open_eyes (anonymous) says...

Henry Morgenthau Jr. was FDR's treasury secretary during his entire presidency. On May 9, 1939 , testifying to the House Ways and Means committee, he said this: "We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I'm wrong ... somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises ... I say after eight years of this administration we have just as much unemployment as when we started ... And an enormous debt to boot."

February 17, 2009 at 11:10 p.m. ( permalink | suggest removal )

create (anonymous) says...

Then again, we've just experienced eight years worth of free-market-wall-street-mania-banks-unleashed-use-your-house-for-a-bank-account-shop-till-you-drop-economy, and we're still in the poorhouse. Seems like a damned if you do and damned if you don't situation.

The latest AP article I read this morning offers this from President Obama:

"We must stem the spread of foreclosuures and falling home values for all Americans, and do everything we can to help responsible homeowners stay in their homes."

Key word here is "responsible" I suppose. Signing on the dotted line for an $800,000 mortgage when you make only $50,000 a year is hardly responsible. It would be different if this were only a spot situation, but it is widespread. Bankers are to blame for this, yes, but so are the stupid blind borrowers who didn't even bother to ask questions. Look at Phoenix with the highest rate of foreclosures.

I'm going to watch this very closely because I'm one of those who HAS BEEN responsible, who IS up to date and not upside down. Will I be offered a lower interest rate for being Ms Responsible Citizen?

This short anecdote will prove a point here: Last Friday, my oldest daughter was in the St. Louis airport waiting for a flight home to Chicago when she was approached by a man asking for "just a couple of bucks." She gave him $5 and he walked away. Minutes later, she walked over to the Starbucks counter for a cup of coffee and paid for it with a $20 bill. This same man appeared again saying, "Can I have the change?" When she refused, he said, "Why not, you're rich." She walked away, but luckily he did not follow.

I told her that her first mistake was to give him $5 because that allowed him to profile her even further than he already had. In fact, I scolded her. Mistake number two was paying for a small purchase with a large bill. But this is all beside the point. The point is that this S O B expected money because she was well-dressed. He pegged her. This troubles me because it takes on a sinister air.

What troubles me even more is this "why not, you're rich" attitude of entitlement. Will this prevail in our country? What is that all about? This has now colored my own desire to help even charitable organizations, at least for awhile anyway. Too bad I wasn't in the airport with her that day.

February 18, 2009 at 7:39 a.m. ( permalink | suggest removal )

seriouslyfolks (anonymous) says...

ceate
"we've just experienced eight years worth of free-market-wall-street-mania-banks-unleashed-use-your-house-for-a-bank-account-shop-till-you-drop-economy"
Think back farther than eight years and I believe you'll remember this shop-till-ya-drop had been going on for a lot longer than just eight years.
There have been some who have tried to regulate the bankers who have been giving out these loans but they were labeled bullies for trying to stop people with no money from buying homes.

"What troubles me even more is this "why not, you're rich" attitude of entitlement."
This is indeed scary. What ever happened to the pride that comes from earning what you've got by the sweat of your brow and the shame of not earning your keep? I think we've needed more of that "bullying" from our leaders and less coddling. Call it tough love. Unfortunately it seems it's too late.

February 18, 2009 at 8:47 a.m. ( permalink | suggest removal )

create (anonymous) says...

Yes, Observation, I was using my daughter's experience to make the same point about all this bailing out. If people have to be bailed out, how long before they become like the guy in the airport with his entitlement attitude.

However, I don't agree with your idea of Obama letting the market work. Look what happened before when the market was "working." Bush's TARP money had to bail out all the financial houses which were going broke by making bad decisions and leveraging themselves into broker Hell. You can't tell me those cats didn't know what they were doing, and all the while shoveling money into their own pockets hand over fist. These were the organizations responsible for making the market "work" so to speak. They were working it for themselves.

I don't have a problem with the bailout providing jobs of all sorts so people can get back to work. I'm thinking of the old adage about giving a man a fish, he eats for a day; teach him to fish and he will always eat.

And yes, I remember community organizers shaming banks into making loans. That was bad business and they should be ashamed of themselves. If Obama taught them to do that, then he needs to be accused of that too. I'd be the first to. But somewhere along the way no one was saying NO. Just like my daughter and the panhandler. When I scolded her -- and mind you, she is 45 years old and her mother is still scolding her -- I told her she and others like her were responsible for giving panhandlers a reason to set themselves up in crowded airports and hotels. Easy pickings. Learn to say NO!

