Posted by: distributorcap | February 28, 2009

Blame It On The Bossa Nova

Last week, Time Magazine published their ranking of the 25 People to Blame for the Financial Crisis. Here is their list:

1. Angelo Mozilo 9. Frank Raines 17. David Lereah
2. Phil Gramm 10. Kathleen Corbett 18. John Devaney
3. Alan Greenspan 11. Richard Fuld 19. Bernie Madoff
4. Christopher Cox 12. Herb Sandler 20. Lew Ranieri
5. Amer Consumer 13. Bill Clinton 21. Burton Jablin
6. Hank Paulson 14. George W. Bush 22. Fred Goodwin
7. Joe Cassano 15. Stan O’Neal 23. Sandy Weill
8. Ian McCarthy 16. Wen Jiabao 24. David Oddsson

25. Jimmy Cayne

If you do not know who some of those people are or what they did, I will list at the bottom. But more importantly, lets look at some of the most ridiculous entries/rankings on the list

A. George W. Bush at #14 – one can argue many ways to what extent Bush is responsibility for this crisis (I put it pretty high), but ranking him #14 just proves what a bunch of hacks or morons (or both) the folks at Time Magazine are. Bush actually did a few reasonable things (signing Sarbanes-Oxley), but they are far outweighed by the idiotic and greedy policies he pushed/approved that ultimately threw this economy into the toilet (can we start with a $1 trillion non-budgeted, Mastercard funded black hole in Iraq). Second, how the hell did the brainiacs put Bush behind Paulson (#6) – Bush hired Paulson, Bush was Paulson’s boss, Bush (allegedly or was supposed to) approved anything Paulson did (and if he didn’t move him to #1 immediately). From Jan 20, 2001 to Jan 20, 2009 Bush was in charge – and if wants to be like Harry Truman (good luck with that!) – the buck stops here.

B. Phil Gramm at #2 – actually he should probably be #1. Rank him atop the leader board just for calling Americans a “bunch of whiners about the economy” last July, two months before everything tanked. But more than any one move that triggered this crisis – it was the billion$ of dollar$ that banks and brokerage firms “invested” (or rather risked) in Credit Default Swaps (CDS). Without explaining how complicated CDS are – you might as well throw your entire fortune on the pass line at the craps table and expect to roll a seven 20x in a row. Gramm snuck into the 2000 Commodity Futures Modernization Act a provision that exempted over-the-counter derivatives like credit-default swaps from regulation by the Commodity Futures Trading Commission. Since virtually no person in Congress (or America) had a clue what a CDS did – he was literally getting away with highway robbery. We are all paying now. Gramm was also instrumental in repealing the Depression era Glass-Steagall Act. This act kept banks and brokerage firms separate. In other words, if Glass-Stegall was still the law, it would not have allowed Citigroup to get into the high risk collaterized bond business. They would have remained a boring bank making a steady profit. And they wouldn’t be virtually owned by the US Govt today.

In my mind Phil Gramm should be in debtor’s prison holding some very slippery soap.

C. They have Clinton on the list. Yes Clinton signed Gramm’s poisonous Commodity Futures Modernization Act – so he must shoulder some blame. But you know someone is kissing the ass of the right when they mention Clinton’s juggling of the Community Reinvestment Act – in other words – blame the poor people for taking out mortgages they couldn’t afford.

When are wingnuts like Larry Kudlow going to get a brain (maybe after the 33rd line of coke he snorts). No one twisted the banks arms to lend money to people who could not afford it. Yes the CRA had some policies that might have cause stress in the mortgage marketplace – but not nearly enough to bring down the entire banking system. Anytime I hear anyone blaming the poor people for this crisis (like a certain douchebag morning host) I want to…..

D. Burton Jablin – what the hell is the programming chief at Scripps-Howard (owner of Home & Garden TV) doing on the list? Blaming recent cable television programs (that had about 4o people watching) for glamourizing real estate is a bit much. If you want to blame television for getting us into this mess, I suggest we go back a bit further – to January 12, 1981 – the day ABC premiered Dynasty. For nearly 10 years, John Forsythe, Diane Carroll and Heather Locklear told us how great and how important it was to be rich – and that nothing else mattered other than money. More people probably watched Joan Collins and Linda Evans catfighting in the lily pond then watched the entire season of My House Is Worth What? on HGTV. Dynasty spawned a whole slew of if-you-aren’t-rich-you-suck television shows that are still on the air in some form. If you want to blame TV programs for this crisis, then you might as well just Blame It On The Bossa Nova.

