So far we got conspiracy to commit traffic obstruction? Or will we have to wait for a Grand Jury to convene? And where’s all the chaotic destruction, the cowbell of punks wild in the streets? Where are the asshole anarchists?
No, seriously, where? I’m wllling enough to accept that this crowd is essentially non-violent, not inclined to throw objects through store windows. Apparently not. But a couple of days ago, I would have bet my bottom dollar that this sort of action would draw urban creeps like buzzards. And by now we would be talking about all the futile violence.
But we aren’t, I was wrong, and I wonder why. What happened to the shit disturbers?
I have no idea if you misunderstand my meaning–how would I know? If you think that someone can be tricked into disobeying the very first traffic law that most Americans learn (don’t play in traffic), you’ll need to explain how that happens.
If they were tricked into thinking the police were too cowed to arrest them for long enough for them all to get onto the bridge, that’s a different creature entirely from them being tricked into thinking that their kindergarten teacher was wrong about playing in traffic.
I’m still agnostic on the protests on wall street but I just wanted to call bullshit on the whole conservative narrative on the mortgage crisis. Folks seem to think they can trot out shit that was disproven a few years ago because noone will remember it was bullshit the first time it was trotted out.
Fanie Mae has been around since the Great Depression. Then the government privatized Fan Mae and created Freddie Mac to provide some competition for it.
CRA was passed in 1977.
They have been securitizing mortgages since the late 1960’s.
So, as far as I can tell, the Conservative narrative is that after a 40 year incubation period, these institutions and policies led to the mortgage crisis that led to the financial meltdown. Are you fucking serious?
We have had no doc mortgages for decades. When the guy that owned the car dealership (who had very little taxable income because he plowed all his profits back into his business, or just cheated on his taxes) wanted to buy a million dollar house, he went to his banker who knew he was good for it. The banker would make the loan and inventory it because noone would ever buy that mortgage from him (because Fannie and Freddie wouldn’t buy it), it simply wasn’t liquid. It wasn’t no doc mortgages per se that drove the financial crisis, it was how the market developed to overlook the fact that there was a reason that no doc mortgages were illiquid. Banks thought they understood how these mortgages performed and started buying them up and packaging them (so now the loan officer was giving his secretary a mortgage a mortgage on that million dollar house without documentation because he could flip the mortgage over to Lehman Brothers).
After 30 years of CRA, banks had developed models on how subprime mortgages performed (faulty models as it turned out, because the default rate on a primary home mortgage of a poor black family with a steady income but bad credit and a small down payment was markedly different than a NINJA loan). In fact most subprime mortgages had been originated by financial institutions that are not subject to the CRA. They based their pricing and default assumptions based on the behaviour of a bunch of poor black families and used it to predict how a bunch of house flippers would act.
Then the private label securities market took off (interest rates were really low and investors were chasing returns) and started swallowing up market share and the “crack spread” (basically the profit from taking crappy mortgages and packing them into investment securities) on these non-conforming mortgages was much higher than for conforming mortgages. In a famous phone call to Fannie Mae, Angelo Mozillo told Fannie Mae that they could either buy more of his subprime mortgages or he would divert his conforming mortgages to private label mortgage bundlers. Fannie mae (like Freddie Mac), driven by their profit motive and the perverse incentives provided to executives, took on more of this crap. If Fannie mae were entirely private with no government involvement at all, they are likely to have engaged in more of this sort of behaviour not less.
Everyone was making a boatload on these crappy mortgages because the default assumptions were way off (everyone was using the best available information but almost everyone at least suspected that the information was bad or at least non-predictive (and the ratings agencies were almost deliberately obtuse in failing to recognize the flaws in the models)) and this led to easy credit for crappy borrowers.
Since the beginning of time, bad credits have wanted to borrow money for soemthing they simply couldn’t afford and lending them this money should properly be viewed as charity and not a loan. I learned this lesson on Popeye, when whimpy would constantly offer to pay Tuesday for a hamburger today. The onus of underwriting, the burden of managing credit has ALWAYS been with the lender, not the borrower. And while any fraudsters should go to jail, it is fucking retarded to try and lay the blame for the financial crisis the typical family that overborrowed for more house than it could afford in order to move into a better school disctrict for their kids or a better neighborhood away from crime.
