So Nick Clegg is talking rubbish again.

[kwerk]

End result:

 

[kwerk]

That doesn't mean that's what led to the banks over extending, it is simply their excuse after they had to be bailed out when all their dodgy practices went wrong, and its very very Republican to blame the disastrous failings of the Bush administration on Clinton. They inherited a massive surplus and managed to turn it into a giant deficit.

Clinton wanted banks to stop being racist/classist, this in no way mean he was forcing their hand to lend to people who couldn't pay it back, that was short sighted bankers trying to make a buck, getting their bonuses, and then getting away with it completely free without having to pay anything back when it all went wrong.

their dodgy practices where state mandated.

Here's an interesting read on the subject:

http://fcic-static.law.stanford.edu/cdn_media/fcic-reports/fcic_final_report_wallison_dissent.pdf

Initiated by Congress in 1992 and pressed by HUD in both the Clinton and
George W. Bush Administrations, the U.S. government’s housing policy sought to
increase home ownership in the United States through an intensive effort to reduce
mortgage underwriting standards. In pursuit of this policy, HUD used (i) the
affordable housing requirements imposed by Congress in 1992 on the government-
sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, (ii) its control over the
policies of the Federal Housing Administration (FHA), and (iii) a “Best Practices
Initiative” for subprime lenders and mortgage banks, to encourage greater subprime
and other high risk lending. HUD’s key role in the growth of subprime and other
high risk mortgage lending is covered in detail in Part III.

Ultimately, all these entities, as well as insured banks covered by the CRA,
were compelled to compete for mortgage borrowers who were at or below the median
income in the areas in which they lived. h is competition caused underwriting
standards to decline, increased the numbers of weak and high risk loans far beyond
what the market would produce without government influence, and contributed
importantly to the growth of the 1997-2007 housing bubble.

When the bubble began to delfate in mid-2007, the low quality and high
risk loans engendered by government policies failed in unprecedented numbers.
The effect of these defaults was exacerbated by the fact that few if any investors—
including housing market analysts—understood at the time that Fannie Mae and
Freddie Mac had been acquiring large numbers of subprime and other high risk
loans in order to meet HUD’s affordable housing goals.

 

[kwerk]

One of the government files from 94 typed up by some know it all bureaucrat with a sociology degree.

Yeah that's who i want running an economy: sociologists, not bankers, sociologists.

http://www.occ.gov/static/news-issuances/ots/ceo-memos/ots-ceo-memo-22.pdf

Example. A lender offered a credit card with a limit of up to $750 for applicants 21-30 and $1500 for applicants over 30. This policy violated the ECOA's prohibition on discrimination based on age.

What could possibly go wrong with that LOL??

 

[kwerk]

Q11: What is the role of the guidelines of secondary market purchasers and private and governmental loan insurers in determining whether primary lenders practice lending discrimination?

A: Many lenders make mortgage loans only when they can be sold on the secondary market, or they may place some loans in their own portfolios and sell others on the secondary market. The principal secondary market purchasers, Federal National Mortgage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac"), publish underwriting guidelines to inform primary lenders of the conditions under which they will buy loans. For example, ability to repay the loan is measured by suggested ratios of monthly housing expense to income (28%) and total obligations to income (36%). However, these guidelines allow considerable discretion on the part of the primary lender. In addition, the secondary market guidelines have in some cases been made more flexible, for example, with respect to factors such as stability of income (rather than stability of employment) and use of nontraditional ways of establishing good credit and ability to pay (e.g., use of past rent and utility payment records). Lenders should ensure that their loan processors and underwriters are aware of the provisions of the secondary market guidelines that provide various alternative and flexible means by which applicants may demonstrate their ability and willingness to repay their loans. Fannie Mae and Freddie Mac not infrequently purchase mortgages exceeding the suggested ratios, and their guidelies contain detailed discussions of the compensating factors that can justify higher ratios (and which must be documented by the primary lender).

A lender who rejects an application from an applicant who is a member of a protected class and who has ratios above those of the guidelines and approved an application from another applicant with similar ratios should be prepared to show that the reason for the rejection was based on factors that are applied consistently without regard to any of the prohibited factors.

 

[kwerk]

Here's another gem:

"Applying different lending standards to applicants who are members of a protected class is permissible".

What do you think "different lending standards" might be a euphemism for? Eventually the banks started using "different lending practices" for everybody. Might as well milk it for what it's worth before it collapses.

Oh and refusing to use "different standards" is prohibited. In other words making your own sound judgement is prohibited under threat of sanctions if it might hurt a poor person's feelings.

here's what happens when you got caught being an evil racist banker, you get a ton of federal agencies pooping on you:

Q12: What criteria will be employed in taking enforcement actions or seeking remedial measures when lending discrimination is discovered?

