How the Bush administration shoved the housing bubble down America's throat.

[Beet]

Yes, I got this from a certain blog, but...

"In 2003, during the height of the predatory lending crisis, the OCC (Office of the Comptroller of the Currency) invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules."

http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html

[Derek]

The Washington Compost. Ever hear of Chris Dodd? He is the one who took the most money from Fannie and Freddie. His wife is a lobbyist supporting financial overhaul right now. Obama too out the second most money from Fannie and Freddie in just 4 short years. Oh and Bush called on congress to fix the housing market collapse in 2003 because ANYONE could've seen it coming with as easy as it is to get a housing loan in this country. John McCain had his own bill to solve the problem in 2005 and the democrats stopped it. The meltdown was staged to happen just before the 2008 election as a political tool for the democrats who are in bed with the financial industry and Wall Street. It's time to stop being a democrat and look at the facts.

[Beet]

The Washington Compost. Ever hear of Chris Dodd? He is the one who took the most money from Fannie and Freddie. His wife is a lobbyist supporting financial overhaul right now. Obama too out the second most money from Fannie and Freddie in just 4 short years. Oh and Bush called on congress to fix the housing market collapse in 2003 because ANYONE could've seen it coming with as easy as it is to get a housing loan in this country. John McCain had his own bill to solve the problem in 2005 and the democrats stopped it. The meltdown was staged to happen just before the 2008 election as a political tool for the democrats who are in bed with the financial industry and Wall Street. It's time to stop being a democrat and look at the facts.

I didn't know you watched Fox News. fwiw, FNM had a good 70 year life and of those 70 years, a grand total of 10 coincided with a housing bubble. The same ten years when the subprime industry was active [the same subprime industry that made the vast majority of bad loans]. FNM didn't go wrong until it was co-opted into the neoliberal con game.

[Mr.Phips]

The Washington Compost. Ever hear of Chris Dodd? He is the one who took the most money from Fannie and Freddie. His wife is a lobbyist supporting financial overhaul right now. Obama too out the second most money from Fannie and Freddie in just 4 short years. Oh and Bush called on congress to fix the housing market collapse in 2003 because ANYONE could've seen it coming with as easy as it is to get a housing loan in this country. John McCain had his own bill to solve the problem in 2005 and the democrats stopped it. The meltdown was staged to happen just before the 2008 election as a political tool for the democrats who are in bed with the financial industry and Wall Street. It's time to stop being a democrat and look at the facts.

I dont know why Democrats would want to have to take over in the middle of a crisis. 

[Хahar 🤔]

The Washington Compost. Ever hear of Chris Dodd? He is the one who took the most money from Fannie and Freddie. His wife is a lobbyist supporting financial overhaul right now. Obama too out the second most money from Fannie and Freddie in just 4 short years. Oh and Bush called on congress to fix the housing market collapse in 2003 because ANYONE could've seen it coming with as easy as it is to get a housing loan in this country. John McCain had his own bill to solve the problem in 2005 and the democrats stopped it. The meltdown was staged to happen just before the 2008 election as a political tool for the democrats who are in bed with the financial industry and Wall Street. It's time to stop being a democrat and look at the facts.

I dont know why Democrats would want to have to take over in the middle of a crisis. 

Maybe because, you know, they wanted to fix the crisis? I find it strange the way you think politics is all about winning elections and completely ignore the fact of governing.

[Mr.Phips]

The Washington Compost. Ever hear of Chris Dodd? He is the one who took the most money from Fannie and Freddie. His wife is a lobbyist supporting financial overhaul right now. Obama too out the second most money from Fannie and Freddie in just 4 short years. Oh and Bush called on congress to fix the housing market collapse in 2003 because ANYONE could've seen it coming with as easy as it is to get a housing loan in this country. John McCain had his own bill to solve the problem in 2005 and the democrats stopped it. The meltdown was staged to happen just before the 2008 election as a political tool for the democrats who are in bed with the financial industry and Wall Street. It's time to stop being a democrat and look at the facts.

