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Who is responsible for housing market collapse?

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Posted: Tuesday, April 19, 2011 12:00 am | Updated: 6:14 am, Tue Apr 19, 2011.

I received a copy of a letter that was sent to the “Letters to the Editor” in The Record some time ago. After reading it, I felt it an excellent letter and that the information should be shared with the good readers of the Lodi News-Sentinel. The letter covered a 30-year period regarding things that caused the burst in the housing bubble. After verifying the information in the letter, I wanted to give a brief history of why the housing bubble burst and the causes.

In 1977, Democrat Jimmy Carter signed the Community Reinvestment Act, guaranteeing home loans to low-income families.

In 1999, Democrat Bill Clinton put the CRA on steroids by pushing Fannie Mae and Freddie Mac to increase the number of sub-prime loans. In September 1999, The New York Times published an article headlined “Fannie Mae Eases Credit to Aid Mortgage Lending,” which warned of the coming crisis due to lax lending policies of the Clinton administration.

In 2003, The White House called Fannie and Freddie a “systemic risk” and the Republican Bush administration pushed Congress to enact new regulations. Also in 2003, Rep. Barney Frank, D-Mass., said Fannie and Freddie are “not in a crisis,” and bashed Republican-sponsored regulation legislation.

In 2005, Federal Reserve Chairman Alan Greenspan voiced warning over F&F accounting, saying, “We are placing the total financial system of the future at a substantial risk.” In addition in 2005, Sen. Charles Schumer, D-N.Y., said he thinks F&F “over the years have done an incredibly good job and are an intrinsic part of making America the best-housed people in the world.”

In 2006, Sen. John McCain, R-Ariz., again called for reform of the regulatory structure that governs F&F. And again Democrats blocked reform legislation.

In 2008, the housing market collapsed; Democrats blamed the Republicans.

Yup, the Republicans caused it — or did they? What do you think?

Sam West

Acampo

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Welcome to the discussion.

39 comments:

  • daniel hutchins posted at 9:30 pm on Fri, Apr 22, 2011.

    daniel hutchins Posts: 1338

    Darrell: 3) finally, the Deed of Trust is executed separate from the loan, and it is not attached. These are entirely separate transactions.

    People believe they received a loan, but in fact, they did not. That's a long story.

    Try asking a bank to certify under penalty of perjury of law that they gave a loan.

     
  • daniel hutchins posted at 9:27 pm on Fri, Apr 22, 2011.

    daniel hutchins Posts: 1338

    Darrell: 2) In a mortgage loan, the Deed of Trust is intended as a foreclosure document, and it is loaded with fraud. In order to secure the promissory note, it must be attached to the promissory note, at all times. In an 1872 supreme court case, the promissory note and foreclosure security document were split into separate investors, and the holder of the foreclosure document claimed injury under the security document, and attempted to foreclose. What’s wrong with this picture is that the promissory note is the document that obligates payment, and a separate person was trying foreclose, to whom the debtor owed nothing.
    Google: CARPENTER V. LONGAN, 83 U. S. 271 (1872)
    Today, the same fraud continues, and state courts have protected the banks, or the borrowers don’t realize the fraud.
    Additionally, same as above, the Deed of Trust falsely defines Mortgage Electronic Registration Systems (MERS), as an electronic database very much like a stock exchange database that tracks ownership of stocks, and MERS forecloses. There are numerous counts of fraud involved.
    1) MERS is not a bank, and therefore is not entitled to receive payments, and therefore cannot be injured. If a party is not injured, it lacks standing to declare default.
    2) MERS definition of power is ambiguous, using the term “nominee” which is not defined in the document.
    3) MERS refuses to identify the holder in due course of the promissory note.
    4) MERS has no employees. Bank executives claim to work for MERS and transfer interest in property to themselves, using the MERS name.

     
  • daniel hutchins posted at 3:47 pm on Fri, Apr 22, 2011.

    daniel hutchins Posts: 1338

    Darrell: In order to understand the mortgage loan, first understand that the promissory note is the debt obligation instrument, and just like a check, whoever holds the note, holds interest to receive payments from the borrower.

    If you write a check, that check is payable upon present to your bank, or as in the case of the promissory note, whoever holds it can show it back to you to prove that you owe them the payment.

    The promissory note can be bought and sold. Whoever holds possession, so long as it is properly indorsed (like the back of a check), that holder is entitled to receive payments.

