(12-15-2014 07:38 AM)UM2001GRAD Wrote:  

(12-12-2014 05:10 PM)Owl 69/70/75 Wrote:  

(12-12-2014 02:29 PM)Fitbud Wrote:  

(12-12-2014 11:45 AM)EverRespect Wrote:  

(12-12-2014 11:38 AM)Owl 69/70/75 Wrote:  Number one, banks don't "give" people loans.
Number two, what incentive does a bank have to "give everyone loans that they can't pay back"?

Because they can sell them to Uncle Sam or package them in a derivative to offset another bet (which this bill relaxes the regulation on). The large Wall Street banks aren't risking anything, the small niche traders are.

And when they collapse, the tax payers will be on the hook again.

No, you don't understand how banks work.

They made bad loans because they were directed by regulators to make them. I know the CRA did not on the face of it require them. But the regulations issued by the banking authorities pursuant to the act DID require banks to make bad loans. And the procedures followed by the bank regulators pursuant to those regulations made that requirement even stronger. I don't know of a single banker who wants to hassle with bad loans, even if the government does take them off their hands. And the ones that were packaged up and sold were gotten rid of because the banks did not want to fool with them.

There is absolutely no reason except regulatory fiat for banks to make bad loans. And when regulatory fiat is the reason those loans were made, why is it not appropriate for government to bail them out?

CRA caused the crash? Yet another right-wing lie. Here's a quick way to see what a stupid lie it is and that it would only be repeated by the most stupid of people - when all these bad loans that mortgage banks were being forced to make were rolled up into MBS products, surely they couldn't find anyone to buy them, right? Because who would buy securities chocked full of risky, bad loans? There couldn't have been any demand for such products, right?

The CRA argument is one of racism. It's the standard right-wing tactic of blaming minorities for the sins of rich white people. Only the worst sort of people perpetuate such lies.

I didn't know that being a financial risk was tied to race. I always thought the color of money was green.

Yet again, somehow - you've attempted to make the financial crisis about race.

If you keep this up, they may put you in a mental institution............of course, if they did, you'd blame "whitey".

(12-15-2014 08:27 AM)Crebman Wrote:  

(12-15-2014 07:38 AM)UM2001GRAD Wrote:  

(12-12-2014 05:10 PM)Owl 69/70/75 Wrote:  

(12-12-2014 02:29 PM)Fitbud Wrote:  

(12-12-2014 11:45 AM)EverRespect Wrote:  Because they can sell them to Uncle Sam or package them in a derivative to offset another bet (which this bill relaxes the regulation on). The large Wall Street banks aren't risking anything, the small niche traders are.

And when they collapse, the tax payers will be on the hook again.

No, you don't understand how banks work.

They made bad loans because they were directed by regulators to make them. I know the CRA did not on the face of it require them. But the regulations issued by the banking authorities pursuant to the act DID require banks to make bad loans. And the procedures followed by the bank regulators pursuant to those regulations made that requirement even stronger. I don't know of a single banker who wants to hassle with bad loans, even if the government does take them off their hands. And the ones that were packaged up and sold were gotten rid of because the banks did not want to fool with them.

There is absolutely no reason except regulatory fiat for banks to make bad loans. And when regulatory fiat is the reason those loans were made, why is it not appropriate for government to bail them out?

CRA caused the crash? Yet another right-wing lie. Here's a quick way to see what a stupid lie it is and that it would only be repeated by the most stupid of people - when all these bad loans that mortgage banks were being forced to make were rolled up into MBS products, surely they couldn't find anyone to buy them, right? Because who would buy securities chocked full of risky, bad loans? There couldn't have been any demand for such products, right?

The CRA argument is one of racism. It's the standard right-wing tactic of blaming minorities for the sins of rich white people. Only the worst sort of people perpetuate such lies.

I didn't know that being a financial risk was tied to race. I always thought the color of money was green.

Yet again, somehow - you've attempted to make the financial crisis about race.

If you keep this up, they may put you in a mental institution............of course, if they did, you'd blame "whitey".

The CRA argument is a race-based argument. If you're ignorant of the facts, then just stay out of the conversation.

(12-15-2014 08:32 AM)UM2001GRAD Wrote:  

(12-15-2014 08:27 AM)Crebman Wrote:  

(12-15-2014 07:38 AM)UM2001GRAD Wrote:  

(12-12-2014 05:10 PM)Owl 69/70/75 Wrote:  

(12-12-2014 02:29 PM)Fitbud Wrote:  And when they collapse, the tax payers will be on the hook again.

No, you don't understand how banks work.

They made bad loans because they were directed by regulators to make them. I know the CRA did not on the face of it require them. But the regulations issued by the banking authorities pursuant to the act DID require banks to make bad loans. And the procedures followed by the bank regulators pursuant to those regulations made that requirement even stronger. I don't know of a single banker who wants to hassle with bad loans, even if the government does take them off their hands. And the ones that were packaged up and sold were gotten rid of because the banks did not want to fool with them.