A: Enforcement sanctions and remedial measures for lending discrimination violations vary depending on whether such sanctions are sought by the appropriate federal financial institutions regulatory agencies, DOJ, HUD or other federal agencies charged with enforcing either the ECOA or the FH Act. The following discussion sets out the criteria typically employed by the federal banking agencies (i.e., OCC, OTS, the Board and FDIC), NCUA, DOJ, HUD, OFHEO, FHFB and FTC in determining the nature and severity of sanctions that may be used to address discriminatory lending practices. As discussed in Questions 8 and 9, above, in certain situations, the primary regulatory agencies will also refer enforcement matters to HUD or DOJ."

 

[Things change I've changed]

Ultimate responsibility lies solely on the person signing on the dotted line. No if's, no buts, I know how some of you like to "blame the bankers" but there's a word that can be used so that you don't screw yourself over, it's NO, try it sometime when someone offers you a store card with 35% APR instead of scrambling for a pen.

So the banks have no responsibility to lend serious amounts of money out sensibly?, what a crock of ****, the responsibility lays on the lender and the borrower imo, I've listened to a few 'American Life' podcasts on this topic and in America (and in the UK on a smaller scale) during the 'bubble' banks were practically giving money away to people who could noway afford to pay it back, that is irresponsible lending.

Listen to both these episodes, they are very interesting and informative,

355: The Giant Pool of Money

A special program about the housing crisis produced in a special collaboration with NPR News. We explain it all to you. What does the housing crisis have to do with the turmoil on Wall Street? Why did banks make half-million dollar loans to people without jobs or income? And why is everyone talking so much about the 1930s?

http://www.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money

&

365: Another Frightening Show About the Economy

Alex Blumberg and NPR's Adam Davidson—the two guys who reported our Giant Pool of Money episode—are back, in collaboration with the Planet Money podcast.

http://www.thisamericanlife.org/rad...65/another-frightening-show-about-the-economy

 

[hurfdurf]

So the banks have no responsibility to lend serious amounts of money out sensibly?, what a crock of ****, the responsibility lays on the lender and the borrower imo, I've listened to a few 'American Life' podcasts on this topic and in America (and in the UK on a smaller scale) during the 'bubble' banks were practically giving money away to people who could noway afford to pay it back, that is irresponsible lending.

But somehow it's Clintons fault because he "allowed" it to happen. Never mind that the top donors to the Republicans are banks, don't follow the money at all, just pretend their all in on it because your a mentally deluded conspiracy nut, it makes the world a more liveable place.

 

[kwerk]

But somehow it's Clintons fault because he "allowed" it to happen. Never mind that the top donors to the Republicans are banks, don't follow the money at all, just pretend their all in on it because your a mentally deluded conspiracy nut, it makes the world a more liveable place.

Really... who sounds like the conspiracy nut here? "follow the money" LOL.. I have never once accused anyone of trolling on here but jesus christ.

Is Stanford Law really going to publish "mentally deluded conspiracy nut" ramblings? I posted tons of info straight from the gov, banking journals, Stanford/FCIC and you have nothing to counter it except inane gibberish about republicans. You'll probably come back with something about Hitler and Thatcher next.

 

[kwerk]

Again not from me, from a professional, published by Stanford FCIC:

Read it, mull it over.

Initiated by Congress in 1992 and pressed by HUD in both the Clinton and
George W. Bush Administrations, the U.S. government’s housing policy sought to
increase home ownership in the United States through an intensive effort to reduce
mortgage underwriting standards. In pursuit of this policy, HUD used (i) the
affordable housing requirements imposed by Congress in 1992 on the government-
sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, (ii) its control over the
policies of the Federal Housing Administration (FHA), and (iii) a “Best Practices
Initiative” for subprime lenders and mortgage banks, to encourage greater subprime
and other high risk lending. HUD’s key role in the growth of subprime and other
high risk mortgage lending is covered in detail in Part III.

Ultimately, all these entities, as well as insured banks covered by the CRA,
were compelled to compete for mortgage borrowers who were at or below the median
income in the areas in which they lived. h is competition caused underwriting
standards to decline, increased the numbers of weak and high risk loans far beyond
what the market would produce without government influence, and contributed
importantly to the growth of the 1997-2007 housing bubble.

 

[kwerk]

The reason Bush kept it going was A. he is simply a retard, and B. if he stopped it he would have been branded a racist. And what's worse than being a racist in politics?

When it crashed by itself they could blame the banks for "predatory lending".

 

[estebanrey]

Let me get this straight.

Are we now blaming the entire Global Economic Crisis on the black community in the States? Wow

 

[Mercenary Keyboard Warrior]

Let me get this straight.

Are we now blaming the entire Global Economic Crisis on the black community in the States? Wow

I don't think so.

The facts are far too many people borrowed far too much money and when the brown stuff hit had no contingency. I worked with people earning 3x plus more than average wage who still had outgoings higher than income. No savings, living pay day to pay day. Pretty much all sense of having a backup plan was nonexistent for these people.

Undoubtedly sub prime caused some of the issues and it was the main trigger for the meltdown to take effect but it was inevitable the meltdown it was going to happen, the question was when.

