The Debates!

[StrangeSox]

from the report itself:

 

We conclude that these two entities contributed to the crisis, but were not a primary

cause. Importantly, GSE mortgage securities essentially maintained their value

throughout the crisis and did not contribute to the significant financial firm losses

that were central to the financial crisis.

 

The GSEs participated in the expansion of subprime and other risky mortgages,

but they followed rather than led Wall Street and other lenders in the rush for fool’s

gold. They purchased the highest rated non-GSE mortgage-backed securities and

their participation in this market added helium to the housing balloon, but their purchases

never represented a majority of the market. Those purchases represented 10.5%

of non-GSE subprime mortgage-backed securities in 2001, with the share rising to

40% in 2002, and falling back to 28% by 2008. They relaxed their underwriting standards

to purchase or guarantee riskier loans and related securities in order to meet

stock market analysts’ and investors’ expectations for growth, to regain market share,

and to ensure generous compensation for their executives and employees—justifying

their activities on the broad and sustained public policy support for homeownership.

[iamshack]

so basically, you are complaining that politics are so partisan, but you insist the other side doesn't do anything right . they only hurt "your team". your intentions were less noble than I thought.

That is certainly not what I said, but if you choose to interpret it that way, I'm not going to lose sleep over it.

[StrangeSox]

Did Biden reference the Op-Ed? And did he actually read it? Because no where did Romney say let Detroit go Bankrupt.

 

He pretended that private capital was available at the time instead. His plan would have been to let Detroit go bankrupt.

 

But that doesn't make Ryan's segue into that story about Mitt any less clumsy.

[StrangeSox]

I don't think anyone said it caused it, but it played a major role in it. If you know you're going to be backed by Freddie/Fannie, it's easy to make the decision to give out a loan you know has a 90% chance of defaulting. Blame for sure goes to the private lenders, but Republicans saw this issue in 2006 and tried to increase the lending standards but congressional dems blocked them. Would it have prevented or stopped everything? No. Would it have made the financial impact a little smaller? Yes.

 

2006 was already too late. The bubble had peaked and things were unwinding from there.

 

Fannie and Freddie did not play a major role. The investigation into the crisis specifically said this.

 

We conclude that these two entities contributed to the crisis, but were not a primary

cause. Importantly, GSE mortgage securities essentially maintained their value

throughout the crisis and did not contribute to the significant financial firm losses

that were central to the financial crisis.

 

Were they engaged in a bad business model? Absolutely. Did they need serious reform? Sure. But they're not the whipping boy conservatives make them out to be to excuse a historic market failure.

[mr_genius]

That is certainly not what I said, but if you choose to interpret it that way, I'm not going to lose sleep over it.

 

actually, it is. you can't even name 1 thing the GOP has done that you agree with.

 

time to re-evaluate. perhaps you are part of the problem.

[southsider2k5]

Where is the data supporting your initial contention? You made the claim that Fannie and Freddie bought enough of the subprime loans to cause the crisis. Provide support.

 

Sometimes I wish you would read instead of changing what I say to fit your left wing talking points to go along with some insults and conjecture.

 

Having someone out there who would purchase any loan supported and encouraged risky activity by ensuring that no matter how bad a loan was, it could be sold to fannie and freddie. There was literally no risk in the system. It was an incredibly stupid and short sighted system set up, and it was proved out with all of the stories about freddie and fannie, despite being the largest guarantee of mortgages in the country, didn't understand what the hell they were purchasing. If there would have been a traditional system that forced banks to be responsible for their own mortgages there wouldn't have been nearly the approach to risk. Instead the thought was that by giving them a place to sell the mortgages they had already financed, it would free up capital to finance more mortgages, which pushed the mortgage market past where its equilibrium should have sat. This caused a historic run in home prices, that shouldn't have been supported by reality. Pretty much it turned into a pyramid scheme that collapsed.

 

And finally, lol, at being able to find a governmental report that blames the government for its role in the collapse. That'll be the day.

 

 

[bmags]

actually, it is. you can't even name 1 thing the GOP has done that you agree with.

 

time to re-evaluate. perhaps you are part of the problem.

 

I think Romney's idea of capped deductions is very interesting and a quality idea to look into.

 

But what's the time frame here? The GOP congress of 2010-2012? They haven't done anything. They've voted 212 times to repeal obamacare for no reason.

[Soxbadger]

actually, it is. you can't even name 1 thing the GOP has done that you agree with.

 

time to re-evaluate. perhaps you are part of the problem.

 

I agree with Abraham Lincoln.

 

Kabooooom!

[southsider2k5]

He pretended that private capital was available at the time instead. His plan would have been to let Detroit go bankrupt.

 

But that doesn't make Ryan's segue into that story about Mitt any less clumsy.

 

Which is funny, because what did Obama do? Put the auto companies through bankruptcy.

