republican economic policy makes buying homes a huge risk as a long term investment

[merrill]

There is very little doubt that the underlying cause of the current credit crisis was a housing bubble. But the collapse of the bubble would not have led to a worldwide recession and credit crisis if almost 40% of all U.S. mortgages--25 million loans--were not of the low quality known as subprime or Alt-A.

These loans were made to borrowers with blemished credit, or involved low or no down payments, negative amortization and limited documentation of income. The loans' unprecedentedly high rates of default are what is driving down housing prices and weakening the financial system.

The low interest rates of the early 2000s may explain the growth of the housing bubble, but they don't explain the poor quality of these mortgages. For that we have to look to the government's distortion of the mortgage finance system through the Community Reinvestment Act and the government-sponsored enterprises (GSEs) Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ).

In a recent meeting with the Council on Foreign Relations, Barney Frank--the chair of the House Financial Services Committee and a longtime supporter of Fannie and Freddie--admitted that it had been a mistake to force homeownership on people who could not afford it. Renting, he said, would have been preferable. Now he tells us.

Long-term pressure from Frank and his colleagues to expand home ownership connects government housing policies to both the housing bubble and the poor quality of the mortgages on which it is based. In 1992, Congress gave a new affordable housing "mission" to Fannie and Freddie, and authorized the Department of Housing and Urban Development to define its scope through regulations.

Frank and Dodd WERE the deception.

" Barney Frank--the chair of the House Financial Services Committee and a longtime supporter of Fannie and Freddie--admitted that it had been a mistake to force homeownership on people who could not afford it."

It was the lending institutions that forced the loans NOT Barney Frank. Barney Frank has no authority over banks or lending institutions.

[Sailor]

" Barney Frank--the chair of the House Financial Services Committee and a longtime supporter of Fannie and Freddie--admitted that it had been a mistake to force homeownership on people who could not afford it."

It was the lending institutions that forced the loans NOT Barney Frank. Barney Frank has no authority over banks or lending institutions.

The pressure to make more loans to minorities (read: to borrowers with weak credit histories) became relentless. Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to "meet the credit needs" of "low-income, minority, and distressed neighborhoods." Lenders responded by loosening their underwriting standards and making increasingly shoddy loans. The two government-chartered mortgage finance firms, Fannie Mae and Freddie Mac, encouraged this "subprime" lending by authorizing ever more "flexible" criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued.

All this was justified as a means of increasing homeownership among minorities and the poor. Affirmative-action policies trumped sound business practices. A manual issued by the Federal Reserve Bank of Boston advised mortgage lenders to disregard financial common sense. "Lack of credit history should not be seen as a negative factor," the Fed's guidelines instructed. Lenders were directed to accept welfare payments and unemployment benefits as "valid income sources" to qualify for a mortgage. Failure to comply could mean a lawsuit.

Time and time again, Frank insisted that Fannie Mae and Freddie Mac were in good shape. Five years ago, for example, when the Bush administration proposed much tighter regulation of the two companies, Frank was adamant that "these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis." When the White House warned of "systemic risk for our financial system" unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing.

Those are the facts Merrill. Want to try again?

[merrill]

The pressure to make more loans to minorities (read: to borrowers with weak credit histories) became relentless. Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to "meet the credit needs" of "low-income, minority, and distressed neighborhoods." Lenders responded by loosening their underwriting standards and making increasingly shoddy loans. The two government-chartered mortgage finance firms, Fannie Mae and Freddie Mac, encouraged this "subprime" lending by authorizing ever more "flexible" criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued.

All this was justified as a means of increasing homeownership among minorities and the poor. Affirmative-action policies trumped sound business practices. A manual issued by the Federal Reserve Bank of Boston advised mortgage lenders to disregard financial common sense. "Lack of credit history should not be seen as a negative factor," the Fed's guidelines instructed. Lenders were directed to accept welfare payments and unemployment benefits as "valid income sources" to qualify for a mortgage. Failure to comply could mean a lawsuit.

Time and time again, Frank insisted that Fannie Mae and Freddie Mac were in good shape. Five years ago, for example, when the Bush administration proposed much tighter regulation of the two companies, Frank was adamant that "these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis." When the White House warned of "systemic risk for our financial system" unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing.

