it has nothing to do with regulations but the lack of them and one formula
Jojo _________________ All art is a kind of confession, more or less oblique. All artists, if they are to survive, are forced, at last, to tell the whole story; to vomit the anguish up.
-James Baldwin
it has nothing to do with regulations but the lack of them and one formula
Jojo
It is a very old story. People bet the baby's milk money on The Magic Money Tree and buy a ticket to The Big Rock Candy Mountain. The same thing happened in Holland in the 17th century with the Tulip Bulb Mania.
it has nothing to do with regulations but the lack of them and one formula
Jojo
It is a very old story. People bet the baby's milk money on The Magic Money Tree and buy a ticket to The Big Rock Candy Mountain. The same thing happened in Holland in the 17th century with the Tulip Bulb Mania.
ruveyn
Erm? Tulip bulb mania occurs during a lack of regulation?
it has nothing to do with regulations but the lack of them and one formula
Jojo
Who could of guessed? All these idiots put their trust in a trendy statistical model they didn't even bother to try and understand. A lot of people seem to think the existence of a precise mathematical formula automatically makes something credible, without bothering to understand the underlying assumptions under which the formula can be derived. Of course it's easier to not bother understanding something if more skepticism will lead to less profits.
it has nothing to do with regulations but the lack of them and one formula
Jojo
Who could of guessed? All these idiots put their trust in a trendy statistical model they didn't even bother to try and understand. A lot of people seem to think the existence of a precise mathematical formula automatically makes something credible, without bothering to understand the underlying assumptions under which the formula can be derived. Of course it's easier to not bother understanding something if more skepticism will lead to less profits.
Joined: Aug 13, 2009 Posts: 3341 Location: In Georgia sipping a virgin pina' colada while the rest of the world is drunk
Posted: Wed Oct 26, 2011 11:15 am Post subject:
The only reason they blindly followed this forumla was greed. They fooled themselves into thinking that risk need not to be assesed if they followed the formula which allowed them to take much larger risks than the formula called for. It was not the math experts that screwed up but the greedy people in upper managment who had no understanding of how the formula was supposed to be used. Even Li himself watched in horror as this formula was misused on a global scale, he did not predict how it would open the doors for greed to run amok. _________________ All art is a kind of confession, more or less oblique. All artists, if they are to survive, are forced, at last, to tell the whole story; to vomit the anguish up.
-James Baldwin
Joined: Sep 22, 2008 Age: 76 Posts: 29317 Location: New Jersey
Posted: Wed Oct 26, 2011 11:30 am Post subject:
jojobean wrote:
The only reason they blindly followed this forumla was greed. They fooled themselves into thinking that risk need not to be assesed if they followed the formula which allowed them to take much larger risks than the formula called for. It was not the math experts that screwed up but the greedy people in upper managment who had no understanding of how the formula was supposed to be used. Even Li himself watched in horror as this formula was misused on a global scale, he did not predict how it would open the doors for greed to run amok.
Actually this fiasco with the housing market was caused by government regulations.
I dont call sub-prime loans....a regulation.
The sub prime loan idea came from a guy from china who studied how when one of an old couple died, how soon after the other member died. Then he developed a formula for life insurance companies to spread risk out to reduce risk in certain areas and one can take on higher risk if they followed his formula. This was later adopted to the mousing market and others markets as well. Well lets just say it did not go as smoothly as they thought. Plus they were kicking ppl out of their homes who were current on their morgage and even creating house loans to deceased ppl. Show me a regulation that requires lenders to rip people homes away from up to date homeowners and lend to dead ppl. What about the auto-filling scandal that used a mechinized process to automatically file for forecloure without reading anything. Show me a regulation that requires that. The whole housing market fallout was based on this failed formula created by this guy from china. Soon as the economy began to falter, he fled the US and is believed to be hiding out back east.
I will see if I can find you a link for it.
I'm not talking just about sub-prime mortgages, I'm talking about the fact that Banks wouldn't have made the loans in the first place if they hadn't been forced to give loans to people that couldn't afford to pay back said loans, which is the root cause of the fiasco.
