of productive capacity occurs."
Their story starts with an accumulation of debt—lots of it. After the Asian financial crisis in 1997, investors were looking for safe havens to park their money. What they wanted were AAA-rated bonds. What they got were mortgage-backed securities that were rated AAA but turned out to be junk. As we all now know—but most of us didn’t know at the time—Wall Street firms in the early 2000s began slicing and dicing and then reassembling mortgage debt into more and more exotic and risky mortgage-backed securities in ways that made them look risk-free.
But, it wasn’t just that there was more securitization. It was that loans made to riskier borrowers were more likely to be securitized. This both drove the housing bubble and made the consequences of it popping all the worse. Mian and Sufi point out that between 2002 and 2005, the growth in mortgage credit and household incomes became negatively correlated, that is, credit expanded in areas where incomes were declining. This makes no sense: How can you pay back a loan if your income is falling? They point to academic research by Yuliya Demyanyk and Otto Van Hemert showing the profound consequences: By 2006, loans had become so disconnected from prudent business practices that “an unusually large fraction of subprime mortgages originated in 2006 and 2007 [became] delinquent or in foreclosure only months later.”
As these foreclosures began to pile up, affected households cut back sharply on spending. Thus, the catalyst for Great Recession had begun two years before the dramatic demise of Lehman Brothers. In the second quarter of 2006, the collapse in consumption started with residential investment, which fell by a 17 percent annual rate. Non-residential investment didn’t begin to fall until late in 2008, but by then households had already pared back spending sharply.
This fallout from the collapse of the housing bubble was amplified by the unequal distribution of net wealth. What Mian and Sufi find is that counties with the largest decline in total net worth—were the ones that cut back most on spending when house prices declined. As housing prices began falling in 2006, in counties where net worth had declined most, consumption fell by almost 20 percent, compared to only five percent for the entire U.S. economy. In contrast, even through 2008, counties that avoided the collapse in net worth saw almost no decline in spending. If debt had been more equally distributed then the decline in consumption would have been less dramatic and the recession would have been less devastating.
Further, they point out that you cannot have a foreclosure crisis—or its associated sharp fall-off in demand—without debt and the way that debt grew during the early 2000s exacerbated the potential for a foreclosure crisis. Mian and Sufi find that about half of the rise in mortgage debt was among people who lived in their homes, not new purchasers. People took out home equity lines of credit and used the cash for home improvements, funds for their kids' college tuition, or other types of consumption. Once the crisis was in motion, about four-in-10 mortgage defaults were among home-equity borrowers. Thus, the foreclosure crisis was not due to people reaching to buy homes, but to borrowing against their primary asset. Had they not ramped up borrowing, falling home prices would not have affected consumption or led to record-high foreclosures.
Finally, all this subprime mortgage debt that had been structured into AAA-rated mortgage-backed securities created financial instruments in which no single investor has the incentive or legal right to restructure the loan, especially for loans to low-net-worth borrowers. This led to a situation that dramatically reduced the capacity of homeowners to get relief in form or informal backruptcy and increased foreclosures. Foreclosures reduce prices more so than principal reductions and thus amplified the decline in home prices and the loss in wealth.
Given the troubling rise in economic inequality over the past four decades, this research could not be more timely. It’s not just the questions they are asking and the results they are finding, but also the methods they are using. Mian and Sufi are part of a new generation of economists who examine detailed microeconomic data and analysis to understand the macroeconomy, giving us a deeper understanding of how inequality affects economic growth and stability. They have done this by using detailed, microeconomic data at the county and zip-code level to examine debt and consumption patterns.
Mian and Sufi’s research shows that the marginal propensity to consume—an economics term that describes the amount of spending done after receiving an additional dollar—out of housing wealth depends not just on the value of the asset but also the debt burden, settling a near-century-old economic debate between two of the most prominent economists of the 20th century.