It was a market failure, not a government one that led to the bubble and the financial crisis.
Ginnie Mae/FHA, was largely immune from the financial crisis because it did not try to compete in an already crowded field of mortgage providers, it simply gave up market share to the point they were hardly doing anything at all.
If anything, The problem with Fannie Mae and Freddie Mac was not too much government it was not enough government. Subjecting them to a profit motive and competitive pressure exposed them to perverse incentives. Perhaps the problem would not have gotten quite as big if Fannie and Freddie had followed GNMA’s example, perhaps other market participants would not have been able to step in and cover the gap but it should be clear that having GSEs did not “cause” the financial crisis.
Easy credit on home mortgages drove up the price of homes and that affected every lender good or bad (see if you can spot the externality). Even Ginnie Mae, but because Ginnie Mae didn’t compete for market share when the market was already providing plenty of mortgage liquidity, they didn’t get hit very hard. Fannie and Freddie had more market exposure and got hit much harder.
It is one thing to impose a burden or regulation on the market to implement some government policy (e.g. the telephone tax that all telecoms pay to subsidize telephone access to rural areas). It is another thing to create a special class of private entity that has special benefits but have to implement some special government policy (see Post Office, monopoly on first class mail but required to reach every address in the United States, either cut them loose entirely or make their competitiors also pay for rural service, better yet, keep the whole thing in house.
The proximate cause, the “but for” cause of the financial crisis was not Fannie and Freddie. They were not leading the charge on the sort of stuff that drove the market into buying crap mortgages and packaging them. If Fannie and Freddie were the ONLY ones making mortgage backed suecurities, the bubble would never have gotten so big (if it developed at all). The proximate cause was private label securities.
Fannie and freddie were also corporations. They also had a profit motive. Compare with Ginnie mae.
As far as I can tell, the “conservative narrative” is that political elements which were in favor of increasing minority and low income home ownership (mostly but not exclusively liberals) pushed Fannie and Freddie to lower their underwriting standards, which was a major cause of the eventual subprime housing market collapse.
Fannie and Freddie did not write mortgages. That was done by mortgage companies that popped up when the banks wanted a hell of a lot more mortgages written.
The banks were making money at an incredible rate with no risk. They were packaging and selling them off immediately. That is why they were comfortable with continuously dropping qualifications.
You are digging in the wrong spot.
The banks need to sell the mortgages to Freddie and Fannie, so they are beholden to whatever standards those entities set.
It’s as if someone has a business selling widgets to Wal-Mart. Technically he sets the standards, but in reality the standards are whatever Wal-Mart says they should be. If the widgets are manufactured to Wal-Mart standards, it’s a mistake to focus blame on the manufacturer.
[In this case it’s not completely clear that the banks were rigorous enough in enforcing the standards - I believe this is the focus of lawsuits at this time. But the standards themselves are also properly part of the issue.]
Unfortunately for the nutbags (including our own Scylla), this narrative is also in conflict with the facts. It’s been repeatedly documented that Fannie’s and Freddie’s share of the subprime market was pretty small until very late in the game, that as Damuri Ajashi said, the private market was the driver here.
Private mortgage lenders were beating the bushes to find subprime people to lend to, because there was incredible demand from the banksters for subprime mortgages that they could package, and slice and dice into tranches where the top tranche could be labeled AAA. And where was the demand for this top-tranche investment coming from? Simply put, there was a lot of money sloshing around at the top, looking for investments with AAA security, but with a rate of return commensurate with greater risk. Everybody wanted some.
Hell, the big banks themselves, who should have known better, who should have been packaging and selling this stuff, thereby distributing the risk, were hanging onto too much of it because they wanted it - which depending on who you talk to, was either a major factor, or the major factor, in bringing the banks down.
And a lot of 'em still have a lot of shit on their books, all these tons of subprime-based securities that are unlikely to ever be worth their book value. Which is why our financial system is still at risk.
It might be, but the biggest lawsuits concern the chain of title. As banks were slicing and dicing and packaging and swapping mortgages, they weren’t doing a very good job of recording changes of title to those mortgages in the county land records in the 3000+ counties around the country. So banks were foreclosing without the legal right to do so, and in a lot of instances it wasn’t clear that the foreclosing bank would have had the right to foreclose even if all the changes in ownership of the mortgage had been properly recorded as they were happening.
