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Valued Social Butterfly
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Message 11 of 44

@Olderscout66 wrote:

Continuing on rk's "who knows what" theme, here's 12 myths GOPers constantly use to protect the GOPerLords illgotten gains:

.

 

Was there anything in that Progressive pap that you haven't heard before or that related to the housing boom/bust??

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Message 12 of 44

If you'll read the items I believe you will see "permit" not "require".

 

Any bank or lender is permitted to lend money, the bank decides if the borrower is credit worthy, and if the collateral, the property,  exceeds the value of the  loan. Generally speaking the loan can't exceed 80% the value of the property. My old time bank has their own appraiser. 

 

 

This was fraud by the lender, appraisers, rating agencies like Moodys.

 

 

These lenders weren't holding the paper, they were fine with bogus appraisals, and bogus ratings on bundled mortgage securities.  They weren't the ones who were going to be left without a chair when the music stopped.

 

 

It wasn't low income " takers " the  " government "  " forced "  " banks " to issue loans to,  the majority of the loans went to middle and high income borrowers.

 

 

https://www.fuqua.duke.edu/duke-fuqua-insights/adelino-subprime

 

 

A decade after it began, the Great Recession is now commonly blamed on a subprime mortgage crisis – banks extending too many loans to low-income borrowers with high risk of default.

 

 

But Professor Manuel Adelino found that narrative doesn’t fit the facts.

 

 

Adelino, a finance professor at Duke University’s Fuqua School of Business, along with co-authors Antoinette Schoar of MIT and Felipe Severino of Dartmouth, reviewed nationwide income, home sales and mortgage data from the years before and during the financial crisis. They found the banking collapses that sparked the recession were the result of spiking loan defaults among buyers with higher incomes.

 

 

The resulting research, The Role of Housing and Mortgage Markets in the Financial Crisis,was recently published in the Annual Review of Financial Economics.

 

 

Adelino discusses the findings in this Fuqua Q&A.

 

 

You found low-income buyers weren’t to blame for the financial collapse that led to the recession. How did you conclude that?

 

 

The subprime crisis argument is that the supply of credit to low-income households fueled increasing house prices, and was the source of the crash. We studied data on all mortgages originated in the United States between 2002 and 2006. We could see the size of the mortgage and the income reported by the buyers. We also had ZIP code-level data from the IRS, and we had access to a sample of mortgages for which we could see whether they were still current on their payments or had defaulted.

 

 

 

We found there was no explosion of credit offered to lower-income borrowers. In fact, home ownership rates among the poorest 20 percent of Americans fell during the boom because those buyers were being priced out of the market. Instead, we found credit was expanded across the board. Everybody was playing the same game. But credit expanded most drastically in areas where house prices were rising the most, and these were markets that were beyond the reach of lower-income borrowers.

 

 

 

The overwhelming majority of mortgages were going to middle income and relatively high income households during the boom, just as they have always done.

 

 

Even if low-income households weren’t getting more credit, defaults caused the recession. Don’t lower income borrowers default more often?

 

 

 

That is usually the case. You become a subprime borrower by having a low credit score, and you get a low credit score by defaulting on your debt obligations. It’s not surprising that mortgages that go to subprime borrowers have higher default rates because that’s how they became subprime in the first place.

 

 

 

But what caused the financial crisis was that middle- and high-income borrowers – including speculators who bought up homes to sell for profit – began defaulting at unprecedented rates. We had a crisis because non-subprime borrowers defaulted, where previously they very rarely had.

In 2003, 71 percent of delinquent mortgages were held by subprime borrowers. But by 2006, subprime borrowers were holding only 39 percent of delinquent mortgages. Not only that, there just aren’t enough low-income borrowers to bring down the financial system, it’s too robust for that.

 

 

Why does it matter if people get this wrong about the recession?

 

 

 

Because regulators responded based on the belief that there had been an explosion of credit given to low-income borrowers. They restricted mortgage credit to subprime borrowers based on the belief those loans had put the banking system at risk. This made it more difficult for people with lower incomes to get credit for several years, just as house prices were lower, when first-time buyers and those with less money would otherwise have been able to enter the market and help it recover. Home ownership rates among low income borrowers have collapsed since the crisis because of the active limiting of credit to those borrowers. This did not add any stability to the banking system as intended.

 

 

 

The financial crisis changed the way we do research in economics and finance. We now think there’s a link between the massive increases in default and foreclosures, and losses in long term economic growth. A deeper understanding of the housing market’s boom and bust can lead to better understanding for regulators and business when a similar situation occurs in the future.

 

 

So now what?

 

 

The " government "  " forced " " banks " to lend money to middle and high income borrowers so they could speculate in a over priced unsustainable market, and then when that market collapsed the " government "  " forced"  them to walk away from their underwater mortgage?

