Are the Democrats responsible for the U.S. financial crisis?

[Kidlicious]

First fear, then loathing, toward Wall Street

This is what they need to exploit, and they aren't.

I suppose, though, that a guy like me would rather see this kind of thing continue than to see either of these guys win the presidency.

[PLATO]

Originally posted by Ramo

There's more where that came from.

Did you not notice the date in that article? That's just a few months ago. The credit crunch is due to the housing bubble, not efforts to slow its collapse.

Look at a longer time average, and make a comparison. Fannie and Freddie kept relatively high down payments while the rest of the market behaved extremely irresponsibly.

Indeed. This is correct, except that Fannie and Freddie did not keep requiring down payments. Fannie did a HUGE amount of business with their Flex 100 purchase. The old Fannie underwriting software was allowing prime rates to borrowers that had low 500 credit scores if they had three months reserves. Fannie and Freddie do have a lot of culpability here...they just don't have as much as a lot of other entities.

[Patroklos]

This is what they need to exploit, and they aren't.

Except Obama has more donations from Wallstreet than McCain.

[Kidlicious]

Originally posted by Patroklos


Except Obama has more donations from Wallstreet than McCain.

Well he's already collected the donations, right? **** them now.

[gwillybj]

Are the Democrats responsible for the U.S. financial crisis?
Yes.

[Ramo]

Actually Freddie and Fannie were the largest purchasers of subprime mortgage MBS.

Given that they're easily the largest players in the market, that's a rather deceptive figure.

The areas they were avoiding were areas that had people with poor credit profiles and low incomes. Race and marital status had little impact as lenders could really care less about these things.

I don't know why that matters any more than race or marital status. Prohibiting discrimination against people coming from areas with poor credit scores and low incomes is absolutely no excuse to recklessly lend to people with poor credit scores and low incomes.

Fannie and Freddie do have a lot of culpability here...they just don't have as much as a lot of other entities.

I totally agree with you here. That was my point.

[Ramo]

Article from 2005...

Do you not understand what an average is?

[PLATO]

Originally posted by Ramo

Actually Freddie and Fannie were the largest purchasers of subprime mortgage MBS.

Given that they're easily the largest players in the market, that's a rather deceptive figure.

It is still $338 billion no matter how you slice it.

The areas they were avoiding were areas that had people with poor credit profiles and low incomes. Race and marital status had little impact as lenders could really care less about these things.

I don't know why that matters any more than race or marital status. Prohibiting discrimination against people coming from areas with poor credit scores and low incomes is absolutely no excuse to recklessly lend to people with poor credit scores and low incomes.

Except that they were threatened to be sued by the government if they didn't.

Fannie and Freddie do have a lot of culpability here...they just don't have as much as a lot of other entities.

I totally agree with you here. That was my point.

We are closer to agreement than we are to disagreement.

[Patroklos]

I don't know why that matters any more than race or marital status. Prohibiting discrimination against people coming from areas with poor credit scores and low incomes is absolutely no excuse to recklessly lend to people with poor credit scores and low incomes.

They were required to lend to these people, by law, if they wanted to lend to anyone else.

[snoopy369]

Although I don't know the specifics, it sounds from what bits I do know personally and from what I'm reading here that the problem was not that the Federal Government was saying "don't discriminate against people", but it was specifically saying "if you do not lend to people in low income areas, you are discriminating against people" without paying much attention to what that means from a practical standpoint.

The interesting question is how do you resolve the fundamental divide between:
Banks' interest in making only 'safe' loans
and
Society's interest in people in lower income areas getting homes

I suspect the Federal Government (and/or state or local gov'ts) is going to have to - significantly - expand low-income mortgage assistance, in order to accomplish both goals adequately. I don't know if there is the political will to accomplish that, though ... and to accomplish it right (ie, giving people in low income areas a good rate on a mortgage that they CAN afford, but they wouldn't be given by banks normally because of their risk profile, rather than giving people homes they CAN'T afford, and just costing taxpayers money).

[Whoha]

Originally posted by snoopy369
The interesting question is how do you resolve the fundamental divide between:
Banks' interest in making only 'safe' loans
and
Society's interest in people in lower income areas getting home.

Via government welfare programs provided that you can pass them, and totally ignoring the actual market. There is a market for lending to people with low credit, but the rates and fees are horrendously high. Even still, utilizing this mechanism responsible people can build up their credit.

[Zkribbler]

The interesting question is how do you resolve the fundamental divide between:
Banks' interest in making only 'safe' loans
and
Society's interest in people in lower income areas getting home.

Poor people can't afford homes.
So, either poor people don't get homes but rather live in apartments and rooming houses...or....
They move to places like Iowa (where homes cost 1/13 as much as they do in California).

If you're poor, there's some things you can't afford. FACT!

[Kuciwalker]

Zkribbler speaks sense

[chequita guevara]

Can I ask the silly question of how the Democrats were able to stop the GOP from doing anything it wanted when it controlled all three branches of government, including both houses of Congress?

[chequita guevara]

Originally posted by Naked Gents Rut
Article from 2005...

http://www.signonsandiego.com/uniontrib/20050220/news_1h20freddie.html

Nice try.

2005 was the end of the inflation of the bubble. All the damage was done by that point. The people who bought mortgages in 2005 and latter haven't even begun to default on their mortgages yet, because they are still in the fixed part of the their ARMs. Really you need to look at borrowers in 2002 and 3 for what's happening now. Of course, that should be cold comfort when one realizes that the earlier borrowers were just the tip of the iceberg.