In The General Theory of Employment, Interests, and Money, University of Cambridge economist John Maynard Keynes argued in 1936 that the distribution of income mattered for the stability of the macroeconomy. Increased spending, be it from consumers, government, greater exports, or investment, will multiply as it works its way through the economy. If additional income goes into the hands of those with a high marginal propensity to consume then the multiplier for consumption demand will be relatively larger. But if additional income goes into the hands of those with a lower marginal propensity to consume then the multiplier on consumption demand will be relatively weaker.
Two decades later, University of Chicago economist Milton Friedman hypothesized that although rich households appear to consume less, they have a pretty clear sense of what their standard of living will be on average year after year and they adjust their savings to keep themselves at that level. In good years, when they get an income bonus, they will save a more while in bad years, they won’t save as much—or will borrow—to maintain that average standard of living.
Yet neither Keynes nor Friedman had access to the kinds of data now at the fingertips of Mian and Sufi. Thus the Keynes-Friedman debate was theoretical, not grounded in empirical reality. Now, Mian and Sufi provide a definite “yes” to the question of whether we could have prevented the Great Recession—and the conclusion isn’t pretty. They argue that policymakers could have seriously mitigated the damage, pointing out that debt forgiveness would have been much more effective that the policies implemented because it would have targeted households with the largest marginal propensity to consume. This is a failure on a massive scale and more economists need to follow the lead of Mian and Sufi and look deep into the data to understand what we got wrong.
Mian and Sufi’s argument hinges on the conclusion that it was the supply of credit that drove the bubble and the heightened debt burdens, rather than increased demand from consumers. They discuss some reasons why people may have wanted to borrow more, such as the idea that people who expected higher incomes were borrowing constrained, but come down on the side that people were just acting irrationally—given that the massive increase in borrows during the credit boom was among borrowers with declining incomes, not those with rising incomes. From this, they conclude that “whatever the reason, however, consumers who were offered more money by lenders took it.”
Were people behaving irrationally? And, what (really) does that mean? The late 1990s saw the strongest labor market in decades. The typical male earner saw his annual earnings finally grow, after over a decade-and-a-half of inflation-adjusted declines; women’s employment rates hit an all-time high of 58 percent; and the typical family income grew by an average annual rate of just under 2 percent. The middle was (finally) back, so it may have been the case that people were optimistic that the recession of 2001 would not just be short and shallow, but that the recovery would look like the late 1990s.
But looking closely at the data reveals another pattern. One thing that did not happen during the recession of the early 2000s was a rise in government borrowing. The cash seeking a safe haven from the Asian financial crisis had to go somewhere, but the federal government wasn’t in the mood to borrow. So those dollars flowed willingly into the mortgage-backed securities being peddled as AAA-rated bonds. And the greater the demand, the more Wall Street packaged up their dodgy securities containing more and more subprime loans extended to those least able to afford credit.
The last few decades of the 2oth century also saw a number of marked changes for families. Women increased their labor supply steadily from the 1960s through the high employment years of the early 1990s. By the late 1990s, however, that long-term rise in employment rates had stalled. The United States went from being an economy that had one of the largest shares of women in the labor force to number 18 among 35 developed-economy member nations of the Organisation for Economic Co-operation and Development.
A variety of reasons have been presented for the sudden end in the growth of women’s employment beginning in the first decade of the 21st century and continuing today. The mainstream media play up the idea that women are “opting out” of careers in favor of motherhood, a story line developed in large part by journalists who either live in more wealthy neighborhoods and thus see this happening or write for publications that cater mostly to these wealthy neighborhoods. Yet empirical research finds that women, like men, found it harder to find and keep jobs due to the lackluster economic recovery after the recession of 2001. As families sought to cope with the slow-job growth economy in the 2000s and a labor market that still does not provide the kinds of supports and protections working parents need, many turned to increasingly-readily-available credit as a way to cope.