 

 

I can understand how it's so much more desirable for you to blame the " takers " and not the lenders,  but when all this was going on my little bank wasn't issuing mortgages, they knew better, they saw it coming, we all did.

 

 

 

 

 

 

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Message 13 of 44

Continuing on rk's "who knows what" theme, here's 12 myths GOPers constantly use to protect the GOPerLords illgotten gains:

.

 
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Message 14 of 44

@mandm84 wrote:

Let's also thank God for Trump's Deregulation. Who needs safe food , air and water. Let the banks and Wall Street run amok so only the insider's prosper. Let the Financial Planners go back to their interest's first over yours.

 

Wipe out all the Safeguards for 99% of America,

 

Now Ain't that making "America Great Again"


There were no Trump deregulations involved in the housing market boom/burst.

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Message 15 of 44

@ChasKy53 wrote:

@rk9152 wrote:

@rker321 wrote:

We need to remember that John Birchers have always had some funny notions as to what this country should be and how it should be governed.

We do have in this message board some glaring examples.


Who do you see as a Bircher - Forbes, Atlantic magazine, or the Boston Globe? Or are you just saying something without thinking?

 

Possiby USNews is run by Birchers:

https://www.usnews.com/opinion/blogs/sam-dealey/2008/09/23/barney-frank-fesses-up-on-financial-crisi...


Actually there is a certain poster here whose opinions coincide with that of the Birchers. I am shocked that you haven't figured out who was referred to.


Which of the cited news sources do you see as "Bircher"? Or would you rather just talk about fellow posters?

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Message 16 of 44

@Panjandrum wrote:

rk9152:  Did he say anything about Barny Frank and the cause of that "wanton mortgage lending" being able to occur??

 

No, I don't think Greenspan is into peddling RWNJ conspiracies.


Who said "conspiracy" RWNJ or otherwise? Was there not an effort for a long time to get poor people into their own homes with the assistance of government or government sponsored agencies? This is hardly a "conspiracy". The bottom line is, sine the banking industry is regulated, the government must have permitted that "wanton mortgage lending".

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Message 17 of 44

@gruffstuff wrote:

O.K. - you know more than Forbes, the Atlantic, and the Boston Globe. If you say so, I'll just have to take your word for it.

 

 

You can prove me wrong by showing me the law that requires lenders to lend money to borrowers that are not credit worthy.


If you'll read the items I believe you will see "permit" not "require". 

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Message 18 of 44

 


@rk9152 wrote:

@Snoopy48 wrote:

@rk9152 wrote:

On a regular basis the recession caused by the housing boom/bust is laid at the feet on President Bush, ignoring the real reason for it. And usually it includes claiming it was Republican support for rich bankers that gave us the sub-prime.

 

Let us consider:

http://archive.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/09/28/franks_fingerprints...

 

https://www.theatlantic.com/business/archive/2011/12/hey-barney-frank-the-government-did-cause-the-h...

 

https://www.forbes.com/sites/georgeleef/2014/01/10/one-bad-law-usually-leads-to-others-the-housing-b...


Why should we believe the opinions of these three hardcore conservative writers over the many others that agree that their claims are bogus? They do not necessarily reflect the views of the publishers. 


Fine - if their thinking doesn't make sense to you, feel free to disagree. You can even point out specifics that you don't agree with. Or you can just say "hardcore conservative" and let your thinking end there.


Oh - you mean in the exact same manner of conservatives and tRump supporters today?

 

It's obvious that logical and rational reasoning backed by proved fact-based data is not any part of current republican and conservative thinking today.

 

You can disingenuously call the illogic in your posts logic - but it is no more believed to be factual than two thirds of tRump's arguments that have - after fact checking - been proved to be incorrect.

 

Smug and glib disingenuity remains false and untrue.

 

44>45
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Message 19 of 44

Let's also thank God for Trump's Deregulation. Who needs safe food , air and water. Let the banks and Wall Street run amok so only the insider's prosper. Let the Financial Planners go back to their interest's first over yours.

 

Wipe out all the Safeguards for 99% of America,

 

Now Ain't that making "America Great Again"

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Message 20 of 44

@rk9152 wrote:

@rker321 wrote:

We need to remember that John Birchers have always had some funny notions as to what this country should be and how it should be governed.

We do have in this message board some glaring examples.


Who do you see as a Bircher - Forbes, Atlantic magazine, or the Boston Globe? Or are you just saying something without thinking?

 

Possiby USNews is run by Birchers:

https://www.usnews.com/opinion/blogs/sam-dealey/2008/09/23/barney-frank-fesses-up-on-financial-crisi...


Actually there is a certain poster here whose opinions coincide with that of the Birchers. I am shocked that you haven't figured out who was referred to.


"The only thing man learns from history is man learns nothing from history"
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