There is absolutely no reason except regulatory fiat for banks to make bad loans. And when regulatory fiat is the reason those loans were made, why is it not appropriate for government to bail them out?

CRA caused the crash? Yet another right-wing lie. Here's a quick way to see what a stupid lie it is and that it would only be repeated by the most stupid of people - when all these bad loans that mortgage banks were being forced to make were rolled up into MBS products, surely they couldn't find anyone to buy them, right? Because who would buy securities chocked full of risky, bad loans? There couldn't have been any demand for such products, right?

The CRA argument is one of racism. It's the standard right-wing tactic of blaming minorities for the sins of rich white people. Only the worst sort of people perpetuate such lies.

I didn't know that being a financial risk was tied to race. I always thought the color of money was green.

Yet again, somehow - you've attempted to make the financial crisis about race.

If you keep this up, they may put you in a mental institution............of course, if they did, you'd blame "whitey".

The CRA argument is a race-based argument. If you're ignorant of the facts, then just stay out of the conversation.

No, you are the zealot that spews warped fabrications - you can shut up.

(12-15-2014 08:45 AM)Crebman Wrote:  

(12-15-2014 08:32 AM)UM2001GRAD Wrote:  

(12-15-2014 08:27 AM)Crebman Wrote:  

(12-15-2014 07:38 AM)UM2001GRAD Wrote:  

(12-12-2014 05:10 PM)Owl 69/70/75 Wrote:  No, you don't understand how banks work.

They made bad loans because they were directed by regulators to make them. I know the CRA did not on the face of it require them. But the regulations issued by the banking authorities pursuant to the act DID require banks to make bad loans. And the procedures followed by the bank regulators pursuant to those regulations made that requirement even stronger. I don't know of a single banker who wants to hassle with bad loans, even if the government does take them off their hands. And the ones that were packaged up and sold were gotten rid of because the banks did not want to fool with them.

There is absolutely no reason except regulatory fiat for banks to make bad loans. And when regulatory fiat is the reason those loans were made, why is it not appropriate for government to bail them out?

CRA caused the crash? Yet another right-wing lie. Here's a quick way to see what a stupid lie it is and that it would only be repeated by the most stupid of people - when all these bad loans that mortgage banks were being forced to make were rolled up into MBS products, surely they couldn't find anyone to buy them, right? Because who would buy securities chocked full of risky, bad loans? There couldn't have been any demand for such products, right?

The CRA argument is one of racism. It's the standard right-wing tactic of blaming minorities for the sins of rich white people. Only the worst sort of people perpetuate such lies.

I didn't know that being a financial risk was tied to race. I always thought the color of money was green.

Yet again, somehow - you've attempted to make the financial crisis about race.

If you keep this up, they may put you in a mental institution............of course, if they did, you'd blame "whitey".

The CRA argument is a race-based argument. If you're ignorant of the facts, then just stay out of the conversation.

No, you are the zealot that spews warped fabrications - you can shut up.

More personal attacks rather than legitimate arguments.

(12-15-2014 09:01 AM)UM2001GRAD Wrote:  

(12-15-2014 08:45 AM)Crebman Wrote:  

(12-15-2014 08:32 AM)UM2001GRAD Wrote:  

(12-15-2014 08:27 AM)Crebman Wrote:  

(12-15-2014 07:38 AM)UM2001GRAD Wrote:  CRA caused the crash? Yet another right-wing lie. Here's a quick way to see what a stupid lie it is and that it would only be repeated by the most stupid of people - when all these bad loans that mortgage banks were being forced to make were rolled up into MBS products, surely they couldn't find anyone to buy them, right? Because who would buy securities chocked full of risky, bad loans? There couldn't have been any demand for such products, right?

The CRA argument is one of racism. It's the standard right-wing tactic of blaming minorities for the sins of rich white people. Only the worst sort of people perpetuate such lies.

I didn't know that being a financial risk was tied to race. I always thought the color of money was green.

Yet again, somehow - you've attempted to make the financial crisis about race.

If you keep this up, they may put you in a mental institution............of course, if they did, you'd blame "whitey".

The CRA argument is a race-based argument. If you're ignorant of the facts, then just stay out of the conversation.

No, you are the zealot that spews warped fabrications - you can shut up.

More personal attacks rather than legitimate arguments.

None of your arguments are legitimate - you find a race angle in everything. You're like the little boy that cried wolf. You cry "race" so often that even if you at some point had a valid point, it's lost because you've had so many bullsh!t ones.

(12-15-2014 09:21 AM)Crebman Wrote:  

(12-15-2014 09:01 AM)UM2001GRAD Wrote:  

(12-15-2014 08:45 AM)Crebman Wrote:  

(12-15-2014 08:32 AM)UM2001GRAD Wrote:  

(12-15-2014 08:27 AM)Crebman Wrote:  I didn't know that being a financial risk was tied to race. I always thought the color of money was green.