I dont know why Democrats would want to have to take over in the middle of a crisis. 

Maybe because, you know, they wanted to fix the crisis? I find it strange the way you think politics is all about winning elections and completely ignore the fact of governing.

Did they fix the crisis?  I think not. 

[Derek]

The Washington Compost. Ever hear of Chris Dodd? He is the one who took the most money from Fannie and Freddie. His wife is a lobbyist supporting financial overhaul right now. Obama too out the second most money from Fannie and Freddie in just 4 short years. Oh and Bush called on congress to fix the housing market collapse in 2003 because ANYONE could've seen it coming with as easy as it is to get a housing loan in this country. John McCain had his own bill to solve the problem in 2005 and the democrats stopped it. The meltdown was staged to happen just before the 2008 election as a political tool for the democrats who are in bed with the financial industry and Wall Street. It's time to stop being a democrat and look at the facts.

I dont know why Democrats would want to have to take over in the middle of a crisis. 

power and growing the government

[Free Trade is managed by the invisible hand.]

so anyone here still arguing for deregulation? is free market fundamentalism still climbing to its peak, or has their bubble popped as well?

[Sam Spade]

The steps politicians take to avoid K-wave winter.  Not avoidable, of course.

[Free Trade is managed by the invisible hand.]

Yes, I got this from a certain blog, but...

"In 2003, during the height of the predatory lending crisis, the OCC (Office of the Comptroller of the Currency) invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules."

http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html

corelation does not equal causation, furthermore this article does not account for several factors.
1.Demographic changes
2. The fact that housing prices prior to this decade only rose at an expected rate of 1% per year, and thus investors thought that housing prices would always safely rise.
3. Finally during this decade housing prices began to rise at more than one percent each year, and would eventualy rise at 6% per year.

[Grumpier Than Uncle Joe]

Did we blame Bush for the Holocaust yet? 

[Free Trade is managed by the invisible hand.]

Did we blame Bush for the Holocaust yet? 

no, but lets blame him for darfur.

[Grumpier Than Uncle Joe]

Did we blame Bush for the Holocaust yet? 

no, but lets blame him for darfur.

Been there done that......don't you read and don't you listen to the Hollywood elites who've told this again and again?  Let's think of something new to blame him for.

[Free Trade is managed by the invisible hand.]

Did we blame Bush for the Holocaust yet? 

no, but lets blame him for darfur.

Been there done that......don't you read and don't you listen to the Hollywood elites who've told this again and again?  Let's think of something new to blame him for.

I'll be honest that I do not actually hate george bush, but I just disagree with some of things he did. dubbya bush had some role in this financial crisis, but their may be other factors that are more important.

[Torie]

The dirty little secret is that there was near unanimous support from all sides to feed the housing bubble. Getting everyone into home ownership was as high a priority, if not higher, than a 19 year old high testosteroned male getting laid regularly. And it was a good deal for many, because as housing prices went up having put nothing down, or actually getting loans higher than the purchase price of a house (the notorious 110% mortgage), it was like almost free money out of a seemingly bottomless ATM machine, and when prices went down, you just stopped paying your mortgage, and lived rent free in your house for a year or two or three, before the lender finally takes it back at no cost to you. What a deal, particularly for those who don't pay any income taxes, so they don't need to worry about the multi trillon dollar cost to the feds.

During the savings a loan crisis in the later 1980's, I once had this fantasy of owning two savings and loan institutions, one of which went short on interest rates, and the other long. Then when there was a big interest rate move, you give the failed institution back to the FSLIC, and make your fortune on the other one. It seemed like a rather  brilliant approach to me.

[Free Trade is managed by the invisible hand.]

