Isn't what set this off the fact that several years ago, the Bush economy started to tank, and then people lost their jobs and started defaulting on their stretched mortgages?

In other words, it wasn't bad character and fraud-- it was sudden unemployment?

It was Bush policy

I would like to know how much of the Bush economy was dependent on the housing bubble and how much was due to the real economy.

Here's the story that MM and other liberals don't want you to see:

"2006 McCain Letter Demanded Action on Freddie and Fannie"

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

The problem with this republican fable is that the act McCain was favoring would have actually reduced regulatory oversight.  It changed the oversight agency from HUD to a new federal oversight agency and removed several other levels of regulation.  Had it passed, it would have made things worse.

You could also say that it shows how impotent McCain was.  It was proposed in a republican controlled Senate and committee and died in that committee.

Since the story about that letter was posated on the "Human Events" web site, chances are pretty good it's a lie.  Just like all the rest of the tgarbage Shoes posts here.

Shoes - don't you ever go to any REPUTABLE web sites other than MFFA?

It was also the Bush economy.

Several years ago the economy started to go downhill and people lost their homes. There was much sympathy for them. They were losing their jobs.

But now, it's a character issue-- they were bad people, who filed phony papers and got loans they didn't deserve.

But wait a minute! That wasn't the explanation a few years ago. Nobody ever accused these "poor people" of immediately defaulting on their mortgages, which would be the case if they were crooks or flakes.

So, why are these people's economic fates being ignored, in preference to the right-wing delusion that this is all the fault of dishonest poor people and their liberal apologists?

Even worse, nobody a few years ago blamed defaults for the bad economy-- it was the other way around. So what explains the reversal, except blind adherence to a dishonest right-wing ideology?

In many ways, it was the one-two punch of deregulation that allowed all sorts of speculation and paper-shuffling which provided financial predators many ways to grab for great gobs of money while owning NOTHING, and Bush policies which were (and still ARE) decimating America's middle class, deporting its jobs, wrecking job security, doing everything possible to eliminate unions, freeing companies from any responsibility to provide pensions or health care insurance for their workers.

Bush policy consisted of allowing a thousand ways for very wealthy folks to sell the golden egg to each other, including trying to make money by betting the next time the egg sold it would be for less money ... and meanwhile Bush policy was relentlessly working to kill off the goose (the middle class WORKERS who are the true economic engine of this country).

It cannot be discounted that America's economic strength was sapped by running up our debt while giving enormous tax cuts to wealthy folks and businesses, undermined by allowing such practices as changing company "ownership" to offshore accounts (to further avoid tax liability), and fighting endless wars with leadership which felt no need to define victory or establish reasonable strategy.

The above information shows that subprime loaning by FM/FM was part of the problem with the specific meltdown of financial institutions today, but by all accounts their participation was only around 20%. This means 80% of the problem originated elsewhere, in independent financial institutions operating under Bush's overweaning policy of deregulation and getting government "off business' backs".

The GOP ran this nation and set its policies for the first SIX YEARS of Bush's terms in office, and in the last two years, have set astronomical records for filibustering Democratic efforts at correcting/setting any NEW policy. They set up our economic environment (of "trickle down" with NO governmental oversight of the markets), and then obstructed any changes.

THE GOP IS ENTIRELY RESPONSIBLE for the economic woes of today. Whenever a Republican says, "I know what to do" to make America prosperous ... they are LYING. They know, give them their due, how to make already wealthy folks fabulously wealthier. That's for sure. But the ways that they do this destroys the economy for the rest of us. Republican policy is disasterous for the health of this nation. This is now proven beyond any possible doubt.

I don't fully understand. Why would Republicans actually blame INSTITUIONS like Fannie Mae or Freddie Mac, and then blame individual borrowers (by saying they never should have gotten loans in the first place). I mean, I thought they were supposed to stick up to big corporations.

This Boston Globe editorial, "Subprime Scapegoats," performs a real public service by revealing a lot of the key facts that the know-nothing punidtry like to ignore: http://www.commondreams.org/view/2008/10/11-5

The stress should be on this: a bad Bush economy caused many people to lose their homes.

Not flakes losing homes equals the bad economy. That seems to be the current Republican/MSM lie. It's a very sleazy, dishonest way for the Repubs to blame poor people and liberals for these bad times, an excuse that most in the MSM are swallowing whole.

Really disgusting.