[iamshack]

actually, it is. you can't even name 1 thing the GOP has done that you agree with.

 

time to re-evaluate. perhaps you are part of the problem.

In the last 4 years, there honestly are not many things the GOP has done that I agree with.

 

But I'd certainly be willing to discuss the issues if there was ever any actual discussion taking place.

 

Because I am not naming the wonderful things the Reps have done recently that makes me part of the problem? How does that logic follow?

[Jenksismyhero]

I agree with Abraham Lincoln.

 

Kabooooom!

 

 

 

[StrangeSox]

Sometimes I wish you would read instead of changing what I say to fit your left wing talking points to go along with some insults and conjecture.

 

Having someone out there who would purchase any loan supported and encouraged risky activity by ensuring that no matter how bad a loan was, it could be sold to fannie and freddie. There was literally no risk in the system. It was an incredibly stupid and short sighted system set up, and it was proved out with all of the stories about freddie and fannie, despite being the largest guarantee of mortgages in the country, didn't understand what the hell they were purchasing. If there would have been a traditional system that forced banks to be responsible for their own mortgages there wouldn't have been nearly the approach to risk. Instead the thought was that by giving them a place to sell the mortgages they had already financed, it would free up capital to finance more mortgages, which pushed the mortgage market past where its equilibrium should have sat. This caused a historic run in home prices, that shouldn't have been supported by reality. Pretty much it turned into a pyramid scheme that collapsed.

 

Fannie and Freddie were not the dominant players in the market. Some of the MBS's could be sold to F&F, but most were not. They were part of the problem, but not the problem and not a primary cause.

 

And finally, lol, at being able to find a governmental report that blames the government for its role in the collapse. That'll be the day.

I know, you reject any report or finding that doesn't agree with you out-of-hand. It is lol-worthy.

 

Can you substantiate your assertions in this post with actual data or reports or anything besides more assertions?

[MexSoxFan#1]

I can't speak for "we", I can speak for me.

 

I am better off now on an overall scale than I've ever been, I said this much in the Democrat thread. The issue is most of (if not all) of that gain is negated by local taxes and fees surging. That said, I was better off in 2009 than I was in 2006, or 2007, and I'm better off now than I was in 2009.

 

I'm a bit of an exception to the rule when it comes to this, however, as every year since my career began I've been better off the year after, successively, regardless of the economy.

I'm happy for you but my queation was "are we better off today than when Obama took office" and only the most partisan republican could say we aren't. Of course the president has had missteps along the way but if we would've had done what Romney said we should do and let the auto industry go down, we would've been in an even bigger economic mess, that isn't up for debate. Almost a million and a half of Americans are working today because of that 80 billion dollar bail out. I've seen figures that up to 4 million jobs might've been lost had George W Bush/Obama hadn't acted. It would've been a clusterf*ck the likes we've never seen before.

 

Look, things aren't nowhere near as well as we all wish they could be but this last recession was no run of the mill recession and both parties are to blame, some jobs are just not coming back, they're out there in 3rd world countries where American corporations could pay them a fraction of what they would pay here (that is immoral IMO but I won't get into that). The fact that Romney was willing to let so many people lose their jobs is what makes me think he isn't someone who cares about the middle class, add to that that Romney keeps talking about creating 12 million jobs. How? Trust us on it is what they say...

[StrangeSox]

Which is funny, because what did Obama do? Put the auto companies through bankruptcy.

 

Romney's plan would have resulted in liquidation, not a managed restructuring bankruptcy. For colloquial use, "bankruptcy" is understood as having GM end as a company.

[Y2HH]

I'm happy for you but my queation was "are we better off today than when Obama took office" and only the most partisan republican could say we aren't. Of course the president has had missteps along the way but if we would've had done what Romney said we should do and let the auto industry go down, we would've been in an even bigger economic mess, that isn't up for debate. Almost a million and a half of Americans are working today because of that 80 billion dollar bail out. I've seen figures that up to 4 million jobs might've been lost had George W Bush/Obama hadn't acted. It would've been a clusterf*ck the likes we've never seen before.

 

Look, things aren't nowhere near as well as we all wish they could be but this last recession was no run of the mill recession and both parties are to blame, some jobs are just not coming back, they're out there in 3rd world countries where American corporations could pay them a fraction of what they would pay here (that is immoral IMO but I won't get into that). The fact that Romney was willing to let so many people lose their jobs is what makes me think he isn't someone who cares about the middle class, add to that that Romney keeps talking about creating 12 million jobs. How? Trust us on it is what they say...

 

This is an unfair way of looking at things...

 

Nobody can speak for "we", because there is a huge portion of the population is IS worse off now than they were in 2009. You can't just choose to ignore that.

[mr_genius]

In the last 4 years, there honestly are not many things the GOP has done that I agree with.