Furthermore, Freddie Mac for example is a quasi-government entity.
Joined: Aug 13, 2009 Posts: 3341 Location: In Georgia sipping a virgin pina' colada while the rest of the world is drunk
Posted: Wed Oct 26, 2011 8:01 pm Post subject:
Inuyasha wrote:
jojobean wrote:
Inuyasha wrote:
@jojobean
Actually this fiasco with the housing market was caused by government regulations.
I dont call sub-prime loans....a regulation.
The sub prime loan idea came from a guy from china who studied how when one of an old couple died, how soon after the other member died. Then he developed a formula for life insurance companies to spread risk out to reduce risk in certain areas and one can take on higher risk if they followed his formula. This was later adopted to the mousing market and others markets as well. Well lets just say it did not go as smoothly as they thought. Plus they were kicking ppl out of their homes who were current on their morgage and even creating house loans to deceased ppl. Show me a regulation that requires lenders to rip people homes away from up to date homeowners and lend to dead ppl. What about the auto-filling scandal that used a mechinized process to automatically file for forecloure without reading anything. Show me a regulation that requires that. The whole housing market fallout was based on this failed formula created by this guy from china. Soon as the economy began to falter, he fled the US and is believed to be hiding out back east.
I will see if I can find you a link for it.
I'm not talking just about sub-prime mortgages, I'm talking about the fact that Banks wouldn't have made the loans in the first place if they hadn't been forced to give loans to people that couldn't afford to pay back said loans, which is the root cause of the fiasco.
Furthermore, Freddie Mac for example is a quasi-government entity.
I read that Obama had less regulations for wall st. than Bush because of his Goldman buddies who he appointed had of a finacial task force at the begining of his term. As for the regulations during the housing bubble, it was greed that created the situation, not regulations.
There are no regulations requiring lenders to give loans to people who are unable to pay them back. You are mistaken. It was rampant greed that created this economic crisis and a lack of regulations that protect the market from that level of greed. If you read the article I posted....you would understand how the crisis happened. It was not just the housing market. The global market took on this formula which basicly eleminates risk factors into the equasion. It was misused by top level managment to increase profit regardless of risk. It had nothing to do with programs such as the rural development loans and things like that which give loans to lower income at a low down payment and low interest rate. Ppl who apply still had to have a certain credit score, and proof of yearly income. I know this because I applied for such a loan and was turned down. They did not just willy-nilly give me a rural development loan regardless of my situation. However, with those who misused and misunderstood the formula to gather wealth, they willingly did not calculate the risks, instead they just omited the risks altogether. You can blindly chant the republican mantra all you want, but in cases like this, it is not reality.
Wall st. needs to be regulated to protect the economy from rampant greed...which they are a greedy bunch.
Jojo _________________ All art is a kind of confession, more or less oblique. All artists, if they are to survive, are forced, at last, to tell the whole story; to vomit the anguish up.
-James Baldwin
Actually this fiasco with the housing market was caused by government regulations.
I dont call sub-prime loans....a regulation.
The sub prime loan idea came from a guy from china who studied how when one of an old couple died, how soon after the other member died. Then he developed a formula for life insurance companies to spread risk out to reduce risk in certain areas and one can take on higher risk if they followed his formula. This was later adopted to the mousing market and others markets as well. Well lets just say it did not go as smoothly as they thought. Plus they were kicking ppl out of their homes who were current on their morgage and even creating house loans to deceased ppl. Show me a regulation that requires lenders to rip people homes away from up to date homeowners and lend to dead ppl. What about the auto-filling scandal that used a mechinized process to automatically file for forecloure without reading anything. Show me a regulation that requires that. The whole housing market fallout was based on this failed formula created by this guy from china. Soon as the economy began to falter, he fled the US and is believed to be hiding out back east.
I will see if I can find you a link for it.