The dirty little secret is that there was near unanimous support from all sides to feed the housing bubble. Getting everyone into home ownership was as high a priority, if not higher, than a 19 year old high testosteroned male getting laid regularly. And it was a good deal for many, because as housing prices went up having put nothing down, or actually getting loans higher than the purchase price of a house (the notorious 110% mortgage), it was like almost free money out of a seemingly bottomless ATM machine, and when prices went down, you just stopped paying your mortgage, and lived rent free in your house for a year or two or three, before the lender finally takes it back at no cost to you. What a deal, particularly for those who don't pay any income taxes, so they don't need to worry about the multi trillon dollar cost to the feds.

During the savings a loan crisis in the later 1980's, I once had this fantasy of owning two savings and loan institutions, one of which went short on interest rates, and the other long. Then when there was a big interest rate move, you give the failed institution back to the FSLIC, and make your fortune on the other one. It seemed like a rather  brilliant approach to me.

1. Prior to the housing bubble prices for housing went up 1% percent a year and thus were considered a safe and steady investment. During the housing bubble the price of housing would go up anywhere between 3 to 6%. What lead to this change is the fact that after the Glass steagal act was repealed the housing market now became more interconnected with securities, and a market which is prone to high amounts of speculation. When investors saw the housing market beginning to boom they immediately started widen their portfolio, and over speculate on housing. Thus as a result the housing industry no longer became a steady safe investment, but instead something more prone to violitale changes like most things in the stock market are usually prone to doing. Thus if the Glass-Steagal act was never repealed we would not have had housing so interconnected with the stock market, and a stocks almost inherit inclination to behave in a highly violalate manner.

[Torie]

No, it was more due to a change in tax policies, tighter zoning and building permit regulations, and the feds encouraging, subsidizing, and buying more risky mortgages actually. California has had three housing bubbles since I purchased my first place in 1979.

[opebo]

... Getting everyone into home ownership was as high a priority,

Not 'everyone' of course, but the great majority.  It was a worthy, reasonable, and very easily achievable goal, Torie, and the part missing was requiring that workers be paid enough.  This was the missing link, and what was destroyed since Reagan - the deregulation, though very stupid, was only the kindling - inequality was what made the whole edifice so flammable.

[Free Trade is managed by the invisible hand.]

on a side note consumer price inflation has continued to remain low since the 80's, and the only thing that has changed is we now have high unemployment.

[Torie]

... Getting everyone into home ownership was as high a priority,

Not 'everyone' of course, but the great majority.  It was a worth, reasonable, and very easily achievable goal, Torie, and the part missing was requiring that workers be paid enough.  This was the missing link, and what was destroyed since Reagan - the deregulation, though very stupid, was only the kindling - inequality was what made the whole edifice so flammable.

Yes, I know that this notion that the workers' standard of living (and I take it the "workers" means everyone other than the privileged elites like Fezzy and myself) can be raised through some sort of government fiat above the current industrial democracy standard is your own particular leap of faith Opebo. It is like arguing about whether or not Christ has divine aspects or something.

And maybe someday you will actually offer up an example of where this has been accomplished, or even some economic theory offered up by creditable economists of how we might be able to go where no man has gone before.  Don't you find it odd that the standard of living in most of the industrial democracies is about the same no matter what the details of their economic policies are, and when some push the envelop, like some have in Europe, they are teetering on the edge, and are having to retrench on a rather Draconian basis?

In the end of course, the only thing that can accomplish it is an increase in per capita worker productivity overall. And that means restructuring our secondary school system from top to bottom.

[cannonia]

1. Prior to the housing bubble prices for housing went up 1% percent a year and thus were considered a safe and steady investment. During the housing bubble the price of housing would go up anywhere between 3 to 6%. What lead to this change is the fact that after the Glass steagal act was repealed the housing market now became more interconnected with securities, and a market which is prone to high amounts of speculation. When investors saw the housing market beginning to boom they immediately started widen their portfolio, and over speculate on housing. Thus as a result the housing industry no longer became a steady safe investment, but instead something more prone to violitale changes like most things in the stock market are usually prone to doing. Thus if the Glass-Steagal act was never repealed we would not have had housing so interconnected with the stock market, and a stocks almost inherit inclination to behave in a highly violalate manner.