Now, of course, such easy credit is no longer available. Neither is a robust jobs market. It may be true that it doesn’t matter why people took on more debt prior to the Great Recession, as Mian and Sufi contend, but today the lessons learned then are critically important. The story that emerged in the early days of the Great Recession was that too many people borrowed too much to afford fancy houses. That’s not what Mian and Sufi’s data show. They show that the boom in debt occurred among borrowers that couldn’t qualify for a government-backed mortgage. That the private sector sought them out in the tens of millions to offer loans they were demonstrably unable to repay—without worry because these lenders very quickly diced up those loans and sold them to supposedly savvy institutional investors—created the housing bubble that exploded into the twin crises that led to the Great Recession.
This activity produced a bubble—one that anyone could see and one that policymakers blithely passed off as either non-existent or unimportant—to the detriment of our entire economy. Subsequent reforms to our financial system give policymakers more tools to police housing finance, yet the continuing over-reliance on debt and a lack of good jobs leaves families at risk and exposes our economy to the whipsaw of another debt-fueled credit bubble. Mian and Sufi deserve credit of another kind for detailing how ensnared the American Dream is in this tangled web of debt finance—and how exposed the vast majority of us are to the broader economic consequences.
interesting it was not government regulation and LOANS IN REDLINED GHETTO'S it was DEREGULATION and EQUITY LOANS note the GHETTO'S DIDNOT have much EQUITY
or in the executive short version it was the NUT CON'S DOGMA of MARKETS KNOW BEST and DEREGULATION +greed
or the very points I have been making here for years
they argue that the Great Recession was the result of a sharp fall-off in consumption due to the unevenly accumulated household debt in the first six years of the 21st century. In that period, mortgage-credit grew more than twice as fast in neighborhoods with low credit scores than in neighborhoods with high credit scores,… Unfortunately, the two authors don’t provide answers for why so many households took on so much debt,…. all this subprime mortgage debt that had been structured into AAA-rated…. how ensnared the American Dream is in this tangled web of debt finance..
Yep on that part.
So.. people took out loans they could not pay back.
The Fed made money cheap, which created the bubble. Loans made to people who couldn't pay them back caused the defaults.
The Fed inflated the bubble. Defaults popped it. It doesn't matter how much your house is "valued" at after you buy it, if you took out a loan you could afford. That only affects property taxes.
"The Consumer Financial Protection Bureau has issued a fresh warning to lenders who aren't making enough prime loans to low-income minorities, to take "corrective action" or face discrimination charges.
Meanwhile, there's new evidence the quality of loans underwritten by the nation's largest banks is deteriorating, as lenders weaken credit standards under threat of prosecution.
In a 48-page "Fair Lending Report," the bureau urges banks to review home, auto, business and student lending data for racial "disparities in pricing (and) underwriting." It also advises putting staff through racial sensitivity training and to aggressively market loans in recession-torn urban areas.
The report, which mentions "discrimination" no fewer than 51 times, further warns lenders that CFPB regulators, working with federal prosecutors, are launching "targeted reviews" of their loan data by race in search of "disparate impact" violations.
Credit unions also are running scared. Their Credit Union National Association worries the new disparate impact focus will take lending decisions out of the hands of loan officers and underwriters.
Disparate Impact: A theory of liability that prohibits an employer from using a facially neutral practice or policy that has an unjustified adverse impact on members of a protected class. A facially neutral practice or policy is one that does not appear to be discriminatory on its face; rather it is one that is discriminatory in its application or effect http://legal-dictionary.the...com/Disparate+Impact http://en.wikipedia.org/wiki/Disparate_impact
"The Consumer Financial Protection Bureau has issued a fresh warning to lenders who aren't making enough prime loans to low-income minorities, to take "corrective action" or face discrimination charges.
Meanwhile, there's new evidence the quality of loans underwritten by the nation's largest banks is deteriorating, as lenders weaken credit standards under threat of prosecution.
In a 48-page "Fair Lending Report," the bureau urges banks to review home, auto, business and student lending data for racial "disparities in pricing (and) underwriting." It also advises putting staff through racial sensitivity training and to aggressively market loans in recession-torn urban areas.
The report, which mentions "discrimination" no fewer than 51 times, further warns lenders that CFPB regulators, working with federal prosecutors, are launching "targeted reviews" of their loan data by race in search of "disparate impact" violations.