    Look-up "holder in due course," and with that keyword search, combine it with the term "Uniform commercial code," which is the law of contracts.

    Next, consider that the holder of the notes is an investor who holds thousands of them, and he wants to apppoint an accountant to bill for payments. That accountant is termed a "loan servicer."

    The magician trick and just one of the frauds and deceptions that the major "banks" perform is the disappearing act with the promissory note, which results from abundant side-profits which they reaped through fraud on Wall Street. when they sell the note to Wall Street, they pretend that they are still the loan servicer, and they continue to send you a bill for payment, and even foreclose, although they already claimed the full face value of profit on the note, many times over, at your expense.

    If you try to negotiate a loan modification, the bank is subject to the "pooling and servicing agreement" which is an additional set of undisclosed terms and conditions that are placed on the promissory note for the benefit of Wall Street.

    As a result, applications for loan modifications are denied, and the house often goes into foreclosure.

     
  • daniel hutchins posted at 3:40 pm on Fri, Apr 22, 2011.

    daniel hutchins Posts: 1338

    Darrell: Sorry. Kevin needed to be put into his place. Kevin also needs to challenge some congressmen that I watched on CSPAN, who are also into Kevin's conspiracy.

    Below, the "riddles" make a good set of keywords to search in google. I put those there for anyone who would be serious to investigate.

     
  • Darrell Baumbach posted at 9:48 am on Fri, Apr 22, 2011.

    Darrell Baumbach Posts: 9405

    daniel....sometimes you write things that really does catch my attention and motivates me to want to investigate or research information... the problem I have is that many times you write in riddles where it is difficult to follow exactly what you are saying... I am looking forward to reading posts from you that clearly inform and educate so further research can constructively take place. You write in terms that you clearly understand and appreciate... but it results in comments like Kevin's..." Must be that my tinfoil hat is too tight"....
    I think you have something good to say... that all can benefit from... I'm just not sure what it is as the vocabulary and concepts you write about are unorthodox. This is not meant as a criticism but as a critique with a positive outcome in mind. If I am out of line, I apologize in advance.

     
  • Kevin Paglia posted at 8:18 am on Fri, Apr 22, 2011.

    Kevin Paglia Posts: 2027

    Must be that my tinfoil hat is too tight.

     
  • daniel hutchins posted at 1:09 am on Fri, Apr 22, 2011.

    daniel hutchins Posts: 1338

    pooling and servicing agreement.

     
  • daniel hutchins posted at 1:09 am on Fri, Apr 22, 2011.

    daniel hutchins Posts: 1338

    Kevin: Addendum: I suggest studying the below topics. These will change your understanding if you take quite a bit of time to understand these.

    Obviously, you also don't know what is a REMIC: Real Estate Mortgage Investment Conduit.

    Obviously, you don't understand what is a mortgage security trust which is the investment security foundation of a mortgage-backed security.

    Obviously, you don't understand how much money they are making from your signature for these, and how much money is being lost on Wall Street.

     
  • daniel hutchins posted at 12:56 am on Fri, Apr 22, 2011.

    daniel hutchins Posts: 1338

    Kevin: This problem has reached into every household in California, and you are playing the conspiracy card. That’s pretty cheap.

    Besides that, I scarcely doubt that you understand what is in your DEED OF TRUST. That document has taken me 2 years of study to understand, and you think you can understand it if it were slid in front of you at a title company before closing escrow.

     
  • Kevin Paglia posted at 3:08 pm on Thu, Apr 21, 2011.

    Kevin Paglia Posts: 2027

    Daniel, what you did not consider is that I am not a conspiracy fanatic. Everything I read from you sounds like a cousin of mine who swears the government has his house bugged.

    Countrywide may very well have "bought" the loan, but they can not change the loan conditions. That is unless you default on some condition of your agreement. If you enter into a loan for $1000 a month fixed, 30yr loan, Countrywide and any other bank can not change these conditions without your agreement. That is why you READ everything before you sign it. When we were signing our papers we made several, hand written adjustments to the loan because of wording we didn't like, had the company rep sign off on it, THEN we signed the paperwork. We've done the same thing every major loan we've had. If you don't like it, don't sign it. They need you, you don't need them.

    Blame the companies all you want, but in the end it was the individuals who signed second and third mortgages on too big of house, bought too many big boy toys and such that caused the problems. Expecting the loan industry to NOT make loans you ask for is like walking into a bar and expecting them NOT to serve you alcohol when you ask for it.

