tag:blogger.com,1999:blog-13073631.post7157907445934966325..comments2024-01-04T07:21:18.243-05:00Comments on John In Carolina: The Mess Dems MadeUnknownnoreply@blogger.comBlogger3125tag:blogger.com,1999:blog-13073631.post-41841149058630867472008-09-19T13:15:00.000-04:002008-09-19T13:15:00.000-04:00The IBD article conveniently forgets to mention th...The IBD article conveniently forgets to mention that David Mudd, Republican and successor to Raines was far more responsible for flooding FNM with subprime debt than Raines. As we know subprime financing didn't really take off untill 2005, which is after Raines left FNM in 2004.<BR/><BR/>Then of course there is the history of the Gramm-Leach-Bliley Act, passed by a 2/3 majority of a Republican Congress during the Clinton years that many feel provided the mechanisms for this disaster in the fist place. Gramm "Recession is Mental" has been and still is an economic policy mentor for Mr. McCain.Pressed Rat and Wart Hoghttps://www.blogger.com/profile/11418120533084618456noreply@blogger.comtag:blogger.com,1999:blog-13073631.post-48231641440520693442008-09-16T20:47:00.000-04:002008-09-16T20:47:00.000-04:00John -To add a little texture to what you quoted f...John -<BR/><BR/>To add a little texture to what you quoted from IBD let me note the following: what led the Clinton Administration to put the "Community Reinvestment Act on steroids" was a series of article written at the Boston Federal Reserve Bank at the end of the 80s and beginning of the 90s. The articles purported to show that American of African descent were being discriminated against. Because Americans of African descent tend to live together, it looked like their neighborhoods were being redlined. Articles written later in other journals debunked the Boston Fed articles. They showed that reason for the apparent redlining was inability of people in those so-called redlined areas to keep up with the mortgage payments because they were too poor. A debunked theory, though, never stopped a good populist (or Liberal Fascist, to use H.G. Well's term [via Jonah Goldberg]), and so the Democrats were off to the races. Over time, banks, to avoid (needless) prosecution, created sub-prime mortgages so they could have a mechanism to lend to poor people. Simultaneously, someone hit on the idea of packaging the sub-primes with other better mortgages. In 1999, the probability theory was seemingly worked out to be able to package the mortgages with other better mortgages to reduce the risk of holding just sub-primes. (The theory was correct; on the other hand, the probability distribution that was used was too optimistic, as time would tell.) The packaged mortgages were termed call Collateralized Debt Obligations (CDOs). Added to this little witch's brew was that the CDOs were incorrectly rated by the main ratings agencies: S&P, Moody's & Fitch. The net result of all those mistakes was that the interest rates on the CDOs were too low (or the price was too high). That led an explosion of the CDO market by making it too easy to lend to sub-primes which occupied the lowest "tranche" of the CDOs. Consequently, underwriting standards went to hell in the proverbial handbasket. By the end of 2005, or 2006, the recent sub-prime cohorts starting defaulting, prices on homes starting falling and suddenly there were a lot of unsold new homes on the market. With default rates going up, private lenders began withdrawing from the mortgage market. That was when HUD stepped in and told Fannie & Freddie to take up the slack in the mortgage market, which they did, and the rest is history.<BR/><BR/>It may be true that Clinton appointees can be blamed, but the Bush Administration (I am sad to say) shares part of that blame. It should never have pushed Fannie & Freddit to take up the slack in the sub-prime market which is what ultimately did them in.<BR/><BR/>Jack in Silver SpringAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-13073631.post-647806945585787562008-09-16T17:42:00.000-04:002008-09-16T17:42:00.000-04:00OMG!! Say it isn't so! Jamie Gorelick padding her ...OMG!! Say it isn't so! Jamie Gorelick padding her pockets? Why she's just as pure as the driven snow, one of those courageous barristers defending the honor of Brodhead and his gang of slugs. Why am I not surprised?<BR/>And speaking of the lacrosse frame-up, what will Durham do when it turns out that AIG is bankrupt and can't pay on its policy?? When the judgement comes, where, oh where will the money come from? I guess it would be out of the question to have Duke cover the good city fathers of Durham...<BR/>Tarheel HawkeyeAnonymousnoreply@blogger.com