Banks should have said NO to those cash-strapped, debt-ridden, credit-impaired dreamers; parents should have said no to kids wanting cars and shopping trips and you name its. When you provide the down payment, have a job and good credit, you can buy a house that is within your means. When you earn the money for a car or computer game, you may have it. Etc...If not, where does it stop?

The problem is no one bothered to say no, no, no. Did anybody have a clue about true economic principles? Did anybody stop long enough to say that local home prices must match historical home price ratios or its a bubble? Not the real-estate agents, that's for damn sure. They're to blame too.

In Riverside County, California, for example, you should be able to take median incomes and multiply by 2 or 3 to get the median home price. But no, it got to be 12 to 15 times that and STILL people were buying. That's insanity! So those people are to blame too.

February 18, 2009 at 12:24 p.m. ( permalink | suggest removal )

seriouslyfolks (anonymous) says...

Why did the bankers feel that they could make these high risk loans?

February 18, 2009 at 12:46 p.m. ( permalink | suggest removal )

open_eyes (anonymous) says...

Create, I posted this last fall - I went back & dug up some excerpts again....

And from Investors Business Daily:

Obama, who once represented ACORN in a lawsuit against the state of Illinois, was hired by the group to train its community organizers and staff in the methods and tactics of the late Saul Alinsky. ACORN would stage in-your-face protests in bank lobbies, drive-through lanes and even at bank managers’ homes to get them to issue risky loans in the inner city or face charges of racism.

In the early 1990s, reports Stanley Kurtz, senior fellow at the Ethics and Policy Center, Obama was personally recruited by Chicago’s ACORN to run training sessions in “direct action.” That’s the euphemism for the techniques used under the cover of the federal Community Reinvestment Act to intimidate financial institutions into giving what have been called “Ninja” loans — no income, no job, no assets — to people who couldn’t afford them.

CRA was designed to increase minority homeownership. Whenever a bank wanted to grow or expand, ACORN would file complaints that it was not sufficiently sensitive to the needs of minorities in providing home loans. Agitators would then be unleashed.

Chicago’s ACORN used Alinsky’s tactics against institutions such as Bell Federal Savings and Loan and Avondale Federal Savings. In September 1992, the Chicago Tribune described the group’s agenda as “affirmative action lending.”........

The CRA empowered regulators to punish banks that failed to “meet the credit needs” of “low-income, minority and distressed neighborhoods.” It gave groups such as ACORN a license and a means to intimidate banks, claiming they were “redlining” poor and minority neighborhoods. ACORN employed its tactics in 1991 by taking over the House Banking Committee room for two days to protest efforts to scale back the CRA.

As a former White House staff economist writes in the American Thinker, Obama represented ACORN in a 1994 suit against redlining. ACORN was also a driving force behind a 1995 regulatory revision pushed through by the Clinton administration that greatly expanded the CRA and helped spawn the current financial crisis.

Obama was the attorney representing ACORN in this effort. Last November, he told the group, “I’ve been fighting alongside ACORN on issues you care about my entire career.”.......

continued....

February 18, 2009 at 1:02 p.m. ( permalink | suggest removal )

open_eyes (anonymous) says...

continued...

And from CNS News Analysis:

Under the Clinton administration, federal regulators began using the act to combat “red-lining,” a practice by which banks loaned money to some communities but not to others, based on economic status. “No loan is exempt, no bank is immune,” warned then-Attorney General Janet Reno. “For those who thumb their nose at us, I promise vigorous enforcement.”

The Clinton-Reno threat of “vigorous enforcement” pushed banks to make the now infamous loans that many blame for the current meltdown, Richman said. “Banks, in order to not get in trouble with the regulators, had to make loans to people who shouldn’t have been getting mortgage loans.”

This threat combined with the government backing of Fannie and Freddie set the stage for the current uncertainty, because the “banks could just sell the loans off to Fannie or Freddie,” who could buy them with little regard for negative financial outcomes, Richman said."

===================
And the moral of the story is? I DO believe much of this was well-intentioned - but gone bad. We DO need to do something to give those less advantaged a "leg up". But this was mismanaged and misused.

Guess the whole point is, sometimes the lending institutions weren't given much of a choice, and were strong-armed into at least some of this.

And by who?

February 18, 2009 at 1:03 p.m. ( permalink | suggest removal )

open_eyes (anonymous) says...

And from other articles....

"The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago......

Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing....

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

----------------------

These well-intended rules were supercharged in the early 1990s by President Clinton. Despite warnings from GOP members of Congress in 1992, Clinton pushed extensive changes to the rules requiring lenders to make questionable loans.