"Why would Republicans actually blame INSTITUIONS like Fannie Mae or Freddie Mac"

Two words, tman:

ELECTION YEAR.

In part. The thought just stuck me while reading the above. Good job by the way. Seemly an american doing his 40hr/wk job should be able to afford his or her own home after a decade or less steady employment. Two things in this adminstration's time have worked against this. Wages for most americans have stagnated for the last 7.5 years and the value of housing has increased tremendously. The subprime lending gave the illusion that your average american worker could easily afford to buy a home. The situation will not improve untill they actually can. In combination housing devaluation and an increase in the wages would do this. Not easy, and we prefer easy. The uptick sounds like the classic error of the 1920's of buying on margin. On the whole aquiring wealth quickly though finacial jymnastics is not a right or even a viable dream.

Right on, ewestone. And this illuminates a virulent point of contention I have with McCain's dishonest explanation of his, "fundamentals of the economy are strong," comment. He said he was talking about the productivity of the American worker. Aside from the fact that he apparently views people as an abstract, a fundamental, more or less, a resource; he never makes any mention of linking that productivity to profit sharing or pay. No. His is just empty pandering.

I'm sure that you know as well as I do, that the productivity of the American work force has increased something like 73% in the last dozen years, inflation has increased in the upper sixty percent range while real wages have stagnated or declined. It doesn't add up and McCain is just faking his populism when he says he cares. 

It is outrageous to me that a person can work a full time job and still not make a living wage sufficient to feed a small family. 

I do not buy at all McCain's explanation claiming he was really talking about the American worker. Believe it or not, I think McCain was trying to play a leadership role, to provide a calm, reassuring voice in the midst of the crisis. Didn't work out that way though, did it?

He is lying. It is impossible to believe that McCain was talking about some new definition of economic fundamentals. He lied he lied and he continues to lie. He is a liar, plain and simple. Lied to first wife, lied to AZ voters now lying again. LIAR

Bingo....you nailed it.  When you have accountants shuffling numbers and discovering that they just "made" millions of dollars then the economy is in danger. Money is a representation of energy generated by WORKING....by producing something...by being creative and efficient and innovative.  

What these CEOs, CFOs, accountants and lawyers have done is dishonest, un-capitalist and un-American...and it should be criminal. The GOP has been hammering away on Fannie and Freddie because it is easier to make them look like bi-partisan problems....and it helps turn on the whole issue on its ear so they can blame poor people for our economic collapse.

Its much like when they tried to deflect the Abramoff scandal by saying that the Indian tribes gave to Democrats too. It sounds like it means something and the public isn't any wiser.

 "This is a straightforward deal for ACORN and other groups, left-wing groups, set up by the Democratic leadership of Congress. They're not interested in the bailout per se. They want to spread this out, and many people believe that this bailout in part is dear to the Democratic leadership because they want to advance a social agenda here as much as much as an economic bailout of Wall Street."

Another phony bastard who hates the people empowering work of community organizers.

Anyway. Hell yeah we have Dems complicit in this corporate communism known as the bailout. Where were you Lou when you could have done something to affect the outcome?

I bet David Sirota  contacted you.

THANK YOU! This financial crisis started when we shipped our manufacturing and hi-tech jobs overseas. It's hard to keep paying the mortgage and other bills when you're unemployed or have had to take a job paying much less. I saw on a local PBS show that between 2000 and 2007 the State of Ohio lost paycheck earnings of $4 BILLION ANNUALLY. 

EXACTLY!

It was job loss that started off this bad-mortgage crisis, not evil poor people.

But, try to find anyone in the MSM who are blaming the bad economy for precipitating the mess! You would think these same people would remember their own reporting on this issue a few years ago.

Remember when the MSM showed some sympathy for foreclosures? Now it's their fault for destroying our economy!

This is such a basic factual omission that it makes you wonder just what's going on here.

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I am a realtor and have seen much of what has been happening.  I can assure everyone that the worst contributors to this situation have been independent mortgage brokers.  They made loans chosen to collect maximum commissions.  They sold people on ARMs at high interest rates when the borrowers qualified for a fixed term at a lower rate.  They coached people to tell lies to put on their applications saying that everyone does it and they can't get their house otherwise.  Brokers did not properly verify income and employment.  Also, the brokers lied to the principals funding the loans.  I saw this personally and have also heard the same stories from broker employees. 