I'm not talking just about sub-prime mortgages, I'm talking about the fact that Banks wouldn't have made the loans in the first place if they hadn't been forced to give loans to people that couldn't afford to pay back said loans, which is the root cause of the fiasco.
Furthermore, Freddie Mac for example is a quasi-government entity.
I read that Obama had less regulations for wall st. than Bush because of his Goldman buddies who he appointed had of a finacial task force at the begining of his term. As for the regulations during the housing bubble, it was greed that created the situation, not regulations.
Actually it's the Chicago way, your campaign contributors get to ignore laws cause they're paying you off and you squeeze the people that are supporting your political opponents.
jojobean wrote:
There are no regulations requiring lenders to give loans to people who are unable to pay them back. You are mistaken. It was rampant greed that created this economic crisis and a lack of regulations that protect the market from that level of greed. If you read the article I posted....you would understand how the crisis happened. It was not just the housing market.
While greed may have played a role, your statement about the government not forcing banks to make the loans is completely inaccurate.
The specific piece of legislation was the Community Reinvestment act and changes to said act during the term of President William Jefferson Clinton in the 1990s.
jojobean wrote:
The global market took on this formula which basicly eleminates risk factors into the equasion. It was misused by top level managment to increase profit regardless of risk. It had nothing to do with programs such as the rural development loans and things like that which give loans to lower income at a low down payment and low interest rate. Ppl who apply still had to have a certain credit score, and proof of yearly income. I know this because I applied for such a loan and was turned down. They did not just willy-nilly give me a rural development loan regardless of my situation.
Congress passed CRA in 1977 as legislation designed to prompt banks to lend more in lower income areas which advocates claimed were being ignored. Gradually over time community groups learned they could use the law as leverage to negotiate new inner-city lending programs with banks based on lower underwriting standards, which the groups demanded when banks complained that one reason they weren't doing more lending in some neighborhoods was because few applicants in those areas qualified for loans under traditional criteria.
Acorn led the way in this movement. In 1986, for instance, it protested a potential acquisition by Louisiana Bancshares, a Southern institution, until the bank agreed to new, "flexible credit and underwriting standards" for minority borrowers which included counting public assistance and food stamps as income in mortgage applications.
Acorn also put pressure on the two quasi-government purchasers of mortgages, Fannie Mae and Freddie Mac, to lower their standards, complaining that they were "strictly by-the-book interpreters" who stood in the way of new lending programs. Under pressure both organizations committed to backing billions of dollars in affordable housing loans under so-called "alternative qualifying" programs which approved loans to individuals who didn't qualify under traditional standards, including those who agreed to go to mortgage counseling classes run by community groups like Acorn.
The threat of CRA proved an effective tool in gathering non-bank lenders into this affordable lending maelstrom, too. In late 1993 President Clinton's Secretary of Housing and Urban Development, Henry Cisneros, announced a plan to boost homeownership in the U.S. through a series of government initiatives, including having government subsidize mortgages that required no down payments. To produce more of these new, riskier loans Cisneros proposed expanding CRA to cover mortgage lenders and other financial institutions that were not chartered banks. In Congress Rep. Maxine Waters dubbed mortgage companies "egregious redliners" who needed to be corralled by CRA.
Under pressure from these threats, the trade group that represented mortgage bankers announced an agreement with HUD to sharply boost lending in low-income areas. These mortgage bankers, the so-called non-bank lenders, agreed to "voluntarily" help develop new mortgage products with laxer underwriting standards. The first member of the trade group to sign onto the new program was Countrywide Financial, which partnered with Fannie Mae to commit to $2.5 billion in lending in minority communities under new, lower standards.
Other programs soon followed. Sears Mortgage Corp began a massive effort with Freddie Mac's backing, known as the alternative qualifying initiative, in which low-income borrowers could qualify for a mortgage if their monthly mortgage payment amounted to 45 percent of income, when the industry standard had traditionally been that a mortgage payment should amount to no more than one-third of monthly income. Arbor National Mortgage Inc., a nonbank lender, went further, making loans with monthly payments up to 50 percent of income.
