Need Info and assistance - Housing Crisis Genesis

[supermike80 1,286]

My bro in law and I got into a debate last night over the genesis of the housing crisis.  I admit I am not an expert but I remember reading how a big part of it was the Clinton administration's relaxing of housing lending standards to encourage low income and minority participation into the housing market.  Out come these silly loans that people truly couldn't afford and boom..The entire house crumbled.

He completely blames the Bush administration for allowing banks to merge their investment and savings funds into one, exposing "good" money like savings accounts, to "bad" money like subprime mortgages.  He does not in anyway say the Clinton administration had anything to do with it.

I said..If this merger allowed under Bush did happen(possible...I didn't know at the time) allowed good money to blend with bad money(bad cause of the bad loans) then it was more due to the Clinton administration allowing the bad loans in the first place.

My point was,which I couldn't get through to him, was if the Bush admin did allow the merging of these two sources of funds, it wouldn't have been a bad thing if both pieces were solid..but the mortgage part was bad, I doubt Bush knew it, and this is why it failed.  

 

Any links help out there you guys might want to share?   

[RLLD 3,455]

I think it will depend on who you might be speaking to..... but in general the foundation was laid down by Reagan with the  Housing and Community Development Act of 1977.

But the real gasoline on the fire moment was in 1995 Clinton loosened housing rules by rewriting the Community Reinvestment Act, which put added pressure on banks to lend in low-income neighborhoods,

With this the stage was set. Think of it as like cocking the hammer back on a handgun. Later Bush would sign the Sarbanes-Oxley Act, which on its face seems good, but on the back end he was urging the hedge funds to bail things out after the hangover the tech busts and Enron. Then you had clowns like Stan Oneal at Merril pumping the system full of CDO's, Greenspan gaming the interest rates.

The banks were suddenly able to compartmentalize garbage loans with good ones, sell them off, get more funds, make more bad loans. They were making money hand over fist selling garbage loans to investors. This artificially inflated home values well-past their intrinsic values.  

Then you had morons signing on to loans they could not possible afford, coupled with other morons happily selling these assets for utter bullsh!t values. All along there was opportunity for all the check values to halt this, but the system was chugging along, feeding on itself.

This lasted until those CDO's started to wilt a bit, and with it the appetite for them. It was effectively a huge ponzi scheme

[supermike80 1,286]

Well I found this link:

http://content.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877322,00.html

time magazine of all sources so his liberal mind wont reject it cause its from the dreaded Fox News.

His entire argument was based on the fact that Bush repealed the Glass_Steagall act, and it turns out it was actually Clinton.   So his entire argument just went poof. 

[supermike80 1,286]

1 minute ago, Ray Lewis's Limo Driver said:

I think it will depend on who you might be speaking to..... but in general the foundation was laid down by Reagan with the  Housing and Community Development Act of 1977.

But the real gasoline on the fire moment was in 1995 Clinton loosened housing rules by rewriting the Community Reinvestment Act, which put added pressure on banks to lend in low-income neighborhoods,

With this the stage was set. Think of it as like cocking the hammer back on a handgun. Later Bush would sign the Sarbanes-Oxley Act, which on its face seems good, but on the back end he was urging the hedge funds to bail things out after the hangover the tech busts and Enron. Then you had clowns like Stan Oneal at Merril pumping the system full of CDO's, Greenspan gaming the interest rates.

The banks were suddenly able to compartmentalize garbage loans with good ones, sell them off, get more funds, make more bad loans. They were making money hand over fist selling garbage loans to investors. This artificially inflated home values well-past their intrinsic values.  

Then you had morons signing on to loans they could not possible afford, coupled with other morons happily selling these assets for utter bullsh!t values. All along there was opportunity for all the check values to halt this, but the system was chugging along, feeding on itself.

This lasted until those CDO's started to wilt a bit, and with it the appetite for them. It was effectively a huge ponzi scheme

I was totally willing to concede that it was fueled by both sides.  What frustrated me was that he wouldn't put any fault on the Clintons, just wanted to blame Bush. And that was wrong

[RLLD 3,455]

Just now, supermike80 said:

Well I found this link:

http://content.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877322,00.html

time magazine of all sources so his liberal mind wont reject it cause its from the dreaded Fox News.

His entire argument was based on the fact that Bush repealed the Glass_Steagall act, and it turns out it was actually Clinton.   So his entire argument just went poof. 

 

There is no "one" place to lay blame, there is plenty to go around.....particularly with the banksters

[supermike80 1,286]

Meh...Even when I wrecked his contention that Bush was the main reason, he still blames republicans.  I told him if he isn't willing to even acknowledge the Clinton's culpability in this,  we cant continue to debate.  He hit me with this:

"Just because there are dry trees doesn't mean they had to light them on fire.  Another republican disaster with no care for the common man."

So I guess it somehow was the republicans fault people took on mortgages they couldn't pay.

I didn't reply--I don't have any tolerance for blind loyalties and not at least being willing to see beyond what your biases tell you

[RLLD 3,455]

It is challenging to "debate" folks who align their stance primarily to ideology.  

[frank 2,145]

I want to party with you guys.

[RLLD 3,455]

2 minutes ago, frank said:

I want to party with you guys.

Are you flirting with me? 

[Drizzay 645]

1 hour ago, supermike80 said:

Meh...Even when I wrecked his contention that Bush was the main reason, he still blames republicans.  I told him if he isn't willing to even acknowledge the Clinton's culpability in this,  we cant continue to debate.  He hit me with this:

"Just because there are dry trees doesn't mean they had to light them on fire.  Another republican disaster with no care for the common man."

So I guess it somehow was the republicans fault people took on mortgages they couldn't pay.