Yet again, somehow - you've attempted to make the financial crisis about race.

If you keep this up, they may put you in a mental institution............of course, if they did, you'd blame "whitey".

The CRA argument is a race-based argument. If you're ignorant of the facts, then just stay out of the conversation.

No, you are the zealot that spews warped fabrications - you can shut up.

More personal attacks rather than legitimate arguments.

None of your arguments are legitimate - you find a race angle in everything. You're like the little boy that cried wolf. You cry "race" so often that even if you at some point had a valid point, it's lost because you've had so many bullsh!t ones.

Please back off the personal attacks and engage in legitimate debate.

(12-15-2014 09:23 AM)UM2001GRAD Wrote:  

(12-15-2014 09:21 AM)Crebman Wrote:  

(12-15-2014 09:01 AM)UM2001GRAD Wrote:  

(12-15-2014 08:45 AM)Crebman Wrote:  

(12-15-2014 08:32 AM)UM2001GRAD Wrote:  The CRA argument is a race-based argument. If you're ignorant of the facts, then just stay out of the conversation.

No, you are the zealot that spews warped fabrications - you can shut up.

More personal attacks rather than legitimate arguments.

None of your arguments are legitimate - you find a race angle in everything. You're like the little boy that cried wolf. You cry "race" so often that even if you at some point had a valid point, it's lost because you've had so many bullsh!t ones.

Please back off the personal attacks and engage in legitimate debate.

Your arguments are not legitimate.

(12-15-2014 09:31 AM)Crebman Wrote:  

(12-15-2014 09:23 AM)UM2001GRAD Wrote:  

(12-15-2014 09:21 AM)Crebman Wrote:  

(12-15-2014 09:01 AM)UM2001GRAD Wrote:  

(12-15-2014 08:45 AM)Crebman Wrote:  No, you are the zealot that spews warped fabrications - you can shut up.

More personal attacks rather than legitimate arguments.

None of your arguments are legitimate - you find a race angle in everything. You're like the little boy that cried wolf. You cry "race" so often that even if you at some point had a valid point, it's lost because you've had so many bullsh!t ones.

Please back off the personal attacks and engage in legitimate debate.

Your arguments are not legitimate.

Then make logical rebuttals. If all you can do is launch personal attacks, then it is clear there are no logical rebuttals to my arguments.

(12-15-2014 07:38 AM)UM2001GRAD Wrote:  

(12-12-2014 05:10 PM)Owl 69/70/75 Wrote:  

(12-12-2014 02:29 PM)Fitbud Wrote:  

(12-12-2014 11:45 AM)EverRespect Wrote:  

(12-12-2014 11:38 AM)Owl 69/70/75 Wrote:  Number one, banks don't "give" people loans.
Number two, what incentive does a bank have to "give everyone loans that they can't pay back"?

Because they can sell them to Uncle Sam or package them in a derivative to offset another bet (which this bill relaxes the regulation on). The large Wall Street banks aren't risking anything, the small niche traders are.

And when they collapse, the tax payers will be on the hook again.

No, you don't understand how banks work.

They made bad loans because they were directed by regulators to make them. I know the CRA did not on the face of it require them. But the regulations issued by the banking authorities pursuant to the act DID require banks to make bad loans. And the procedures followed by the bank regulators pursuant to those regulations made that requirement even stronger. I don't know of a single banker who wants to hassle with bad loans, even if the government does take them off their hands. And the ones that were packaged up and sold were gotten rid of because the banks did not want to fool with them.

There is absolutely no reason except regulatory fiat for banks to make bad loans. And when regulatory fiat is the reason those loans were made, why is it not appropriate for government to bail them out?

CRA caused the crash? Yet another right-wing lie. Here's a quick way to see what a stupid lie it is and that it would only be repeated by the most stupid of people - when all these bad loans that mortgage banks were being forced to make were rolled up into MBS products, surely they couldn't find anyone to buy them, right? Because who would buy securities chocked full of risky, bad loans? There couldn't have been any demand for such products, right?

The CRA argument is one of racism. It's the standard right-wing tactic of blaming minorities for the sins of rich white people. Only the worst sort of people perpetuate such lies.

You don't seem to understand the nuances involved in how banking functions and the implications of Clinton/Cuomo's dictate that a certain percentage of mortgage loans were to be made to the sub-prime market. (To be fair, Bush implemented a marginal increase to the percentage.) Now the banks had to make about half their loans to sub prime in order to get the higher quality business. (An analogy would be the auto makers that produced small inexpensive, loss leader, cars in order to average out the gas mileage of the big profitable models.) Couple that with the low interest rates brought by your friendly Federal Reserve, and the market was flooded with plenty of poor loans. Many of these loans were of the ARM variety (as much as 90% of sub prime)and while housing prices continued to rise, everything was good.

