OT: US Pres election

[Trumanator]

^very nice

I find it intriguing how people can revile Bush as an idiot and yet at the same time believe that he had the guile to bamboozle 3/4 of the fairly even Congress. As for deregulation leading to the current financial crisis, thats actually backwards. So much pressure and regulations were brought to bear on lenders to provide loans to people who were not going to be able to pay them that the mortage meltdown was almost guarenteed. As for an 8 year Gore admin... I wouldn't be surprised if we had gone through half a dozen attacks. Unless 9/11 was a conspiracy too...

[PashaDawg]

Originally Posted by Trumanator

^very nice

I find it intriguing how people can revile Bush as an idiot and yet at the same time believe that he had the guile to bamboozle 3/4 of the fairly even Congress. As for deregulation leading to the current financial crisis, thats actually backwards. So much pressure and regulations were brought to bear on lenders to provide loans to people who were not going to be able to pay them that the mortage meltdown was almost guarenteed. As for an 8 year Gore admin... I wouldn't be surprised if we had gone through half a dozen attacks. Unless 9/11 was a conspiracy too...

Sounds like you're a dedicated member of the Republican Party. I didn't accuse Bush as being an idiot. I actually think he and his administration are smart people who knew exactly what they wanted.

With all due respect, it sounds like you misapprehend the whole dynamic of mortgage backed securities. In the late 1990's and through 2006 (maybe even 2007), there was a dramatic shift in lending practices once the whole mortgage-backed securities concept was developed. The entities that were initiating the mortgage loans did not intend to keep the loans. They were to be sold to Wall Street, and then sold to more investors. So, the initial lenders had little worry about whether the borrower could afford the loan or was trustworthy. (Compare this to the more traditional arrangement of a bank lending money to a home buyer and retaining a mortgage for the life of the loan.)

As these loans became more and more profitable (because there was *a lot* of money to be made), there was increased pressure from the free market to find more borrowers. After the sources of responsible, reliable borrowers were tapped out, the mortgage industry needed to lower their standards for qualifying borrowers for loans (e.g., shifting from documentary proof of income to no such requirement). Again, there was no concern for the loan originator, because they planned to sell the loan to Wall Street. They just wanted to collect their initial financing fees, which were substantial.

To keep the customers coming, the industry devised inventive types of loans to get less loan-worthy borrowers into higher priced homes (e.g., adjustable rate mortgages and interest-only mortgages) that eventually trapped borrowers who bought homes that they probably should never have purchased. For example, the adjustable rate mortgage would have a 2-year teaser rate that was more affordable, and when the rate eventually adjusted after 2 years, the monthly payments would jump up substantially. (I think it is a two way problem. The home borrower was not paying attention to what he/she could afford, and the loan originator was pushing to lend as much as possible (to get higher fees) while disregarding the likely ability of the borrower to repay.)

In the end, we're now facing a crisis of millions of defaulted loans that are the basis of huge Wall Street investments. The problem was exacerbated by the runaway housing market and the difficulty in fully understanding and keeping tabs on the investments, because numerous parties would have fractional shares in the bundled up mortgage backed securities. Again, the pressure was from the free market. It was *not* from any regulators forcing Wall Street investment banks into buying mortgage loans.

Thus ends my second rant.

Pasha

[JimMorrison]

Originally Posted by PashaDawg

As these loans became more and more profitable (because there was *a lot* of money to be made), there was increased pressure from the free market to find more borrowers. After the sources of responsible, reliable borrowers were tapped out, the mortgage industry needed to lower their standards for qualifying borrowers for loans (e.g., shifting from documentary proof of income to no such requirement). Again, there was no concern for the loan originator, because they planned to sell the loan to Wall Street. They just wanted to collect their initial financing fees, which were substantial.

To keep the customers coming, the industry devised inventive types of loans to get less loan-worthy borrowers into higher priced homes (e.g., adjustable rate mortgages and interest-only mortgages) that eventually trapped borrowers who bought homes that they probably should never have purchased. For example, the adjustable rate mortgage would have a 2-year teaser rate that was more affordable, and when the rate eventually adjusted after 2 years, the monthly payments would jump up substantially. (I think it is a two way problem. The home borrower was not paying attention to what he/she could afford, and the loan originator was pushing to lend as much as possible (to get higher fees) while disregarding the likely ability of the borrower to repay.)

I actually purchased a home based on "stated income". Both my brother and I were doing a lot of work as a private business, without documentation to prove that income. We jumped into the middle of the housing'mortgage boom with no problems, and great expectations.

2 years later, things were looking alright, and we wanted to consolidate outside debts into the mortgage, and at the same time refinance at a lower rate. We got duped into an ARM after a lot of talk that was getting us nowhere, and we were assured that our rate would likely go down slightly in 2 more years, or if it went up, that it couldn't go up enough to really matter.

2 years later, the ARM matured, and we saw a significant increase in mortgage payment. 6 months later, and they bumped it again. Total increase to our mortgage? 30%. I'm sorry, we were not irresponsible, nor were we unable to pay the mortgage that we signed. However, we were not able to pay a mortgage 30% larger than we signed - especially not as my health declined, and budgets tightened.

This was purely predatory economic behavior, and is indicative of the focal problem with free market capitalism. Those who have the money and power are largely incentivized to do -anything- in their power to maximize profits. The profit is all that matters at the end of their day, because it is a measure of the growth of their personal power.


If you don't believe that the current administration has been all about the pursuit of wealth and power, then I can only encourage to look more closely at the issues. To stop, and actually do some hunting around on the internet to see what is currently going on, and who is scratching whose back. You may find yourself extremely surprised. Oh and for the record, Bush is an absolute moron, who is likely becoming senile. He didn't dupe anyone, he very poorly and clumsily repeated lies that were fed to him by much more intelligent and cunning players in the game - he was just a puppet, or a muppet, if you will.