E. If you have Clinton on the list – where is the vaunted St. Ronald of Reagan? Reagan came into office only 8 days after Dynasty premiered (how coincidental) and sold American a bill of goods that we are still paying for – that you can have something for nothing. Reagan told America that we could have it all – things, services and the easy life – and it would not cost a thing – as a matter of fact, we will even cut your taxes. To Reagan, there was NOTHING a tax cut for the rich couldn’t do to make all the common folk have a great life. I guess that worked out well until the house of cards came tumbling down. And Ronnie also taught us to hate the government and that corporate America was good. If you ask me, Reagan’s complete snow job on America should actually be the #1 reason we are in the economic hole we are in. Not so much for the things he did – a lot of those got changed and altered over the years, but for the way the great communicator convinced this country that we are the chosen people entitled to have it all – and not sacrifice one single thing.

Fuck you Ronald Reagan.

Speaking of cat fights – this week was that annual cockroach gathering called CPAC. This is the place that has vermin like (and including) Ann Coulter, Rush Limbaugh, Mike Pence, Mike Huckabee, Joe the Plumber, Michelle Malkin and a whole slew of other vile-filled douchebags spewing out their messages of hate. This year must of have been a barrel of fun – public kumbayas with each other and private cat fights blaming each other for the complete drubbing they got in the ’08 election and the continued freefall in the polls. Here are some of the catfights going on:

Here are what some of the other people on the list did to insure people not-like them would suffer

  • Angelo Mozilo was the head of Countrywide, who made a lot of bad loans (a lot)
  • Joe Cassano was the head of AIG’s financial products unit which sold Credit Default Swaps (a lot of them)
  • Ian McCarthy runs Beazer Homes, which lied to lenders about buyer’s qualifications
  • Frank Raines ran Freddie Mac (into the ground)
  • Kathleen Corbett ran Standard & Poor’s – which gave all these firms AAA ratings (and they say colleges have grade inflation)
  • Richard Fuld ran Lehman Brothers and basically stole $500 million for himself
  • Herb Sandler ran World Savings, who made a lot of bad loans and sold them off. Then he sold World Savings to Wachovia which of course was forced to sell themselves
  • Stan O’Neal ran Merrill Lynch and left the company saddled with billions in debt, but he left with $140 million+
  • Wen Jiabao is China’s Finance Minister – China has funded a lot of our government’s debt. They have around $1.7 trillion in US obligations. Pretty soon they will take possession of the Statue of Liberty and put in on eBay for sale.
  • David Lereah is the chief economist of the National Realtor Association. Said the housing boom would never end. Ha!
  • John Devaney – a random hedge fund manager Time picked – they could have picked any of them, they all stole.
  • Lew Ranieri – one of the initial developers of mortgage securitization. You can blame him for creating these instruments, you cannot blame him for their abuse
  • Fred Goodwin – head of Royal Bank of Scotland. Why him? How about just generic Bank CEO.
  • Sandy Weill – bought all the pieces that made Citigroup a group. Left and still charges things like plane trips to the bank.
  • David Oddsson – Prime Minister of Iceland – turned the happiest people on earth to the saddest as he leveraged his entire country.
  • Jimmy Cayne – CEO of Bear Stearns – liked to golf a lot while his managers raped America.


  1. There is a lot of fuckery in this post. I’m with you on the Ronnie thing. Preexisting greed was transformed into something altogether more insidious, but equal blame must be tossed on the Murkan people for, er, buying that crap. Though he DID single-handedly defeat the commies while tied up, blindfolded, and dumped over Niagara Falls.

  2. Phil Gramm should not be in a debtor’s prison. He should be drawn and quartered by four very slowly moving tractors.If the 8th Amendment prohibits that, then let’s go with a firing squad, live on CNBC.

  3. I am with Comrade, but do it as a pay per view and get some money back into the system!

  4. When I was in high school, I lived with my parents in a picturesque little suburb outside of San Antonio called Helotes.Known for Floore's Country Store, where Willie Nelson got his start, it's a pretty little community at the foot of the Texas Hill Country.Imagine my horror when my business partner told me today that Phil Gramm lives in Helotes.Yeecch.I'd rather have Mariyln Manson buy the house next door. Or Charlie Manson.I blame the following stooges for the fucked up mess we're in:-Ronald Reagan-Phil Gramm-Anyone named Bush-Newt Gingrich-Any CEO of any bailed out corporation-Rupert Murdoch-Anyone who ever voted for any Republican-Ed McMahon & Dick Clark*-Rush Limbaugh-Anyone who ever watched Fox News for more than 10minutes-Ted Neugent**-Anita Bryant****Fucking sweepstakes crooks who bilked a zillion old people out of their dough**For being a dick in general***See **

  5. Scepticus concurs.

  6. Ronald Reagan should be #1 on any list. I agree that he layed the foundation for the current mess and even now, Voodoo economics is still the creed of the Republican Party. I would love to see the Republicans repudiate Reagan the way the UK Conservatives repudiated Thatcher, but there is no sign of that.

  7. And I don’t give Reagan much credit for the fall of communism. It was falling apart under its own contradictions. If Reagan hadn’t intensified the arms race, the USSR probably would have evolved into a Chinese style hybrid economy.