Now the banks, in an attempt to control risk, started bundling loans into MBS. These were mixtures of low and high quality loans, which ostensibly would mitigate risk (see fuel mileage analogy). Furthermore, banks created the Credit Default Swaps in an attempt to further spread risk. The concept behind the CDS was that risk is being syndicated so that no one party has an outsized exposure.

Then the bubble burst and virtually all the mortgages, sub prime to jumbo, were at or near being underwater. Those in the sub prime market began defaulting at an alarming rate, significantly higher than other loan categories, and the market collapsed.

Bottom line, sub prime was the principal direct cause of the melt down.

(12-15-2014 09:45 AM)UM2001GRAD Wrote:  

(12-15-2014 09:31 AM)Crebman Wrote:  

(12-15-2014 09:23 AM)UM2001GRAD Wrote:  

(12-15-2014 09:21 AM)Crebman Wrote:  

(12-15-2014 09:01 AM)UM2001GRAD Wrote:  More personal attacks rather than legitimate arguments.

None of your arguments are legitimate - you find a race angle in everything. You're like the little boy that cried wolf. You cry "race" so often that even if you at some point had a valid point, it's lost because you've had so many bullsh!t ones.

Please back off the personal attacks and engage in legitimate debate.

Your arguments are not legitimate.

Then make logical rebuttals. If all you can do is launch personal attacks, then it is clear there are no logical rebuttals to my arguments.

This is rich coming from you.

Go back to indoctrinating your poor pupils.

stop pretending you know about real world problems

(12-15-2014 11:24 AM)QuestionSocratic Wrote:  

(12-15-2014 07:38 AM)UM2001GRAD Wrote:  

(12-12-2014 05:10 PM)Owl 69/70/75 Wrote:  

(12-12-2014 02:29 PM)Fitbud Wrote:  

(12-12-2014 11:45 AM)EverRespect Wrote:  Because they can sell them to Uncle Sam or package them in a derivative to offset another bet (which this bill relaxes the regulation on). The large Wall Street banks aren't risking anything, the small niche traders are.

And when they collapse, the tax payers will be on the hook again.

No, you don't understand how banks work.

They made bad loans because they were directed by regulators to make them. I know the CRA did not on the face of it require them. But the regulations issued by the banking authorities pursuant to the act DID require banks to make bad loans. And the procedures followed by the bank regulators pursuant to those regulations made that requirement even stronger. I don't know of a single banker who wants to hassle with bad loans, even if the government does take them off their hands. And the ones that were packaged up and sold were gotten rid of because the banks did not want to fool with them.

There is absolutely no reason except regulatory fiat for banks to make bad loans. And when regulatory fiat is the reason those loans were made, why is it not appropriate for government to bail them out?

CRA caused the crash? Yet another right-wing lie. Here's a quick way to see what a stupid lie it is and that it would only be repeated by the most stupid of people - when all these bad loans that mortgage banks were being forced to make were rolled up into MBS products, surely they couldn't find anyone to buy them, right? Because who would buy securities chocked full of risky, bad loans? There couldn't have been any demand for such products, right?

The CRA argument is one of racism. It's the standard right-wing tactic of blaming minorities for the sins of rich white people. Only the worst sort of people perpetuate such lies.

You don't seem to understand the nuances involved in how banking functions and the implications of Clinton/Cuomo's dictate that a certain percentage of mortgage loans were to be made to the sub-prime market. (To be fair, Bush implemented a marginal increase to the percentage.) Now the banks had to make about half their loans to sub prime in order to get the higher quality business. (An analogy would be the auto makers that produced small inexpensive, loss leader, cars in order to average out the gas mileage of the big profitable models.) Couple that with the low interest rates brought by your friendly Federal Reserve, and the market was flooded with plenty of poor loans. Many of these loans were of the ARM variety (as much as 90% of sub prime)and while housing prices continued to rise, everything was good.

Now the banks, in an attempt to control risk, started bundling loans into MBS. These were mixtures of low and high quality loans, which ostensibly would mitigate risk (see fuel mileage analogy). Furthermore, banks created the Credit Default Swaps in an attempt to further spread risk. The concept behind the CDS was that risk is being syndicated so that no one party has an outsized exposure.

Then the bubble burst and virtually all the mortgages, sub prime to jumbo, were at or near being underwater. Those in the sub prime market began defaulting at an alarming rate, significantly higher than other loan categories, and the market collapsed.

Bottom line, sub prime was the principal direct cause of the melt down.

I'll be happy to discuss sub-prime, MBS, and CDS markets more, but we need to clear up something first. The argument is that the CRA is at the heart of the meltdown (or at least bears serious responsibility). So what portion of sub-prime loans were made by CRA lenders in CRA neighborhoods? And did those CRA loans default at a significantly higher rate than non-CRA loans?

As an aside, I was just discussing the disclosure practices surrounding CDS holdings for major foreign banks following their adoption of IFRS 9 with a banker from RBS last week. It's fascinating how they're structuring their transactions to avoid disclosure. Anyway, I'm sure we can get into all that nuance you're talking about after we clear up the CRA issue.