 

But I'd certainly be willing to discuss the issues if there was ever any actual discussion taking place.

 

Because I am not naming the wonderful things the Reps have done recently that makes me part of the problem? How does that logic follow?

 

if the Democrats (or anyone) doesn't want partisanship, there has to be some level of compromise and an understanding of the other sides view. if you just think they are always wrong, on everything, well you have nowhere to start. your open is basically, "you guys are always wrong, do it our way". That will fail every time.

 

i just don't see how someone can complain about partisanship while saying the other party has done nothing right for 4 years. that's as partisan as you can get.

Edited October 12, 2012 by mr_genius

[Soxbadger]

I dont like either party so Im not sure where I fit in.

[StrangeSox]

http://www.cepr.net/index.php/blogs/beat-t...economic-crisis

 

The beating up on Fannie Mae as the main cuplrit in this story is similarly short on logic. Fannie Mae and Freddiie Mac lost market share at an incredibly rapid pace in the peak bubble years precisely because they were not buying the worst of the junk. That was going to the private investment banks.

 

This is not a secret. They did start to get into the junk market late in the game in 2006, precisely because they were losing market share.

 

Here's what Moody's had to say about Freddie Mac in their December 2006 assessment:

 

“ Freddie Mac has long played a central role (shared with Fannie Mae) in the secondary mortgage market. In recent years, both housing GSEs have been losing share within the overall market due to the shifting nature of consumer preferences towards adjustable-rate loans and other hybrid products. For the first half of 2006, Fannie Mae and Freddie Mac captured about 44 percent of total origination volume -- up from a 41 percent share in 2005, but down from a 59 percent share in 2003. Moody’s would be concerned if Freddie Mac’s market share (i.e., mortgage portfolio plus securities as a percentage of conforming and non-conforming origination), which ranged between 18 and 23 percent between 1999 and the first half of 2006, declined below 15 percent. To buttress its market share, Freddie Mac has increased its purchases of private label securities. Moody’s notes that these purchases contribute to profitability, affordable housing goals, and market share in the short-term, but offer minimal benefit from a franchise building perspective." (p. 6)

 

This puts things about as clearly as they possibly could be. Moody's was concerned that Freddie (the same applied to Fannie) was losing market share to the private issuers because they were not big actors in "adjustable-rate loans and other hybrid products [i.e. junk]." However, they were cheered by the fact that Freddie was moving in this direction. In other words, the private issuers were very clearly the big actors and Fannie and Freddie were jumping in as a business decision to preserve market share. In other words, it was profit, not government compassion that drove this bubble.

 

Just to be clear, Fannie and Freddie were horrible actors in this story. I criticized them throughout this period and raised the possibility of these two mortgage giants being sunk by the bubble as early as 2002. Housing is all they do, how could they have totally missed the largest housing bubble in the history of the world?

 

 

[southsider2k5]

Fannie and Freddie were not the dominant players in the market. Some of the MBS's could be sold to F&F, but most were not. They were part of the problem, but not the problem and not a primary cause.

 

 

I know, you reject any report or finding that doesn't agree with you out-of-hand. It is lol-worthy.

 

Can you substantiate your assertions in this post with actual data or reports or anything besides more assertions?

 

Taking the word of institutions who literally have a vested interest in being able to spin the blame to someone else isn't really substantive proof of anything.

 

At the end of the day, Freddie and Fannie were their as the backstop to this whole s*** show. It is immaterial who the primary seller of the original mortgage was. They all knew at the end of the day, rich Uncle Sam was there to back them up if no one else would. The fact that the whole world knew the feds were backing this paper garbage is even admitted by the CBO. They aren't about to take the next logical step and assign blame for setting up a system like this.

 

Page 30 shows they guaranteed a majority of the mortgages out there, long before this crisis happened. You can also take a peak at the chart on Page 31 to show you that their guarantees were by far the largest share of the marketplace. They also averaged about a 40% share of all mortgage debt in this country, far larger than any other entity out there, even if you take "private banks" as a category all to themselves, instead of being a sum of singular entities like they are in reality.

 

http://www.cbo.gov/sites/default/files/cbo...nniefreddie.pdf

 

Until recently, the GSEs’ debt securities and MBSs were

not officially backed by the federal government. Nevertheless,

most investors believed that the government

would not allow Fannie Mae and Freddie Mac to default

on their obligations. That perception of an implicit federal

guarantee stemmed from the very prominent role the

two entities played in the housing market and in the

broader financial markets. It also stemmed from the specific

benefits that the two entities received because of

their status as GSEs, such as not having to register their

securities with the Securities and Exchange Commission,

being exempt from state and local corporate income

taxes, and having a line of credit with the Treasury.

