Alan Greenspan says...

[CaP'N GRuNGe]

Hey, not my bad.

[wiegie]

Greenspan is such a hack... everybody knows that everything is the fault of those stupid liberals who forced banks to give free money away to uppity negroes who wanted to buy houses.

[MikesVikes]

Greenspan is such a hack... everybody knows that everything is the fault of those stupid liberals who forced banks to give free money away to uppity negroes who wanted to buy houses.

 

 

You failed to mention the Cowboys or Emmitt Smith to hit the trifecta.

[WaterMan]

If we are to retain a dynamic world economy capable of producing prosperity and future sustainable growth, we cannot rely on governments to intermediate saving and investment flows. Our challenge in the months ahead will be to install a regulatory regime that will ensure responsible risk management on the part of financial institutions, while encouraging them to continue taking the risks necessary and inherent in any successful market economy.

 

So who's doing what?

[Azazello1313]

Greenspan is such a hack... everybody knows that everything is the fault of those stupid liberals who forced banks to give free money away to uppity negroes who wanted to buy houses.

 

please stop stealing yukon's schtick.

[billay]

Greenspan is such a hack... everybody knows that everything is the fault of those stupid liberals who forced banks to give free money away to uppity negroes who wanted to buy houses.

 

I have a newfound kindship with wiegie

[Azazello1313]

greenspan is suck a hack....everyone knows everything is the fault of george bush's tax cuts and massive deregulation.

 

[wiegie]

greenspan is suck a hack....everyone knows everything is the fault of george bush's tax cuts and massive deregulation.

 

Actually, Greenspan sort of hints at half of what you are saying:

Our challenge in the months ahead will be to install a regulatory regime that will ensure responsible risk management on the part of financial institutions

.

[Jimmy Neutron]

I've read enough about the actions of the Fed and Greenspan to believe that their actions contributed to this mess.

[wiegie]

I've read enough about the actions of the Fed and Greenspan to believe that their actions contributed to this mess.

I agree

[muck]

I've read enough about the actions of the Fed and Greenspan to believe that their actions contributed to this mess.

 

The earth is not flat.

[The Mucca]

The earth is not flat.

 

 

It used to be---

[Yukon Cornelius]

It used to be---

[jackshi17]

Could someone possibly explain the following?

It appears to me that this is where it all started to go wrong.

 

 

http://query.nytimes.com/gst/fullpage.html...1999&st=cse

 

Fannie Mae Eases Credit To Aid Mortgage Lending

 

Published: September 30, 1999

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

 

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

 

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

 

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

 

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

 

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

 

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

 

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

 

Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

 

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

 

Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.

Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

 

In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.

 

Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.

 

In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

 

The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.

[Ursa Majoris]

There are thousands of banks in this country that are NOT in any kind of trouble because they didn't make a bunch of stupid loans. None of them, to my knowledge, have been pressurized by the government to make such loans. This whole thing is a total red herring - the guilty parties are the so-called Masters of the Universe on Wall Street, who are in fact a bunch of drooling buffoons who couldn't find their own ass with both hands.

 

Ten years ago, these same geniuses were throwing money at start up web companies who didn't even have a business plan much less a product. What will they be wasting money on in another decade?

 

Four steps to sanity:

 

Put in place mortgage minimums e.g. mandatory 15% down and maximum loan of three times (joint) income

Force bank (and other company) bonuses to be based on a minimum of three years performance

Break up the "too big to fail" banks and insurers

Take all the analysts, credit rating "experts", bank executives and the rest out into Central Park, draw straws and shoot one in ten.

 

OK, that last one might be hoping for too much.

 

Carry on.

[The Mucca]

This is true--however then the banks got carried away and started giving loans to the people that could afford it, the problem was

if you qualified for a 250,000.00 house, they would up it to say 450,000.00 to get you into larger home in a bettor neighborhood.

Also most of these type loans were ARMs so when the payments went up from say 1400.00 a month to 3000.00 a month, none of these

people that took out the ARMs could afford their payments. So now Obama says that you and I can pay it for them.

 

So get out your checkbooks Obamas coming for it.

[wiegie]

Could someone possibly explain the following?

It appears to me that this is where it all started to go wrong.

This is part of it, for sure. But when it got really bad, starting around 2004, Freddie and Fannie actually started to get bypassed more and more as the really bad mortgage-related securities went straight to wall street. This is why the problems are not limited to Freddie and Fannie (and are actually worse outside of them).

[wiegie]

This is true--however then the banks got carried away and started giving loans to the people that could afford it, the problem was

if you qualified for a 250,000.00 house, they would up it to say 450,000.00 to get you into larger home in a bettor neighborhood.

Also most of these type loans were ARMs so when the payments went up from say 1400.00 a month to 3000.00 a month, none of these

people that took out the ARMs could afford their payments. So now Obama says that you and I can pay it for them.

 

So get out your checkbooks Obamas coming for it.

That's not really a fair portrayal of Obama's housing plan that was proposed a few weeks ago.

[WaterMan]

This is true--however then the banks got carried away and started giving loans to the people that could afford it, the problem was

if you qualified for a 250,000.00 house, they would up it to say 450,000.00 to get you into larger home in a bettor neighborhood.

Also most of these type loans were ARMs so when the payments went up from say 1400.00 a month to 3000.00 a month, none of these

people that took out the ARMs could afford their payments. So now Obama says that you and I can pay it for them.

 

So get out your checkbooks Obamas coming for it.

 

Hmm if what you said is correct and not radio hate speech, then I'm sure people would rather pay to keep people in their houses than to pay for another Middle Eastern war where American houses are abandoned because the soldiers who pay for them are dead.

[The Mucca]

Hmm if what you said is correct and not radio hate speech, then I'm sure people would rather pay to keep people in their houses than to pay for another Middle Eastern war where American houses are abandoned because the soldiers who pay for them are dead.

 

It,s not hate speech. I didn't vote for Obama, but that doesn't mean I want him to fail. That would not be good for anyone.

However, his new spending bill is way out of control, so far that some of his own party thinks it a joke.

 

Would you rather leave the Middle Eastern Countries alone so that they can build their nuclear weapons in peace. Because

once they finish them they will be aimed strait at us. I would prefer not to let that happen.

[Ursa Majoris]

Would you rather leave the Middle Eastern Countries alone so that they can build their nuclear weapons in peace. Because

once they finish them they will be aimed strait at us. I would prefer not to let that happen.

There are several other courses between ignoring them and sacrificing thousands of lives and trillions of dollars. All of them are cheaper and likely to be much more swift and successful.

[Azazello1313]

This is part of it, for sure. But when it got really bad, starting around 2004, Freddie and Fannie actually started to get bypassed more and more as the really bad mortgage-related securities went straight to wall street. This is why the problems are not limited to Freddie and Fannie (and are actually worse outside of them).

 

so it seems like you're saying the problem got much worse system-wide after fannie and freddie got all mudded up in the subprime business. that would seem only to bolster the idea that they were an absolutely key catalyst.

[The Mucca]

There are several other courses between ignoring them and sacrificing thousands of lives and trillions of dollars. All of them are cheaper and likely to be much more swift and successful.

 

Hmm Maybe you should let are politicions in on this, because between them and the United Nations,

they can't seem to figure it out.

[MojoMan]

There are enough experts who believe that Greenspan's policies were a contributing or key factor in this whole mess.

 

If he was willing to take the "credit" when things were good, he should sack up and take responsibility now that tides have turned.

[nogohawk]

Take all the analysts, credit rating "experts", bank executives and the rest out into Central Park, draw straws and shoot one in ten.

 

OK, that last one might be hoping for too much.

 

Carry on.