Lenders who refused would find themselves castigated publicly as racists. As noted this week in an IBD editorial, no fewer than four federal bank regulators scrutinized financial firms' books to make sure they were in compliance.

Failure to comply meant your bank might not be allowed to expand lending, add new branches or merge with other companies. Banks were given a so-called "CRA rating" that graded how diverse their lending portfolio was......

====================

Sounds like alot of lending institutions had alot of pressure from the gov - Again, I'm not saying they are not at fault - just that they also had pressure on them....

February 18, 2009 at 1:17 p.m. ( permalink | suggest removal )

open_eyes (anonymous) says...

Again, to emphasize to most telling points:

“Banks, in order to not get in trouble with the regulators, had to make loans to people who shouldn’t have been getting mortgage loans.”

Lenders who refused would find themselves castigated publicly as racists. As noted this week in an IBD editorial, no fewer than four federal bank regulators scrutinized financial firms' books to make sure they were in compliance.

Failure to comply meant your bank might not be allowed to expand lending, add new branches or merge with other companies. Banks were given a so-called "CRA rating" that graded how diverse their lending portfolio was......

------------------------------

And now, we have have the fox guarding the chicken house.

February 18, 2009 at 1:20 p.m. ( permalink | suggest removal )

create (anonymous) says...

I wouldn't go that far, open_eyes. But I would accost Obama and ask him about his training sessions with community activists and how he may have affected this same banking/mortgage crisis. It would be interesting to hear his answer, wouldn't it? Why don't you write him? You can you know, through CNN who will pass your letter on to the Whitehouse.

February 18, 2009 at 1:36 p.m. ( permalink | suggest removal )

open_eyes (anonymous) says...

Maybe I'll just send it straight to his Blackberry! - LOL.

Oh, like I've said, I think this was all very well-intentioned, just not thought out well for the future. And, groups like ACORN managed to hijack it and twist and turn it into something beyond what it was originally intended to be. So I'm not putting all the blame at his feet. But part of it, yes.
My main point though, was showing that many lending institutions had pressure on them to do this. From our government. And, they were provided an easy way out, selling off the loans to Freddie & Fannie, who, our wonderfully re-elected Barney assured us was in no way in any peril.

We have turned into a culture that rewards stupidity and condemns common sense & hard work. Not only in our citizens, but in our elected officials as well.

February 18, 2009 at 1:41 p.m. ( permalink | suggest removal )

create (anonymous) says...

seriouslyfolks, those bankers made all those high-risk loans because they knew they could easily pass them on to Wall Street Brokerage firms who dealt with buying loans like that. Those brokerage firms then passed them on to other entities like other countries or American retirement funds or mutual funds who invested in mortgages. All the debt was floating around the cosmos.That's why sub prime loans were handed out like candy at a little kid's birthday party. It got to the point where no one even knew where the original mortgages were located.

For that reason, that one congressman urged homeowners who were to be foreclosed upon to just sit tight and demand to see the original mortgage. If the mortgage couldn't be produced, the debt didn't exist either.

February 18, 2009 at 1:48 p.m. ( permalink | suggest removal )

seriouslyfolks (anonymous) says...

So was/is Freddie & Fannie kind of a government safety net for banks?

February 18, 2009 at 1:58 p.m. ( permalink | suggest removal )

goodoleboy (anonymous) says...

Open eyes,

Seriously, links will suffice just fine, those that will read what you present will follow links, these forums have 0 editing tools and I have a hard time deciphering what you have to say at times.

Now on to what I have to say, I recently read this article direct from Clinton
http://www.cnn.com/2009/POLITICS/02/1...

It goes over exactly what he did as president, and I am not convinced of your argument that he had a large hand in this, if anything I am even more convinced that Bush and a republican Congress mucked up bad by not putting their foot down when Fannie and Freddie DID veer off track from the entity they were supposed to be. If only the Right had been as vocal about matter when they were in power as they are now eh? I am convinced that Obama has does have a working strategy and there are a great deal of people that are much more knowledgeable about this than you and I that agree with him. I am positive that his advisors and experts have all the knowledge and historical data that you and I have access to and more, yet you seem to know better, you can rant all you want at this point, the deal is done, the cards are played, it will work or it won't. If it does not, then someone else will try again in 2012.

February 18, 2009 at 3 p.m. ( permalink | suggest removal )

open_eyes (anonymous) says...

