Gardnr
Recycles dryer sheets
Nope, but he's got a heapin' helpin' of it that he has to bear. Plenty of it to go around though, unfortunately.
Will the FED cut rates now?
- Thread starter shotgunner
- Start date
ziggy29
Moderator Emeritus
He helped enable the borrowing frenzy with cheap and easy money. But ultimately he didn't hold a gun to anyone's head and force them to overextend and live beyond their means with borrowed money.
REWahoo
Give me a museum and I'll fill it. (Picasso) Give
Yep, Al supplied low-cost crack. But he didn't force the addicts to buy...
audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
But we used to have systems in place that kept people from doing exactly this! You didn't get a mortgage unless you met certain requirements. How that system was allowed to be circumvented I will never understand.
Did it really start with congress/president wanting more people to own homes and so let this "shadow" mortgage system get put into place with NO CONTROLS and go run amuck? I suppose.
That's the WHOLE REASON we have controls - so that people - lenders AND borrowers can't run amuck and then go bust and screw things up for the rest of us.
Audrey
ziggy29
Moderator Emeritus
Audrey, I believe what happened is that in recent decades, legislators began to believe that the "dream" of homeownership needed to be expanded to as many people as possible. Poverty was nothing that the ability to own one's own home couldn't cure.
It was largely bipartisan. Conservatives pushed the "ownership society" as a way to get more people to care about run-down neighborhoods. Liberals pushed for more lenient lending standards in poor and minority-dominated areas. Even if disagreeing on many specifics and supportive of it for different reasons, both were pushing for more homeownership.
So all these programs came along to make it easier for lower income and otherwise less-qualified buyers to buy homes. That meant relaxing lending standards. That means creating quasi-government entities to package, own and "implicitly" guarantee mortgages. That meant making homeowners of people with questionable income and/or credit.
Then came easy money at low rates together with "creative" financing and no-doc loans to turn the smoldering fire into a conflagration of irresponsible borrowing and lending practices.
audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
The "quasi-government" entities to guarantee mortgages were put in place in the 1930s and worked prefectly well for decades. That was NOT a contributor to the crazy mortgage lending of the 2000s. The craziness occurred outside the traditional mortgage lending mechanisms.
Audrey
ziggy29
Moderator Emeritus
Except that standards for what was guaranteed changed.
cute fuzzy bunny
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I wouldnt cut Uncle Al too much slack...from 2004 when he said the housing market was fine, bankruptcies were no problem, and encouraged homeowners to consider adjustable rate mortgages while concurrently encouraging bankers to 'offer a broader range of products'. Seems he provided the crack, gave a promotional speech to the dealers, and told the users it'd be good for them.
Don't take mortgage advice from Alan Greenspan - MSN Money
"On Monday, he extolled the virtues of the levered-up homeowner to a credit union conference."
"What he advocated last Monday should send cold shivers down the spine of anyone so engaged. I already thought that what was going on in real estate was dangerous, but what he now cites as a good thing is not only dangerous, it will be disastrous -- guaranteed."
"In a rare evaluation of interest-rate options that households face, Federal Reserve Chairman Alan Greenspan questioned whether American homeowners are well served by popular fixed-rate long-term mortgages."
"The notion of the whole country piling into ARMs when rates are at multi-decade lows is a truly destabilizing concept to contemplate. What happens if rates go up (because my view is incorrect) and the economy roars ahead?"
"Greenspan says personal debt Is mitigated by housing value,"
"An extended period of low interest rates and extra cash from mortgage refinancing has given borrowers flexibility to better manage their debt."
"Mortgage refinancing and the rise in home values have helped to bolster economic spending in economic hard times, as well as better periods."
"We have postponed the inevitable via this leveraging of home values and aggressive lending tactics to keep the housing market alive and percolating. But we are running out of steam."
Don't take mortgage advice from Alan Greenspan - MSN Money
"On Monday, he extolled the virtues of the levered-up homeowner to a credit union conference."
"What he advocated last Monday should send cold shivers down the spine of anyone so engaged. I already thought that what was going on in real estate was dangerous, but what he now cites as a good thing is not only dangerous, it will be disastrous -- guaranteed."
"In a rare evaluation of interest-rate options that households face, Federal Reserve Chairman Alan Greenspan questioned whether American homeowners are well served by popular fixed-rate long-term mortgages."
"The notion of the whole country piling into ARMs when rates are at multi-decade lows is a truly destabilizing concept to contemplate. What happens if rates go up (because my view is incorrect) and the economy roars ahead?"
"Greenspan says personal debt Is mitigated by housing value,"
"An extended period of low interest rates and extra cash from mortgage refinancing has given borrowers flexibility to better manage their debt."
"Mortgage refinancing and the rise in home values have helped to bolster economic spending in economic hard times, as well as better periods."
"We have postponed the inevitable via this leveraging of home values and aggressive lending tactics to keep the housing market alive and percolating. But we are running out of steam."
audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
This is true. Fannie/Freddie started buying subprime mortgages securities in the 1990s. The buying escalated in the 2000s and peaked in 2004.
How HUD Mortgage Policy Fed The Crisis
I didn't realize that Fannie/Freddie participated in the subprime mortgage market to that extent. Given the timeline of how their buying of such loans peaked in 2004, and they cut back in 2005, then they cut back in 2006. This eerily coincides with the ballooning of the housing bubble.
Wow!
Audrey
I wish people would be more discerning in assessing the blame for the subprime blow-up. I have a colleague who has an extensive bankruptcy practice and he tells me that most of the subprime mess he's handling for major lenders evolves around middle-income borrowers using their home equity as an ATM or purchasing second homes or speculating during the real estate bubble. There are a lot of low income people who should have not obtained any conventional housing loans, but I think people over-state the case when they blame the entire mess on low-income borrowers or CRA on the subprime mess. The FHA has had low-income housing loan or guarantee programs for years and years promoting home ownership, and it appears to work well.
The neighborhoods I tour where housing has blown up are not low income areas, where you would think the prevalent housing problems of foreclosure and stagnation would occur. They are middle-income and upper income areas, where many people just got over their heads with lending products that they didn't, in many cases, understand. Granted some of the people in these areas are lower income people trying to move up, but a large percentage are ordinary working, middle class folks sucked into credit problems.
capjak
Full time employment: Posting here.
http://www.villainouscompany.com/vcblog/archives/2008/09/barney_frank_di.html
I am sure this is biased but still has some good facts...
http://www.taxfoundation.org/blog/show/23617.html
Gotta love Barney Frank....
Similar threads