  8. Reagan should be #1, he’s the biggest piece of pond scum that ever slithered out of the swamp.I concur with the list of Karen Zipdrive. That pretty much says it for me, too.

  9. Karen Zipdrive said it for me. Someone on another blog, I don’t remember whose, said that we should empty Guantanamo and send these bastards there. I concur.

  10. All 25 need to be hanging from lamp posts. Their inherit belief that the rules didn’t apply to them has screwed the country.

  11. i think karen got it right.

  12. Randal – there is more crap poisoning the blog than normal. And there is NO peggy noonan or Karen HughesComrade eb – you are right, gram should be a reason to get rid of cruel and unusual punishment]\Skyler – I would actually pay to see any of them. Kz – you left out dick cheney. Bad bad bad LOLAnonymous – 8-)Toujou – Reagan is really the reason we are in this mess – he made people hate govt, and for what reason – to make his friends richToujou – I am so with you – I HATE when people (like ass lickers Pat Buchanan and Joe S – ) give Reagan credit for ending the cold war – the Russians were killing themselves, much like we are doing nowGrandpa – Reagan pond scum? Stop insulting pond scum?Jadedj – I think we should send all ceos and bush (with soap) to guantanamoBeach – those 25 and the 25,000 they didn’t mention. All in gitmo – one bathroomNonnie – 😎

  13. How about…no bathroom!

  14. Hi Cap;I hope Obama doesn’t end up on this list four years from now.The mess he is in is not his fault, but he is in a position to hopefully alleviate it.When I read about the troop pullout going to take another 18 months with a residual force to stay of 50,000 I wonder if he isn’t another like the 25 above.I would have liked it a lot better if he kept his promise and told Iraq, get it together we are out of here in entirety in six months.The list above gives us a history of what not to do. Is anyone listening?

  15. St. Ronnie should be first on the list, or second if you put Alan Greenspan first. I knew time was a bunch of idiots, my precious colleagues, but I didn’t know they were part of the Reagan cult.

  16. Who can we blame for this economic downturn–the rich and all the fucking assholes they bankrolled into office. That just about covers it. Oh and Kz has a really good list too.

  17. Great post. I was pretty stunned seeing Clinton ranked ahead of Bush. I suppose if the piece was a total right wing hack job we would’ve seen Chris Dodd and Barney Frank up there too.

  18. A ridiculous and flawed list. Here is the corrected top five:1. George W. Bush2. Alan Greenspan3. Ronald Reagan4. David Stockman5. Hank PaulsonLet’s be perfectly clear about several things. Bush’s two tax cuts during wartime helped bleed the U.S. Treasury dry and led to massive deficit spending. Many people mistakenly think the cost of the Iraq war came out of the Pentagon’s budget. It did not. The cost of the Iraq war was separate and came in the form of appropriations. This was borrowed money obtained in large part from China and Japan.Alan Greenspan’s gibberish before the Congress should’ve been a red flag to members scratching their heads in disbelief each time he crawled to the US Capitol and received the attention usually reserved for movie and rock stars. But it was clear our elected lawmakers were afraid of appearing stupid. A few years ago, David Stockman gave an interview with The Nations William Grieger where Stockman candidly admitted Reagan had such blatant contempt for all Federal entitlement programs such as Medicare, Social Security, Medicaid, and regulatory agencies like the EPA and the FDA, believing the only expenditure of Federal dollars should be on national security and the Pentagon that the two men devised a long term approach of ending these programs and agencies by setting the country on a path of deficit spending that would one day break the bank, making it impossible to do anything except the military. We’re almost there now, kiddies.

  19. There is a glaring omission in this post and in Time Magazine’s list. That being I don’t see one member of the MSM or even the MSM itself. From the same people who were the biggest cheerleaders for the mess in Iraq, not once is Jeff Zucker or any of his on air mouthpieces(or any other media outlet) for touting the never ending economic boom. Save for the Wall Street Journal which was onto Fannie and Freddie’s major problems over two years ago, there was almost no coverage or investigation of what was involved with the prosperity and what it was built upon for the past decade or so.Of course, since GE owns NBC, this is one investigation you’ll not likely see. Now all they can do is tout the “depression” and take no responsibility for their own piece in it. Perhaps this is because they’re now so depressed over their own 401k’s sinking to new depths filled with GE stock that just wiped out its dividend.Instead of just droning on about how the world is about to end, it would be terrific to see some truly level-headed and balanced reporting from those we depend on to give some form of truth.The first step might be looking in the mirror and accepting that they were part of the problem.JAS