Those are the facts Merrill. Want to try again?

NOWHERE does it state that Barney Frank authorized financial institutions to
to violate lending guidelines to secure home loans.

Barney Frank CANNOT issue such authorizations!

It was Henry Paulson not doing his jobs aka turning a blind eye. The entire "bad loan fiasco" could have been stopped in its' tracks by GW Bush or Henry Paulson. They were the regulating enforcement authority at the time. In fact they could have called in the FBI.

[Sailor]

NOWHERE does it state that Barney Frank authorized financial institutions to
to violate lending guidelines to secure home loans.

Barney Frank CANNOT issue such authorizations!

It was Henry Paulson not doing his jobs aka turning a blind eye. The entire "bad loan fiasco" could have been stopped in its' tracks by GW Bush or Henry Paulson. They were the regulating enforcement authority at the time. In fact they could have called in the FBI.

Merrill. Do you have any idea what committee Frank was in charge of at that time? Do you even have a clue what you are talking about?

[merrill]

In the early 1980s, under Reagan, regulatory changes took place that gave the S&L industry new powers and for the first time in history measures were taken to increase the profitability of S&Ls at the expense of promoting home ownership.

What is important to note about the S&L scandal is that it was the largest theft in the history of the world and US tax payers are who was robbed.

The problems occurred in the Savings and Loan industry as they relate to theft because the industry was deregulated under the Reagan/Bush administration and restrictions were eased on the industry so much that abuse and misuse of funds became easy, rampant, and went unchecked.

There are several ways in which the Bush family plays into the Savings and Loan scandal, which involves not only many members of the Bush family but also many other politicians that are still in office and still part of the Bush Jr. administration today.

Jeb Bush, George Bush Sr., and his son Neil Bush have all been implicated in the Savings and Loan Scandal, which cost American tax payers over $1.4 TRILLION dollars (note that this is about one quarter of our national debt).

Between 1981 and 1989, when George Bush finally announced that there was a Savings and Loan Crisis to the world, the Reagan/Bush administration worked to cover up Savings and Loan problems by reducing the number and depth of examinations required of S&Ls as well as attacking political opponents who were sounding early alarms about the S&L industry.

Industry insiders were aware of significant S&L problems as early 1986 that they felt would require a bailout.

This information was kept from the media until after Bush had won the 1988 elections.

Jeb Bush defaulted on a $4.56 million loan from Broward Federal Savings in Sunrise, Florida. After federal regulators closed the S&L, the office building that Jeb used the $4.56 million to finance was reappraised by the regulators at $500,000, which Bush and his partners paid.

The taxpayers had to pay back the remaining 4 million plus dollars.In the early 1980s, under Reagan, regulatory changes took place that gave the S&L industry new powers and for the first time in history measures were taken to increase the profitability of S&Ls at the expense of promoting home ownership.

Bush/Cheney did a magnificent repeat performance of robbing taxpayers,putting millions more out work,out of medical insurance and billed taxpayers trillions of dollars for the Bush/Cheney admin monitor the largest fraud scheme in the history of the USA.

Who can afford another republican administration?

[merrill]

Merrill. Do you have any idea what committee Frank was in charge of at that time? Do you even have a clue what you are talking about?

Produce the document that states:

that Barney Frank could legally authorize financial institutions to
to violate lending guidelines to secure home loans

Barney Frank can legally issue such authorizations

that the Bush admin was not the regulating enforcement authority at the time

[rastaman]

By the way, that article is from Forbes.

By the way.....post the link!! Did you forget or are you just lazy or both!!!!

[Sailor]

By the way.....post the link!! Did you forget or are you just lazy or both!!!!

Slow day at the Meth lab today Rastaman?

[rastaman]

Slow day at the Meth lab today Rastaman?

Which shift are you working in your Meth lab?

[merrill]

Fed Chairman Alan Greenspan denied the housing bubble’s existence—not fraud exactly, but deception that kept the bubble going. (Greenspan, whose view was ideologically driven, got support in his bubble denial from the academic work of the man who was to be his successor, Ben Bernanke.)