     
  • daniel hutchins posted at 11:00 pm on Wed, Apr 20, 2011.

    daniel hutchins Posts: 1338

    Fannie Mae, and Freddie Mac are NOT a government agency. They do not loan a single dime of money, but the money and promissory notes cross pathes through them, between the home buyers, and Wall Street.

     
  • daniel hutchins posted at 10:59 pm on Wed, Apr 20, 2011.

    daniel hutchins Posts: 1338

    Kevin: after shopping around, it is possible that Countrywide might have purchased the loan from someone else, and then you're stuck with them.
    Countrywide securitized a lot of loans into mortgage-backed securities.

     
  • daniel hutchins posted at 10:56 pm on Wed, Apr 20, 2011.

    daniel hutchins Posts: 1338

    TO ALL WHO BLAME GOVT: For fraud, the primary enforcement branch is the 50 Attorney Generals who allow mortgage fraud to exist in each of their states. In our state, the most recent Attorneys General was elected as governor.

    Another enforecement branch of government is the Securities and 'Exchange Commission, for violations of securitization of the promissory notes. below, I have referenced a case of SEC et. al. v. Mozila, president of Countrywide, filed in US Distric Court, Central Division (Los Angeles). Mozila allegedly settled for about $65 Million. Nevertheless, fraudulent foreclosure upon Countrywide loans continues.

    Federal Trade Commission regulates fraudulent business practice, such as violations of Truth in Lending Act. I don't think they have done anything.

    Congress subpoenaed the bank presidents of the major bank lenders, and all of the testimony sounded like the problem was out of their control, and someone else did it. Congress doesn't seem to have enforced anything.

     
  • daniel hutchins posted at 10:47 pm on Wed, Apr 20, 2011.

    daniel hutchins Posts: 1338

    There is no end of the frauds. I have pleaded over 20 counts in US District Court, and after my case is already filed, I am still finding new violations that i did not plead.


     
  • daniel hutchins posted at 10:42 pm on Wed, Apr 20, 2011.

    daniel hutchins Posts: 1338

    Jerome: TEA Party is completely irrelevant.

     
  • daniel hutchins posted at 10:40 pm on Wed, Apr 20, 2011.

    daniel hutchins Posts: 1338

    Jerome: Makes no sense at all: "TEA Party is at the heart of the housing debacle."
    What debacle?
    What did the TEA Party do?

    I suggest you take an english grammar class at Delta College.

     
  • Jerome Kinderman posted at 10:40 pm on Wed, Apr 20, 2011.

    Jerome R Kinderman Posts: 2357

    Blaming the Notary Public? Please tell me this isn't some sort of a joke. The Notary's sole purpose has only to do with the signing of the documents - to ensure that the signatures are valid and that the documents were signed at the place and on the date indicated. Even if a Notary Public is a lawyer, unless he/she is representing someone at the table at the same time (terribly unethical and stupid – probably illegal too), there should be no other conversation between said Notary and the parties to the transaction. Now if someone comes back screaming about the Notary Public and they actually have a case, then THAT problem is the Notary's for doing something they should not have been doing during the course of the transaction.

    The bottom line is just as Mr. Paglia stated and I've stated on numerous other occasions - we are each solely responsible for the instruments we sign AND that we fully and completely understand every single part of them before signing. Now, if laws have been broken, then heads should roll to the full extent of the law, be it civil or criminal. But this "they made me do it" defense still being used out there to excuse these loans that the borrowers could not afford is simply nonsense.

     
  • daniel hutchins posted at 10:37 pm on Wed, Apr 20, 2011.

    daniel hutchins Posts: 1338

    correction: 2c) new terms and conditions that were NOT disclosed to you.

     
  • daniel hutchins posted at 10:36 pm on Wed, Apr 20, 2011.

    daniel hutchins Posts: 1338

    Kevin, you did not consider a few points:
    0) The Loan does not exist. The bank did not loan you a single dime.
    1) The Lender violates Truth in Lending Act.
    1.5) The right to foreclose is not related to the promissory note in any way.
    2) Lender gives DEED OF TRUST that is embroiled in fraud, not to mention that it contains loopholes. DEED OF TRUST defines Mortgage Electronic Registration Systems (MERS)

    2a) What goes around, comes around. You're next.

    2b) MERS is a new organization and it has taken home buyers 10 years to identify the fraud contained therein and to gain court victories which identify the fundamental flaws.