(12-15-2014 12:11 PM)UM2001GRAD Wrote:  

(12-15-2014 11:24 AM)QuestionSocratic Wrote:  

(12-15-2014 07:38 AM)UM2001GRAD Wrote:  

(12-12-2014 05:10 PM)Owl 69/70/75 Wrote:  

(12-12-2014 02:29 PM)Fitbud Wrote:  And when they collapse, the tax payers will be on the hook again.

No, you don't understand how banks work.

They made bad loans because they were directed by regulators to make them. I know the CRA did not on the face of it require them. But the regulations issued by the banking authorities pursuant to the act DID require banks to make bad loans. And the procedures followed by the bank regulators pursuant to those regulations made that requirement even stronger. I don't know of a single banker who wants to hassle with bad loans, even if the government does take them off their hands. And the ones that were packaged up and sold were gotten rid of because the banks did not want to fool with them.

There is absolutely no reason except regulatory fiat for banks to make bad loans. And when regulatory fiat is the reason those loans were made, why is it not appropriate for government to bail them out?

CRA caused the crash? Yet another right-wing lie. Here's a quick way to see what a stupid lie it is and that it would only be repeated by the most stupid of people - when all these bad loans that mortgage banks were being forced to make were rolled up into MBS products, surely they couldn't find anyone to buy them, right? Because who would buy securities chocked full of risky, bad loans? There couldn't have been any demand for such products, right?

The CRA argument is one of racism. It's the standard right-wing tactic of blaming minorities for the sins of rich white people. Only the worst sort of people perpetuate such lies.

You don't seem to understand the nuances involved in how banking functions and the implications of Clinton/Cuomo's dictate that a certain percentage of mortgage loans were to be made to the sub-prime market. (To be fair, Bush implemented a marginal increase to the percentage.) Now the banks had to make about half their loans to sub prime in order to get the higher quality business. (An analogy would be the auto makers that produced small inexpensive, loss leader, cars in order to average out the gas mileage of the big profitable models.) Couple that with the low interest rates brought by your friendly Federal Reserve, and the market was flooded with plenty of poor loans. Many of these loans were of the ARM variety (as much as 90% of sub prime)and while housing prices continued to rise, everything was good.

Now the banks, in an attempt to control risk, started bundling loans into MBS. These were mixtures of low and high quality loans, which ostensibly would mitigate risk (see fuel mileage analogy). Furthermore, banks created the Credit Default Swaps in an attempt to further spread risk. The concept behind the CDS was that risk is being syndicated so that no one party has an outsized exposure.

Then the bubble burst and virtually all the mortgages, sub prime to jumbo, were at or near being underwater. Those in the sub prime market began defaulting at an alarming rate, significantly higher than other loan categories, and the market collapsed.

Bottom line, sub prime was the principal direct cause of the melt down.

I'll be happy to discuss sub-prime, MBS, and CDS markets more, but we need to clear up something first. The argument is that the CRA is at the heart of the meltdown (or at least bears serious responsibility). So what portion of sub-prime loans were made by CRA lenders in CRA neighborhoods? And did those CRA loans default at a significantly higher rate than non-CRA loans?

As an aside, I was just discussing the disclosure practices surrounding CDS holdings for major foreign banks following their adoption of IFRS 9 with a banker from RBS last week. It's fascinating how they're structuring their transactions to avoid disclosure. Anyway, I'm sure we can get into all that nuance you're talking about after we clear up the CRA issue.

I'm pretty sure you can find, with adequate Googling, academic and think tank papers that will support whatever position you want to take.

Nonetheless, a "very" quick look, provided a large number of reputable papers on the subject. One thing I found was that sub-prime loans hit an accumulated 36% default rate, versus 11% on prime and about 7 times average default across all mortgage products.

http://www.stat.unc.edu/faculty/cji/fys/...crisis.pdf

http://www.chicagofed.org/digital_assets...L_web.pdf.

We can argue forever on whether subprime was the principal cause. Certainly the Fed's loose money policy and the banks taking advantage of the availability of new financially engineered products, and loose regulatory oversight contributed, but it defies common sense to suggest that sub prime wasn't the major contributing factor.

(12-15-2014 03:10 PM)QuestionSocratic Wrote:  

(12-15-2014 12:11 PM)UM2001GRAD Wrote:  

(12-15-2014 11:24 AM)QuestionSocratic Wrote:  

(12-15-2014 07:38 AM)UM2001GRAD Wrote:  

(12-12-2014 05:10 PM)Owl 69/70/75 Wrote:  No, you don't understand how banks work.

They made bad loans because they were directed by regulators to make them. I know the CRA did not on the face of it require them. But the regulations issued by the banking authorities pursuant to the act DID require banks to make bad loans. And the procedures followed by the bank regulators pursuant to those regulations made that requirement even stronger. I don't know of a single banker who wants to hassle with bad loans, even if the government does take them off their hands. And the ones that were packaged up and sold were gotten rid of because the banks did not want to fool with them.