Oh, yes, and I fully expect Clinton or ANY politician to say "yes, I was wrong, the other party had it right" - LOLOL

Well, then here's a funny for ya: On Sept 25, 2008, Bill Clinton said this to ABC news: (also "direct from Clinton")

“I think the responsibility the Democrats have may rest more in resisting any efforts by Republicans in the Congress or by me when I was President to put some standards and tighten up a little on Fannie Mae and Freddie Mac,”

LOL

February 18, 2009 at 3:45 p.m. ( permalink | suggest removal )

goodoleboy (anonymous) says...

I have seen you chime on here time and time again how Clinton had a big part in this, I am not convinced, after reading that article, I read the acts outlined in them, it makes sense, if your gonna toss the gauntlet down on good ole Billy boy, you better be equally as harsh as on Phil Ghram and John McCain for their deregulation of Wall Street in the late 90's. I only wish I could present the articles that were written at the time about that whole fiasco. I'm not saying that Dem's are innocent here, I am saying that Clinton is not near what you make him out to be.

February 18, 2009 at 4:01 p.m. ( permalink | suggest removal )

open_eyes (anonymous) says...

I have never made him out to be the end all of everything. I've said repeatedly Bush had some blame in this, early in his administration HE also was pushing for everyone to get a house. What I AM trying to point out is those who claim it was all Bush, and especially "GOP Deregulation" that caused all this. Just because I am mostly pointing out one side of the coin does not mean that is the only side there is. It just means I've heard plenty putting most or all the blame on one side, I'm trying to point out there are 2 sides to that coin, and alot more on the other side than the Bush-haters like to admit. Read Clinton's statement above again. He said the the Democrats even resisted HIS OWN efforts when he was President to clamp down on Fannie & Freddie.

Now, does that sound like I'm blaming him for everything?

February 18, 2009 at 4:11 p.m. ( permalink | suggest removal )

create (anonymous) says...

seriouslyfolks, this should explain Fannie Mae to you. It's a neat explanation:

http://en.wikipedia.org/wiki/Fannie_Mae

February 18, 2009 at 4:17 p.m. ( permalink | suggest removal )

open_eyes (anonymous) says...

If, for instance, say, Patrick Kelley were to suffer some unfortunate head trauma, and wake up from it seriously "Hannitized", and start anointing Bush for Sainthood, and blaming everything from AIDS to killer bees on Clinton, I'm sure I'd be catching alot of flack on here for my liberal views trying to point out Bush's mistakes.

But, I'm not expecting hell to freeze over anytime soon. What with global warming and all that, ya know. :)

February 18, 2009 at 6 p.m. ( permalink | suggest removal )

seriouslyfolks (anonymous) says...

"In 2003, the Bush administration recommended significant regulatory overhaul of Fannie Mae and Freddie Mac. However, the Democrats opposed that proposal, fearing that tighter regulation could sharply reduce financing for low-income housing, both low and high risk. Under immense lobbying pressure from Fannie Mae in association with Congressional Democrats led by Rep. Barney Frank, the Republican controlled Congress did not introduce any legislation aimed at bringing this proposal into law until 2005.

In 2006, the Federal Housing Enterprise Regulatory Reform Act of 2005 (first put forward by Sen. Chuck Hagel)[15] where he pointed out that Fannie Mae's regulator reported that profits were "illusions deliberately and systematically created by the company's senior management".[16] However, this legislation too met with opposition from both Democrats and Republicans. This bill was passed by the House, but was never presented to the Senate for a vote."

http://www.swivel.com/graphs/show/315...

February 19, 2009 at 8:51 a.m. ( permalink | suggest removal )

open_eyes (anonymous) says...

Create - you should have watched O'Reilly last night (I'm sure you didn't). He repeatedly asked Karl Rove the question that you, I, and others have asked. Basically, even though Bush tried to push thru legistation adding more regulation to Fannie/Freddie, the question was "Why didn't he push harder to make it in the forefront of the American consciousness? Why didn't he bang the drum louder until everyone took notice?" Bill asked the question of Rove repeatedly several times. The answer, although somewhat lame, but yet somewhat believable at the same time, was much what we expected. That in the prevailing political atmosphere at the time, nobody wanted to listen. Nobody wanted to burst the housing bubble. But at least the question got asked, very pointedly.

February 19, 2009 at 10:12 a.m. ( permalink | suggest removal )

create (anonymous) says...

open_eyes, I'm sorry I missed seeing Karl Rove on Bill O'Reilly. That was a very good question he asked. And yes, the answer was lame. "Nobody wanted to listen." That's like saying why cry for help when you're drowning in the swimming pool at a party -- nobody will hear you. So you drown?

