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

[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 What lead to this change is the fact that after the Glass steagal act was repealed the housing market now became more interconnected with securities, and a market which is prone to high amounts of speculation.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 Thus if the Glass-Steagal act was never repealed we would not have had housing so interconnected with the stock market, and a stocks almost inherit inclination to behave in a highly violalate manner.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.

[Southern Senator North Carolina Yankee]

There were instances where banks manipulated or forced into giving loans they shouldn't have by multiple groups. One such group engaged in a near home invasion endangering a child because the bank President who lived in the home had tightened lending standards considerably. For the most part banks are to blame but its kind of like a Slave Owner wanting to free his slaves but can't because of state law and accounting standards demanding such "assets" be maintained if any debts were owed and such. An individual bank who wanted to do the safe and smart thing often couldn't because of outside forces they couldn't control.

To lay all the blame at the feet of Fanny and Freddie is just as ridiculous as to lay it all at the feet of the repeal of Glass-Steagal.

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.

LOL oh yea Carter, Clinton and the democrats conspired from the 1970's to the 2001 to collapse the housing market so McCain would get beat and we would Obama. Derelk please, quit posting this garbage, Jesus, that is so deranged.

You're generalizing and way over simplifying what I'm saying. Carter's policies made it easier and so did Clinton's. The Republicans were spineless on the matter and therefore partially at fault.  The card could have been used earlier but we had a great housing market in 2004 and would have been very odd to hear about. The bottom line is that it was too easy to get loans and not pay them back. That's what caused it, greedy people who expected to be entitled to loans and politicians looking the other way because they were getting sweetheart deals as well.

Greedy people feeling entitled to loans doesn't get people a loan.  You clearly don't understand how loans and regulations work.  The banking industry wants no regulations.  They want to do whatever they want to do if they think they can make a few bucks off of it, even if it ruins peoples' lives.

The government was stupid to reduce regulations and encourage giving loans to people who shouldn't have gotten them.  And they should take the blame for that.  And they, being the only ones who can fix that problem, have, I believe, accepted at least some of that blame.  But just guess which party has been trying to throw a wrench int he process of reforming bank regulations to prevent this from happening again.  It's infuriating the lack of principles the Republicans in congress have.  They love to shout out to pissed off middle aged white Americans that it's all the poor inner city minorities' fault for taking loans on homes and how the government caused it... yet they seem to be adamantly against any kind of fix to the problem.  Cuz they have no principles.. no agenda.. no real desire to lead.  They want a strong minority so they can oppose and stop absolutely anything from getting done in congress in some twisted belief that that will win them elections.  Why is it that despite the coming Republican Revolution in November, Americans still trust Democrats more to fix the problems facing our country today?

But in typical Republican fashion.. the banks aren't to blame at all.  It's all the greedy, entitled, lazy, good-for-nothings who probably vote Democrat that your party loves to demonize behind this whole thing.  It is their fault the bank said yes to their loan application despite the BANKS being the experts on who historically can and cannot repay their loans.

Then, if a bank *is* to blame.. it has to be some bank connected somehow to the evil gubmint.. never an angelic, overly-large private bank!!

Because if only the Republicans had held power from the beginning of time, there never would have been a housing bubble or a stock bubble... because no Republican ever would have appointed an idiot like Alan Greenspan who kept interest rates too low for too long and is singlehandedly the most to blame for the bubbles in the first place.. yes.. no Republican would ever appoint an idiot like th... oh wait.

As for the title of this thread:  Very apt.  Congressional Republicans seem to have a strong, homo-erotic infatuation with ramming and shoving and jamming things down their throats.

There are serious problems with the banking regulations being proposed that need to be addressed. This is another problem. The reaction you are displaying and I am sure is very popular is too "REGULATE THE BASTARDS NOW". While such sentiment is understandable it rarely makes for good policy. Regulatory changes need to be change on a wide variety of areas but we must be carefull not to punish actors who had no part in the crisis with over burdensome regulations. Regulations should be 1) necessary, 2) narrow and focused on specific areas where problems occured, and 3) effective.

[Southern Senator North Carolina Yankee]

I wish the left wouldn't be so short sighted. You realize Fannie and Freddie got in no trouble at all and received a sweet heart bail out.

lol. Fannie and Freddie were contributing factors most assuredly but no where near the main culprits. the Housing boom started in 1996 as part of the 1990's expansion.

The Fed increased its growth by 1) over responding to the Asian Financial crisis of 1997 and 2) keeping rates too low, too long from 2002-2004.

The fast runupps in certain areas were do to local zoning board decisions. Add in the new financial instruments, the growth of subrime, the decline in lending standards, politicians and advocacy groups pusing home ownership to as many as possible. A slight tax code change that made debt more attractive by allowing interest to be written off on peoples taxes which sort of nudge some of the money created by the Bush tax cuts from other safer and smarter investments into investments related to housing and in and of itself encouraged more people to buy homes by making it cheaper. Together you got the makings of a crisis.

To put all the blame in what area is incorrect and a mistake.

[Southern Senator North Carolina Yankee]

I wish the left wouldn't be so short sighted. You realize Fannie and Freddie got in no trouble at all and received a sweet heart bail out.

lol. Fannie and Freddie were contributing factors most assuredly but no where near the main culprits. the Housing boom started in 1996 as part of the 1990's expansion.

The Fed increased its growth by 1) over responding to the Asian Financial crisis of 1997 and 2) keeping rates too low, too long from 2002-2004.

The fast runupps in certain areas were do to local zoning board decisions. Add in the new financial instruments, the growth of subrime, the decline in lending standards, politicians and advocacy groups pusing home ownership to as many as possible. A slight tax code change that made debt more attractive by allowing interest to be written off on peoples taxes which sort of nudge some of the money created by the Bush tax cuts from other safer and smarter investments into investments related to housing and in and of itself encouraged more people to buy homes by making it cheaper. Together you got the makings of a crisis.

To put all the blame in what area is incorrect and a mistake.

You can blame the voters and the ones they voted for. Without political promises, there isn't a problem. If you think a politician breaking a promise is bad, just wait until they keep their promises.

I hate simplification of complex problems. And that is exactly what you are doing.