  20. Jadedj – you know, no bathroom and only one slice of bread and watered down gruel soupIch – the right has already labeled obama as a socialist/communist. I don’t understand – or maybe I do – when someone enters the “office” – all things change — we truly do not have a working government for the people. Trust me – we will NOT even be down to 50,000 troops by august 2010News writer – Reagan and bush 43 set the tone, greenspan., gram and cox set the policies – the rest of those clowns just took advantage of themLib – watching the douchebag pundits on tv is infuriating me – they cannot deal with the fact their buddies and they themselves are being blamedBubs – well acc’d to joe s – barney frank is the SOLE reason for this messChristopher – I go 1. bush 2. Reagan 3. gram 4. greenspan 5. cox – the rest of them are all tied – oh and add Fox News. Next post I do is why we bother to have a budget when it is obviously meaningless. Jas – funny you mention that – right after I posted it I thought – where is the media? But do not delude yourself to thinking you will truth from media. Cnn put rush on the air last night – too bad the world didn’t have a blackout

  21. We’ve just kind of become a nation of douchebag whiners!

  22. d-cap, your knowledge of the financial world — based on this post — is limited to nonexistent. I’ll bet you had never heard of Herb Sandler before 60 Minutes performed its hatchet job on him and his wife, who together, ran Golden West Financial.The bank’s lending philosophy was simple — lend money only to creditworthy borrowers able to make hefty downpayments.If all lenders had the standards of the Sandlers, there would be no mortgage/housing problem today.

  23. slappz – proving once again what a complete idiot you are – the sentence on Sandler was lifted directly from Time Magazines website – if you have a beef with their description of the sandlers, talk to them.

  24. d-cap, the source of the statement about the Sandlers is irrelevant. The key issue is the fact that it is false.There have been some shady bankers operating in the US. But the Sandlers were not among them.This is something I know from professional experience, which includes contact with them. As I said, if all bankers had the standards of the Sandlers, there would be no bank crisis.Just so you know — the US started down the slippery slope of banking problems in 1977 when the Community Reinvestment Act was passed. You can thank Jimmy Carter for that one. For the following three decades, Congress tinkered with the problem that was created by the CRA, making the problem worse with each step. And here we are.

  25. slappzi will give the Sandlers – i dont know if they were good or badbut i will not even bother to comment on anyone who blames the CRA for this crisis – what a fucking crock of shit – what a right wing tool you are – that is right – BLAME The poor, not the greedy bankers who issued the loans to people that shouldnt be getting and sold them to alleviate their risk and then the CDS to “protect them”anyone who blames the CRA for this mess know absolutely NOTHING about what went wrong – the CRA is microscopic in scope to the what caused the mess.i guess phil gramm sneaking in the Commodity bill a lack of regulation on CDS had nothing to do with the mess or the dismantling of glass-steagall – i guess the poor people caused that too.i thought you knew some stuff – but you are like the rest of the right wing – hate and blame the poor no wonder class warfare is on the way

  26. BRAVO ,DC, BRAVO!!!!

  27. d-cap, here’s why the CRA was the first step on the slippery slope.It allowed people with lousy credit, poor job prospects and minimal downpayment money to buy homes.The original legislation was aimed at “helping” blacks and hispanics.The part you and most others misunderstand is that this legislation opened the door for Anyone and Everyone with bad credit, a lousy job and no downpayment money to obtain a mortgage.It’s not that minority borrowers are the chief culprits in the mortgage crisis. The chief culprit is the legislation that opened the door — which was the CRA. Warren Buffett mentioned this issue in his latest letter to his shareholders. He stated that it is absolutely necessary for lenders to require at least a 10% downpayment when buying a house.In short, when a person can buy a house with 100% Other People’s Money, he’s speculating.The buyer may believe he is a conscientious citizen who merely wants a home. But a house purchased with 100% borrowed money is a massive speculation and a terrible risk for all parties.

  28. slappz if you really believe the CRA is the root of the problem, then you really know a lot less then i ever thought.while the CRA made have made the banks make some loans they might not want to have (in relation to the ones they CHOSE TO MAKE THEMSELVES) – the CRA did not force the banks to make all the subprime loans they ended up making. the CRA did not force the banks to sell the mortgages, the CRA did not force Lehman bros to gamble with CDS, the CRA did not force people like Stan O’Neal and Fuld to make ungodly amounts of money. The CRA did not force mortgage brokers to tell people making $100K a year to take out $1MM mortgages, the CRA did not end the Glass Steagall act and let banks get into the investment bank game, the CRA did not elect that cocksucker asswipe Phil Gramm, the CRA did not make people take mortgages they couldnt afford, the CRA did not make Cayne of Bear Stearns go golfing 3 days a week while his staff made risky investments. the CRA did not cause this country to be sitting in a place where 2% of the population controls 8 billion percent of the wealth (obviously i am exaggerating, but you get the point)the CRA sure sounded like your HERO george bush’s call for an ownership society (except the poor, they dont count in the Rich White WASP arrogant Republican world)sure the CRA probably forced a few bad mortgages. but the banks CHOSE THEMSELVES to make loans they shouldnt have. no slappz, the CRA did not cause this crash – that would be unbridled American capitalism at its worse and the complete mismanagement of the govt by a Douchebag President called Bush – that would be an immoral and illegal war that is costing $800 billion or more – NO PAID FOR ON THE BUDGET, that would be out of control spending by all americans to live beyond their means and or course good old fashioned greedbecause Richard Fuld lives much better on his $500 million he STOLE from Lehman than the $400 million. i guess mrs fuld had to suffer with 9 jaguars instead of 10yep, keep blaming the poor and the CRA you know i dont believe in bailing anyone out. no one forced people to buy homes just makes you look more pathetic