These lending institutions were not only pushed by politicians and advocates into these new programs but were assured by federal institutions that the loans could be safe. In 1992 the Federal Reserve Bank of Boston produced lending guidelines for banks operating in low-income markets which advised them to take into consideration the "economic culture of urban, lower income and nontraditional customers."
The Fed told lenders, for instance, that applicants with poor credit histories, a problem which plagued many would-be urban borrowers, could still be good loan risks if they agreed to mortgage counseling, even though there was no evidence that counseling programs prevented defaults. The Fed also told banks to consider junking their traditional income requirements in favor of lending with much higher ratios of income to mortgage payments, and to consider nontraditional sources of income as qualifying earnings, including unemployment benefits, even though by definition they are temporary and don't last nearly as long as the term of a mortgage.
However, with those who misused and misunderstood the formula to gather wealth, they willingly did not calculate the risks, instead they just omited the risks altogether. You can blindly chant the republican mantra all you want, but in cases like this, it is not reality.
Wall st. needs to be regulated to protect the economy from rampant greed...which they are a greedy bunch.
Jojo
Based on what I've found, it was Government that caused the mess with the Community reinvestment act. You can blindly play the Democrat's class warfare card all you want, but that doesn't change the facts.
I've got plenty more sources to back up what I'm saying, ACORN was sueing banks that were saying wait a minute these people can't afford these loans.
Joined: Aug 13, 2009 Posts: 3341 Location: In Georgia sipping a virgin pina' colada while the rest of the world is drunk
Posted: Thu Oct 27, 2011 10:06 am Post subject:
Inuyasha....that is interesting, I never knew about all that. thank you for informing me. Open mouth, insert foot.
Anyway...I am sure that may have played a part, but people eleminating risk as they give out loans, also played a big part in it.
Like all finacial calamities, it is a a web of failures.
Jojo _________________ All art is a kind of confession, more or less oblique. All artists, if they are to survive, are forced, at last, to tell the whole story; to vomit the anguish up.
-James Baldwin
Joined: Nov 03, 2005 Age: 26 Posts: 333 Location: Ohio
Posted: Thu Oct 27, 2011 2:06 pm Post subject:
Please never use the term "class warfare" if you want to sound credible whatsoever. Ah wait, you've already gone really far in the direction of "not credible".
Stop believing in the false dichotomy between big government and big corporations. Here, they're virtually the same thing.
Inuyasha....that is interesting, I never knew about all that. thank you for informing me. Open mouth, insert foot.
Anyway...I am sure that may have played a part, but people eleminating risk as they give out loans, also played a big part in it.
Like all finacial calamities, it is a a web of failures.
Jojo
Banks were also sued, received predatory audits, etc. if they did not make these loans, as the article I submitted pointed out. So the bulk of the problem was the Federal Government's policies not simply Corporate Greed, like what Democrats want people to think cause it plays into their class warfare rhetoric.
Joined: Nov 03, 2005 Age: 26 Posts: 333 Location: Ohio
Posted: Thu Oct 27, 2011 4:27 pm Post subject:
You continue to lose all credibility when you use the "class warfare" term. That has to be one of the dumbest talking points in politics. There was plenty of corporate involvement in the subprime crisis, and that was only one aspect of the financial crash.
Edit: Well, actually, you don't have any credibility as is. You're clearly regurgitating clueless talking points while not understanding anything whatsoever about the movement or about the problems with the country.
You continue to lose all credibility when you use the "class warfare" term. That has to be one of the dumbest talking points in politics. There was plenty of corporate involvement in the subprime crisis, and that was only one aspect of the financial crash.
Edit: Well, actually, you don't have any credibility as is. You're clearly regurgitating clueless talking points while not understanding anything whatsoever about the movement or about the problems with the country.
Whatever...
I've provided sources to back up what I'm saying, all you're doing is personally attacking me, so I guess you have nothing to counter what I'm saying that I couldn't easily debunk.