[Y2HH]

I'm happy for you but my queation was "are we better off today than when Obama took office" and only the most partisan republican could say we aren't. Of course the president has had missteps along the way but if we would've had done what Romney said we should do and let the auto industry go down, we would've been in an even bigger economic mess, that isn't up for debate. Almost a million and a half of Americans are working today because of that 80 billion dollar bail out. I've seen figures that up to 4 million jobs might've been lost had George W Bush/Obama hadn't acted. It would've been a clusterf*ck the likes we've never seen before.

 

Look, things aren't nowhere near as well as we all wish they could be but this last recession was no run of the mill recession and both parties are to blame, some jobs are just not coming back, they're out there in 3rd world countries where American corporations could pay them a fraction of what they would pay here (that is immoral IMO but I won't get into that). The fact that Romney was willing to let so many people lose their jobs is what makes me think he isn't someone who cares about the middle class, add to that that Romney keeps talking about creating 12 million jobs. How? Trust us on it is what they say...

 

Also, do note that there is a yin/yang to "bailing out" companies like this, as it makes them more prone to taking risks, knowing that they can use the "hide behind our workforce defense", knowing full well that when they f*** up huge, the government will bail them out of their mistakes, no matter how many times they repeat them, because that many people losing their jobs would be a bad thing. There is give and take in every action...as physics says, for every action...

 

When speaking of the broad US economy, yes, we can probably say we are better off now than in 2009. I've never been a fan of macro economics on this subject, however, as it has little to do with everyday people, and has more to do with companies.

[iamshack]

if the Democrats (or anyone) doesn't want partisanship, there has to be some level of compromise and an understanding of the other sides view. if you just think they are always wrong, on everything, well you have nowhere to start. your open is basically, "you guys are always wrong, do it our way". That will fail every time.

 

i just don't see how someone can complain about partisanship while saying the other party has done nothing right for 4 years. that's as partisan as you can get.

I said nothing about this being either party's fault. I was basically implying it is both of their faults. Although you failed to infer that.

[MexSoxFan#1]

if the Democrats (or anyone) doesn't want partisanship, there has to be some level of compromise and an understanding of the other sides view. if you just think they are always wrong, on everything, well you have nowhere to start. your open is basically, "you guys are always wrong, do it our way". That will fail every time.

 

i just don't see how someone can complain about partisanship while saying the other party has done nothing right for 4 years. that's as partisan as you can get.

There was a time when reaching across the aisle was common, Reagan and Tip O'Niell for example. Partisanship really has gotten ugly, it was bad in the Clinton years, worse in the W years and today you have an opposition party that openly admits their number 1 goal is to make the sitting president a one termer. I'm blaming both sides but the Tea Party has driven the GOP far right where they think Obama, who has raised taxes less than Reagan, a socialist. SMH.

[StrangeSox]

Taking the word of institutions who literally have a vested interest in being able to spin the blame to someone else isn't really substantive proof of anything.

 

But you'll quote the CBO at me later in this post? okay...

 

At the end of the day, Freddie and Fannie were their as the backstop to this whole s*** show. It is immaterial who the primary seller of the original mortgage was. They all knew at the end of the day, rich Uncle Sam was there to back them up if no one else would. The fact that the whole world knew the feds were backing this paper garbage is even admitted by the CBO. They aren't about to take the next logical step and assign blame for setting up a system like this.

 

If you want to make an argument against implicit government guarantees of T-B-T-F for the big banks, that's one thing. That is separate from blaming F&F for the inflated sub-prime and MBS markets, let alone all the CDS's that sunk AIG and others.

 

Page 30 shows they guaranteed a majority of the mortgages out there, long before this crisis happened. You can also take a peak at the chart on Page 31 to show you that their guarantees were by far the largest share of the marketplace. They also averaged about a 40% share of all mortgage debt in this country, far larger than any other entity out there, even if you take "private banks" as a category all to themselves, instead of being a sum of singular entities like they are in reality.

 

http://www.cbo.gov/sites/default/files/cbo...nniefreddie.pdf

 

"All loans" and subprime loans are not the same thing. You are conflating categories. You'll also notice Fannie and Freddie's total share of the secondary market declining starting in 2002, which is when the bubble really started to inflate.

[Jenksismyhero]

There was a time when reaching across the aisle was common, Reagan and Tip O'Niell for example. Partisanship really has gotten ugly, it was bad in the Clinton years, worse in the W years and today you have an opposition party that openly admits their number 1 goal is to make the sitting president a one termer. I'm blaming both sides but the Tea Party has driven the GOP far right where they think Obama, who has raised taxes less than Reagan, a socialist. SMH.

 

This is nothing new and has been a part of the process from the beginning. Unless there's a reason to compromise, you stick to your demands. Politics 101.

[iamshack]

This is nothing new and has been a part of the process from the beginning. Unless there's a reason to compromise, you stick to your demands. Politics 101.

What would be a reason to compromise if there are none now?