  29. You had me at the title ….

  30. The falsehoods about the Community Reinvertment Act (CRA) causing the current financial crisis have been repeatedly and thoroughly debunked, The Wall Street Journal has run several articles, including statements by at least 2 different Federal Reserve Board governors (Randall Kroszner and Elizabeth Duke), where extensive studies have shown that loans made under the CRA have lower default rates than other similar loans. These studies were completed and released before Obama was elected, so don’t even try to claim they are political lies. Also, the Fed does an excellent job of historical research. This makes sense. The only loans which would qualify for CRA credit would be those which were bank originated. The worst loans with the loosest underwriting standards were done by mortgage companies, which had no obligations under CRA as they were not covered by the act. But this won’t stop this wingnut talking point from resurface. I give it 6 months before we hear this again.

  31. CRA was enacted in 1977. The sub-prime lending at the heart of the current crisis exploded a full quarter century later. In the mid-1990s, new CRA regulations and a wave of mergers led to a flurry of CRA activity, but, as noted by the New America Foundation’s Ellen Seidman (and by Harvard’s Joint Center), that activity “largely came to an end by 2001.” In late 2004, the Bush administration announced plans to sharply weaken CRA regulations, pulling small and mid-sized banks out from under the law’s toughest standards. Yet sub-prime lending continued, and even intensified — at the very time when activity under CRA had slowed and the law had weakened.Second, it is hard to blame CRA for the mortgage meltdown when CRA doesn’t even apply to most of the loans that are behind it. As the University of Michigan’s Michael Barr points out, half of sub-prime loans came from those mortgage companies beyond the reach of CRA. A further 25 to 30 percent came from bank subsidiaries and affiliates, which come under CRA to varying degrees but not as fully as banks themselves. (With affiliates, banks can choose whether to count the loans.) Perhaps one in four sub-prime loans were made by the institutions fully governed by CRA.Most important, the lenders subject to CRA have engaged in less, not more, of the most dangerous lending. Janet Yellen, president of the San Francisco Federal Reserve, offers the killer statistic: Independent mortgage companies, which are not covered by CRA, made high-priced loans at more than twice the rate of the banks and thrifts. With this in mind, Yellen specifically rejects the “tendency to conflate the current problems in the sub-prime market with CRA-motivated lending.? CRA, Yellen says, “has increased the volume of responsible lending to low- and moderate-income households.”Yellen is hardly alone in concluding that the real problems came from the institutions beyond the reach of CRA. One of the only regulators who long ago saw the current crisis coming was the late Ned Gramlich, a former Fed governor. While Alan Greenspan was cheering the sub-prime boom, Gramlich warned of its risks and unsuccessfully pushed for greater supervision of bank affiliates. But Gramlich praised CRA, saying last year, “banks have made many low- and moderate-income mortgages to fulfill their CRA obligations, they have found default rates pleasantly low, and they generally charge low mortgages rates. Thirty years later, CRA has become very good business.”It’s telling that, amid all the recent recriminations, even lenders have not fingered CRA. That’s because CRA didn’t bring about the reckless lending at the heart of the crisis. Just as sub-prime lending was exploding, CRA was losing force and relevance. And the worst offenders, the independent mortgage companies, were never subject to CRA — or any federal regulator. Law didn’t make them lend. The profit motive did.From The American ProspectI would like to see just one statement from the President of CEO of any of the failed banks and investment firms that blames CRA for the crisis.Just one. I see it from Phil Gramm and Fox News, but nothing from Lehman, AIG, Citi, BofA, WaMu or Wachovia.

  32. thanks toujours! it is quite apparent slappz is on the karl rove faxed talking points list — anyone who can actually say that the CRA is a reason for the economic mess – needs to take a hard look at the world of economics.i truly appreciate your work and efforts in supporting me!

