I know, I know.... the left isn't warm and fuzzy with O'Reilly, and that's where my info came from, in the interest of full disclosure.

O'R was discussing all this banking mess and pointing fingers. His assertion was that it's a matter of the government not looking out for us - that the government agencies who are supposed to oversee these things weren't talking to each other and issuing warnings as they should have.

He blamed Bush for several appointees that he claims should have been vocal about the problems with the loans that never should have been made to alert the public to what was going on. I believe the pivotal man's name was Cox - the appointee, that is. He said the position is supposed to be a watchdog position and that he did not treat it as such.

He also blamed Barney Frank, as he is the head of the congressional banking committee that was really pushing loan-making to the poor, as that is part of his political philosophy. He pushed the 'dream of home ownership' for those who were on the lower end of the income spectrum and encouraged the creation of a number of the 'no money down, roll-the-closing-costs-into-the-loan, no income statements are necessary' policies that resulted in people being loaned money who never should have been loaned money.

Anyone here have a great handle on all of this? I admit I'm just learning how all of this works. I've always bristled at debt and have been surprised in recent years at the amount of house people that I presume make less than we do seem to be able to afford. I'm beginning to see how all of that happened and it does seem terribly irresponsible on the part of lenders.

Is there a "Southwest Airlines" among the big banks? One that has maintained solid practices that have kept it running in the black as all others are failing?

ETA: Here's a three minute clip where he discusses those he believes are largely to blame.
Bill O’Reilly | The O’Reilly Factor - FOXNews.com

ETA Again: He doesn't go into full details in that clip like I thought he did. The clip sets up the lead story, and it was in the lead story that he named names and called out those he believes are to blame. Still, the clip is a good synopsis of his view of *why* it happened.

Didn't see the show, but I am with you on this one, learning. But I think our government has done too much already and not positively. You talk about "pushing the dream of home ownership". I have dreams, however my feet are grounded in reality. The government (politicians to feel good?) are airborne in that pie in the sky mentality. I don't think everyone is meant to own a home.

We are giving and giving and giving. I too, have thought to wonder just how people could not only afford the house, but the 2 huge, new vehicles and the rest of the lifestyle so many flaunt, Silly us, did with what we needed, saved, were careful and when getting a loan for our 1st house choked at how much house we supposedly could buy in 1994.

Since they knew our finances, I asked them to turn it around and tell me how much per month we could afford, then we'd see how much house we could afford ! The guy was clueless. Absolutely clueless. We had a good idea of what we could pay each month and stuck to it. 6 years after that and more of being careful, thinking, doing with true necessities, and we were able to buy our 2nd and what should be final house. Had a huge down payment and pay extra principal each month. Less than 2 years and it will be paid, which translates into less than 10 years.


What I think I am trying to say is that every time government supposedly is looking out for us, it becomes a mess. Why can't people look out for themselves? Why must we look for blame? No one is entitled to anything and we have to get that mindset turned around.

dl

Mainly the Federal Reserve (that no one audits) that has allowed the fiat money system we have now.
We went away from the principles of sound money.

Actually they were people years ago that have tried to warn what is coming.
A speech Ron Paul gave 5 years ago(2003)

Fannie Mae and Freddie Mac Subsidies Distort the Housing Market

"The connection between the GSEs and the government helps isolate the GSE management from market discipline. This isolation from market discipline is the root cause of the recent reports of mismanagement occurring at Fannie and Freddie. After all, if Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurance that they follow accepted management and accounting practices."



Bloomberg warns of possible 'next wave' crisis: Financial News - Yahoo! Finance

"Fast forward to 2008 -- and the meltdown of confidence in U.S. financial markets -- and Bloomberg had many nice things to say about regulation, including the Depression-era Glass-Steagall Act that separated commercial and investment banking, and was scrapped in 1999. As the modern financial sector has struggled, many Wall Street watchers have suggested resuscitating the old law."

ETA: a couple of good sites that I read a couple of times during the week.

The Bank Implode-O-Meter - Your play-by-play for the end game of modern banking.

Euro Pacific Capital : Because there's a bull market somewhere.

Welcome to Jim Sinclair's MineSet

RGE - The transformation of the USA into the USSRA (United Socialist State Republic of America) continues at full speed with the nationalization of AIG

clip-clop, clip-clop...
What's that you ask? Why it's the Four Horsemen riding into the final days...
I'm sure there's got to be something going on because this is twice that I'm agreeing with you in less than 2 days!