    2c) If you suffer a change in employment, and you need to negotiate a loan modification, the Lender is subject to new terms and conditions that were disclosed to you, which prevent you from getting a new loan.

    2d) The Lenders, especially Countrywide, have caused and conspired to inflate home values, which have finally crashed, and Countrywide expected these prices to crash, and you cannot sell your house because the value is less than your loan.

     
  • Kevin Paglia posted at 9:44 pm on Wed, Apr 20, 2011.

    Kevin Paglia Posts: 2027

    See, this is what I mean. When we bought our house here we went with Countrywide. When they started talking loan options we laid out exactly what we wanted and let them know if they weren't willing to make it work for us then we would go somewhere else. Knowledge is power. If you are signing loan papers and don't fully understand what you are signing then it is on YOU. Yes there are corrupt loan officers and institutions, but in the end it is the consumer that is signing the paper and if they don't understand what they are singing then they need to ask or walk away. No one can force them to sign for a house that they can't afford, it is the buyer going in saying what they want, not the lending company saying they HAVE to buy this or that house.

     
  • Joanne Bobin posted at 8:52 pm on Wed, Apr 20, 2011.

    Joanne Bobin Posts: 4488

    Daniel has some very good information here about Countrywide (and its subprime division Full Spectrum Lending). I have personally witnessed the strong-arm tactics that brokers used to virtually "force" borrowers to sign loans they knew they would have a hard time paying.

    Among their tactics, tying up loans and making borrowers jump through hoops until they had no time left to shop for a different lender. Their balloon payments were due or the "interest only" period was expiring, or the fixed rate period was expiring and the ARM portion of their loan was about to kick in. They were desperate to pay off past due bills and property taxes.

    If a borrower balked at the signing, the broker would convince them that they had no alternative unless they wanted to deliberately ruin their credit. As a notary, I was asked many times by brokers to persuade the borrower to sign which, of course, I would never do, not to mention that is against the rules of ethical notarial practice and the law. If a borrower asked me if they were getting a raw deal, the only thing I could say was "I cannot under any circumstances advise you - read the terms of the loan. If you don't understand them, you are not obligated to sign - it is YOUR home and YOUR money." Brokers would tell borrowers that they were obligated to pay high fees for "all of the work" they had performed on their behalf unless they signed the loan papers.

    Many times a borrower would refuse to sign. I received many angry phone calls and threats from brokers who accused me of sabotaging their loans when a borrower had refused to sign. Who could blame them (the brokers, that is) ....they had lost anywhere from 10K-20K commissions on loans that didn't get signed - fees that were, of course, tacked on to the loan amount.

    This is no way excuses borrowers who put themselves in vulnerable positions in the first place, but unethical brokers and predatory lenders should not be let off the hook either.

     
  • daniel hutchins posted at 4:50 pm on Wed, Apr 20, 2011.

    daniel hutchins Posts: 1338

    President Mozila of Countrywide was named in a civil lawsuit of Securities and Exchange Commission v. Mozila, filed in US District Court in Los Angeles. When Mozila's motion to dismiss was denied, and it became apparent that Mozila would stand trial, Mozila settled out of court.

    Of particular interest in this case is the fact that Mozila's case is not available on the court website www.pacer.gov.

    I imagine that one of the terms for settlement would be that the court case would be stricken from the public record.

    This case is referenced in Maxam et. al. v. Bank of America et. al., which is how I found it, and journalism in the internet is where people can find it to be mentioned.

     
  • daniel hutchins posted at 4:47 pm on Wed, Apr 20, 2011.

    daniel hutchins Posts: 1338

    Kevin: My wife saw on CSPAN, so this is hearsay, in testimony before a congressional investigation, one bank president confessed that the ARM loans with a 5-year zero-principal front-end were intended to cause foreclosures after 5-years when the balloon payment becomes due.

    This is not hearsay, because I watched this on CSPAN: Bankers knew that the housing market would collapse, and the banking executives only intended to harvest the greatest amount of wealth as possible before the housing market would collapse.

    The most flagrant violation was at Countrywide which gave the highest-risk loans.

     
  • daniel hutchins posted at 4:40 pm on Wed, Apr 20, 2011.

    daniel hutchins Posts: 1338

    The central point in the fraud is securitization.

    The promissory note travels through banking the moment it is whisked away at the title company, after you sign it.

    Your signature on the document is used as security in mortgage-backed securities, and additional terms and conditions are attached to the document, which you did not agree upon when you signed it.

    On the reverse side of the transaction is Wall Street where investors in mortgage-backed securties are also losing.

