IndyMac collapse

[Balta1701]

You know, this is kind of a remarkable window in to how badly weakened the regulatory environment in this country got over the last few years. The Fed is, starting October 1, going to slap some new "Regulations" on the mortgage market. The amazing thing to me is...how in the world were these things not already required?

 

Here are highlights of new federal rules for mortgage lending, which take effect Oct. 1.

 

For subprime mortgages

* Lenders will be required to verify a borrower's income and assets.

 

* Lenders will be barred from levying prepayment penalties for the first four years of any adjustable-rate subprime mortgage; other subprime mortgages could have no prepayment penalties for two years.

 

For all mortgages

* Lenders won't be allowed to run advertising that compares different loans unless all payments and rates are also disclosed.

 

* Advertising that touts mortgage plans in a foreign language would be required to include legally required disclosures in that same language.

 

* Lenders would be required to credit borrowers' payments on the day of receipt.

 

...

Among other measures, the new rules bar misleading advertising practices, including using the word "fixed" to describe the terms of a mortgage whose rate or payments will change over the course of the loan. The rules also require mortgage ads in a foreign language to make all important disclosures in that language.

So, we're operating in an environment where the Fed rules say that mortgage lenders can compare different loans without actually comparing them, where they could get around disclosure rules by running ads in Spanish, and where there were no rules requiring any verification of income for a sub-prime loan...and we wonder how in the world people were able to take advantage of this system?

[StrangeSox]

You know, this is kind of a remarkable window in to how badly weakened the regulatory environment in this country got over the last few years. The Fed is, starting October 1, going to slap some new "Regulations" on the mortgage market. The amazing thing to me is...how in the world were these things not already required?

 

So, we're operating in an environment where the Fed rules say that mortgage lenders can compare different loans without actually comparing them, where they could get around disclosure rules by running ads in Spanish, and where there were no rules requiring any verification of income for a sub-prime loan...and we wonder how in the world people were able to take advantage of this system?

 

I thought This American Life's show on the subprime crisis explained the whole situation in a humorous way. Well, as humorous as wide-spread economic downturn and financial industry collapse can be, anyway.

http://thislife.org/Radio_Episode.aspx?sched=1242

 

Basically, they ran out of people with good credit and good income who wanted to borrow money. So they turned to people with lower credit but still had some income and assets. But they still had to sell more, so they turned to people with bad credit and questionable income. Eventually it just got to the point where you could go in and ask to borrow tens of thousands or hundreds of thousands of dollars without providing any documentation of income or assets.

 

Edited July 16, 2008 by StrangeSox

[mr_genius]

I'd actually say a lot of people did...they're just not the people who get jobs on CNBC or interviews and columns in the Washington Post. Half of my writings from that era have vanished, but I was saying this was going to be a mess back in 2003-2004. It was all those crazy liberals who were just trying to make George W's great economy look bad by pointing out that it was built on a housing market of cards.

 

yea right, so now only liberals were on to this? i don't think so. your post needs a government bailout.

[Balta1701]

yea right, so now only liberals were on to this? i don't think so. your post needs a government bailout.

I'm sure it's not only liberals...but it's certainly not the people who were in the major media pieces talking about the economy, and it wasn't the people who were writing that the media was telling people the economy was doing great and it was only those dirty liberals saying it wasn't doing well because they wanted to make sure GWB looked bad.

[mr_genius]

I'm sure it's not only liberals...but it's certainly not the people who were in the major media pieces talking about the economy, and it wasn't the people who were writing that the media was telling people the economy was doing great and it was only those dirty liberals saying it wasn't doing well because they wanted to make sure GWB looked bad.

 

GW doesn't really need anyone to make him look bad, he can do that just fine on his own. looking back it's funny to think about all those "flip this house" type shows. i bet most of those people had subprime mortgages, they didn't care they were going to be millionaires cause the housing bubble would, of course, never burst.

[southsider2k5]

I'd be interested in the data, if you have them. IMB reported that in the two days following the comments, $100 mil was withdrawn, and then said that on Monday, withdrawals were "substantially lower" (or something like that, I don't have the exact quote in front of me). Shortly before Schumer's comments, the ratings on IMB's bonds were lowered, and on Tuesday a policy group report was issued that blasted IMB's mo. A little later, IMB laid off half its employees. The bank was losing money and its mortgage default rate had exploded, and all this was public knowledge. It was already little better than a penny stock. Yet you think IMB's only problem was Schumer's comments?

 

Quit putting words into people's mouths.. Where did he say that their ONLY problem was Schumer?

[southsider2k5]

and so also chuck schumer is the only one to blame for our banking collapse, now, right? Before in here it was the consumers fault for taking on loans they'd never be able to pay back, but now, that a democratic senator can be blamed, it is his fault then, oi?

 

Again, no one said this was all Schumers fault. I'd love to see the person that did.

[StrangeSox]

Again, no one said this was all Schumers fault. I'd love to see the person that did.

 

Uh, how about that editorial you posted?

 

The headline:

Chuck Schumer Causes $1.3 Billion Run on IndyMac: Bank Failure Results

 

From the article:

Over the next eleven business days following Schumer’s reckless behavior, IndyMac, experienced a $1.3 Billion run by the bank’s depositers. In short, the bank failed because a United States Senator publicly poked his nose into the operational procedures of the OTS.

 

So I'd say that the poorly-written op-ed you posted, the article that started this whole debate, said exactly that.

[southsider2k5]

You know, this is kind of a remarkable window in to how badly weakened the regulatory environment in this country got over the last few years. The Fed is, starting October 1, going to slap some new "Regulations" on the mortgage market. The amazing thing to me is...how in the world were these things not already required?

