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Old 10-08-2008, 11:47 AM   #1
GarfieldJL
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Sub-Prime Mortgage Crisis

This thread is about the events that caused this crisis. While there were people on both sides of the aisle that are responsible, there is a pattern that implicates 1 party even their Presidential Candidate far more than the other.
I was asked to make a new topic concerning this, so in the spirit of quickly going over some of my prior arguments from http://www.lucasforums.com/showthrea...=192771&page=2

Quote:
Quote:
Originally Posted by Web Rider View Post
ALL banks have ties to the federal government.
Not at the level Freddie Mac and Fannie Mae did, they are actually technically owned by the Federal Government.

Quote:
Dood, you almost made me spit up my drink. I can picture it now, Obama going around forcing these multi-billion dollar banks to issue bad loans. Man, what's even more hilarious is that you're serious.:¬:
Sorry that the truth is so funny.

Quote:
In 1995, Illinois Gov. Jim Edgar balked at implementing the federal motor voter law out of concern that letting people register via postcard and blocking the state from pruning voter rolls might invite vote fraud. A young lawyer named Barak Obama, a community organizer himself, sued on behalf of ACORN and won. ACORN later invited Obama to train its staff on voter registration drives.
http://noquarterusa.net/blog/2008/09...rime-mortgage/

http://www.pittsburghlive.com/x/pitt.../s_584284.html


Quote:
Okay, Obama did not force banks to do anything. Anything a bank did was the decision of their corporate executives.
That isn't entirely true.

http://www.mediacircus.com/2008/10/o...ake-bad-loans/

Quote:
Case Name
Buycks-Roberson v. Citibank Fed. Sav. Bank Fair Housing/Lending/Insurance
Docket / Court 94 C 4094 ( N.D. Ill. ) FH-IL-0011
State/Territory Illinois
Case Summary
Plaintiffs filed their class action lawsuit on July 6, 1994, alleging that Citibank had engaged in redlining practices in the Chicago metropolitan area in violation of the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691; the Fair Housing Act, 42 U.S.C. 3601-3619; the Thirteenth Amendment to the U.S. Constitution; a*nd* 42 U.S.C. 1981, 1982. Plaintiffs alleged that the Defendant-bank rejected loan applications of minority applicants while approving loan applications filed by white applicants with similar financial characteristics and credit histories. Plaintiffs sought injunctive relief, actual damages, and punitive damages.

U.S. District Court Judge Ruben Castillo certified the Plaintiffs’ suit as a class action on June 30, 1995. Buycks-Roberson v. Citibank Fed. Sav. Bank, 162 F.R.D. 322 (N.D. Ill. 1995). Also on June 30, Judge Castillo granted Plaintiffs’ motion to compel discovery of a sample of Defendant-bank’s loan application files. Buycks-Roberson v. Citibank Fed. Sav. Bank, 162 F.R.D. 338 (N.D. Ill. 1995).

The parties voluntarily dismissed the case on May 12, 1998, pursuant to a settlement agreement.
Plaintiff’s Lawyers Alexis, Hilary I. (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Childers, Michael Allen (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Clayton, Fay (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Cummings, Jeffrey Irvine (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Love, Sara Norris (Virginia)
FH-IL-0011-9000
Miner, Judson Hirsch (Illinois)
FH-IL-0011-7500 | FH-IL-0011-9000
Obama, Barack H. (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Wickert, John Henry (Illinois)
FH-IL-0011-9000
And the lawsuit was courtesy of Acorn.

Quote:
ONE key pioneer of ACORN's subprime-loan shakedown racket was Madeline Talbott - an activist with extensive ties to Barack Obama. She was also in on the ground floor of the disastrous turn in Fannie Mae's mortgage policies.

Long the director of Chicago ACORN, Talbott is a specialist in "direct action" - organizers' term for their militant tactics of intimidation and disruption. Perhaps her most famous stunt was leading a group of ACORN protesters breaking into a meeting of the Chicago City Council to push for a "living wage" law, shouting in defiance as she was arrested for mob action and disorderly conduct. But her real legacy may be her drive to push banks into making risky mortgage loans.
http://www.nypost.com/seven/09292008...als_131216.htm
On the Flipside the Republicans including John McCain had been trying to fix this problem.

Quote:
Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were "illusions deliberately and systematically created" by the company's senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight's report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae's former chief executive officer, OFHEO's report shows that over half of Mr. Raines' compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator's examination of the company's accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac--known as Government-sponsored entities or GSEs--and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay.

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I urge my colleagues to support swift action on this GSE reform legislation.
-- Senator John McCain on May 25, 2006

http://www.govtrack.us/congress/reco...&bill=s109-190

Discuss please:
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Old 10-08-2008, 11:50 AM   #2
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You're shifting the blame solely onto Obama?