Last week a former broker employee told me that his boss prohibited him from accepting fixed rate loan applications because the commission was higher on the more exotic loans.  And why not do these things?  There was no recourse by the lenders to get the brokers to take financial responsibility for their fraudulent applications.  The brokers were home free once the loan was funded.

As to the CRA which is getting this heat - there has NEVER been any law or rule that required anyone to make a loan to a financially unqualified applicant.  75-80% of subprime loans have originated from independent mortgage brokers who are NOT governed by CRA rules anyway.  If CRA is at fault, why did it take from 1977 to 2006 for the effects to surface?  We have had at least 3 housing downturns in that time that did not turn into anything like our current situation. 

Beyond the brokers, the actual lenders did not do due diligence on the loans that they were funding.  These are banks and Wall St brokers.  They mistakenly trusted the brokers to do their job in qualifying applicants.

As a realtor, I tried to refer buyers to reputable direct lenders - not brokers.  However, most people ignored my advice in favor of going somewhere recommended by a friend or relative.  The Fannie Mae serious delinquency rate on loans that they bought from direct lenders is currently only 1.45%

Another factor is the huge number of speculators who ordered new homes with the intent to "flip" them - sell them before completion and do simultaneous closings in the purchase and sale.  They frequently lied on loan applications that the home was to be their primary residence in order to get more favorable loan terms (lower down payments and interest rates).  Many of them were buying 5-50 homes under these terms.  Of course, when the market cooled, they couldn't find buyers and were forced to forfeit these new homes which became a huge drag on the real estate market.  This issue is too large for me to further explicate in this letter.

The bottom line is that the government tried to do the right thing but the overriding factor in the failure is mostly greed by brokers and also by some financial institutions.

Good post. I hear this all the time.

Where I live (So Cal) so many of these independent mortagage brokers are some kind of good-looking girlfriend or f-buddy of a realtor or real estate attorney. Don't want to sound sexist, but it's true-- they drive around in expensive cars, party at clubs all weekday night, then go to the job the next day and write up these lucrative loans. Annoying, offensive, and-- until recently-- very arrogant and affluent.

P.S.-- just to add-- I'm sure you know this, but for the last 20 years, the entire real estate business has been full of these kind of moronic clowns. Where once it was a pretty mainline genteel trade, real estate has become a repositiory for every a-hole in the country.

This has definitely added to the problem.

But here, they are STILL prospering. Real estate in my area is so desirable that foreign investors now panicked about their money are buying up local properties in HUGE quantities, crowding out family buyers. They are parking their money in California real estate-- many properties are getting 10 or 12 competing bids at a time! It's become a nightmare.

Don't forget the appraisers. I have personally heard loan brokers call an appraiser and tell them the dollar amount the appraisal needs to be if the appraiser wants to get the work. Some appraisers with ethics refuse to whore , but many are just as unethical as a common crack whore.

I blame both sides on the current economic crisis.  First, there is that stupid war that we are stuck in that gobbles up inconceivable amounts of money.  Second, there is way too much greed in publicly traded companies (i.e. $50 million dollar+ bonuses, salaries, etc.) and not enough money being paid for poor and middle class workers.  In other words, all the profits seem to be going to the directors and officers and publicly traded companies.  Third, there is the manipulation of stock and commodity prices that has to end.  For example, speculation on oil which drives the price of everything UP!

But then there are the liberal policies. For example, lenders should NOT have been forced to give loans to people that were incapable of paying them back.  Illegal aliens should be dealt with swiftly (i.e. deportation) to drive the price of labor back up.  Unions should be reborn where the wages for workers are adequate for the standard of living.  Companies that hire illegal workers should be seriously punished. 

Dude, CRA loans are safe, respectable loans and account for only 16% of the high cost, securitized mortgages.

Here are some facts for you, The CRA has encouraged banks to lend fairly and responsibly for over 30 years. It does not impose fines. It does periodically examine FDIC-backed banks, and issues them a CRA compliance rating. A highly-rated bank must meet the financing needs of as many community members as possible, and must not discriminate against racial and ethnic groups or certain neighborhoods. However, a bank will not receive a high rating unless it is also maintains “safe and sound banking practices.”

So don't try to peddle that nonsense around here.

