The democrats caused this mess - Page 2

Inferno · #11 (**permalink**) 09-22-2008, 08:02 AM

Quote:

Originally Posted by jhffmn

1) Fannie Mae and Freddie Mac enabled the mortage fiasco by buying billions in bad loans. Banks made the loans, then turned them over to Fannie Mae and Freddie Mac for a profit. They did this under the assumption they were backed by the govt.

2) It was obvious what risk this posed to tax payers, the republicans pushed for reform. The democrats opposed this.

The democrats need to own up, and stop screwing us all.

The democrats have been in power all these years, Reagan 8 Bush 4 Clinton 8 Bush 8. Senate and House Dem's 10 Pub's 18. How do you always find a way to blame the Dem's when the Pub's have been in power a lot more.

Rebellion · #12 (**permalink**) 09-22-2008, 01:59 PM

Quote:

Originally Posted by siddhartha

Republicans wrote the legislation allowing lenders to write the bad loans.

The role of Freddie and Fannie is to buy loans so that lenders can go out and write MORE LOANS. You do understand that, don't you?

If Republicans had not allowed the bad loans in the first place - Fannie and Freddie wouldn't have had a problem.

If Fannie and Freddie stopped buying the loans, there would have been a huge credit crunch. Lenders wouldn't have had the liquidity to write any more. That's called being between a rock and a hard place.

The source of the problem was removing the rules governing lending practices and allowing the co mingling of financial services industries.

Exactly what legislation was written that allowed for bad loans again?

alexg · #13 (**permalink**) 09-22-2008, 03:31 PM

Of course the Republicans will try to blame somebody else, anybody else for the mess they've caused. It's their MO. I doubt that anyone is buying it. This mess is the fault of DEREGULATION. A crazy idea that's been pushed by conservative Republicans ever since Reagan. John McCain has been quoted as saying, "I'm basically a deregulator".

But what bothers me most about Bush's bailout plan is that it spends a trillion dollars of taxpayer's money to buy the "bad paper" of these crooked institutions. What about the "good paper"? In a typical bankruptcy, the conservator takes over all debts AND assets. In this instance, we'll just be buying the debts and presumably, the Masters of the Universe will skip happily away with all the assets to play another day. That's just wrong. But it's typical of the way the Republicans think. Everything for the wealthiest and screw the taxpayers.

Yeshua_Lives · #14 (**permalink**) 09-22-2008, 03:36 PM

GREED caused this mess.....after all $$$ is non partisan.

+++

Windigo · #15 (**permalink**) 09-22-2008, 03:52 PM

Quote:

Originally Posted by siddhartha

Republicans wrote the legislation allowing lenders to write the bad loans.

Bull(*)(*)(*)(*) little eva.

It was the Depository Institutions Deregulation and Monetary Control Act of 1980 and Mortgage Transaction Parity Act (Parity Act) of 1982 that created the subprime market. Both written and passed by the democrats.

farmer_fred · #16 (**permalink**) 09-22-2008, 03:52 PM

Quote:

Originally Posted by Yeshua_Lives

GREED caused this mess.....after all $$$ is non partisan.

)))

But Rethugs are better at it.

Indyhunter · #17 (**permalink**) 09-22-2008, 03:58 PM

I think there is enough blame to go around and enough proof overall to conclude that BOTH PARTIES SUCK.

All of this dribble back and forth about these two dead end, worthless, overbearing, greedy parties amounts to mass insanity. These parties collectively if allowed to continue their circus of idiocy will kill this country.

siddhartha · #18 (**permalink**) 09-22-2008, 06:13 PM

Alright ladies. Read and learn.

Quote:

Gramm's long been a handmaiden to Big Finance. In the 1990s, as chairman of the Senate banking committee, he routinely turned down Securities and Exchange Commission chairman Arthur Levitt's requests for more money to police Wall Street; during this period, the sec's workload shot up 80 percent, but its staff grew only 20 percent. Gramm also opposed an sec rule that would have prohibited accounting firms from getting too close to the companies they audited—at one point, according to Levitt's memoir, he warned the sec chairman that if the commission adopted the rule, its funding would be cut. And in 1999, Gramm pushed through a historic banking deregulation bill that decimated Depression-era firewalls between commercial banks, investment banks, insurance companies, and securities firms—setting off a wave of merger mania.

But Gramm's most cunning coup on behalf of his friends in the financial services industry—friends who gave him millions over his 24-year congressional career—came on December 15, 2000. It was an especially tense time in Washington. Only two days earlier, the Supreme Court had issued its decision on Bush v. Gore. President Bill Clinton and the Republican-controlled Congress were locked in a budget showdown. It was the perfect moment for a wily senator to game the system. As Congress and the White House were hurriedly hammering out a $384-billion omnibus spending bill, Gramm slipped in a 262-page measure called the Commodity Futures Modernization Act. Written with the help of financial industry lobbyists and cosponsored by Senator Richard Lugar (R-Ind.), the chairman of the agriculture committee, the measure had been considered dead—even by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. "Nobody in either chamber had any knowledge of what was going on or what was in it," says a congressional aide familiar with the bill's history.