No one person (or indeed, party) is responsible for this mess. I find it stupid to keep pointing fingers in this manner, when, everyone ought to actually be working out a way to sort out this increasing crisis.






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Old 10-08-2008, 11:52 AM   #3
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Quote:
Originally Posted by Astor_Kaine View Post
You're shifting the blame solely onto Obama?

No one person (or indeed, party) is responsible for this mess. I find it stupid to keep pointing fingers in this manner, when, everyone ought to actually be working out a way to sort out this increasing crisis.
I'm not saying he had sole responsibility, but he is partially responsible for this mess.


If you'll look at John McCain's record, he actually tried to fix this mess years ago. Would we even be in this mess if S-190 had been passed?
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Old 10-08-2008, 11:53 AM   #4
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Wow. What subprime crisis are you talking about? We have a credit crisis brought on by a number of factors one of which was subprime loans, but we do not have a subprime crisis in this Country.
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Old 10-08-2008, 11:57 AM   #5
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Originally Posted by mimartin View Post
Wow. What subprime crisis are you talking about? We have a credit crisis brought on by a number of factors one of which was subprime loans, but we do not have a subprime crisis in this Country.
The sub-prime loans is what caused the credit crunch. They are what caused the enormous number of people being unable to pay the mortgage payments.

That traces back to a court case in Illinois, as well as Freddie/Fannie.


Also another interesting source that is pointing out NYTimes lack of credibility: (is relevant to the topic)
http://timeswatch.org/articles/2008/20080926144706.aspx

Last edited by GarfieldJL; 10-08-2008 at 12:12 PM.
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Old 10-08-2008, 12:21 PM   #6
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Quote:
Originally Posted by GarfieldJL View Post
The sub-prime loans is what caused the credit crunch. They are what caused the enormous number of people being unable to pay the mortgage payments.
Saying it is so, does not make it so.
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Old 10-08-2008, 12:24 PM   #7
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Quote:
Originally Posted by GarfieldJL View Post
Also another interesting source that is pointing out NYTimes lack of credibility: (is relevant to the topic)
http://timeswatch.org/articles/2008/20080926144706.aspx
Come on. That 'organisation' is entirely dedicated to discrediting the NY times. How anyone can take that as a serious source when it's even more biased than the paper it's supposedly exposing?






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Old 10-08-2008, 12:31 PM   #8
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We have a big problem with greedy lenders, greedy CEOs at major banking organizations, and people who didn't take responsibility for checking out their own finances before buying a house that was way out of their reach given their income and available resources. Lenders gave people who really shouldn't have had loans those home loans, and people took them. When housing prices started to fall, it meant those loans were now for over-valued products, and people couldn't sell their homes without taking a huge loss, so they were stuck with huge loan payments and no way to get out without defaulting or bankruptcy.

This isn't an Obama-McCain issue. It's a massive problem starting with:

de-regulation in the '90's

inadequate or complete lack of appropriate oversight for Fannie Mae and Freddie Mac by the gov't when it privatized these agencies

fraudulent or inappropriate lending (who in their right mind thinks it's good business practice to give someone with no job, no income, and no assets a home loan????)

fraudulent mis-statement of earnings by CEOs in some major investment firms, incompetent management of some other major investment firms

fraudulent lenders in some cases

some buyers taking out loans for more than what they could afford and abdicating their personal responsibility to do their homework on what they could truly afford

an oil crisis these last 2 years driving up prices on everything and causing an economic problem that affected people's ability to repay their loans, particularly those who were in a fragile financial situation to begin with

Congressional leaders on both sides of the aisle sticking their heads in the sand when it was clear a couple years ago that action was needed to forestall this crisis

probably there's even more I'm missing than what I've listed, but it's definitely much more than either Obama or McCain, and the solution is going to be much more than either of these men will be able to effect as President, too.


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Old 10-08-2008, 12:32 PM   #9
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Quote:
Originally Posted by mimartin View Post
Saying it is so, does not make it so.
Outlining how it caused the credit crunch:
1. Okay, banks put out money for risky loans which are guarenteed by Freddie/Fannie

2. Loans go bad, and properties have to go back on market where they aren't selling.

3. Banks lose money and go to Freddie/Fannie to get their money back

4. Freddie/Fannie doesn't have the money

5. Banks are unable to loan money out to other people

Looks to me like it is so.

Quote:
Come on. That 'organisation' is entirely dedicated to discrediting the NY times. How anyone can take that as a serious source when it's even more biased than the paper it's supposedly exposing?
At this point the NYTimes has been hit for being disreputably biased for the liberal left by so many sources, it's kinda hard to disprove this site in that regard, so yeah I'd trust them to be less biased than the NYTimes. Heck I'd trust the National Enquirer more than the NYTimes, and I wouldn't trust the Enquirer to give me real news to begin with.
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Old 10-08-2008, 01:00 PM   #10
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Quote:
Originally Posted by GarfieldJL View Post
Looks to me like it is so.
No doubt, but that still does not make it so. The subprime loans were a factor, but only a factor.