There is absolutely no reason except regulatory fiat for banks to make bad loans. And when regulatory fiat is the reason those loans were made, why is it not appropriate for government to bail them out?

CRA caused the crash? Yet another right-wing lie. Here's a quick way to see what a stupid lie it is and that it would only be repeated by the most stupid of people - when all these bad loans that mortgage banks were being forced to make were rolled up into MBS products, surely they couldn't find anyone to buy them, right? Because who would buy securities chocked full of risky, bad loans? There couldn't have been any demand for such products, right?

The CRA argument is one of racism. It's the standard right-wing tactic of blaming minorities for the sins of rich white people. Only the worst sort of people perpetuate such lies.

You don't seem to understand the nuances involved in how banking functions and the implications of Clinton/Cuomo's dictate that a certain percentage of mortgage loans were to be made to the sub-prime market. (To be fair, Bush implemented a marginal increase to the percentage.) Now the banks had to make about half their loans to sub prime in order to get the higher quality business. (An analogy would be the auto makers that produced small inexpensive, loss leader, cars in order to average out the gas mileage of the big profitable models.) Couple that with the low interest rates brought by your friendly Federal Reserve, and the market was flooded with plenty of poor loans. Many of these loans were of the ARM variety (as much as 90% of sub prime)and while housing prices continued to rise, everything was good.

Now the banks, in an attempt to control risk, started bundling loans into MBS. These were mixtures of low and high quality loans, which ostensibly would mitigate risk (see fuel mileage analogy). Furthermore, banks created the Credit Default Swaps in an attempt to further spread risk. The concept behind the CDS was that risk is being syndicated so that no one party has an outsized exposure.

Then the bubble burst and virtually all the mortgages, sub prime to jumbo, were at or near being underwater. Those in the sub prime market began defaulting at an alarming rate, significantly higher than other loan categories, and the market collapsed.

Bottom line, sub prime was the principal direct cause of the melt down.

I'll be happy to discuss sub-prime, MBS, and CDS markets more, but we need to clear up something first. The argument is that the CRA is at the heart of the meltdown (or at least bears serious responsibility). So what portion of sub-prime loans were made by CRA lenders in CRA neighborhoods? And did those CRA loans default at a significantly higher rate than non-CRA loans?

As an aside, I was just discussing the disclosure practices surrounding CDS holdings for major foreign banks following their adoption of IFRS 9 with a banker from RBS last week. It's fascinating how they're structuring their transactions to avoid disclosure. Anyway, I'm sure we can get into all that nuance you're talking about after we clear up the CRA issue.

I'm pretty sure you can find, with adequate Googling, academic and think tank papers that will support whatever position you want to take.

Nonetheless, a "very" quick look, provided a large number of reputable papers on the subject. One thing I found was that sub-prime loans hit an accumulated 36% default rate, versus 11% on prime and about 7 times average default across all mortgage products.

http://www.stat.unc.edu/faculty/cji/fys/...crisis.pdf

http://www.chicagofed.org/digital_assets...L_web.pdf.

We can argue forever on whether subprime was the principal cause. Certainly the Fed's loose money policy and the banks taking advantage of the availability of new financially engineered products, and loose regulatory oversight contributed, but it defies common sense to suggest that sub prime wasn't the major contributing factor.

I'm talking about CRA loans and you keep going on and on about subprime. Why?

(12-15-2014 04:47 PM)UM2001GRAD Wrote:  

(12-15-2014 03:10 PM)QuestionSocratic Wrote:  

(12-15-2014 12:11 PM)UM2001GRAD Wrote:  

(12-15-2014 11:24 AM)QuestionSocratic Wrote:  

(12-15-2014 07:38 AM)UM2001GRAD Wrote:  CRA caused the crash? Yet another right-wing lie. Here's a quick way to see what a stupid lie it is and that it would only be repeated by the most stupid of people - when all these bad loans that mortgage banks were being forced to make were rolled up into MBS products, surely they couldn't find anyone to buy them, right? Because who would buy securities chocked full of risky, bad loans? There couldn't have been any demand for such products, right?

The CRA argument is one of racism. It's the standard right-wing tactic of blaming minorities for the sins of rich white people. Only the worst sort of people perpetuate such lies.

You don't seem to understand the nuances involved in how banking functions and the implications of Clinton/Cuomo's dictate that a certain percentage of mortgage loans were to be made to the sub-prime market. (To be fair, Bush implemented a marginal increase to the percentage.) Now the banks had to make about half their loans to sub prime in order to get the higher quality business. (An analogy would be the auto makers that produced small inexpensive, loss leader, cars in order to average out the gas mileage of the big profitable models.) Couple that with the low interest rates brought by your friendly Federal Reserve, and the market was flooded with plenty of poor loans. Many of these loans were of the ARM variety (as much as 90% of sub prime)and while housing prices continued to rise, everything was good.