Furthermore, unions are the fundamental cornerstone of liberal values, I don't even know what you getting at with your, "then there are the liberal policies," tripe. If you think liberals like border crossers, you're insane. We do, I do anyway, empathize with their plight. If you think deporting people is going to magically make employers start paying living wages, then you really have no idea what capitalism is all about.  

Another purveyor of these "myths and falsehoods" has been Michael Bloomberg (at a speech on the financial crisis at Georgetown University on September 17.

The Lie That Goes Over Common Folk's Head

Real estate  has very specific terms. Does anyone know what "liquidity" means? I am a College grad, and I was not sure what Richard Fuld of Lehman Brothers meant by "clearly an environment that lost liquidity." I know now after looking it up, but I am not sure the average voter will do this.

Chances are the average voter will assume it does not relate to anything they need to worry about. The truth of the matter is the average voter needs to know what is going on. They need to know that the Republicans are trying to blame this on the very people who lost their houses. How is that for wanting you vote? "It is because you could not pay your house note; it does not matter if you lost your money and would be home."

They are blaming the minorities, the newly weds, white and black, and the lower financial class who tried to buy a home. They are not just settled with saying they had nothing to do with this crisis; they are saying the crisis was made possible by the Democrats and the very people they help. If I can inform one voter of what these no class, no conscious politicians are doing, I would deprived them of one less uninformed vote. 

At some point, the masses will wake up to the conservative ideology. All my life I have watched them get away with lie after lie. In fact, without the lies, they would not have the representation they have. I know the counter to my claims is "the Democrats do the same." I am not so naive to say there is not one in my ranks who have misused others. I am saying the Party I know and chose would not make a plan to deceive others and rip off others to stay in power.

Joseph

Blaming the Bush administration is an easy way out, why research when we can simply point a finger..

Take a read, click the first result of the search.. also note the date

http://query.nytimes.com/search/sitesearch?query=Fannie+Mae+Eases+Credit+To+Aid+Mortgage+Lending&date_select=full&srchst=cse

The logic of these loans was not present, How ar eyou going to get someone into a house at 200K with no money down, then when the economy drops and the houses value is at 180K, what reason does that person have to keep paying on the house? none.. they have no money down, they have nothing to lose but their credit, which was probably gone long ago..

What of the "balloon payment" pushed by lending institutions? On the surface, this syestem seemed to allow folks to buy a home, move in, and then their efforts would make them more able to pay a larger mortgage payment five years down the line. Would they BE able to pay? The lending institutions couldn't care less; they take their INTEREST up front, so everything paid in that five years is PROFIT for the institution's books. With a Republican like Bush in office, the prospects of that family "doing better" five years hence were dismal indeed. Republicans are resoundingly anti-worker, and every policy they promote has the effect of harming American workers while enriching corporations and companies. Shipping jobs to cheaper markets is just ONE of the ways encouraged by Republican politicians to undermine America's workforce. There are thousands of other ways, including making ever greater demands on "disposable income" by encouraging and enabling increased retail prices on gasoline, home heating oil, health care, tuition, and even FOOD. When those balloon payments came due, they found an American workforce that WAS NOT doing better in five years, able to absorb an increase in mortgage payment. In fact, American workers were doing MUCH WORSE, thanks to Bush policies. IF they had a job, it didn't pay much more in comparison to the demands of inflationary pricing for all necessary commodities (meanwhile, Exxon posts record PROFITS every quarter). Chances are, they LOST the job they had when the bought the house, and now have two jobs that pay much less ... and with NO benefits (which they must now try to buy). Does the lending institution care? After taking pure PROFIT for the past five years, with that family struggling to make that "starter" mortgage payment? The family's insolvency would be somebody else's problem, down the road. For NOW, it's huge bonuses for the lending institution's executives. Well, "down the road" has arrived, and NOW these lending institutions are wanting the TAXPAYERS to cover their losses, when they discovered their loaned-to family can no longer afford the house, and a replacement buyer cannot be found (Bush's economic policies have destroyed ALL the middle class).

That is my new most favorite picture used here at MMFA. Congratulations, perfectly portrays the sharks getting trapped in the net and having their dorsal fins tagged so we can see them coming from now on.

Thanks for putting together this info, along with references for fact checking! I usually blog on Gretawire. Greta Van Sustren's 'On The Record' page at the fix noose (Fox News) website. The blog is resoundingly anti-democrat. I advise anyone with the time and the temperment to visit and spread some truth, or at least rebuttal.