I didn't reply--I don't have any tolerance for blind loyalties and not at least being willing to see beyond what your biases tell you

Its not shocking that he is blaming republicans, instead of blaming the people who got themselves in the mess to begin with.  There is never any personal responsibility.

[Strike 3,977]

It's all my fault.  Ask RLLD.

[RLLD 3,455]

3 minutes ago, Drizzay said:

Its not shocking that he is blaming republicans, instead of blaming the people who got themselves in the mess to begin with.  There is never any personal responsibility.

I am always fascinated by folks who seem intent that the government should deliver to us health coverage, civil rights protections....and yet seem intent to suggest they are the source of these problems....

[RLLD 3,455]

Just now, Strike said:

It's all my fault.  Ask RLLD.

Strawmen are fun too

[NorthernVike 2,080]

[Hardcore troubadour 12,649]

Watch the Frontline episode "The Warning". It's a great jump off for the  Genesis of the housing crises. It had bi-partisan support, as you will see. 

[SenatorRock 708]

The movie Big Short is entertaining and informative. Great cast.

 

Ray gave the best answer OP. Also, quit discussing politics with people. All it does is bring out the worst in people. No matter how many facts they are presented with they will not change their mind. Like trying to convince a Brown's fan to root for the Steelers.

[JustinCharge 2,397]

You need to read about the Community Reinvestment Act:

https://en.wikipedia.org/wiki/Community_Reinvestment_Act

This Act was passed under Jimmy Carter in 1977.  The reason for its passage was:

Before the Act was passed, there were severe shortages of credit available to low- and moderate-income neighborhoods. In their 1961 report, the U.S. Commission on Civil Rights found that African-American borrowers were often required to make higher downpayments and adopt faster repayment schedules. The commission also documented blanket refusals to lend in particular areas (redlining).

So basically, banks were trying to follow sound fiscal guidelines when handing out home loans.  Liberals came along in the 1970s and said that was racist and sexist.

So they passed legislation that BASICALLY said "You either start handing out loans to high-risk clients or we will investigate you, find you in violation of this Act,
and probably fine you severely." So various financial institutions did. This in turn helped cause the Savings and Loan crisis in the 1980s

President George H.W. Bush then tried to reform this as part of solving the S & L crisis:

The Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) was enacted by the 101st Congress and signed into law by President George H. W. Bush in the wake of the savings and loan crisis of the 1980s. As part of the subsequent general reform of the banking industry, FIRREA added section 807 (12. U.S.C. § 2906) to the existing CRA statutes in an effort to improve the area concerning insured depository institution examinations.

The new language now required the appropriate Federal regulatory agency to prepare a written evaluation after completing the examination of an institution's record in meeting the credit needs of its entire community, including any low- and moderate-income neighborhoods within it.

Although Bush's reform was more symbolic than anything else, requiring a written evaluation as part of meeting credit needs.

During the Clinton administration we had 2 pieces of legislation that helped cause the housing crisis in the 2000s.

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, which repealed restrictions on interstate banking, listed the Community Reinvestment Act ratings received by the out-of-state bank as a consideration when determining whether to allow interstate branches.

This made it easier for banks to do businesses nationwide BUT ONLY if they follows CRA guidelines and handed out risky loans.

In 1999 the Congress enacted and President Clinton signed into law the Gramm-Leach-Bliley Act, also known as the Financial Services Modernization Act. This law repealed the part of the Glass–Steagall Act that had prohibited a bank from offering a full range of investment, commercial banking, and insurance services since its enactment in 1933. On signing the Gramm-Leach-Bliley Act, President Clinton said that it, "establishes the principles that, as we expand the powers of banks, we will expand the reach of the [Community Reinvestment] Act"

Then in 1999, Clinton gets an Act passed to expand the CRA further by allowing these nationwide banks to offer a full suite of services (again only if compliant with CRA). So Clinton in these two separate Acts encouraged banks to hand out high risk loans to low income applicants in exchange for nationwide access.

 

[Hardcore troubadour 12,649]

1 hour ago, riversco said:

You need to read about the Community Reinvestment Act:

https://en.wikipedia.org/wiki/Community_Reinvestment_Act

This Act was passed under Jimmy Carter in 1977.  The reason for its passage was:

Before the Act was passed, there were severe shortages of credit available to low- and moderate-income neighborhoods. In their 1961 report, the U.S. Commission on Civil Rights found that African-American borrowers were often required to make higher downpayments and adopt faster repayment schedules. The commission also documented blanket refusals to lend in particular areas (redlining).

So basically, banks were trying to follow sound fiscal guidelines when handing out home loans.  Liberals came along in the 1970s and said that was racist and sexist.

So they passed legislation that BASICALLY said "You either start handing out loans to high-risk clients or we will investigate you, find you in violation of this Act,
and probably fine you severely." So various financial institutions did. This in turn helped cause the Savings and Loan crisis in the 1980s

Stop. The bulk of the risky loans weren't given to areas covered by the CRA. A small percentage were.  Let's not pretend that the government was pushing the banks around. It's the other way around.  

[Cdub100 3,381]

There's a lot of blame to go around but you are mostly right.  Personally I think the blame falls on the individual who received the loans and couldn't pay them. Clinton allowed that to happen.

 

I was a huge Clinton fan just a few years ago but we are really hurting from many of his policies. 

 

[JustinCharge 2,397]

Sorry I made a huge edit to my last post.  For some reason, the forum balked at my attempt to say S & L with no spaces.  If a post contains S & L with no spaces, the forum software will prevent the post from going thru for a few attempts.  Then if you keep trying, your IP is apparently banned for a few hours.  Took me a while to solve that.  But I figured it out and finished my post.