Who will win the GOP nomination for President of the United States of America?

Sunday, October 16, 2011

Who is to Blame for the Sub-Prime Financial Crisis?

As Newt Gingrich stated at the GOP debate in Hanover last week, if one is looking for where the blame is to rest for financial crisis, you have to look at Chris Dodd and Barney Frank.  However, the problem is much deeper.  Let us trace the financial crisis to its roots.

Here is a timeline of events that ultimately caused the financial turmoil of the later part of the last decade:

1977:  Community Reinvestment Act - Signed into law by the white devil, Jimmy Carter.  No empirical evidence that the governmental demand of making loans to low income individuals had a major effect on the financial crisis.  The culprit of course was the sub-prime lending boom that was encouraged by Clinton and Bush, most likely to prop economic numbers.
  
1999: The Gramm–Leach–Bliley Act was brought before the house and senate by the three republicans that the bill's name carries.  Signed into law by President Clinton.  This bill reversed the Glass-Steagal act of 1933 that separated investment banking and retail banking.  This is how retail banks were able to invest in higher risk securities over the past decade and find themselves holding trillions of dollars in toxic assets.

2002:  Rep. Ron Paul is warning of Fannie Mae’s and Freddie Mac’s possible ruin of the financial industry in front of the House of representatives .

Thanks to Squeakywheel for pointing out that Bush Signed into law the American Dream Downpayment Act in Dec. 16th 2003.  This helped low income borrowers with down payments and closing costs, but I was unable to find anything tying this to the lax borrowing guidelines.  Squeakywheel says that this lead to Stated Income mortgages, but I could not find the data to support.  If anyone has insight, please comment.

2004:  Republicans push for more regulation of Fannie and Freddie. Barney frank, who later became the head of the subcommittee and bold-faced lied numerous times that, “he inherited the problem when he took the position in 2007”.  What a turd.  Listen to the fool below stump for not increasing regulation of the industry; even in light of a compelling report for such things.  You will also notice other members of the committee playing race politics.

Here is the subcommittee hearing on the matter.  It is one of the best portrayal of the democrat/republican dynamic(emotional driven nonsense vs. prudence, based upon evidence) I have ever seen.  The democrats got us good, though liberal media has pulled the wool over the eyes of most. Watch.  It is hugely interesting.


2005:  Emboldened by the lack of action $1.469 Trillion subprime mortgage are originated between 2005 and 2006.

 2007:  The financial collapse begins takes hold.

2009:  Obama takes office.

2012:  Obama leaves office accomplishing nothing more than inhibiting the public sector from creating long term employment opportunities for those Americans desperate for employment.  He did this in a number of ways, which will be discussed at length in a blog to follow.

The future:  The ramifications of the financial crisis are still not fully known. However, this blog is all about the blame game.  The score Rep. 25% the Democrats 75%


5 comments:

squeakywheel said...

You seem to have left out an important event. On May 17, 2002 George W Bush announced his "Home Ownership Plan" which allowed those with no down payment or bad credit to get loans. In order to achieve this, he got Fannie Mae and Freddie Mac to loosen their lending standards. Thus, the "stated income" loans were born. In the real estate industry, we called them "liar loans".

http://www.youtube.com/watch?v=kNqQx7sjoS8

squeakywheel said...

You left out an important date.
May 17, 2002 George W Bush introduces his "Homeownership Plan" and the fact that he asked Fannie and Freddie to loosen their lending standards so that people with no down payment or bad credit could enjoy being homeowners. Thus, the "stated income" or as we in the real estate industry called them "liars loans" were born.

Barney Frank nor Chris Dodd who were in the minority party at the time had absolutely nothing to do with the housing crisis.

http://www.youtube.com/watch?v=kNqQx7sjoS8

squeakywheel said...

I failed to mention one thing in my previous comments. There was a bill in the US Senate which would have reeled in Fannie and Freddie, but Freddie's administrator had paid a lobbyist to target 17 republican senators to vote against the bill. This is the bill that John McCain referred to during the 2008 presidential campaign. Those 17 senators included the chairman of the committee, Bill Frist. Frist was determined not to let the bill get out of committee. Thus, Fannie and Freddie continued their loose lending standards and people who should never have been allowed to buy a home were now in homes they couldn't pay for.

National Sponsor said...

Thanks for the input Squeakywheel. I will have to check out the new information and update the blog as necessary. I appreciate the feedback.

Big fan of the supporting videos.

National Sponsor said...

Alright, so I was able to watch the video and I could find no evidence that the ADDI had a role is loosening guidelines other than providing assistance to low income borrowers.

http://www.hud.gov/offices/cpd/affordablehousing/programs/home/addi/

All evidence point to this guy as liar and probably worse:

http://www.youtube.com/watch?v=4fKpBPRKbvQ&feature=related