  33. d-cap, toujourdan, you guys seem to have zero capacity to see the obvious –As I stated, it was NOT minority borrowers receiving CRA loans who accounted for the magnitude of the problem — it was the precedent set by the CRA.The CRA opened the door to mortgage lending to people with bad credit, lousy jobs and no downpayment money. CRA loan recipients were people lacking the usual forms of creditworthiness.Subprime loans — which were offered by only a few banks — were brought to life by the low standards of the CRA.However, before mortgage lenders exploited the CRA/Low-Documentation/No-Documentation opportunity, banks like Greenpoint in NY City were highly successful at lending money in this fashion.However, when Greenpoint extended a subprime loan to a borrower, the borrower was required to cough up a huge downpayment — typically 40% for real estate.Lots of borrowers with cash businesses were willing to provide the high downpayments and pay a higher interest rate in exchange for no questions asked. Greenpoint had no default problem because it protected itself against the usual loss experience for its type of lending.Meanwhile, toujourdan, your comment claimed that subprime lending came 25 years after the 1977 CRA. That claim is totally false.Subprime lending has been a standard aspect of credit since there’s been a credit system in this country.Many companies have been in the subprime business in the US over the last hundred years.Here’s some names for you — Beneficial Finance. Household Finance and Commercial Credit. There are/were many more.The concept is known as Asset Based Lending — the same form of lending practiced by your local pawn shop.Bottom line, the Government encouraged lending to people with lousy credit. The Government thought it was more important to ensure that anyone who wanted a house would find a willing financier rather than looking ahead to the default problem that is inevitable when the law prohibits the application of reasonable credit standards.By the way, the reason CRA faded was due to the fact that people who would have borrowed through that program were instead, borrowing a lot more money from mortgage brokers.Will you accept a return to sane lending standards for real estate purchases?

  34. slappz it is you who cannot see the obvious – the CRA had a microscopic affect on the this problem. unbridled american capitalism, lack of regulation and oversight and especially greedy wall street assholes are the root cause of the problem. and toss in bad govt management – under reps and demsif you want to think CRA set a precedent – go ahead – NO ONE FORCED mortgage brokers to make bad and risky loans – NO ONE, only their greedi should have known you seek a fight and to be opposing for the sake of opposing – i dont know why i bothered to respond. i wont againi am done with you and your comments — comment all you like, NO RESPONSE from me anyone who wants to blame the CRA and therefore the poor for this mess is completely deluded

  35. Would there have a been a mortgage crisis if all borrowers were required to have good credit, a decent job and a decent downpayment?What do you think?

  36. d-cap, toujourdan, you guys seem to have zero capacity to see the obvious –Says the pot to the kettle.Bottom line, the Government encouraged lending to people with lousy credit.True. But this wasn’t because of CRA. CRA prohibited the banks from redlining neighbourhoods and was weakened under the Bush Administration. The housing bubble was because of the deregulatory policies of Alan Greenspan, the Bush Administration and greed by mortgage companies. You are conflating two completely different things here. You have provided no evidence that the CRA set a precident for subprime crisis other than saying so. Meanwhile, toujourdan, your comment claimed that subprime lending came 25 years after the 1977 CRA. That claim is totally false.Go back and re-read what I wrote for comprehension this time. Maybe English isn’t your first language. The sub-prime lending at the heart of the current crisis exploded a full quarter century later. In the mid-1990s,Now what does this say? It doesn’t say that there was no subprime lending. Would there have a been a mortgage crisis if all borrowers were required to have good credit, a decent job and a decent downpayment?This has nothing to do with the CRA. This is completely non responsive to your earlier point.

  37. toujourdan, you wrote:”CRA prohibited the banks from redlining neighbourhoods and was weakened under the Bush Administration.”At the same time CRA was enacted — 1977 — the secondary market in mortgage securities came to life. Till then a bank that underwrote a mortgage kept the mortgage on its own balance sheet until the house was sold or the mortgage paid off. When secondary markets — trading markets for mortgages — opened, a bank was able to underwrite a mortgage in a crappy neighborhood, collect the underwriting fee and sell the mortgage to another bank or investor.Securitization started around the same time. Thus, between these two major changes in the mortgage market, there was no longer a reason for banks to redline. This term is an anachronism from the past and is no longer relevant, as price inflation of real estate over the last decade has shown. Thus, the CRA offered borrowers very little almost from the start. But it STARTED the country on the slippery slope of giving mortgages to people with bad credit, lousy jobs and no downpayment money.Moreover, the chief reason issuance of CRA mortgages slowed over the years was this: When the would-be homeowners with lousy credit came to the bank, the bank sent them to an affiliated mortgage company that would underwrite mortgages for them.Thus, the bank got a piece of the action, the customer got his mortgage and CRA requirements in the neighborhood were met. Then the mortgage was sold into the securitization market. Meanwhile, if you want to learn about the CRA, read the original material on the FDIC website. Skip the interpretations by the nitwits with an ax to grind.Standards were loosened a few times — during Clinton’s administration. Why? To allow Fannie and Freddie to add CRA loans to their portfolios.Again, setting a precedent for accepting loans made to people with bad credit, lousy jobs and no downpayment. Another step on the slippery slope. I ask you again — would we have a mortgage mess today if ALL borrowers had been required to have decent credit, a decent job and a hefty downpayment?