Credit unions also are running scared. Their Credit Union National Association worries the new disparate impact focus will take lending decisions out of the hands of loan officers and underwriters.
Disparate Impact: A theory of liability that prohibits an employer from using a facially neutral practice or policy that has an unjustified adverse impact on members of a protected class. A facially neutral practice or policy is one that does not appear to be discriminatory on its face; rather it is one that is discriminatory in its application or effect http://legal-dictionary.the...com/Disparate+Impact http://en.wikipedia.org/wiki/Disparate_impact
repackaged LIES from 2009 were not true then or now check the facts not the lies you were told by the leadership of the nut-con's
dereg and markets know best and greed ie con's DOGMA not ghetto loans or even the regulated loans of the feds loan corps but unregulated equity loans +dereg+ greed+ con's DOGMA was the direct cause
You do know that there are other words you could use besides LIES, DOGMA, and NUTCONS. It would gain you a bigger audience if you expanded your vocabulary.
You do know that there are other words you could use besides LIES, DOGMA, and NUTCONS. It would gain you a bigger audience if you expanded your vocabulary.
Not everyone who posts is compensating by looking for a bigger audience like you seem to be.
Heh, though the discriminating against the poor for loan qualifications is priceless! At this rate they will be requiring us all to date fat chicks! not that there is anything wrong with that.
repackaged LIES from 2009 were not true then or now check the facts not the lies you were told by the leadership of the nut-con's
dereg and markets know best and greed ie con's DOGMA not ghetto loans or even the regulated loans of the feds loan corps but unregulated equity loans +dereg+ greed+ con's DOGMA was the direct cause
Regulations arent inherently bad, there are good and bad, and regulations done the right way and the wrong way. The direct cause was people taking loans they could not pay back.
You do know that there are other words you could use besides LIES, DOGMA, and NUTCONS. It would gain you a bigger audience if you expanded your vocabulary.
I call them as I see them sorry if the lies caught up with the DOGMA TRUTH always trumps SPIN
Talk about first world problems - we define someone who gives you hundreds of thousands of dollars based on nothing more than your promise to pay it back a "predator."
Originally posted by Tony Kania: Clinton promised everyone a McMansion. They could not afford their mansion.
Thank you Clinton.
not sure of that promise - but I do put the blame on the "clinton years". not because of the loans BS - but because of the trade agreements thats when the US got sold out. and nothing will bring us back until trade is fair again.
interesting it was not government regulation and LOANS IN REDLINED GHETTO'S it was DEREGULATION and EQUITY LOANS note the GHETTO'S DIDNOT have much EQUITY
or in the executive short version it was the NUT CON'S DOGMA of MARKETS KNOW BEST and DEREGULATION +greed
or the very points I have been making here for years
You really need to get your head out of your a$$. You are so stuck in finding blame with the right that you cannot even see straight.
The easy lending all started with Bill Clinton in 1995 with his view that home ownership is what will help the poor the most. "In 1995 Clinton loosened housing rules by rewriting the Community Reinvestment Act, which put added pressure on banks to lend in low-income neighborhoods." http://content.time.com/tim...7350_1877322,00.html
I remember being offered twice the loan amount I felt I could afford in 1998. Crazy amount of money given my income. I only bought what I could afford even if I lost my primary job and had to take a lower paying job.
Congress changed the rules which resulted in unintended consequences. Bankers are greedy and did what bankers do. You need to find a different dead horse to beat.
there is nothing wrong with the defaulted loans. the loans were backed by property. there was a agreed upon deal, and default was a part of that agreed deal. both sides agreed, and were A-OK with it all. This is nothing but BS Herring. The only loss in the loan defaults is the bank doesnt make the interest it expected. It get the collateral. which it agreed was of equivalent value. It would do so otherwise. Or is someone claiming banks dont know how to manage money?
not one bank was forced to loan money to anybody. not one. the only thing they couldnt do was deny a loan based on ZIP code. thats it. they could still deny based on income vs loan amount. all day long. all them loans were because they wanted to loan the money, not because they "had too".
and I too find the idea of "predatory lending" to be somewhat a BS line. yes, I can see the taking advantage of human personal weaknesses - but - that what education and "growing up" are for. and - the "walk away" option is alwasy there. but, I expect that same personality which got you sucked up, wont let you walk off. nothing wrong with defaulting. it is part of the contract both parties agreed too.