I get sooooo tired of people thinking that they are entitled to "things". Those people who have a minor injury at work, and never, ever get over that and end up disabled for the rest of their lives. Those are the people that expect the govt. to bail them out when they decide not to leave the Gulf Coast when a Cat 4 Hurricane is blowing in...

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Mental that one, I'm telling you. ---Ron Weasley, "Harry Potter and the Chamber of Secrets"

I hear it too !!! Here are some more winks for you









dl

You are SO right, Marilyn. (Gasp!) I totally agree with you! LOL!

Are you hearing the thundering of hooves?

completely OT, but I believe that most of us here are good people. And generally, there is something that we can agree on. What we might not agree on is the logistics of how something needs to be done....

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Mental that one, I'm telling you. ---Ron Weasley, "Harry Potter and the Chamber of Secrets"

This was touched briefly in another thread, here on the election board, but, I forget which thread it was. Anyway, the poster said NO homeowners were bailed out....the gov't was bailing out the banks. Opened my eyes. Well, tonite on the news they were going over how much money we, the tax payers, were spending to bail out the banks. Well, they mentioned how much we are paying for FHA loans for the people who had a funky loan. So, I guess in a way, homeowners ARE being bailed out???

Ok, yes, I am with MarilynK on this, too.....and Deddlast makes some great points as well. Sadly, more don't share this sentiment and have been conditioned to expect things. The hurricanes are PERFECT examples,thank you for bringing that up. When Gustav was heading thru, people were evacuated from NO. Well, it wasn't so bad, and they got to return. I saw one woman on the news complaining how "they jumped the gun" in evacuating people. Well, WTH???? That may be a bad example. I'm just so dam sick of people expecting others to bail them out.

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Doing the right thing isn't always the same as doing the easy thing.

Is there like some kind of full moon going on tonite???? Doo Doo Doo Doo.....you're in the twilight.....you're in the twiiiiiillliiggghhhht.....twilight zone

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Doing the right thing isn't always the same as doing the easy thing.

What the banks and brokerages have done is the result of deregulation. Barney Frank has pushed affordable rental housing for the poor. He has not promoted home ownership for the poor. Habitat is the only ebtity that did that. House Financial Services Committee

We used to regulate 80% of the banking industry. In 1999 we began to regulate only 20% of the business. It took a while for the truly stupid mortgages to start. Barney Frank and Michael Oxley tried to push through legislation in 2003 amd 2005 to begin regulation again. It died in the Senate with strong objections from the White House.

The loans made were entirely without documentation. The banks reasoned that the market was hot for housing and because the houses would appreciate so rapidly that the borrowers would have no trouble refinancing their loans before the rates went up. The last of these loans was made in 2007. The loans were bundled as collateralized debt obligations and sold to investors. They were also insured as triple A. All of these different business knew what was going on and had convinced themselves that the boom could go on forever.

Then, we ended up with a surplus of unsold houses which meant property values weren't going up. And, that's what brought the party to an end.

You should know that this is far deeper than anything you've witnessed before. The breadth of this mess is global. Did you know that America has lost a trillion dollars in wealth since Monday?

Both the Washington Post and New York Times have some articles that explain in more detail what is going on. If you like, you can read the Financial Times.

McCain and Palin have said that it's an outdated regulatory system. That's not true, the regulatory agencies just don't get to look at much anymore. They have also said that it's caused by greed. That is true. McCain has said that he plans to address this by overhauling the regulatory agencies and setting up a commission to see how we got into this mess. Neither of these proposals are worthwhile endeavours.

Obama has blamed greed and Bush. Bush does bear some blame for blocking a return to regulation. But, there's a lot of blame to go around. His plan is to re-regulate the banking industry and, for the first time ever, regulate the brokerrage houses.

This came up on another board I post at. Like here, most of us took a "buyer beware" stance. I feel for those people losing their homes, but if you go to a used car dealership and some dork tries to sell you a car you can't really afford. . .that's on you! What we concluded is that it would be nice if some kind of mandatory first time home buyer class would be required. We took a similar class when we bought our home and it would help in the cases of people just being told that they can afford something they really can't. A few years ago we looked at buying a house in a better neighborhood. . . . man I wanted that house!!! It would mean finally having a garage, our kids being in a better school district and FINALLY having more than one bathroom. BUT. . .the mortgage broker tried to feed us some crap about being able to afford it if we took an interest only loan. . .we had to pass. If a lender was involved in fraud and predatory lending then there are already laws on the books regarding that. Go after them. . like Countrywide, I've heard. BUT if someone just made an uneducated, stupid decision, than that's on them.