It's not exactly like Gramm hid his handiwork—far from it. The balding and bespectacled Texan strode onto the Senate floor to hail the act's inclusion into the must-pass budget package. But only an expert, or a lobbyist, could have followed what Gramm was saying. The act, he declared, would ensure that neither the sec nor the Commodity Futures Trading Commission (cftc) got into the business of regulating newfangled financial products called swaps—and would thus "protect financial institutions from overregulation" and "position our financial services industries to be world leaders into the new century."
Subprime 1-2-3

Don't understand credit default swaps? Don't worry—neither does Congress. Herewith, a step-by-step outline of the subprime risk betting game. —Casey Miner

Subprime borrower: Has a few overdue credit card bills; goes to a storefront lender owned by major bank; takes out a $100,000 home-equity loan at 11 percent interest

Lending bank: Assuming housing prices will only go up, and that investors will want to buy mortgage loan packages, makes as many subprime loans as it can

Investment bank: Packages subprime mortgages into bundles called collateralized debt obligations, or cdos, then sells those cdos to eager investors. Goes to insurer to get protection for those investors, thus passing the default risk to the insurer through a "credit default swap."

Insurer: Thinking that default risk is low, agrees to cover more money than it can pay out, in exchange for a premium

Rating agency: On basis of original quality of loans and insurance policy they are "wrapped" in, issues a rating signaling certain slices of the cdo are low risk (aaa), medium risk (bbb), or high risk (ccc)

Investor: Borrows more money from investment bank to load up on cdo slices; makes money from interest payments made to the "pool" of loans. No one loses—as long as no one tries to cash in on the insurance.

It didn't quite work out that way. For starters, the legislation contained a provision—lobbied for by Enron, a generous contributor to Gramm—that exempted energy trading from regulatory oversight, allowing Enron to run rampant, wreck the California electricity market, and cost consumers billions before it collapsed. (For Gramm, Enron was a family affair. Eight years earlier, his wife, Wendy Gramm, as cftc chairwoman, had pushed through a rule excluding Enron's energy futures contracts from government oversight. Wendy later joined the Houston-based company's board, and in the following years her Enron salary and stock income brought between $915,000 and $1.8 million into the Gramm household.)

But the Enron loophole was small potatoes compared to the devastation that unregulated swaps would unleash. Credit default swaps are essentially insurance policies covering the losses on securities in the event of a default. Financial institutions buy them to protect themselves if an investment they hold goes south. It's like bookies trading bets, with banks and hedge funds gambling on whether an investment (say, a pile of subprime mortgages bundled into a security) will succeed or fail. Because of the swap-related provisions of Gramm's bill—which were supported by Fed chairman Alan Greenspan and Treasury secretary Larry Summers—a $62 trillion market (nearly four times the size of the entire US stock market) remained utterly unregulated, meaning no one made sure the banks and hedge funds had the assets to cover the losses they guaranteed.

In essence, Wall Street's biggest players (which, thanks to Gramm's earlier banking deregulation efforts, now incorporated everything from your checking account to your pension fund) ran a secret casino. "Tens of trillions of dollars of transactions were done in the dark," says University of San Diego law professor Frank Partnoy, an expert on financial markets and derivatives. "No one had a picture of where the risks were flowing." Betting on the risk of any given transaction became more important—and more lucrative—than the transactions themselves, Partnoy notes: "So there was more betting on the riskiest subprime mortgages than there were actual mortgages." Banks and hedge funds, notes Michael Greenberger, who directed the cftc's division of trading and markets in the late 1990s, "were betting the subprimes would pay off and they would not need the capital to support their bets."

These unregulated swaps have been at "the heart of the subprime meltdown," says Greenberger. "I happen to think Gramm did not know what he was doing. I don't think a member in Congress had read the 262-page bill or had thought of the cataclysm it would cause." In 1998, Greenberger's division at the cftc proposed applying regulations to the burgeoning derivatives market. But, he says, "all hell broke loose. The lobbyists for major commercial banks and investment banks and hedge funds went wild. They all wanted to be trading without the government looking over their shoulder."

http://en.wikipedia.org/wiki/Commodi...on_Act_of_2000

There. Now aren't you glad that you learned what lying sacks John McCain and his top economic adviser, Phil Graham, are?

You do understand that they think that all you guys are complete idiots, don't you?

They think that you'll faithfully listen to everything Hannity and Rush and the rest of them spoon feed you - and that you're too stupid to even try to wrap your head around the rather complex truth.

Show them that you're better than that.

jhffmn · #19 (**permalink**) 09-22-2008, 06:28 PM

What a hock of crap.

Investing in the loans was only a "gamble" because they did not have an accurate idea of what loans were bad. They had been repackaged and sold as high grade investments.

No one knew, how destructive the policies of Fannie Mae and Freddie Mac truely were.

In short, Fannie Mae and Freddie Mac were the disease. You are just blaming how it was spread.

You know, after the IQ by state BS, it's pretty clear you don't look very closely at anything.

siddhartha · #20 (**permalink**) 09-22-2008, 06:45 PM

Gramm-Leach-Bliley Act

http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act

Commodity Futures Modernization Act.

http://en.wikipedia.org/wiki/Commodi...on_Act_of_2000

The Subprime Mess and Phil Gramm: An Experiment in Deregulation

http://losangeles.injuryboard.com/mi...oogleid=242468

If you have an intelligent response, please bring it on, with documentation to support your contention.

"Nuh ugh", doesn't qualify.

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