Originally posted by Hudini: You really need to get your head out of your a$$. You are so stuck in finding blame with the right that you cannot even see straight.
The easy lending all started with Bill Clinton in 1995 with his view that home ownership is what will help the poor the most. "In 1995 Clinton loosened housing rules by rewriting the Community Reinvestment Act, which put added pressure on banks to lend in low-income neighborhoods." http://content.time.com/tim...7350_1877322,00.html
I remember being offered twice the loan amount I felt I could afford in 1998. Crazy amount of money given my income. I only bought what I could afford even if I lost my primary job and had to take a lower paying job.
Congress changed the rules which resulted in unintended consequences. Bankers are greedy and did what bankers do. You need to find a different dead horse to beat.
You left out the biggest banking deregulation in history effectively axing the safe guards to keep a collapse from happening was signed by Bill Clinton. I am by no means saying the repubs are blameless in the deregulation. They almost (both sides) ALL took money to git er done. All never would have happened if Bill Clinton did not sign it.
The blithering ranting's from Ray in haiku form are entertaining though. Scary that some can be so ignorant.
Originally posted by Hudini: You really need to get your head out of your a$$. You are so stuck in finding blame with the right that you cannot even see straight.
The easy lending all started with Bill Clinton in 1995 with his view that home ownership is what will help the poor the most. "In 1995 Clinton loosened housing rules by rewriting the Community Reinvestment Act, which put added pressure on banks to lend in low-income neighborhoods." http://content.time.com/tim...7350_1877322,00.html
I remember being offered twice the loan amount I felt I could afford in 1998. Crazy amount of money given my income. I only bought what I could afford even if I lost my primary job and had to take a lower paying job.
Congress changed the rules which resulted in unintended consequences. Bankers are greedy and did what bankers do. You need to find a different dead horse to beat.
THAT WAS NEWT'S CONGRESS THE VOTE WAS LINE GOP with one single demo voting yes on DEREG and it was the existing homes with equity loans that were NOT REGULATED NOT the new regulated loans in redlined areas that failed
Originally posted by Pyrthian: not one bank was forced to loan money to anybody. not one.
Would you also agree that not one borrower was forced to borrow money?
quote
Originally posted by Pyrthian:
there is nothing wrong with the defaulted loans. the loans were backed by property. there was a agreed upon deal, and default was a part of that agreed deal. both sides agreed, and were A-OK with it all. This is nothing but BS Herring. The only loss in the loan defaults is the bank doesnt make the interest it expected. It get the collateral. which it agreed was of equivalent value. It would do so otherwise.
That ignores the definition of a bubble. Sure, the bank gets the property back, but a property they loaned $500k for someone to buy may only now sell for $200k. The bank loses the differerence. This happens even in the best of times and some losses like that are accounted for, but when you have a bubble burst and prices across the board drop as drastically and rapidly as they did, the banks lose not only the interest income, but a chunk of the capital they loaned out as well.
That's the risk they take. They try to mitigate that risk by only loaning to people they're reasonably sure can repay. The Subprime market was loans made to people they didn't think could repay, so the derivatives market was created to try and spread that risk around so make it less impactful.
I find it dubious that you didn't already know this.
THAT WAS NEWT'S CONGRESS THE VOTE WAS LINE GOP with one single demo voting yes on DEREG and it was the existing homes with equity loans that were NOT REGULATED NOT the new regulated loans in redlined areas that failed
Originally posted by Formula88: That ignores the definition of a bubble. Sure, the bank gets the property back, but a property they loaned $500k for someone to buy may only now sell for $200k. The bank loses the differerence. This happens even in the best of times and some losses like that are accounted for, but when you have a bubble burst and prices across the board drop as drastically and rapidly as they did, the banks lose not only the interest income, but a chunk of the capital they loaned out as well.