Note to Scylla: I’m sure that was all Barney Frank’s fault too.
It was an effort to be polite, to suggest that perhaps I had misunderstood. An effort smartly rejected, I note.
You seem to think this “kindergarten teacher” theme of yours is some kind of super-duper trump card, that I must fall back in disarray before its mighty power. Meh.
Explain? Any number of them. They might have been foolish enough to believe in the good indentions of the police. They might have been misinformed. Or a lower ranking police officer might have advised them only to be overruled.
Why would they believe? Possibly on the advice of their kindergarten teachers, I suppose. Respect for authority, and all that. My guess is that these people are virgins to protest, and don’t know that if you are protesting the Established Order of Things, the police are not your friend. These recent actions should go a long way to educating them. The stuff they don’t tell you in kindergarten.
Its always a bit sad to see innocence vanish, but it is a form of ignorance, I suppose. They’ll know better next time.
If this had been a spontaneous protest by the local VFW’s would they have been arrested? I think not. But then, my kindergarten teacher never advised me as to the strict enforcement of the law, depending on the nature of the violators. Had to learn that myself, the hard way.
“You there, 'luc! When we got to that last line, about “liberty and justice for all”, I saw that smirk! This will go on your Permanent Record!”
What I’ve written is my impression, but I’m not sure - you could be right.
What I am pretty sure of is that what I wrote is the “conservative narrative”, although whether that narrative is correct or not is another story.
[I do know that at this time Fannie and Freddie are drivers of lending standards, and the banks won’t lend anything that doesn’t meet those standards, but this might be only the aftermath of the mortgage crisis.]
Is my memory at fault? I seem to recall that the Bushiviks were very enthusiastic about the housing market. To the point that any time someone suggested that their policies were not in the best interests of our economy, they would instantly begin to cheerlead for the housing market, how everybody’s equity was going up, up, up! Everybody was making a ton of free money. because the housing market was never going to go down! Don’t recall them making any complaints about Freddie and Fannie then.
And why not toddle on down to your local bank, borrow some of that free money, and spend it! No worries, your increased equity will cover it, and then some!
Nonsense. If they believed in the good intention of the police, they’d have believed that the police would arrest people who were deliberately blocking traffic–y’know, they’d believe that the police would enforce the law impartially. Maybe they believed in the wimpiness of the police, or their own ability to overpower the police via a mob, as evidenced by Tweets like “OWS has taken over Brooklyn Bridge!” But that’s different from believing in good intentions.
Given the protestors’ own reports that the police, through bullhorns, advised the front of the crowd that they needed to stay off of the road and limit themselves to the pedestrian walk, and given no reports I’ve seen that any protestor heard a cop say it was okay to walk on the street, this is quite a supposition.
Maybe they don’t know that, but they should know that if you are breaking the law, the police are not your friend. Back to kindergarten, which may not be a trump card, but you’ve not explained yet how people would reach adulthood lacking the default understanding that you shouldn’t play in traffic.
Justice for all means that if you break the law, you suffer the consequences, whether you’re a veteran or a hippie or a busy executive. You don’t think that should have happened: you seem to despise the very idea of justice for all. Is that why you were caught smirking?
Actually, the Bush administration waged a regulatory and PR war against the GSE’s, jokingly called “Operation Noriega” within the White House. Quoting from All the Devil’s Are Here by Bethany McClean and Joe Nocera:
Chapter 12, “The Fannie Follies”, page 177.
Of course, the end result was that the Bush administration made things worse because:
The war pushed the GSE’s to invest more money into riskier mortgages, and
The focus on Freddy and Fannie blinded Congress to the dangers posed by systemic risks in the private mortgage bond market.
Real civil disobedience involves people who deliberately break the law and accept the consequences as a way of grinding the gears of injustice to a halt.
This action involves people who deliberately broke the law and then, when they took consequences for it, whined about getting tricked.
It’s pitiful, and rather than suggesting I’m biased (I who would dearly love to see corporate personhood eliminated, who would love to see tax brackets returned to 1970s levels, who doesn’t believe in private property as anything more than a useful legal fiction), you need to look at your own un-nuanced defense of these pathetic excuses for protestors.
