GOP trying to put the blame for the financial crisis on poor people...

[HomerJS]

I was watching the Morning Joe show when Larry Kudlow started this next Republican talking point, poor people are to blame for this crisis. This line has been spreading and will continue, even harder in the swing states.

Article

 

[brandonb]

Blaming poor people for what? Not paying their bills and loans off. Gee. What a shocker. People are generally poor for a reason.

What happened to qualifying for a loan? It's the banks fault. Thats why I'm so pissed they get a bail out. Its poor business practice and they get bailed out? No way.

 

[Genx87]

Originally posted by: HomerJS
I was watching the Morning Joe show when Larry Kudlow started this next Republican talking point, poor people are to blame for this crisis. This line has been spreading and will continue, even harder in the swing states.

Article

I havent heard republicans pushing this have you? I'll reserve judgement on the cause of this meltdown. But I have a feeling there is enough blame to go around. And that blame may even include Afirmative Action like programs for lending. I find it hard to believe anybody has a solid proved theory on what happened at this stage in the game.

So far all I have seen is partisan hacks offering their theory which unbelievably lines up with their ideology!

*shocked*

 

[JS80]

If the question is, what was the "root" of the cause, I'd say the first is government sponsorship of homeownership (fannie, freddie, mortgage interest tax deduction, low interest rates) and a tie for second - poor people and speculators. Third would be the dirty salesmen who sold the mortgages.

 

[Lemon law]

Well HomerJS, if one starts out with the premise smart rich investors are infallibility correct, all there is left is to blame the poor.

But in a sense, poor buyers should not have signed on the dotted line, so Kudlow is partially correct. What is being ignored is the fact that these rich investors set up a 56 trillion dollar casino based on nothing but thin air, spit, and baling wire to escape government regulations. And they bet our savings, our 401-K's, and now when the other part of rich investors greed also collapsed the entire world's financial markets, its a far bigger problem than can be explained away by any few poor fool theory.

Maybe at some point, we can answer the percentage blame question, but IMHO, I doubt more than 5% can be blamed on the poor.

 

[nageov3t]

poor people shouldn't have been "buying" houses that they couldn't afford. bankers shouldn't have been lending them the money. the government shouldn't have been encouraging banks to lend them the money.

there's plenty of blame for everyone, but ultimately, it was the defaulters choice to take loans they had no hope of repaying and often without actually reading what they were signing.

 

[Stuxnet]

I think the majority of the people who "blame poor people" only blame them insofar as they were getting themselves into a situation they didn't understand. I hate to legitimize such a stupid topic title, but I suppose that needed clarification. Of course, predatory lending played a huge rule, but anyone who thinks the Democrats didn't have a huge hand in getting that ball rolling is simply kidding themselves.

I'd continue, but JS80 beat me to it:

Originally posted by: JS80
If the question is, what was the "root" of the cause, I'd say the first is government sponsorship of homeownership (fannie, freddie, mortgage interest tax deduction, low interest rates) and a tie for second - poor people and speculators. Third would be the dirty salesmen who sold the mortgages.

As did Loki:

Originally posted by: loki8481
poor people shouldn't have been "buying" houses that they couldn't afford. bankers shouldn't have been lending them the money. the government shouldn't have been encouraging banks to lend them the money.

there's plenty of blame for everyone, but ultimately, it was the defaulters choice to take loans they had no hope of repaying and often without actually reading what they were signing.

 

[Moonbeam]

Originally posted by: loki8481
poor people shouldn't have been "buying" houses that they couldn't afford. bankers shouldn't have been lending them the money. the government shouldn't have been encouraging banks to lend them the money.

there's plenty of blame for everyone, but ultimately, it was the defaulters choice to take loans they had no hope of repaying and often without actually reading what they were signing.

Yes they should have. The underclass is the underclass because they are the underclass. They don't have anything. Having a house is the source of most families inherited wealth. If the underclass can become part of the owner class they won't be the underclass any more. Housing prices, as well as everything else, keeps going up and nothing gets to be a bigger nothing every day. People not part of wealth generation will kill you one day.

 

[Stuxnet]

I think I speak for everyone when I say ANYWHO........

 

[DAPUNISHER]

Originally posted by: Moonbeam
People not part of wealth generation will kill you one day.

My magic 8 ball says- cancer, heart disease, or a traffic accident, will get me first.

As to the OP: I tire of all the finger pointing, it brings us no closer to a solution.

 

[JS80]

Originally posted by: jbourne77
I think the majority of the people who "blame poor people" only blame them insofar as they were getting themselves into a situation they didn't understand. I hate to legitimize such a stupid topic title, but I suppose that needed clarification. Of course, predatory lending played a huge rule, but anyone who thinks the Democrats didn't have a huge hand in getting that ball rolling is simply kidding themselves.