Now the banks, in an attempt to control risk, started bundling loans into MBS. These were mixtures of low and high quality loans, which ostensibly would mitigate risk (see fuel mileage analogy). Furthermore, banks created the Credit Default Swaps in an attempt to further spread risk. The concept behind the CDS was that risk is being syndicated so that no one party has an outsized exposure.

Then the bubble burst and virtually all the mortgages, sub prime to jumbo, were at or near being underwater. Those in the sub prime market began defaulting at an alarming rate, significantly higher than other loan categories, and the market collapsed.

Bottom line, sub prime was the principal direct cause of the melt down.

I'll be happy to discuss sub-prime, MBS, and CDS markets more, but we need to clear up something first. The argument is that the CRA is at the heart of the meltdown (or at least bears serious responsibility). So what portion of sub-prime loans were made by CRA lenders in CRA neighborhoods? And did those CRA loans default at a significantly higher rate than non-CRA loans?

As an aside, I was just discussing the disclosure practices surrounding CDS holdings for major foreign banks following their adoption of IFRS 9 with a banker from RBS last week. It's fascinating how they're structuring their transactions to avoid disclosure. Anyway, I'm sure we can get into all that nuance you're talking about after we clear up the CRA issue.

I'm pretty sure you can find, with adequate Googling, academic and think tank papers that will support whatever position you want to take.

Nonetheless, a "very" quick look, provided a large number of reputable papers on the subject. One thing I found was that sub-prime loans hit an accumulated 36% default rate, versus 11% on prime and about 7 times average default across all mortgage products.

http://www.stat.unc.edu/faculty/cji/fys/...crisis.pdf

http://www.chicagofed.org/digital_assets...L_web.pdf.

We can argue forever on whether subprime was the principal cause. Certainly the Fed's loose money policy and the banks taking advantage of the availability of new financially engineered products, and loose regulatory oversight contributed, but it defies common sense to suggest that sub prime wasn't the major contributing factor.

I'm talking about CRA loans and you keep going on and on about subprime. Why?

Because that's what all my posts have been about, while you've been stuck on the CRA.

So I guess we're done.

I realize we've been arguing two different directions.

(12-15-2014 06:11 PM)QuestionSocratic Wrote:  

(12-15-2014 04:47 PM)UM2001GRAD Wrote:  

(12-15-2014 03:10 PM)QuestionSocratic Wrote:  

(12-15-2014 12:11 PM)UM2001GRAD Wrote:  

(12-15-2014 11:24 AM)QuestionSocratic Wrote:  You don't seem to understand the nuances involved in how banking functions and the implications of Clinton/Cuomo's dictate that a certain percentage of mortgage loans were to be made to the sub-prime market. (To be fair, Bush implemented a marginal increase to the percentage.) Now the banks had to make about half their loans to sub prime in order to get the higher quality business. (An analogy would be the auto makers that produced small inexpensive, loss leader, cars in order to average out the gas mileage of the big profitable models.) Couple that with the low interest rates brought by your friendly Federal Reserve, and the market was flooded with plenty of poor loans. Many of these loans were of the ARM variety (as much as 90% of sub prime)and while housing prices continued to rise, everything was good.

Now the banks, in an attempt to control risk, started bundling loans into MBS. These were mixtures of low and high quality loans, which ostensibly would mitigate risk (see fuel mileage analogy). Furthermore, banks created the Credit Default Swaps in an attempt to further spread risk. The concept behind the CDS was that risk is being syndicated so that no one party has an outsized exposure.

Then the bubble burst and virtually all the mortgages, sub prime to jumbo, were at or near being underwater. Those in the sub prime market began defaulting at an alarming rate, significantly higher than other loan categories, and the market collapsed.

Bottom line, sub prime was the principal direct cause of the melt down.

I'll be happy to discuss sub-prime, MBS, and CDS markets more, but we need to clear up something first. The argument is that the CRA is at the heart of the meltdown (or at least bears serious responsibility). So what portion of sub-prime loans were made by CRA lenders in CRA neighborhoods? And did those CRA loans default at a significantly higher rate than non-CRA loans?

As an aside, I was just discussing the disclosure practices surrounding CDS holdings for major foreign banks following their adoption of IFRS 9 with a banker from RBS last week. It's fascinating how they're structuring their transactions to avoid disclosure. Anyway, I'm sure we can get into all that nuance you're talking about after we clear up the CRA issue.

I'm pretty sure you can find, with adequate Googling, academic and think tank papers that will support whatever position you want to take.

Nonetheless, a "very" quick look, provided a large number of reputable papers on the subject. One thing I found was that sub-prime loans hit an accumulated 36% default rate, versus 11% on prime and about 7 times average default across all mortgage products.

http://www.stat.unc.edu/faculty/cji/fys/...crisis.pdf

http://www.chicagofed.org/digital_assets...L_web.pdf.