  38. Let me put this into really simple language. If this doesn’t work I will accept D-cap’s wise advice that some people are just too saturated with propaganda to think for themselves.In order to prove a causal link between CRA and the subprime mortgage mess you would have to prove one of two things: 1) That subprime mortgage lending originated around the time the CRA was passed in 1977, or 2) That subprime lending somehow spiked soon after the passage of the CRA, which would be in the 1978-1980 date range. You have failed to prove either. Where is the evidence? Just stating something is true doesn’t make it so. At various times in history the government has encouraged banks to relax credit restrictions in order for othersise non-qualified people to buy homes. In recent history, it happened after WWII when veterans returned from overseas duty and again during the Vietnam War. Lending to people who wouldn’t qualify didn’t start with CRA. It simply isn’t a precedent. Read your history.The modern boom in subprime mortgage lending started in 1993, a full 16 years after CRA was passed. While both types of loans were given to people to subpar credit histories etc., the terms and conditions of subprime mortgage lending and CRA were completely different. CRA loans relied on documented income, work and credit scores. The lending criteria were relaxed, but they existed and were set by bank policy. Subprime mortgages often didn’t have any lending criteria at all. What caused the subprime mortgage crisis were two things: 1) the terms and conditions of the loans themselves; and 2) that these loans were packaged with regular loans and sold between banks. Neither one of these things originated with CRA.In 75% of subprime lending, the terms and conditions gave the borrower a low initial interest rate that reset to a much higher rate after a few years. So those borrowers who could afford and were paying their mortgage payments on time found that their monthly payments were often doubling or tripling. This made the payments unaffordable and drove them into default and foreclosure. CRA loans never had that time-bomb embedded in them.These ticking time bombs were wrapped up with conventional loans and sold from bank to bank in mortgage-backed securities. While these subprime loans originated with the greedy mortgage companies, the banks found themselves holding the toxic assets just at a time when the teaser interest rates reset and the borrower defaulted. Packaging up mortgages and trading them did not originate under CRA.CRA did not encourage banks or anyone else to lend irresponsibly. I know your CPAC Masters don’t want you do a little research for yourself but it’s really simple with the internet nowadays. What you have written has been debunked in numerous places.Here is Business Week’s Article: Community Reinvestment Act had nothing to do with subprime crisis and subprime lending and Subprime Mortgage Crisis Yes. The last two are Wikipedia but there are links at the bottom to the original sources. I would advise you to use them. It’s not all that hard. Just click.Yes, government encouraged the housing bubble through irresponsible lending, but this originated under the Bush Administration, not in 1977. There is no empiracal evidence to suggest causal link between the passage of the CRA and subprime mortgage boom. The lending procedures and terms and conditions of mortgages under CRA and with the subprime were quite different. Nice try though.