I'd continue, but JS80 beat me to it:

Originally posted by: JS80
If the question is, what was the "root" of the cause, I'd say the first is government sponsorship of homeownership (fannie, freddie, mortgage interest tax deduction, low interest rates) and a tie for second - poor people and speculators. Third would be the dirty salesmen who sold the mortgages.

As did Loki:

Originally posted by: loki8481
poor people shouldn't have been "buying" houses that they couldn't afford. bankers shouldn't have been lending them the money. the government shouldn't have been encouraging banks to lend them the money.

there's plenty of blame for everyone, but ultimately, it was the defaulters choice to take loans they had no hope of repaying and often without actually reading what they were signing.

Now the question is, if the mortgage securitization business didn't explode and take over wall st (i.e. loans stayed on the books of banks), would we have had a problem as bad as we do now?

 

[JS80]

Originally posted by: DAPUNISHER

Originally posted by: Moonbeam
People not part of wealth generation will kill you one day.

My magic 8 ball says- cancer, heart disease, or a traffic accident, will get me first.

As to the OP: I tire of all the finger pointing, it brings us no closer to a solution.

No but it does teach us a lesson so we don't repeat our mistakes.

 

[PingSpike]

Blaming poor people (I'd say more accurately, people with shitty credit) for this makes about as much sense as blaming the gun used in a suicide. Everyone knows that the gun is going to kill you if you put it in your mouth and pull the trigger, and those bankers knew damn well people with shitty credit were going to default on their loans.

 

[WHAMPOM]

I put the blame squarely in the Republican's dogma of deregulation. The Gingrich congress passed the "lending institutions can screw up the financial system as much as they want legislation" in 1999 and Bill C vetoed it. In 2000 they got enough Democratic riders attached and Democrats' votes to make it veto proof.

 

[JS80]

Originally posted by: WHAMPOM
I put the blame squarely in the Republican's dogma of deregulation. The Gingrich congress passed the "lending institutions can screw up the financial system as much as they want legislation" in 1999 and Bill C vetoed it. In 2000 they got enough Democratic riders attached and Democrats' votes to make it veto proof.

QF Idiot

 

[1prophet]

States warned about impending mortgage crisis --------- rest of article at link

More than five years ago, in April 2003, the attorneys general of two small states traveled to Washington with a stern warning for the nation's top bank regulator. Sitting in the spacious Office of the Comptroller of the Currency, with its panoramic view of the capital, the AGs from North Carolina and Iowa said lenders were pushing increasingly risky mortgages. Their host, John D. Hawke Jr., expressed skepticism.

Roy Cooper of North Carolina and Tom Miller of Iowa headed a committee of state officials concerned about new forms of "predatory" lending. They urged Hawke to give states more latitude to limit exorbitant interest rates and fine-print fees. "People out there are struggling with oppressive loans," Cooper recalls saying.

Hawke, a veteran banking industry lawyer appointed to head the OCC by President Bill Clinton in 1998, wouldn't budge. He said he would reinforce federal policies that hindered states from reining in lenders. The AGs left the tense hour-long meeting realizing that Washington had become a foe in the nascent fight against reckless real estate finance. The OCC "took 50 sheriffs off the job during the time the mortgage lending industry was becoming the Wild West," Cooper says.



This was but one of many instances of state posses sounding early alarms about the irresponsible lending at the heart of the current financial crisis. Federal officials brushed aside their concerns. The OCC and its sister agency, the Office of Thrift Supervision (OTS), instead sided with lenders. The beneficiaries ranged from now-defunct subprime factories, such as First Franklin Financial, to a savings and loan owned by Lehman Brothers, the collapsed investment bank.

Some states, including North Carolina and Georgia, passed laws aimed at deterring rash loans only to have federal authorities undercut them. In Iowa and other states, mortgage mills arranged to be acquired by nationally regulated banks and in the process fended off more-assertive state supervision. In Ohio the story took a different twist: State lawmakers acting at the behest of lenders squelched an attempt by the Cleveland City Council to slow the subprime frenzy.

A number of factors contributed to the mortgage disaster and credit crunch. Interest rate cuts and unprecedented foreign capital infusions fueled thoughtless lending on Main Street and arrogant gambling on Wall Street. The trading of esoteric derivatives amplified risks it was supposed to mute.

<One cause, though, has been largely overlooked: the stifling of prescient state enforcers and legislators who tried to contain the greed and foolishness. They were thwarted in many cases by Washington officials hostile to regulation and a financial industry adept at exploiting this ideology.