Do I think we should bail these corporations out? I see it like this. I understand the ramifications if we don't. . .BUT. . .we had a small business, painting houses. If we convinced everybody in town they could afford to have their houses painted, did the work, then a lot of people couldn't pay, we would have been screwed. That's on us! I wonder what the top guys at Freddie and Fannie May have been making?

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"No one believes more firmly than Comrade Napoleon that all animals are equal. He would be only too happy to let you make your decisions for yourselves. But sometimes you might make the wrong decisions, comrades, and then where should we be?"
- George Orwell Animal Farm

I'll be bold and say that I think it's both greed and ignorance. A guy in a slick suit looks sophisticated and as though he 'knows stuff', and he tells John No Job that yes indeed, he can afford a $400,000 home! Mr. Suit obviously knows stuff. I mean, after all, he's a banker and has a nice car out in the parking lot and so if he says I qualify, alrighty then, show me the money!

There were people who didn't have the wisdom to see through the flash. They saw their friends getting bigger and better stuff and assumed that they, too, must know something because after all... they were able to acquire stuff! They couldn't get stuff if somebody smart didn't help them, right? And if somebody smart said they could afford a loan for a house like that, then obviously I must be able to afford one, too!

People without a lot of financial savvy were being given money. It's rather like that family that got the hosue through Extreme Home Makeover who mortgaged it and now must sell it. If people who don't *get* how money works are given the responsibility to manage money that they haven't yet earned, it's really a recipe for disaster.

So is the Barney Frank part true? Anyone know?

kvmj, can I ask where you got your information? It really sounds slanted and I'm honestly looking for straight-up answers.

ETA: kvmj, I see now that your information is from a letter representatives of Barney Frank wrote to the Wall Street Journal in refutation of a piece they wrote. Here is a clip of the assertions in the WSJ piece:

I agree. The finger can be pointed in every which direction. . .BUT ultimately the ownness rests on the consumer. KNOW WHAT THE HELL YOU ARE SIGNING UP FOR FOR THE NEXT 30 YEARS WHEN IT COMES TO THE BIGGEST PURCHASE YOU WILL EVER MAKE!

__________________
"No one believes more firmly than Comrade Napoleon that all animals are equal. He would be only too happy to let you make your decisions for yourselves. But sometimes you might make the wrong decisions, comrades, and then where should we be?"
- George Orwell Animal Farm

It's funny that you say that, hambirg. I was twenty years old when we got our first mortgage in 1988 and signed on a dotted line underneath a lot of words that said we'd have to pay that mortgage off in full by 2018.

2018?!?!?!

That was SO stinkin' far away! I was going to be FIFTY! I felt like I was signing my LIFE away!

I was a newlywed who had never had a full-time job. My husband had been out of college for several years and was very financially responsible, but seeing that date - 2018 - absolutely freaked me out, and I remember asking, "What if we want to pay it off early?"

They said we'd probably sell the house before we paid it off. I was so stinkin' young and so stinkin' clueless about all of that. I just knew that there was no WAY I was going to still be paying on that house until 2018! lol

So I taught school for the next four years and we lived like we just had my husband's income. We had all but paid it off by the time I quit to stay home when we started having kids. Thirteen years into our marriage we in fact did sell it (and it was fully paid for at that time) and bought another house.... and I eBayed that mortgage away over the first four years after we moved into this house. I just hate hate hate a debt hanging over my head.

HATE IT!

There are lots of ways in which I'm not nearly as focused with money as I should be, but I'm very glad we own our home outright.

Good job!!!!!! I work with a woman who has a decent job and her husband worked for the city but has since retired early. They had two kids, now aged 24 and 22. They lived in a nice trailer. Never took vacations. They both had a car but nothing too special. They ended up filing bankruptcy about 7 years ago. How they got that far into debt with nothing to show for it I will never know. A few years ago they bought a NEW zero lot line house with a VA mortgage. I have no idea if they will be able to hold onto this house or not. It's always struck me as strange that they couldn't handle their money, declared bankruptcy and got all their credit card debt wiped away, wait a few years and buy a NEW house. Weird.

Barney Frank's record supports his assertions.