    Even if the promissory notes produce 100% of the face value of the promissory notes, the mortgage-backed securities cannot perform for that which is promised. Subsequently, as homeowners default, these become bad investments, and the return on investment dwindles.

     
  • daniel hutchins posted at 4:36 pm on Wed, Apr 20, 2011.

    daniel hutchins Posts: 1338

    There are other similar cases floating around. I got a solicitation in the mail to join a case for a different lender.

    Even if your house is already foreclosed, you can join this case or others like it, to recover damages.

     
  • daniel hutchins posted at 4:34 pm on Wed, Apr 20, 2011.

    daniel hutchins Posts: 1338

    Anyone who has a loan with Countrywide can join this case as one of the fictitious Plaintiffs.

    http://www.prweb.com/releases/2011/4/prweb8301949.htm

    Philip Kramer has filed a mass joinder lawsuit against Bank of America/Countrywide (BOA) (Maxam v. Bank Of America, Superior Court of California, Orange County Superior Court, case number: 30-2011-00450819-CU-MT-CXC) in what is potentially the most significant and precedent-setting legal action taken against lenders as a result of the national foreclosure crisis, it was announced today by Philip Kramer, Esq. of Kramer & Kaslow.

     
  • daniel hutchins posted at 4:31 pm on Wed, Apr 20, 2011.

    daniel hutchins Posts: 1338

    see: http://www.prweb.com/releases/2011/4/prweb8301949.htm
    maxam v. Countrywide

    The above reference is a mass joinder case filed in Orange County.
    300 Plaintiffs + 1000 fictitious Plaintiffs that can join.
    This lawsuit filed in Orange county pleads that Countrywide conspired with real estate appraisors to "inch" the appraised value up tiny amounts upon every loan.
    Countrywide initiated its conspiracy in a little-noticed County of Placer, as a prototype for practice, and expanded its price hiking to every county in California.

    The pleading examines the fraud of Mortgage Electronic Registration Systems, Inc., which is a creation of the banks who collectively hold its shares, for which MERS serves in foreclosures.

     
  • Darrell Baumbach posted at 9:09 am on Wed, Apr 20, 2011.

    Darrell Baumbach Posts: 9405

    Seems to me that both sides are right... people should definitely take responsibility for their personal decisions.. Sam and Pattye have very good points... however, government also has to take responsibility for when they fail to take appropriate measures to protect the public from entities that are motivated to make money at all costs even at the expense of peoples safety. There has to be a balance which is why I can appreicate the positions of Doug, Josh and Pat as well.

    I especially appreciate Jeromes position that people will use information to politically harm their enemies and and not care if the information is true or not....the ends justify the means...

     
  • Sam Heller posted at 6:34 pm on Tue, Apr 19, 2011.

    Sam Heller Posts: 176

    Pattye, great blog. I agree. Quit blaming government for bad personal decisions.

    Also Kevin... nice blog.

     
  • Patrick W Maple posted at 6:33 pm on Tue, Apr 19, 2011.

    Pat Maple Posts: 1805

    Some of the losses were due to job losses also...good jobs meant honest people who believed they would be able to make their payments even if it meant sacrifices...I don't think ANYONE believed it would get this bad.

     
  • Patrick W Maple posted at 6:27 pm on Tue, Apr 19, 2011.

    Pat Maple Posts: 1805

    Well...you all have a ringer (horseshoes)...but my leaner (JP's comments) is that the start was with the "loosening" of the money bags by the Feds through the tightening of the noose around the lenders' necks. Homes! Ownership! Loans for everyone!!! Now many have no home, no ownership and no loan...they are renting.

     
  • Kevin Paglia posted at 5:40 pm on Tue, Apr 19, 2011.

    Kevin Paglia Posts: 2027

    If someone gets a credit card and maxes it out then is it the CC company's fault or the consumer? Same for the housing industry. People fudged their numbers so they could get more house than they could afford then turn around and blame the companies. Take some responsibility for your own actions and deal. Stop taking out second and third mortgages to buy big person toys.

    Then there is the rebuttal that people weren't told that they couldn't afford all the stuff they were buying. You know what, it is simple math, if you are spending more than you are getting then you can't afford to buy more. Don't blame the lending companies for doing what you asked them to do.

