The Sub-prime mortgage debacle - explained

[MrBishop]

Perhaps one of easiest to understand explanations for the credit crunch going on now..and amazingly - It's non-partisan

Video Link Here

 

[Gonz]

Simplistic but insufficient. It blames the bankers & forgets to add the government.

 

[randomJACKASS]

I know it's not what you mean, but it doesn't bring up the fact that the government allowed the flim-flammery to go on as long as it did.

 

[Cerise]

You are correct, Jackass. If only the government would've listened to GWB when he tried to rein it in.

The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industr

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.

 

[catocom]

yep Bush failed.

 

[randomJACKASS]

Well he was certainly right in this case, I agree.

 

[Gonz]

it doesn't bring up the fact that the government allowed the flim-flammery to go on as long as it did.

Allowed? Hell, the government started it. See Community Reinvestment Act of 1977.

 

[MrBishop]

Allowed? Hell, the government started it. See Community Reinvestment Act of 1977.

..and I wonder who convinced the GVT to pass such a law...hmm.

If the banks hadn't wanted such a law to pass, the House would've been packed to the rafters with bank lobbyists all crying "No..you're going to ruin the economy"

It's laughable to think that this idea came from anywhere BUT the banks, finance firms and dealers that were going to profit BIG TIME from such a law being passed.