The rest is history, lack of true valuable assets to back the loans and borrowings that were tangled from institution to institution globally mean't one failure rippled round. It truly was setup like a deck of cards.
Add to that the recent (at that time) fiscal mismanagement by many governments globally (eg Uk/Eurozone/US ++++) and the recipe was perfect. The one hope was a very fast and decisive response globally from governments, they did too little too late and generally took the decision to try to keep the mess from unravelling by spending.

We are still suffering from failure of the Eurozone to deal with their issues, repeated and repeated failure to really deal with the wounds. They just add another plaster each time that will stave off the problems for a month or two. Its out of the news but how long do people think it will be before Greece asks for bailout 3. Its coming as they still haven't fixed the issues they need to fix...

 

[kwerk]

Let me get this straight.

Are we now blaming the entire Global Economic Crisis on the black community in the States? Wow

I dont blame the black community I blame the government who created an affirmative action mortgage program. You can compare it to the "No Child Left behind" act Bush did. It tried to make everyone equal in education by penalizing teachers who didn't perform. In a nutshell black kids had to perform as good as asians/whites or you got fired.

Result: massive fraud, just like the subprime crisis. The biggest cheating scandal in history. The teachers simply used fraud to make everyone "equal" in majority black places like Atlanta.

http://news.yahoo.com/americas-bigg...eating-scandal-unfolds-atlanta-213734183.html

"Teachers who confessed to cheating blamed "inordinate pressure" to meet targets set by the district and said they faced severe consequences such as a negative evaluation or termination if they didn't"

Sound familiar?

Same thing as subprime. Fudge it to please the government mandates.

And actually it was more latinos than blacks who were buying houses. That's another reason why Bush kept it going, he went very hard after the latino vote in 2004. There were millions of the coming up from mexico to build all the houses remember, not just live in them.

 

[kwerk]

Now imagine that the public schools where private and competing with each other in a global market, and the teachers got paid bonuses based on performance. Imagine the scale of cheating then.

 

[Slam62]

Let me get this straight.

Are we now blaming the entire Global Economic Crisis on the black community in the States? Wow

it would be more accurate to point out that the majority of the under privileged, poor and frequently unemployed american are black or Hispanic.

Probably most middle class americans managed to keep paying the mortgage.

 

[robgmun]

So the banks have no responsibility to lend serious amounts of money out sensibly?, what a crock of ****, the responsibility lays on the lender and the borrower imo, I've listened to a few 'American Life' podcasts on this topic and in America (and in the UK on a smaller scale) during the 'bubble' banks were practically giving money away to people who could noway afford to pay it back, that is irresponsible lending.

wow, just wow, speechless. You make it sound like the banks forced money into peoples pockets. No matter the rules of government, there was a simple defence mechanism to stop this, it's called your brain.

I need to go out and buy Shoes, Jeans, a new laptop etc. But i don't have the money this month, you know what? I don't want to use my credit card and i'll wait until next month when i can actually afford them!

 

[Things change I've changed]

wow, just wow, speechless. You make it sound like the banks forced money into peoples pockets. No matter the rules of government, there was a simple defence mechanism to stop this, it's called your brain.

I need to go out and buy Shoes, Jeans, a new laptop etc. But i don't have the money this month, you know what? I don't want to use my credit card and i'll wait until next month when i can actually afford them!

Speechless?, you took the words right out of my mouth, you think banks shouldn't lend responsibility?, you think it's sensible business practice for them to give thousands of pounds/dollars out to people without even checking whether they have the ability to pay it back?

Like I said in my post, "the responsibility lays on the lender and the borrower imo", you can't just give money away irresponsibly then place the onus solely on the poor people that take it when the market crashes, banks are a fundamental part of our economy, they have a responsibility to make sure that their actions do not have an adverse effect on that, you speak as though they played no part in our current economic crisis, that's madness, I'm saying we are both to blame, the banks and the consumers, but more so the banks imo.

Did you even listen to those podcasts I linked?

 

[Woden]

wow, just wow, speechless. You make it sound like the banks forced money into peoples pockets. No matter the rules of government, there was a simple defence mechanism to stop this, it's called your brain.

I need to go out and buy Shoes, Jeans, a new laptop etc. But i don't have the money this month, you know what? I don't want to use my credit card and i'll wait until next month when i can actually afford them!

The banks staff should be able to advise. You may think you are able to afford a mortgage of X a month but the banks should be able to look at your finance, and using the far superior experiance they should be offering mortages that wont cripple you.

People, wrongly, trusted the banks. The banks said, "heres what you can have", and people took it, thinking "well they wont offer me something i cant afford to repay will they?". But that is exactly what they did.

No other profesion I can think of works like this. A doctor gives you bad advice and he can be struck off, sued for malpractice. An architect designs a unsafe building, he will be punished. Restraunt gives people food poisening, its shut down.

Personal responsibility, while very important can only go so far. Bankers, like anyone else offering a product or service have a duty of care to their customers. The market crashed because that duty of care was ignored.