There is a vast number of ways one can get the public's attention, especially if you're number one dude in the Whitehouse. All he had to do was call a giant press conference to alert the public. If that didn't work, call another one. He certainly got everyone's attention when it was time to go to war.

All too often, he let his press secretary handle public details. They'd come out, give a few pieces of news, close up shop, and that was it. Very few questions were entertained.

One of these days, the truth will come out that George Bush allowed himself to be controlled by Karl Rove and Dick Cheney. That's why Dick Cheney, even now, is protesting some of what is being said. Yeah, the gentleman protests too much methinks.

Somebody stood to lose a good deal of money if the whistle on the housing crisis was blown too soon. Also, a lot of people were riding that bubble big time. Aswan!

Yeah, sorry I missed it, except I didn't miss Karl Rove weaseling out.

February 19, 2009 at 5:35 p.m. ( permalink | suggest removal )

seriouslyfolks (anonymous) says...

Well of course no one would listen! People haven't listened to Republicans for years. Maybe they have reasons not to listen but even a broken clock is right two times a day. Like I've said before maybe some times things need to be said that might be a little uncomfortable to hear.

February 19, 2009 at 9:32 p.m. ( permalink | suggest removal )

flinthillsmom (anonymous) says...

seriouslyfolks, One of those things uncomfortable to hear might be that it's our fault, us, the American peoples fault. We have been complicit living far beyond our means for a long time. Remember the days when if you didn't have the money you didn't buy something? If you actually lived by that rule then you probably saved money or at least didn't owe anything. But that takes self control and we live in a time of instant gratification. Well, now we use plastic and spend spend spend. We see a nice house and dream of living there until we can't stand it and so go buy it with magic money not realizing that until it's too late. We do a walk through and imagine all the new furniture we will need to make it a wonderful home. Then we spend spend spend on credit cards until they are maxed out. We end up with a huge mortgage and credit card debt resulting in monthly payments difficult to make. OH, and then someone gets ill, loses a job, and there is nothing in the savings account to help because we have spent it all. We are not children in a candy store but act like it and therefore it's our responsibility for the mess we find ourselves in the majority of the time. God gave us brains but it seems we use them very little.

February 20, 2009 at 11:03 a.m. ( permalink | suggest removal )

seriouslyfolks (anonymous) says...

flinthillsmom
You are right on. I'm in my mid-thirties and I honestly can't remember the days when if I didn't have the money I didn't buy something. This was all I knew. I had to learn the hard way and am paying for it now. I wish some one would have given me more "hard" talks. It's never too late to learn, it's to bad we have to learn things the hard way sometimes.

February 20, 2009 at 11:24 a.m. ( permalink | suggest removal )

open_eyes (anonymous) says...

Create, not only did alot of people stand to lose alot of money, but alot of politicians stood to lose as well. So, while I agree it was a lame answer, I also stated that it was somewhat believable at the same time. Let's look for a minute at a possible outcome: Bush pushes thru tougher legistation/oversight, the Dems scream bloody murder that the fat GOP is making it harder for everyone to own a home, people start complaining that their neighbor got these deals before and now they can't. The housing bubble still comes to a head, but not nearly as bad as it has, since it was partially nipped in the bud before it got completely out of hand. At least not to the point that the gov bails the banks out to the tune of $700 billion. Who do you think the public will view as the bad guy?
Lose-lose proposition for the politicians. No, wait, scratch that. Turned out just fine for Barney Frank & company.

February 20, 2009 at 1:22 p.m. ( permalink | suggest removal )

neighbor (anonymous) says...

I was given a 100% 30yr loan in 1989 for a house, nothing down, high interest variable rate mortgage. At that time, 11.5% was a good rate. We had only been married one year, didn't make much money, nor did we have much in savings. High risk? Indeed it was on the bank's part, as well as for my wife and I as we were on shakey financial ground.

We both had good credit, and worked responsibly to pay our bills on time or early if possible. When interest rates started down, I refinanced the mortgage and went to a fixed rate 15yr note. When we bought land(paid for it from savings), built a new home, and sold the original house, we used the equity we had established as a 30% downpayment on the new home.

Good faith risky home loans work and benefit responsible, hard working citizens.

The problem is and always has been lazy, irresponsible, and assistance dependent people abusing/scamming the system.

February 20, 2009 at 3:21 p.m. ( permalink | suggest removal )