  39. Bravo, toujoursdan, bravo!It is sad that some people JUST DON’T GET IT!

  40. Thus far: toujoursdan – 4 no_slappz – 0

  41. toujoursdan,With respect to knowing one's history, well, you better hit the books.A few points from the 70s.1970 Congress charters the Federal Home Loan Mortgage Association (Freddie Mac) to provide capital to finance U.S. housing. Bank Holding Company Amendments (BHCA) of 1970…The BHCA of 1956 left a large loophole with respect to non-bank activities. Growing political concern about the growth of conglomerate enterprises lead to these amendments. The Bank Holding Company Amendments (BHCA) of 1970:Require Federal Reserve Board approval for the establishment of a bank holding company Liberalize non-bank activity restrictions. 1974The FDIC deposit insurance limit increases from $20,000 to $40,000 because of inflation. 1975Maine becomes the first state to allow the entry of out-of-state bank holding companies. Home Mortgage Disclosure Act of 1975 (HMDA)– This act:Encourages banks and S&Ls to lend mortgage money in low-income areas Requires banks and S&Ls to document their lending practices. 1976Several banks license VISA.1977Inflation accelerates when President Jimmy Carter places emphasis on restoring economic growth instead of controlling inflation.Community Reinvestment Act (CRA) of 1977 — This act:Directs banks and S&Ls to meet the credit needs of their communities, including low-income areas. Requires the FDIC to examine non-member state banks for CRA compliance. 1978Iranian Revolution occurs, the Shah is deposed, Middle East oil production is cut, and international oil prices soar. Interest rates on securities surpass the rates that banks and S&Ls can pay. Financial Institutions Regulatory and Interest Rate Control Act of 1978 — This act:Establishes Federal Financial Institutions Examination Council (FFIEC), which includes the Federal Reserve Board (FRB), the Office of the Comptroller of Currency (OCC), the FDIC, and the Federal Home Loan Bank Board (FHLBB) Provides for the assessment of civil money penalties against banks and individuals. The FFIEC begins operations in 1979. 1979President Jimmy Carter appoints Paul Volcker to the chairmanship of the Federal Reserve Board (FRB). Inflation is over 13 percent, and Volcker is committed to reducing that figure. Volcker concentrates on controlling the money supply instead of keeping interest rates low. Unemployment reaches 11 percent, and the prime rate reaches 21.5 percent during Volcker's tenure. Volcker is chairman of the FRB until 1987.toujoursdan, your claims about the Veterans Administration Mortgage Loan program made it clear you have no understanding of the subject. The VA plan allows virtually every veteran — peacetime or war years — to obtain a mortgage GUARANTEED by the government.The program is the opposite of the CRA. The VA plan relieves the banks of default risk because the VA plan gives a Credit Default of its own to the bank underwriting the mortgage.These loans have been issued since the 1940s. During the post-WWII years, a huge influx of veterans were suddenly dumped into the civilian economy. A far smaller group followed after the Korean War. But there was almost no impact on commerical markets from people who served during Vietnam because of the nature of service during those years. That aside, you also have no knowledge of how banks reacted to CRA lending, or why.The CRA empowered activist groups to intrude on bank business, such as mergers and expansions. The groups would claim too few mortgages were made in poor neighborhoods, which was the basis for blocking bank activity.Banks created special neighborhood funds that gave money to some borrowers, enabling them to qualify for mortgages under CRA guidelines.Meanwhile, as I said, the Secondary Market for Mortgages was created around 1977. That meant banks could originate a mortgage, and for the first time, sell it like a bond, to another financial institution. Thus, they were no longer stuck with loans in bad neighborhoods. But, buyers understood the risks, which were reflected in the bid/offer prices of these mortgages.Meanwhile, the banking industry was much different in those days. There were more than 10,000 banks and 3,000 Savings & Loans in those days — and most were small. State laws put severe limits on branching.Bottom line, mortgage activity was slow from 1977 to 1981 when Adjustable-Rate Mortgages caught on. Though they had been available in the 1970s, their advantage went unrecognized until interest rates peaked in the early 1980s.The changes in the banking industry and an improving economy led to mortgage growth during the 1980s, an era that was hit with the Savings&Loan Crisis, which is another nightmare that owes its start to Jimmy Carter, when he legislated the end of Regulation Q.Anyway, as demand for mortgages grew and more demand came from people living in crappy neighborhoods, the banks realized the safe way to handle the new demand.Banks gave CRA loans to the most qualified buyers from the hoods, but sent the less qualified buyers to their affiliated mortgage banks offering subprime loans. For that, the banks got CRA credit.Therefore, it was easy to claim that bank-issued CRA mortgages defaulted no more than non-CRA mortgages. But that's because the uncreditworthy borrowers were sent to the affiliated mortgage banks, which had balance sheets separate from the banks.Again, the legislation of the CRA forced banks to provide loans to people with lousy credit, lousy jobs and no downpayment money. And the subprime lending business gave banks a way to sidestep the risks by steering weak borrowers to lenders willing to finance them.You have refused to answer my simple question. Do you think we would have a mortgage problem if all borrowers had been required to have a decent credit rating, a decent job and a hefty downpayment? Do you think conventional lending standards — decent credit, decent job, downpayment money — should become necessary for mortgage approval?

  42. toujoursgive it up, you cannot make a point with him. he and ann coulter may be the only two people on earth left who blame the CRA for the mess.slappz will continue to just spout out info and call them facts — he never sees anything except the way he wants to see it – through right wing, love Bush, hate the poor eyes. i think he works in finance – so his people never do anything wrong.i won’t even bother anymore with him and if the delete key was working on this blog, i would have deleted him

  43. d-cap, tourjoursdan,My statements about the FDIC and the CRA come straight from the FDIC and/or its website as well as statements from documents submitted to the SEC. Not from interpretations provided by journalists.

  44. tourjoursit is amazing how slappz just does not get it — no matter HOW you look at it – NO ONE FORCED banks and especially mortgage banks to make risky loans – NO ONE. if they saw that an applicant was risky or weak, they could have walked away from loaning.second NO ONE FORCED the banks or mortgage companies to sell the loans or collateralize them – NO ONE – only greed greed greedbut slappz will never see this, as almost ALL republicans feel – they are NEVER to blame, it is always someone else’s fault – usually the govt and now the poorthis mess is ALL the fault of the greedy banks

  45. d-cap,Both banking and Wall Street, whether you believe it or not, are heavily regulated industries.The FDIC truly CONTROLS banking. When regulators speak to banks, the banks stand at attention.Meanwhile, when Wall Street firms go off track, they are put out of business. Perhaps you recall Drexel Birnham? Meanwhile, there is a long list of firms that were forced out of existence or into mergers when things went wrong.Kidder Peabody, Paine Webber. E.F. Hutton, and a long list of lesser known firms.It also appears you do not know the difference between a bank and a brokerage firm, or why our current difficulties are the result of bad politics.For those reasons I can assure you more problems lie ahead. Obama and his team of halfwits are well on their way to bungling the recovery process.We will recover simply because capitalism is more powerful than the Obama administration, but the socialist crowd now in charge will slow the process.

  46. slappzplease dont comment anymoreanywhere on my siteyou are not welcome here

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