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  1. #191  
    SEAduced SuperMod Hawkgirl's Avatar
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    An example of Government imposed Regulation:

    http://www.forbes.com/2009/10/03/com...schweizer.html

    An example of Government imposed Regulation:

    The White House and Congress want to expand a 30-year-old law--the Community Reinvestment Act--that helped to fuel the mortgage meltdown. What the CRA does, in effect, is compel banks to seek the permission of community activists to get regulatory approval for bank expansions and mergers. Often this means striking a deal with activist groups such as ACORN or unions like the Service Employees International Union (SEIU) and agreeing to allocate credit to poor and minority areas that are underserved.

    In short, the CRA encourages banks to make loans they would not ordinarily make. What's more, these agreements often require that banks offer no-money-down mortgages and remove caps on how much debt a borrower can take on. All of this is done in the name of "financial democracy."


    According to the National Community Reinvestment Coalition, in the first 20 years of the act, up to 1997, commitments totaled approximately $200 billion. But from 1997 to 2007, commitments exploded to more than $4.2 trillion. (Keep in mind this is more than four times the size of the current health bill being debated in Congress.) The burdens on individual banks can be enormous

    For all the talk of unsold condos in Miami and foreclosed McMansions in California, the epicenters of the mortgage crisis are inner-city urban areas--precisely those areas where the CRA was most applicable. As the Boston Federal Reserve put it in a massive 2008 study, "In the current housing crisis foreclosures are highly concentrated in [urban] minority neighborhoods." The study found that borrowers in these areas were seven times more likely to be foreclosed on than the general population. Analysis by the Pew Research Center and another by The New York Times found that mortgage holders in these areas had foreclosure rates four times higher than the national average.

    In short, the CRA is compelling banks to make trillions in loans to individuals who have poor credit and who often can't or won't make their payments.
     

  2. #192  
    Senior Member Zeus's Avatar
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    Quote Originally Posted by Bailey View Post
    but didn't they bundle these bad loans and sold them to other banks? Sounds like they tried to make a buck off a bad investment.
    Loan Bundling or group discounting for sale to larger organizations has been a banking practice almost since the establishment of banks. The primary reason being the smaller banks don't have the cash on hand to be able to maintain those loans or the manpower available to service all loans made.

    The Bundling of discounted loans provides for a continuing cash flow enabling a bank to continue to issue more loans.
    The 21st century. The age of Smart phones and Stupid people.

    It is said that branches draw their life from the vine. Each is separate yet all are one as they share one life giving stem . The Bible tells us we are called to a similar union in life, our lives with the life of God. We are incorporated into him; made sharers in his life. Apart from this union we can do nothing.
     

  3. #193  
    Senior Member Molon Labe's Avatar
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    Quote Originally Posted by Hawkgirl View Post
    FlaGator, Back in the day, if you didn't have the cash, you didn't buy the new car. Now people will pay outrageous interest rates to get that new car, house, phone (etc) to keep up with their neighbors. If a person signed a CONTRACT with high interest rates it was their fault, not the loaners. If I am late on my mortgage I get a credit mark. There are repercussions to actions. Bailing everyone out due to stupidity or mistakes led us to the mess we are in now. Regulations didn't stop people from buying $500,000 houses with 0% down when all they really could afford was a $200K house.
    Not to mention that 500K house was inflated within the illusion of the housing bubble (created by government intervention in the market) when it was really only worth about 350K.
    Gun Control: The theory that a woman found dead in an alley, raped and strangled with her panty hose, is somehow morally superior to a woman explaining to police how her attacker got that fatal bullet wound - Unknown


    The problem is Empty People, Not Loaded Guns - Linda Schrock Taylor
     

  4. #194  
    Power CUer FlaGator's Avatar
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    Quote Originally Posted by Hawkgirl View Post
    FlaGator, Back in the day, if you didn't have the cash, you didn't buy the new car. Now people will pay outrageous interest rates to get that new car, house, phone (etc) to keep up with their neighbors. If a person signed a CONTRACT with high interest rates it was their fault, not the loaners. If I am late on my mortgage I get a credit mark. There are repercussions to actions. Bailing everyone out due to stupidity or mistakes led us to the mess we are in now. Regulations didn't stop people from buying $500,000 houses with 0% down when all they really could afford was a $200K house.
    That's an awful broad brush you're painting with. First of all, I believe firmly in people taking responsibility for their actions. I'm not a bleeding heart by any stretch of the imagination, however, the Lord blessed me with compassion for people who really need help and I hate seeing people take advantange of them. Dispite what Neal Boortz would have you believe, not everybody who is poor got that way by being stupid with their money. Sometimes events just happen and the next thing you know you're in trouble.

    Were not talking about buy cars or getting things they couldn't otherwise afford. We're talking about people who put their car titles up as collateral in order to make a mortgage payment of buy medicine for a sick family member. I'm not saying that everyone who should up was in need. I figure a lot just wanted some case to buy drugs or gamble or doing something relativily stupid with the case. However a lot off people really need the funds to bail them out of an emergency.

    At any rate the state saw it the same as I did and regulations were created to stop preditory lending.

    I believe in Christianity as I believe that the sun has risen: not only because I see it, but because by it I see everything else.
    C. S. Lewis
     

  5. #195  
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    Quote Originally Posted by Hawkgirl View Post
    FlaGator, Back in the day, if you didn't have the cash, you didn't buy the new car. Now people will pay outrageous interest rates to get that new car, house, phone (etc) to keep up with their neighbors. If a person signed a CONTRACT with high interest rates it was their fault, not the loaners. If I am late on my mortgage I get a credit mark. There are repercussions to actions. Bailing everyone out due to stupidity or mistakes led us to the mess we are in now. Regulations didn't stop people from buying $500,000 houses with 0% down when all they really could afford was a $200K house.
    If it make you feel better about yourself to think that all of these people were just plain stupid, then fine. However, if you want the whole picture it has to be on a broader scope and more personal level.