Nonsense!  There have always been housing booms and busts.  The "safe and secure investment" line was BS while prices were on the way up and is still BS now.

Now what was different in the past was that banks generally held the mortgages they issued, and thus they screened their customers better and insisted on sufficient down payments.  Federal policy (and Fannie/Freddie) simultaneously attacked both pillars, and the market hopped on the bandwagon looking for better returns after the tech bubble collapse.

[opebo]

And maybe someday you will actually offer up an example of where this has been accomplished, or even some economic theory offered up by creditable economists of how we might be able to go where no man has gone before.  Don't you find it odd that the standard of living in most of the industrial democracies is about the same no matter what the details of their economic policies are, and when some push the envelop, like some have in Europe, they are teetering on the edge, and are having to retrench on a rather Draconian basis?

Not at all, Torie - the US from 1945-1973 was the perfect example.  And anyway, the point is to compare within a society rather than across societies - they'll be higher if most people are unionized, there is a generous dole limiting supply of workers, high minimum wages, etc.  In other words a social democratic Keynesian paradise.

In the end of course, the only thing that can accomplish it is an increase in per capita worker productivity overall. And that means restructuring our secondary school system from top to bottom.

Not at all, Torie.  What you say bears no relation to reality.  Worker productivity has shot up rapidly over the last decades, while worker incomes have declined in relative terms.  This is because pay is about distribution, and is political.  Productivity only means more wealth is being produced than would be at a lower productivity level - without political redistribution nearly all increase in production will flow to the owners.  (I might add that it would almost certainly be the case that productivity would be markedly greater under the social democrat Keynesian regime I hypothesized above, but that is a plus unnecessary for my argument).

[Torie]

Well I guess we just have one of those factual disputes Opebo. I will look up the per capita productivity thing in due course to confirm matters.

[Southern Senator North Carolina Yankee]

The dirty little secret is that there was near unanimous support from all sides to feed the housing bubble. Getting everyone into home ownership was as high a priority, if not higher, than a 19 year old high testosteroned male getting laid regularly. And it was a good deal for many, because as housing prices went up having put nothing down, or actually getting loans higher than the purchase price of a house (the notorious 110% mortgage), it was like almost free money out of a seemingly bottomless ATM machine, and when prices went down, you just stopped paying your mortgage, and lived rent free in your house for a year or two or three, before the lender finally takes it back at no cost to you. What a deal, particularly for those who don't pay any income taxes, so they don't need to worry about the multi trillon dollar cost to the feds.

During the savings a loan crisis in the later 1980's, I once had this fantasy of owning two savings and loan institutions, one of which went short on interest rates, and the other long. Then when there was a big interest rate move, you give the failed institution back to the FSLIC, and make your fortune on the other one. It seemed like a rather  brilliant approach to me.

1. Prior to the housing bubble prices for housing went up 1% percent a year and thus were considered a safe and steady investment. During the housing bubble the price of housing would go up anywhere between 3 to 6%. What lead to this change is the fact that after the Glass steagal act was repealed the housing market now became more interconnected with securities, and a market which is prone to high amounts of speculation. When investors saw the housing market beginning to boom they immediately started widen their portfolio, and over speculate on housing. Thus as a result the housing industry no longer became a steady safe investment, but instead something more prone to violitale changes like most things in the stock market are usually prone to doing. Thus if the Glass-Steagal act was never repealed we would not have had housing so interconnected with the stock market, and a stocks almost inherit inclination to behave in a highly violalate manner.