The Bush Administration and many banks clung to what is known as "preemption." It is a legal doctrine that can be invoked in court and at the rulemaking table to assert that, when federal and state authority over business conflict, the feds prevail ? even if it means little or no regulation.

 

[ayabe]

Originally posted by: Genx87

Originally posted by: HomerJS
I was watching the Morning Joe show when Larry Kudlow started this next Republican talking point, poor people are to blame for this crisis. This line has been spreading and will continue, even harder in the swing states.

Article

I havent heard republicans pushing this have you? I'll reserve judgement on the cause of this meltdown. But I have a feeling there is enough blame to go around. And that blame may even include Afirmative Action like programs for lending. I find it hard to believe anybody has a solid proved theory on what happened at this stage in the game.

So far all I have seen is partisan hacks offering their theory which unbelievably lines up with their ideology!

*shocked*

Here's everyone's favorite R-MIN Michele Bachmann blaming blacks and the poor.
Text


Here's a few others:

- Laura Ingraham: ?When Bill Clinton decided to tell Robert Rubin to re-write the rules the Community Reinvestment Act and push all of these institutions to lend to minority communities.?

- Neil Cavuto: ?I don?t remember a blaring call that said, Frannie and Freddie are a disaster, loaning to minorities and risky folks is a disaster.?

- Gov. Mike Huckabee (R-AR): ?It was their harsh regulation under the Community Reinvestment Act that started this ball rolling down the hill.?


*******************

I'm sure someone could find more I just don't have the time to research right now. It's been a pretty common theme in certain circles.

 

[StageLeft]

This won't be PC, but it is in great part their fault. However, they are poor because they suck with money and/or aren't as smart as the non-poor, so really that is the fault of smarter people with money for giving the poor the rope they needed to hang all of us, and thus more blame does go with us. You don't blame an alcoholic for starting drinking again if you made him work in a bar. What else did you expect to happen? It's in his nature.

--

And there goes my chance of ever getting public office if somebody pulls this up, hee hee

 

[beyoku]

Does anyone here understand a thing about swaps and derivatives? I was telling a friend about it and they came back with a link and broke it down with a comical explanation:
Go here and see the chart on the derivatives market.

"It would be similar to if every black family in America took out $500,000 insurance policy on ME and then I die (go bankrupt) and then ask yourself: will AIG pay, will JP Morgan, will MetLife pay, will Allstate pay, will all the other fools? That?s what the graph shows when you see only five years ago the total notational value was 106 trillion and now it?s 531.2 trillion.

The swap market is bigger than all ?real? wealth in the known universe.

It?s a fvcking pyramid scheme designed by immoral greedy petty fools. All money be it gold or cash or a derivative ultimately is worth what humans BELIEVE it to be worth. That?s the first lesson of every entrepreneurship class I?ve ever taught. Credit is from:

The Latin word credere, "to believe," from which credit is derived, is also the source of English credible, creed, grant, and miscreant.

 

[Stuxnet]

Originally posted by: WHAMPOM
I put the blame squarely in the Republican's dogma of deregulation.

Then you're ignorant.

 

[ayabe]

+1 to beyoku.

It's not just the "bad" mortgages, it's the fact they were repackaged and sold a million freaking times.

 

[Stuxnet]

Originally posted by: Skoorb
This won't be PC, but it is in great part their fault. However, they are poor because they suck with money and/or aren't as smart as the non-poor, so really that is the fault of smarter people with money for giving the poor the rope they needed to hang all of us, and thus more blame does go with us. You don't blame an alcoholic for starting drinking again if you made him work in a bar. What else did you expect to happen? It's in his nature.

--

And there goes my chance of ever getting public office if somebody pulls this up, hee hee

LOL

It is a bit of a paradox, isn't it

 

[DAPUNISHER]

Originally posted by: JS80

Originally posted by: DAPUNISHER

Originally posted by: Moonbeam
People not part of wealth generation will kill you one day.

My magic 8 ball says- cancer, heart disease, or a traffic accident, will get me first.

As to the OP: I tire of all the finger pointing, it brings us no closer to a solution.

No but it does teach us a lesson so we don't repeat our mistakes.

And yet, history repeats itself frequently, despite all the warnings it provides. At the very least, fix the damned problem first.

 

[StageLeft]

Originally posted by: DAPUNISHER

Originally posted by: JS80

Originally posted by: DAPUNISHER

Originally posted by: Moonbeam
People not part of wealth generation will kill you one day.

My magic 8 ball says- cancer, heart disease, or a traffic accident, will get me first.