    Yes, a lot of people paid too much for houses. The price of houses is driven by a number of factors including demand and the ease with which people can get loans. But the price of housing wasn't simply rising due to bad loans in bad neighborhoods. People were indeed stretching, frather perhaps than previous generations, because with prices rising, one simply could not save up for a house. People bought houses with little or no down, because they thought that they would be shut out of the market.

    People buy cars on time. Rightly or wrongly, if it weren't for financing, cars wouldn't sell. Financing might make an individual car more expensive for an individual buyer, but by and large the fact that there is a lot of money available to borrow in a variety of formats such that just about anyone can drive, doesn't drive up the cost of cars. I agree with you that people spend stupid money on cars. I would have loved a $30,000 truck but I didn't want another car loan. Had one, and that was enough. I'd like to thank Jim Burney Dodge of Redwood City California for forever shaping my opinion of car dealers- fucking sleaze balls. After I paid off that loan, I swore I would never have another. But I probably will, I'll just be smarter and more demanding. I'd say that if you are leasing or buying on time a $50,000 -$100,000 car then you need to examine your priorities.
     

  6. #196  
    SEAduced SuperMod Hawkgirl's Avatar
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    The real issue with the housing market rise and resulting fall is that investors took advantage of the CRA regulation imposed by the government. Investors, who had no intention of living in the homes they bought, (end users), bought up a lot of inventory and then flipped them Builders couldn't keep up with the demand to build more. The prices skyrocketed and once investors unloaded their inventory, it crashed. There are people that still will profit, even with government involvement/regulations. The Miami condo fiasco is a good example of the damage government can do. Downtown Miami is an example, it's a sad place of tall, beautiful modern highrises that sit completely empty.
     

  7. #197  
    SEAduced SuperMod Hawkgirl's Avatar
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    Quote Originally Posted by FlaGator View Post
    That's an awful broad brush you're painting with. First of all, I believe firmly in people taking responsibility for their actions. I'm not a bleeding heart by any stretch of the imagination, however, the Lord blessed me with compassion for people who really need help and I hate seeing people take advantange of them. Dispite what Neal Boortz would have you believe, not everybody who is poor got that way by being stupid with their money. Sometimes events just happen and the next thing you know you're in trouble.

    Were not talking about buy cars or getting things they couldn't otherwise afford. We're talking about people who put their car titles up as collateral in order to make a mortgage payment of buy medicine for a sick family member. I'm not saying that everyone who should up was in need. I figure a lot just wanted some case to buy drugs or gamble or doing something relativily stupid with the case. However a lot off people really need the funds to bail them out of an emergency.

    At any rate the state saw it the same as I did and regulations were created to stop preditory lending.
    I can appreciate your compassion, but ALL of the people I know that took out second mortgages didn't do it for a sick relative, and I know lots of them. Not One was for the noble example you gave.
     

  8. #198  
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    Quote Originally Posted by Molon Labe View Post
    When people actually have to take great risk that could lead to thier demise they are usually much more careful. These regs did just the opposite.
    It's more complicated than that in the banking system. The system is built on faith. That's the problem but it's also the reason we can all pay our houses off over 30 years. If a bank gets too big, makes a bad bet or two and loses, the whole thing could collapse. Not just that one bank. If it was just that one bank it wouldn't be an issue.

    I tried to explain it with the pizza example.

    I'm not saying I have the solution. I'm saying that unregulated, too big too fail banks could cause us an incredible amount of pain.
    Be Not Afraid.
     

  9. #199  
    Senior Member Zeus's Avatar
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    Quote Originally Posted by Hawkgirl View Post
    The real issue with the housing market rise and resulting fall is that investors took advantage of the CRA regulation imposed by the government. Investors, who had no intention of living in the homes they bought, (end users), bought up a lot of inventory and then flipped them Builders couldn't keep up with the demand to build more. The prices skyrocketed and once investors unloaded their inventory, it crashed. There are people that still will profit, even with government involvement/regulations. The Miami condo fiasco is a good example of the damage government can do. Downtown Miami is an example, it's a sad place of tall, beautiful modern highrises that sit completely empty.
    Investors weren't enticed by govt regulations but rather they saw an opportunity where there were more buyers than product available on the market. Whether they intended to live in them or not is immaterial other than the delineation between Investor and homeowner and very few Investors are Involved in the financing aspect of the buyers. Sure they were aware of loosening of credit requirements of potential buyers but that wasn't their doing.The shortage of available product is what drove prices up. The increase in foreclosures is what dried up the money pipeline and caused the Housing bubble to burst. Now commercial ventures are a completely different animal with far more in play than Residential real estate.
    The 21st century. The age of Smart phones and Stupid people.

    It is said that branches draw their life from the vine. Each is separate yet all are one as they share one life giving stem . The Bible tells us we are called to a similar union in life, our lives with the life of God. We are incorporated into him; made sharers in his life. Apart from this union we can do nothing.
     

  10. #200  
    SEAduced SuperMod Hawkgirl's Avatar
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    Quote Originally Posted by Zeus View Post
    Investors weren't enticed by govt regulations but rather they saw an opportunity
    Sure they were aware of loosening of credit requirements of potential buyers but that wasn't their doing.
    That's my point. It wasn't their doing, but the government's doing.
     

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