I love how repeal Glass-Steagal has been turned into this magic silver bullet into the American economy that caused the Housing Bubble of the 2000's. The effect of Glass-Steagal and its repeal had very limited impact on the creation of the problem. I have pointed to a far less mentioned de-regulation bill that had far more impact by de-regulating derivitives yet all you and the others keep masturbating over is the repeal of Glass-Steagal.

The Housing Boom started in 1996 as part of the 1990's economic expansion after decades of the number of people who owned homes fell or remained stagnant. Things that impacted it were the rise of Mortgage backed securities which ties back to bill I referenced, actions taking by the Fed in 1997 to respond the Asian Financial Crisis and in 2001-2004 to respond to the Early 2000's recessions, local zoning regulations (Areas with very tight zoning such as LA, Phoenix, Las Vegas, etc were at the top of the list in areas that experienced both the bubble and bust), changes in the tax code (and not even the Bush tax cuts as a whole but a small change that gave debt based speculation an advantage of traditional industrial or business investment by allowing the debtor to deduct the interest), Pandering Politicians on both sides of the aisle pushing programs to beef up home ownership in the late 70's and early 90's (during that stagnation in homeownership that I mentioned above), media and Hollywood glamourizing home ownership, and decline in the Industrial sector of the economy in the early 2000's including the declining potential for large Cap Gains like was seen in the 90's led many to look for new investments and the Housing market privided that in speculation in Homes, House flipping, trading of MBS, and investing in industries related to the housing market.

so anyone here still arguing for deregulation? is free market fundamentalism still climbing to its peak, or has their bubble popped as well?

Yes, I do. Deregulation made resolving this crisis easier. Especially the repeal of Glass-Steagal which you dwell on so much, made resolving the insolvency crisis at big insitutions much simpler allowing the consolidation of firms that Glass-Steagal never would have allowed.

There are other instances as well. Deregulation in the Railroads help to make freight very profitable by reducing unecessary lines, routes, closing stations, shedding unneeded employees, and allowing necessary consolidation that 1) ends over competiton while 2) making sure that there is still some level of competition to keep transportion rates down. And yes there are calls from farmers and chemical industry for re-regulation in that sector (keep in mind that when you hear the word farmer in this context its big agribusiness so its not exactly the little guy getting squeezed here) but for the most part its a war over who has the most lobbyists in Washington and whether big agra and big chemicals/oil can get a handout from the Feds via screwing the big choo choo companies. I firmly support maintaining de-regulation here.

Another area in is Sarbanes-Oxley which to most analysts estimation has done little to reduce corporate malfeasance and crime and done very much to drive business formation off-shore and enrich the London Stock exchange at the expense of Wall Street. Considering this was past in Republican Congress and signed into law by a Republican President at the height of the De-regulation era, the GOP has never had a problem emposing a few necessary regulations when the need arised, including that wvil devil of man named GEORGE W. BUSH such as Sarbanes-Oxley, and his attempt to reign in Fannie and Freddie. You can be sure he would have easily signed a law beefing up Mortgage lending Standards and some other things to prevent a similar problem from occuring again. I can also assure you Bush would have signed a bill improving safety standards on oil drilling as well. All based of his willingness to sign Sarbanes-Oxley after Enron whether regulations are effective and don't have uninted consequences is another matter as Sarbox certainy wasn't and did.

[Derek]

The housing collapse was caused by democrats in Washington like Chris Dodd, Barack Obama, and presidents like Carter and Clinton who allowed such things to happen. Obama borrowed the 2nd most amount from Fannie and Freddie out of any senator and had only been there for 4 years. The fact that banks had to lend money to people who had no ability or no intention to pay them back was wrong. Bush tried to call on congress about this matter in 2003 and in 2005 McCain proposed his own bill for it. If there are any heroes on the matter it's Bush and McCain. The ones who contributed the most were Obama and Dodd which is why Dodd isn't running for reelection. The cry for help from the housing industry could've come at any time. It was designed to happen right before the 2008 election.