wiegie Posted March 12, 2009 Share Posted March 12, 2009 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. ever heard of the post hoc ergo prompter hoc fallacy? Quote Link to comment Share on other sites More sharing options...
Yukon Cornelius Posted March 12, 2009 Share Posted March 12, 2009 ever heard of the post hoc ergo prompter hoc fallacy? I am sure he hasn't but he will try to tell you has. Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted March 12, 2009 Share Posted March 12, 2009 post hoc ergo prompter hoc What a coincidence. One of our cats is called that. Quote Link to comment Share on other sites More sharing options...
Azazello1313 Posted March 12, 2009 Share Posted March 12, 2009 ever heard of the post hoc ergo prompter hoc fallacy? it's a fallacy to connect greatly relaxed lending standards at the agencies that back over half of all US mortgages with subsequent relaxed lending standards elsewhere in the system? I suppose the alternative explanation is that the evil greedy bankers just coincidentally happened to become evil and greedy at around the same time. ever heard of occam's razor? Quote Link to comment Share on other sites More sharing options...
TimC Posted March 12, 2009 Share Posted March 12, 2009 Ever heard of the Corbomite Maneuver? Quote Link to comment Share on other sites More sharing options...
MojoMan Posted March 12, 2009 Share Posted March 12, 2009 Ever heard of the Corbomite Maneuver? Is that anything like a Rochambo? Quote Link to comment Share on other sites More sharing options...
Azazello1313 Posted March 12, 2009 Share Posted March 12, 2009 Is that anything like a Rochambo? more like a Rustytrombone? Quote Link to comment Share on other sites More sharing options...
wiegie Posted March 12, 2009 Share Posted March 12, 2009 it's a fallacy to connect greatly relaxed lending standards at the agencies that back over half of all US mortgages with subsequent relaxed lending standards elsewhere in the system? I suppose the alternative explanation is that the evil greedy bankers just coincidentally happened to become evil and greedy at around the same time. ever heard of occam's razor? The standards at the agencies weren't nearly as bad as the standards that started coming out of Wall Street. And at the height of the problem, the agencies were losing market share because Wall Street was willing to put up money much cheaper and easier. If you want to blame the agencies, then you would basically be making an argument along the lines of: Wall Street saw the agencies smoking a joint so they thought it would be ok to go inject some heroin. Quote Link to comment Share on other sites More sharing options...
wiegie Posted March 12, 2009 Share Posted March 12, 2009 more like a Rustytrombone? for the love of god, do you guys always have to bring Barney Frank up in these threads Quote Link to comment Share on other sites More sharing options...
Azazello1313 Posted March 12, 2009 Share Posted March 12, 2009 (edited) The standards at the agencies weren't nearly as bad as the standards that started coming out of Wall Street. And at the height of the problem, the agencies were losing market share because Wall Street was willing to put up money much cheaper and easier. If you want to blame the agencies, then you would basically be making an argument along the lines of: Wall Street saw the agencies smoking a joint so they thought it would be ok to go inject some heroin. so you're going with, "wall street just coincidentally happened to get evil and greedy shortly after the GSEs started gulping down garbage loans themselves and the two facts are totally unrelated"? also, I'm wondering, if the GSEs were so much more responsible, then why are they seemingly in worse shape than anyone else? didn't they just recently report massive losses, and indicate that they are going to need even more bailout money from the government to stay solvent? I think part of the issue is, sure, they themselves weren't doing the very riskiest lending. but part of their whole deal is they are supposed to the bellwether, risk-averse, charter-restricted rock on which everything else leans. when they start jumping into the junk loan business, it seems like it would just embolden everyone else. again, I'm not trying to lay all of the blame at their feet. I think what I said is they appear to have been a "key catalyst". seems pretty obvious that they were. Edited March 12, 2009 by Azazello1313 Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted March 12, 2009 Share Posted March 12, 2009 when they start jumping into the junk loan business, it seems like it would just embolden everyone else. So the mighty captains of the banks are mere sheep following FM2? They can't make their own decisions? What about the thousands of banks that didn't make crappy loans? Quote Link to comment Share on other sites More sharing options...
Azazello1313 Posted March 12, 2009 Share Posted March 12, 2009 So the mighty captains of the banks are mere sheep following FM2? They can't make their own decisions? What about the thousands of banks that didn't make crappy loans? umm, good for them? the point is fannie and freddie DID make crappy loans. far crappier than they ever had before. and they own or guarantee more than half of the mortgages in the country. they are now being bailed out by the government to the tune of hundreds of billions of dollars as a result of these loans. seems to me like that makes them a pretty significant player in this whole mess. Quote Link to comment Share on other sites More sharing options...
muck Posted March 12, 2009 Share Posted March 12, 2009 Related to this, FNM and FRE were allowed to operate with about 1/3rd less capital than other banks were. Frankly, they should have been required to keep their capital levels in line with other banks...but, they weren't. In fact, their capital adequacy levels were relaxed (iirc) several times in the past 10-15 years (again, iirc). Quote Link to comment Share on other sites More sharing options...
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