    If you see a rock, kick the rock and break your toe, don't blame the rock. I spent a lot of time in the great outdoors and one lesson I always remember is never jump over a fallen log without looking, you have no idea what may be over there. Same is true for taking loans, never go further than you can predict (peak over the log). You want out of the mess, budget, budget, budget. Stop waiting for DC to fix YOUR money problems.

     
  • Doug Chaney posted at 5:36 pm on Tue, Apr 19, 2011.

    Doug Chaney Posts: 1232

    Mr. Morgan, I agree firmly with your take on the subject. How could someone with a $40K income qualify for a $425K jumbo loan when in essence their annual income was closer to $25K before those unscrupulous realtors, lenders and brokers greatly exaggerated those numbers? It's not like those who were responsible for reporting and/or verifying those figures didn't have the means to do so with a simple credit check from Equifax or one of the other credit rating agencies. It was all about personal greed and a crime that has gone unpunished to this day.

     
  • Josh Morgan posted at 3:23 pm on Tue, Apr 19, 2011.

    Josh Morgan Posts: 533

    Pattye, you are certainly correct in attributing some responsibility to the homeowners. But the crux of the problem still lies with the elected officials who believed everyone should have access to the "American Dream".....home ownership. Even if it meant allowing someone to buy a home who really couldn't afford it. Loans were being made with no documentation of income or ability to repay the loan. But, by god, those people were entitled to home ownership come hell or high water.

     
  • Pattye Nelson posted at 12:46 pm on Tue, Apr 19, 2011.

    Pattye Nelson Posts: 29

    Why isn't it the fault of the owners who used their homes like credit cards? Not everything is the politicians fault. Where is the personal responsibility of people who decide they need bigger houses, better cars and toys of all kinds?

     
  • Joe Baxter posted at 10:45 am on Tue, Apr 19, 2011.

    Joe Baxter Posts: 1849

    WOW, come on now, EVERYBODY knows it is Bush's fault. Ask any Demoncrat liberal, they'll set you straight.

     
  • Patrick W Maple posted at 8:03 am on Tue, Apr 19, 2011.

    Pat Maple Posts: 1805

    Yes Jerome...there is a bunch of Santa Clauses! Santa Waters, Santa Frank, Santa Billy, Santa Jimmy, Santa Obie and Santa et. al. There is the present that Mr West left out of the Christmas sack though...the inflated worth of 99.5% (really 100%) of the homes and the frenzy set forth by many (not all) of those in the industry...both builders and lenders as well as the realty business. America is about making a buck for yourself...not giving away the Elf's workshop and tools. Those on the assembly line certainly didn't want to kick Santa(s) in the shin...including me.

    My grandmother use to tell us that when you tell a lie you will have to tell seven more...and then start over again...and eventually you will forget what your original lie was and that is when you will get caught... It seems to me that BO, his buddies and the rest of Congress are starting on their 44th trip around the lie.

     
  • Jerome Kinderman posted at 7:33 am on Tue, Apr 19, 2011.

    Jerome R Kinderman Posts: 2357

    Now to be perfectly fair, all sides' opinions must be taken into consideration. I doubt anyone would disagree with what is written in this letter as the data is so crystal clear. But still, after doing a little more research on my own it is my conclusion based upon the very best evidence available that the newly formed TEA Party is at the heart of the housing debacle. Just as the environmentalists and many politicians have deemed the debate over global warming to be over owing to the overwhelming proof they've provided, so is the debate ended regarding this problem.

    Of course we still need to develop a solution: czars need to be appointed; gobs of money appropriated; elections tampered with; innocent people pilloried; etc., etc. So let’s get to work America!

     
  • Charles Nelson posted at 7:09 am on Tue, Apr 19, 2011.

    Charles Nelson Posts: 259

    The frenzy of sub prime lending would not have been possible if it weren't for the repeal of the Glass/Steagall Act of 1933. Glass/Steagall put up a wall between banks and Wall St. It was a law passed in an effort to try and keep the Great Depression from repeating itself. The repeal was passed in the Senate by over 90 votes. The bill was co-authored by Grahm of Texas, and Leach of Nebraska, both Republicans. In order to obtain what was a veto proof majority during the Clinton presidency, I'm sure certain boots had to be licked on the Democrat side of the aisle. The repeal was bi partisan. There's plenty of blame to go around. Greenspan was asleep at the wheel, it was his job to police the lenders. The Republicans tried to warn congress, but were shot down by Maxine Waters and Barney Frank et al, for trying to put the brakes on the situation years before the collapse. It was hinted as racist to keep unqualified people out of the housing market.

     

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