As to the OP: I tire of all the finger pointing, it brings us no closer to a solution.

No but it does teach us a lesson so we don't repeat our mistakes.

And yet, history repeats itself frequently, despite all the warnings it provides. At the very least, fix the damned problem first.

History always repeats itself, it just sometimes repackages the lesson.

That's hopefully my last pseudo-philosophy for the day.

 

[shira]

Originally posted by: JS80
If the question is, what was the "root" of the cause, I'd say the first is government sponsorship of homeownership (fannie, freddie, mortgage interest tax deduction, low interest rates) and a tie for second - poor people and speculators. Third would be the dirty salesmen who sold the mortgages.

As I've written in several other posts, blaming the financial crisis on sub-prime loans is nonsense. The amount of loss attributable to sub-prime loans is minuscule compared with the overall losses associated with the crisis. And today in the Washington Post, Robert Samuelson confirms this:

Text

Alone, American subprime mortgages should not have triggered a global crisis. Losses are smaller than they seem. Mark Zandi of Moody's Economy.com estimates that all U.S. mortgage losses will ultimately reach $650 billion [Note: This is the total expected loss due to ALL mortgages, not just sub-primes, which are a small percentage of total mortgages - Shira]. But that hefty amount pales against the value of all financial assets -- stocks, bonds, bank loans. For the United States, these totaled almost $60 trillion at the end of 2007; for the world, the comparable figure exceeded $250 trillion.

Such a vast financial system should have absorbed the subprime losses without calamity. By way of contrast, the stock market's drop since its peak in October 2007 to Friday was $8.4 trillion, or 42 percent, reports Wilshire Associates. The official response to the subprime losses also seems larger than the problem. The government has taken over mortgage giants Fannie Mae and Freddie Mac; the Federal Reserve is pumping out short-term loans of $1 trillion or more; and Congress's $700 billion rescue allows the Treasury Department to buy subprime securities and to make direct investments in banks.

Still, the situation has not stabilized; the crisis continues. It's as if more firefighters had arrived at a burning home and turned their hoses on the flames, but the conflagration raged anyway. What's going on?

What we've discovered is that the real problem is bigger. Large parts of the financial system are too thinly capitalized and too dependent on unreliable short-term debt. Leverage ratios often reached 30 to 1 for investment banks and hedge funds (that is, $30 of debt for every $1 of capital). The presumption was that the MBA types had learned how to "manage risk." That false conceit backfired. Low capital didn't adequately protect against losses. Confidence and trust evaporated, because no one knew which institutions held suspect securities, how much the losses were and who was ultimately safe.

Deleveraging -- a shift from excessive debt toward more capital -- is inevitable and desirable in the long run. The trouble is that, in the short run, it could destabilize the economy if it proceeds too rapidly.

Consider stocks. Their plunge has been driven in part by hedge fund selling. Hedge funds often buy stocks by borrowing from their "prime dealers" -- firms such as Goldman Sachs and Morgan Stanley, which in turn borrow from commercial banks. If banks "deleverage" by reducing loans to prime dealers, then prime dealers tighten up on hedge funds, which react by selling stocks. "It's a big piece of why the stock market is down," says Michael Decker, former chief economist for the Securities Industry and Financial Markets Association and now co-head of the Regional Bond Dealers Association.

All around the world, we see variants of this cycle. Countries could face crippling capital outflows. The yen "carry trade" -- borrowing at low interest rates in Japan and lending at higher rates in other countries -- is reportedly contracting. Iceland's main banks have been nationalized because they couldn't renew their short-term borrowings. But if credit is withdrawn too abruptly, the prices of stocks, bonds and other assets that it propped up -- and also the real economy of production and jobs -- will fall. And the effects feed on themselves. Hedge funds, for example, have been hit with high redemptions from investors: about 5 percent in September, 2 1/2 times normal, says Charles Gradante of the Hennessee Group. These compound selling pressures.

The present challenge is far more complicated than merely quarantining dubious mortgage-related securities. What's involved is a fundamental remaking of the global financial system, from one that was inherently fragile to one that rests on firmer foundations. But if the change proceeds too quickly and haphazardly, it risks a hugely destructive credit implosion. All the policies undertaken so far will ultimately be judged by whether they succeed in managing the transition and restoring confidence in financial markets that self-correct naturally -- as opposed to submitting to the continuing mayhem of uncontrolled deleveraging.

Blaming the crisis on sub-prime mortgages (and therefore poor folk, F/F, and mortgage lenders) is just scapegoating at its worst. Sub-prime mortgages were just one relatively small aspect of a much larger issue: global malfeasance in the granting and using of credit throughout the financial markets.