That's the risk they take. They try to mitigate that risk by only loaning to people they're reasonably sure can repay. The Subprime market was loans made to people they didn't think could repay, so the derivatives market was created to try and spread that risk around so make it less impactful.
I find it dubious that you didn't already know this.
yes. sucks, dont it? surprised banks would do such a thing. almost like they are in the wrong business. but, again just a mislead for the real cause: "sending the jobs to china" most who did have a decent manufacturing job and got a loan, would have in fact paid it off. if they remained employed.....
That ignores the definition of a bubble. Sure, the bank gets the property back, but a property they loaned $500k for someone to buy may only now sell for $200k. The bank loses the differerence. .
In some states the debtor even owes the difference.
yes clinton did sign it but it was a GOP LAW passed by party line vote [with 1 count them 1 demo vote] that does NOT make it clintons law or idea and does not allow the con's to escape their responsibility
Talk about first world problems - we define someone who gives you hundreds of thousands of dollars based on nothing more than your promise to pay it back a "predator."
Well yeah. No difference then stealing a retarded kids lunch money. We are talking about the General American public here.
Do you realize though, how silly that sounds... "predatory lending?"
The whole construct of your argument is that people are too stupid to make informed decisions... that is the entire basis of the Democrat party in America (and I suspect, the socialist party in your country as well).
Originally posted by ray b: yes clinton did sign it
Say no more, say no more. That really does end it.
BUT BUT BUT! heh.
Also not mentioning the almost complete deregulation of investment banking but hey! keep your head in the sand and spit that hate at everyone except who is to blame!
Your fried Barney Frank. As long as housing prices kept rising, the illusion that all this was good public policy could be sustained. But it didn't take a financial whiz to recognize that a day of reckoning would come. "What does it mean when Boston banks start making many more loans to minorities?" I asked in this space in 1995. "Most likely, that they are knowingly approving risky loans in order to get the feds and the activists off their backs . . . When the coming wave of foreclosures rolls through the inner city, which of today's self-congratulating bankers, politicians, and regulators plans to take the credit?"
Frank doesn't. But his fingerprints are all over this fiasco. Time and time again, Frank insisted that Fannie Mae and Freddie Mac were in good shape. Five years ago, for example, when the Bush administration proposed much tighter regulation of the two companies, Frank was adamant that "these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis." When the White House warned of "systemic risk for our financial system" unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing.
Now that the bubble has burst and the "systemic risk" is apparent to all, Frank blithely declares: "The private sector got us into this mess." Well, give the congressman points for gall. Wall Street and private lenders have plenty to answer for, but it was Washington and the political class that derailed this train. If Frank is looking for a culprit to blame, he can find one suspect in the nearest mirror.
Originally posted by 82-T/A [At Work]: Do you realize though, how silly that sounds... "predatory lending?"
The whole construct of your argument is that people are too stupid to make informed decisions... that is the entire basis of the Democrat party in America (and I suspect, the socialist party in your country as well).
yes clinton did sign it but it was a GOP LAW passed by party line vote [with 1 count them 1 demo vote] that does NOT make it clintons law or idea and does not allow the con's to escape their responsibility
Be very careful replying to things I didn't say. Clinton signed it. I did not make any comment regarding who passed it or who's idea it was. The point is that Congress bears responsibility for their part AND Clinton as the last check in the process bears final responsibility for it's passage. If he had vetoed it and been overridden, he would have no culpability - but he didn't. He bears as much responsibility as those who wrote the legislation.
I'm saying, it's their own damned problem for being stupid. Stupidity is more a cause and effect than it is a birth-right. If you help people feel smart in stupidity, they will continue to be stupid. If you let them face the world with their stupidity, they'll learn to make better decisions. Said basically... people need to learn from their mistakes, not constantly be saved from them.