We can argue forever on whether subprime was the principal cause. Certainly the Fed's loose money policy and the banks taking advantage of the availability of new financially engineered products, and loose regulatory oversight contributed, but it defies common sense to suggest that sub prime wasn't the major contributing factor.

I'm talking about CRA loans and you keep going on and on about subprime. Why?

Because that's what all my posts have been about, while you've been stuck on the CRA.

So I guess we're done.

I realize we've been arguing two different directions.

Yep. I think we probably agree more than we disagree about this topic.

Saw the CRA vs. Subprime distinction coming down main st.

Face it, the "liberalization" of the lending standards, with CRA AND the woefully thought out subprime market both contributed to that whole mess. The bottom line was the Feds were pushing mortgages for people that clearly couldn't or wouldn't pay for the "Housing for all" and it was a program/scheme destined for failure.

There were plenty of dirty hands on all of this. Honest folks doing the right thing got burned the worst in the long run. We're paying for it even now, nearly a decade later.

(12-15-2014 08:19 PM)JMUDunk Wrote:  Saw the CRA vs. Subprime distinction coming down main st.

Face it, the "liberalization" of the lending standards, with CRA AND the woefully thought out subprime market both contributed to that whole mess. The bottom line was the Feds were pushing mortgages for people that clearly couldn't or wouldn't pay for the "Housing for all" and it was a program/scheme destined for failure.

There were plenty of dirty hands on all of this. Honest folks doing the right thing got burned the worst in the long run. We're paying for it even now, nearly a decade later.

I'll give you the same questions - what portion of sub-prime loans were made by CRA lenders in CRA neighborhoods? And did those CRA loans default at a significantly higher rate than non-CRA loans?

(12-15-2014 07:38 AM)UM2001GRAD Wrote:  

(12-12-2014 05:10 PM)Owl 69/70/75 Wrote:  

(12-12-2014 02:29 PM)Fitbud Wrote:  

(12-12-2014 11:45 AM)EverRespect Wrote:  

(12-12-2014 11:38 AM)Owl 69/70/75 Wrote:  Number one, banks don't "give" people loans.
Number two, what incentive does a bank have to "give everyone loans that they can't pay back"?

Because they can sell them to Uncle Sam or package them in a derivative to offset another bet (which this bill relaxes the regulation on). The large Wall Street banks aren't risking anything, the small niche traders are.

And when they collapse, the tax payers will be on the hook again.

No, you don't understand how banks work.
They made bad loans because they were directed by regulators to make them. I know the CRA did not on the face of it require them. But the regulations issued by the banking authorities pursuant to the act DID require banks to make bad loans. And the procedures followed by the bank regulators pursuant to those regulations made that requirement even stronger. I don't know of a single banker who wants to hassle with bad loans, even if the government does take them off their hands. And the ones that were packaged up and sold were gotten rid of because the banks did not want to fool with them.
There is absolutely no reason except regulatory fiat for banks to make bad loans. And when regulatory fiat is the reason those loans were made, why is it not appropriate for government to bail them out?

CRA caused the crash? Yet another right-wing lie. Here's a quick way to see what a stupid lie it is and that it would only be repeated by the most stupid of people - when all these bad loans that mortgage banks were being forced to make were rolled up into MBS products, surely they couldn't find anyone to buy them, right? Because who would buy securities chocked full of risky, bad loans? There couldn't have been any demand for such products, right?
The CRA argument is one of racism. It's the standard right-wing tactic of blaming minorities for the sins of rich white people. Only the worst sort of people perpetuate such lies.

If you actually understood anything--even a smidgeon--about the problem, you would realize that your questions are meaningless and mis-informed. But hey, never miss an opportunity to blame racism and launch ad hominem attacks.

The GRAD decoder ring:

Idiot, moron, etc. = disagrees with Grad
Right-wing nut = disagrees with Chairman Mao
Racist = continues to disagree

(12-14-2014 02:06 PM)QuestionSocratic Wrote:  

(12-14-2014 01:23 PM)Fitbud Wrote:  Incorrect. Sub prime lending initially didn't qualify for Fannie and Freddy.

Posted from my mobile device using the CSNbbs App

Sub prime lending was forced on the banks by the government (see Andrew Cuomo). That started the ball rolling downhill. Don't try to deflect by inserting Fannie & Freddie as they were only part of the problem.

When that happened, the ball was already rolling down hill.

(12-17-2014 08:47 PM)Fitbud Wrote:  

(12-14-2014 02:06 PM)QuestionSocratic Wrote:  

(12-14-2014 01:23 PM)Fitbud Wrote:  Incorrect. Sub prime lending initially didn't qualify for Fannie and Freddy.

Posted from my mobile device using the CSNbbs App

Sub prime lending was forced on the banks by the government (see Andrew Cuomo). That started the ball rolling downhill. Don't try to deflect by inserting Fannie & Freddie as they were only part of the problem.

When that happened, the ball was already rolling down hill.

I think you have the timing wrong, if you are trying to say what I think you are trying to say.