 

So, we're operating in an environment where the Fed rules say that mortgage lenders can compare different loans without actually comparing them, where they could get around disclosure rules by running ads in Spanish, and where there were no rules requiring any verification of income for a sub-prime loan...and we wonder how in the world people were able to take advantage of this system?

 

Hence the failure of the regulatory system we have in place now. People who are directly benefiting from the way these regulations are written are making a direct cash influence on the people making the laws.

 

It needs to be done completely separate from the Congress, which is why this umbrella should fall to the independant Federal Reserve Banking system. All of the individual government entities that exist need to be rolled into one group that oversees our entire financial system so that regulations can be clearn and cohesive as you move from one sector to another. So that they can be complimentary instead of contradictary.

[southsider2k5]

Uh, how about that editorial you posted?

 

The headline:

Chuck Schumer Causes $1.3 Billion Run on IndyMac: Bank Failure Results

 

From the article:

 

 

So I'd say that the poorly-written op-ed you posted, the article that started this whole debate, said exactly that.

 

The editorial did, not any person on here.

 

My point was that members of Congress shouldn't be speaking ill of individual businesses and industries for political gain.

[Balta1701]

It needs to be done completely separate from the Congress, which is why this umbrella should fall to the independant Federal Reserve Banking system. All of the individual government entities that exist need to be rolled into one group that oversees our entire financial system so that regulations can be clearn and cohesive as you move from one sector to another. So that they can be complimentary instead of contradictary.

Wait one second here...the rules that I posted a while ago were rules that, as far as I could read, were being put in place by the Fed. In other words, the "independent" fed had the power to have those rules in place a long time ago and chose not to. The LAT piece didn't say anywhere that they had to submit them to Congress for approval or that Congress had told them to get rid of those regulations at some point in the past, although those details could have been left out.

 

If the Fed already had the ability to put the simplest of the simplest of the simplest rules in place and chose not to do so...and this clearly helped build this in to the debacle that it is...why should I trust the Fed in the future?

[jackie hayes]

The editorial did, not any person on here.

 

My point was that members of Congress shouldn't be speaking ill of individual businesses and industries for political gain.

Please. You said Schumer took down IMB:

 

"We have Congress people in positions of power who should be minding their words knowing that they can move markets, taking down banks."

 

That's not any different than the "editorial" saying that Schumer "caused" IMB's fall, or saying it fell "because" of him.

[southsider2k5]

Please. You said Schumer took down IMB:

 

"We have Congress people in positions of power who should be minding their words knowing that they can move markets, taking down banks."

 

That's not any different than the "editorial" saying that Schumer "caused" IMB's fall, or saying it fell "because" of him.

 

But no one ever said it was ONLY him. You can read into things and keep making up what you want to see. It is not there.

[jackie hayes]

But no one ever said it was ONLY him. You can read into things and keep making up what you want to see. It is not there.

Oh, people put little caveats in, like, Well, maybe they would have eventually failed. Even the "editorial" said those things. So why are you saying that it said something different than you?

[southsider2k5]

Oh, people put little caveats in, like, Well, maybe they would have eventually failed. Even the "editorial" said those things. So why are you saying that it said something different than you?

 

How many times would you like me to type the samethings over and over for you to nitpick something out of that really has nothing to do with the main arguement in the first place, or could you just save the time and cut and paste the questions and answers again?

 

There is no real point in taking this any further if you are just looking to see how circular you can make this.

 

Put whatever words you want into my mouth, have me reach whatever conclusion you want me to reach, and move on. I'm done.

[HuskyCaucasian]

AP is reporting that the FBI is investigating IndyMac for fraud.

[jackie hayes]

How many times would you like me to type the samethings over and over for you to nitpick something out of that really has nothing to do with the main arguement in the first place, or could you just save the time and cut and paste the questions and answers again?

 

There is no real point in taking this any further if you are just looking to see how circular you can make this.

 

Put whatever words you want into my mouth, have me reach whatever conclusion you want me to reach, and move on. I'm done.

You were the one who differentiated between what posters were saying and what the article was saying. And that's wrong, you were saying the same things. If you don't like being called on it, well damn, that's tough. Don't say it in the first place.

 

As for the main argument, you made a bogus comparison between this bailout and the spending of this administration on all sorts of things, including the Iraq war. It was a ridiculous comparison, and you haven't backed it up one bit. If I keep asking the same question, it's because you won't answer it except to whine about how I'm treating you unfairly.

[mr_genius]

learning more about this, it appears they got special treatment and implicit government backing on illegal loans, which basically allowed them to give out money they didn't have. bravo.

 

of course the Dems and Republicnas were bribed.

 

yea bailout!

Edited July 16, 2008 by mr_genius

[Rex Kickass]

who said that? i mean there are people here defending Schumer or any Democrat on the banking committee as if they didn't do anything wrong. but anyone who knows about this should be blaming the GOP the most.

 

You did actually. You were the one assuming that Schumer did nothing when in fact, he did work towards some sort of solution.

 

Another question, where was Schumer and the Senate banking committee when this problem was developing? Asleep at the wheel, as usual. And this is the government we are going to trust with covering all these companies? greeaaat

 

For all I know, because I haven't spent the five minutes to do a google search, other members of the Senate Banking committee may have done work as well. But never let a thing like research get in the way of mediocre snark!

[mr_genius]

You did actually. You were the one assuming that Schumer did nothing when in fact, he did work towards some sort of solution.

 

lol no i didn't. read the thread. i explicitly stated that the GOP holds the most blame in this scandal at least twice. i don't even think you know what posts you are replying to. i was addressing the assertion that we were letting the GOP off the hook and only blaming Schumer on this whole scandal.

 

and he hasn't done anything. but keep up the blind defense of 'your guy'. espcecially the "He said something in 2007!" argument. classic.

Edited July 16, 2008 by mr_genius