Jae seems to have a handle on it. It may not be written in financial or legal terms, but it is accurate summation.
Now if I could put it into medical terms, I'd be in great shape. --Jae

Last edited by Jae Onasi; 10-08-2008 at 01:43 PM.
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Old 10-08-2008, 01:05 PM   #11
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Originally Posted by mimartin View Post
No doubt, but that still does not make it so. The subprime loans were a factor, but only a factor.

Jae seems to have a handle on it. It may not be written in financial or legal terms, but it is accurate summation.
Actually the problem with Jae's argument is that Freddie/Fannie don't fall under the deregulations, because of their unique ties to the Federal Government.
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Old 10-08-2008, 01:38 PM   #12
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You may want to read up a little on what Freddie Mae and Freddie Mac are and what they do before making accusing someone of being wrong.

Fannie Mae

Freddie Mac

Federal takeover of Fannie Mae and Freddie Mac

Your remarks make it oblivious that all you are trying to do is play the blame game, but without the knowledge to do so properly.
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Old 10-08-2008, 01:41 PM   #13
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Freddie/Fannie are not the entire cause, Garfield. They're only part of this giant cascade failure.


From MST3K's spoof of "Hercules Unchained"--heard as Roman medic soldiers carry off an unconscious Greek Hercules on a 1950's Army green canvas stretcher: "Hi, we're IX-I-I. Did somebody dial IX-I-I?"

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Old 10-08-2008, 01:44 PM   #14
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Freddie/Fannie are not the entire cause, Garfield. They're only part of this giant cascade failure.
It was more than just a trivial part, it was the start of the cascade. It finally came to a head when oil prices went up.

And both Freddie/Fannie were created by the Federal Government.
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Old 10-08-2008, 01:53 PM   #15
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Freddie and Fannie had no impact on CEO fraud, oil prices and resultant inflation, housing devaluation, predatory lenders, or foolish buyers. The 2 agencies were created by the gov't, but Fannie Mae was privatized in '68.


From MST3K's spoof of "Hercules Unchained"--heard as Roman medic soldiers carry off an unconscious Greek Hercules on a 1950's Army green canvas stretcher: "Hi, we're IX-I-I. Did somebody dial IX-I-I?"

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Old 10-08-2008, 02:15 PM   #16
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Freddie and Fannie had no impact on CEO fraud, oil prices and resultant inflation, housing devaluation, predatory lenders, or foolish buyers. The 2 agencies were created by the gov't, but Fannie Mae was privatized in '68.
Uh actually it did, Freddie

Freddie/Fannie is tied to the following: housing devaluation, predatory lending, and foolishly buying property. Heck they were paid by the number of loans they issued.


The CEO Fraud partially ties in.


The only thing it doesn't tie into is oil prices, aside from being the straw that broke the camel's back.
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Old 10-08-2008, 07:27 PM   #17
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Quote:
Originally Posted by GarfieldJL View Post
Uh actually it did, Freddie

Freddie/Fannie is tied to the following: housing devaluation, predatory lending, and foolishly buying property. Heck they were paid by the number of loans they issued.


The CEO Fraud partially ties in.


The only thing it doesn't tie into is oil prices, aside from being the straw that broke the camel's back.
I bet you missed correlation and causation when you went to school.


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Old 10-08-2008, 08:11 PM   #18
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Quote:
Originally Posted by GarfieldJL View Post
Uh actually it did, Freddie

Freddie/Fannie is tied to the following: housing devaluation, predatory lending, and foolishly buying property. Heck they were paid by the number of loans they issued.

The CEO Fraud partially ties in.

The only thing it doesn't tie into is oil prices, aside from being the straw that broke the camel's back.
Please show me where Freddie/Fannie informed lenders to be predatory. Please show me where buyers were forced to sign a home loan.
Please show me where Freddie and Fannie manipulated housing prices.
Please show me where Freddie and Fannie told CEOs to commit fraud.


From MST3K's spoof of "Hercules Unchained"--heard as Roman medic soldiers carry off an unconscious Greek Hercules on a 1950's Army green canvas stretcher: "Hi, we're IX-I-I. Did somebody dial IX-I-I?"

Read The Adventures of Jolee Bindo and see the amazing Peep Surgery
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Old 10-08-2008, 10:26 PM   #19
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Quote:
Originally Posted by Jae Onasi View Post
Please show me where Freddie/Fannie informed lenders to be predatory. Please show me where buyers were forced to sign a home loan.
Please show me where Freddie and Fannie manipulated housing prices.
Please show me where Freddie and Fannie told CEOs to commit fraud.
They were paid by the loan, the more loans they made the more money they earned.
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Old 10-08-2008, 10:29 PM   #20
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She said show her, not tell her.

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