Case in point, it wasn't that the people were so stupid as to take loans out they couldn't afford, it's that the Equal Housing Lender act forced banks to offer loans to poor people. These banks didn't even exist in the ghettos... but the changes Barney Frank made to the lending act stated that most of these banks were not properly serving the poor communities. Most of these poor people wouldn't have dared go into these banks and apply for these loans because they knew they wouldn't get them. They were SMARTER before. Once the lending act forced them to offer sub-prime mortgages to poor people (for every normal secured loan they offered), word got out... it's like the free juice truck at a 5k... everyone swarms.
The biggest problem is... people didn't end up better off, they ended up WORSE off. These poor people not only lost their homes, but were forced to move back to the ghetto, now with WORSE credit history, and MORE debt. To make matters worse, because so many of them had their credit absolutely destroyed, they all have to rent. In the past, many of them with jobs could have been able to afford condos, apartments, or even small town-houses... but now they can't even afford that, so they have to rent. Now, because EVERYONE has to rent, the cost of rent has sky-rocketed everywhere.
I can't even tell you... the cost of rent is substantially higher than what the mortgage would be. What I pay in my mortgage right now is only 3/5ths what the rent would be.
Barney Frank and the Equal Housing Lender act really screwed everyone. And the people it was meant to help, actually ended up worse off (in the end) than if they had simply done nothing.
But that's quite honestly... what happens with most Democrat policies. Most Democrat laws and policies end up hurting the very people they intend to help. They're all well-intentioned, but they simply don't understand how society and the economy works.
not sure of that promise - but I do put the blame on the "clinton years". not because of the loans BS - but because of the trade agreements thats when the US got sold out. and nothing will bring us back until trade is fair again.
yes clinton did sign it but it was a GOP LAW passed by party line vote [with 1 count them 1 demo vote] that does NOT make it clintons law or idea and does not allow the con's to escape their responsibility
I am a democrat. I guess it was my fault, BUT...
Dems figure ways to get out of work, responsibility, or blame. There is a very apparent common core theme here.
Be very careful replying to things I didn't say. Clinton signed it. I did not make any comment regarding who passed it or who's idea it was. The point is that Congress bears responsibility for their part AND Clinton as the last check in the process bears final responsibility for it's passage. If he had vetoed it and been overridden, he would have no culpability - but he didn't. He bears as much responsibility as those who wrote the legislation.
why do I need to be careful I am not limited to yes or no answers [in a thread I started] when I know you wil spin things HARD RIGHT and never ever admit your conned DOGMA is the root problem just as you are trying here it was not clintons law or idea it was the rightwing trying to implement their DOGMA OF MARKETS KNOW BEST so dereg everything and the crash and RESESSION resulted
yes clinton did sign it but it was a GOP LAW passed by party line vote [with 1 count them 1 demo vote]
Thats funny I did not know there were 90 republicans in the senate, and 362 Republicans in the house in 1999 when the final nail was put in the coffin of Glass-Steagal by a 90-8 margin in the senate and a 362-57 vote in the house oh that's because there weren't the democrats in the senate voted yea 38-7 and the house democrats voted yea 155-51
bi-partisanship at its finest ladies and gentlemen
So you don't make a fool of yourself. Ok, maybe it's too late for that.
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Originally posted by ray b: I am not limited to yes or no answers
Lake Titicaca. (see, I'm not limited to yes or not answers either, but the answer I gave doesn't actually address anything you said. There's a lesson here if you're capable of understanding it.)
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Originally posted by ray b: just as you are trying here it was not clintons law or idea it was the rightwing trying to implement their DOGMA
See, this is when you start outright lies. I explicitly stated I wasn't saying it was Clinton's law or idea. If you have evidence to the contrary, show it. Read what I actually posted - between bong hits if you can. Unlike you, I blame both parties for the actions they are responsible for. Your saying I am trying to blame it all on Clinton is not only demonstrably false, it's irrelevant. Clinton bears the responsibility of his actions, just as the Congress that passed the bill does for theirs.
Something to ponder...