To bring you up to speed here's an article from today's WSJ which has a bit of history of the last year's unraveling.
http://finance.yahoo.com/banking-bud...d-Yet-in-Sight

There is not going to be any free market solution. Washington Mutual, Wachovia, Goldman-Sachs, and even Citi are on the brink. Citi, like AIG, is too big to fail.

Here's an article from Wikipedia on CDOs: Collateralized debt obligation - Wikipedia, the free encyclopedia

If you have a subscription, you can read the WSJ, Financial Times has some good info, Washington Post and NYT have good info., and Bloomberg also.

Mortages is only a part of the problem.

OTC derivatives is the major mess. Even Warren Buffet stated he do not understand the behind the scenes derivative market.

The first thing that happen. Congress thought it was a good idea to make it easier for people to own homes. They changed the Glass-Steagall Act in 1999 (Bill Clinton signed). So a lot of the good priniciples of banking fundmentals were no longer in place.
The banks decided it was an easy way to make money. The banks did not want to be the ones left holding mortages that they thought were "bad", so they bundled them up and sold them to other banks, investment funds, etc. They would tuck a couple of "bad" loans into a bundle with good ones so that others would buy them.
Each place weeded out what they wanted then pass the "bad" stuff along until it end up at Freddie or Fannie. Over time a portion of what Freddie and Fannie owned is worthless. They have always been backed by the "promise" of the US government, so that is why the taxpayer is left holding the bag.

Other things changed also. People were not putting as much into savings (where banks get their capital) so they changed the way fractional banking worked. Now instead of the bank being able to only loan x amount out compared to the deposits a smaller percentage was needed.

This is where the idea of "direct deposits" was pushed by companies and banks. Yes, it helps the consumer but it helped the banks more. They needed to show on their balance sheets a high dollar amount so that they could loan out more money.

As time went on the "system" needed more money. Then 401K was the target. They got people into the sytem and used that money also. Most people are losing lots of money that they thought would be there for retirement.

The Federal Reserve (which is not part of the US government) just keeps "creating money" from nothing. Instead of printing "physical" money they just create "credit" which the outcome no one knows for certain. The more dollars the "system" needs the more it is starting to create. Nothing backs our US dollars anymore ..other then the "promise" that the money is good.

The idea of credit had it's place in the sysytem. A small part of the financial world has to have credit. But over time the system has too much credit.

There is still a lot more involved in this...the OTC derivatives market is hundreds of trillions of dollars that no one yet understands "fully" how that is going to play in this unwinding that you are seeing on Wall Street.

Funny.

People looking for straight answers don't start threads by citing Bill O.

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Reading is Fundamental.

Forrestlayne you are correct about the date but not the intention of the act. The act in question is the Gramm-Leach-Bliley Act and Bill Clinton most certainly should have vetoed it. It had nothing to do with making it easier for people to own homes. From Wikipedia:
"The Gramm-Leach-Bliley Act, also known as the Gramm-Leach-Bliley Financial Services Modernization Act, Pub. L. No. 106-102, 113 Stat. 1338 (November 12, 1999), is an Act of the United States Congress which repealed part of the Glass-Steagall Act, opening up competition among banks, securities companies and insurance companies. The Glass-Steagall Act prohibited a bank from offering investment, commercial banking, and insurance services."
Gramm-Leach-Bliley Act - Wikipedia, the free encyclopedia

Do read the entry at Wikipedia on CDOs.

Do read the entry on the Great Depression: Great Depression - Wikipedia, the free encyclopedia The causes are quite similar.

We are definitely headed into a bad recession. Without the Fed, we would already be in a Depression.

Sorry.. I should have made that more clear.
On November 12, 1999, President Bill Clinton signed into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act of 1933.

ETA: It is not fair to blame either a Republican, Democrat, or Independent . It is fair to blame them all.

ETA; A link from a 1999 article. Very interesting.
Agreement Reached on Overhaul of U.S. Financial System

Everybody deserves blame.

And this contributed to the conversation how?

Thank you for posting that. I was reading something earlier today that said that Fannie was making most of it's money by buying it's own bundles. I'll be the first to admit that when I start reading some of this stuff that my head goes into a tailspin. It's complicated. . .and that is what those profiting from all this are banking on. Gee. . .the average dumb American won't be able to understand all this. It really all is a catch 22. I'm starting to see my Libertairian freinds' points more and more.

__________________
"No one believes more firmly than Comrade Napoleon that all animals are equal. He would be only too happy to let you make your decisions for yourselves. But sometimes you might make the wrong decisions, comrades, and then where should we be?"
- George Orwell Animal Farm