Philosophy Stoked Mortgage Bonfire

[Ordie]

December 21, 2008
The Reckoning
White House Philosophy Stoked Mortgage Bonfire

By JO BECKER (http://topics.nytimes.com/top/reference/timestopics/people/b/jo_becker/index.html?inline=nyt-per), SHERYL GAY STOLBERG (http://topics.nytimes.com/top/reference/timestopics/people/s/sheryl_gay_stolberg/index.html?inline=nyt-per) and STEPHEN LABATON (http://topics.nytimes.com/top/reference/timestopics/people/l/stephen_labaton/index.html?inline=nyt-per)
“We can put light where there’s darkness, and hope where there’s despondency in this country. And part of it is working together as a nation to encourage folks to own their own home.” — President Bush, Oct. 15, 2002
WASHINGTON — The global financial system was teetering on the edge of collapse when President Bush and his economics team huddled in the Roosevelt Room of the White House for a briefing that, in the words of one participant, “scared the hell out of everybody.”
It was Sept. 18. Lehman Brothers (http://topics.nytimes.com/top/news/business/companies/lehman_brothers_holdings_inc/index.html?inline=nyt-org) had just gone belly-up, overwhelmed by toxic mortgages. Bank of America (http://topics.nytimes.com/top/news/business/companies/bank_of_america_corporation/index.html?inline=nyt-org) had swallowed Merrill Lynch (http://topics.nytimes.com/top/news/business/companies/merrill_lynch_and_company/index.html?inline=nyt-org) in a hastily arranged sale. Two days earlier, Mr. Bush had agreed to pump $85 billion into the failing insurance giant American International Group (http://topics.nytimes.com/top/news/business/companies/american_international_group/index.html?inline=nyt-org).
The president listened as Ben S. Bernanke (http://topics.nytimes.com/top/reference/timestopics/people/b/ben_s_bernanke/index.html?inline=nyt-per), chairman of the Federal Reserve (http://topics.nytimes.com/top/reference/timestopics/organizations/f/federal_reserve_system/index.html?inline=nyt-org), laid out the latest terrifying news: The credit markets, gripped by panic, had frozen overnight, and banks were refusing to lend money.
Then his Treasury secretary, Henry M. Paulson Jr. (http://topics.nytimes.com/top/reference/timestopics/people/p/henry_m_jr_paulson/index.html?inline=nyt-per), told him that to stave off disaster, he would have to sign off on the biggest government bailout in history.
Mr. Bush, according to several people in the room, paused for a single, stunned moment to take it all in.
“How,” he wondered aloud, “did we get here?”.”
More:http://www.nytimes.com/2008/12/21/business/21admin.html?_r=2&hp=&pagewanted=print

[BearInBunnySuit]

The article is way too long for me to wade through so I only read a part of it. While the article is persuasive and compelling in some ways, I also feel that a crisis of this proportion could not have come about in just the past 8 years. Not sure if the NYT touches on it later but it was probably a combination of bad policies, supply and demand and downright greed that dragged the economy into the cesspool that it is wallowing in right now.

But if any country can rebound, I believe it is the U.S. so let's keep our fingers crossed and hope for the best.

[Flagg]

Hats off to the people that voted for Bush twice , hope you are happy now.

Go educate yourself..........

[Violet Fashion by Mindy]

Poor government regulation, greed and complex contracts have caused the crisis.

[11 Bravo]

Poor government regulation, greed and complex contracts have caused the crisis.

It's the lack of ANY specific regulation in the financial markets that is the main culprit , and government practically demanding mortgages for people whom could not realistically float the home loans they did get...and you can guess if you have 'arf a brain matey which party blocked and sank any proposals in those regards..... you know some of them by name like Barney the bonesmuggler frank , and chris count me in or cut it out dodd.

PS ; oh and our soon to be president was one of 'dem' guys too .

[Ordie]

Poor government regulation, greed and complex contracts have caused the crisis.

The regulations were already there. It's the lack of will and enforcement.
Over regualtion can be a burden, but lack of regulation enforcement leads to zero confidence.

We're at a point of 0% interest, but no one is lending money.

[Violet Fashion by Mindy]

Also many loan contracts are difficult to understand for the average person thus putting them in a position where they put pen to paper on a contract that they can't meet but due to the way the contract is structured it appears they are able to meet their end of the deal.

The system needs to be regulated to protect and simplified to ensure people understand fully what they are getting into.

[Jobu]

Senate Bill 190

[Laworkerbee]

We're at a point of 0% interest, but no one is lending money.

What's the point of 0% when the home prices are still over valued? I don't understand the governments reasoning behind that?

[Albatross]

0%.......buy dinars. This is going to cause such bad inflation.

[Ordie]

What's the point of 0% when the home prices are still over valued? I don't understand the governments reasoning behind that?

They're trying to get the banks to start lending again.

[Laworkerbee]

They're trying to get the banks to start lending again.

But once again, what is the point when the housing market (at least in my area) is so overvalued?

0% on a house that is over priced by 200k is still a terrible idea.

[Walter Sobchak]

Yeah, this article was so "objective"....

They forgot the facts:

http://www.youtube.com/watch?v=LPSDnGMzIdo

Or the malfeasance by Raines and Meeks at Fannie Mae, where they outright cooked the books. As an employee of a private company, I am under Sarbane-Oxley (and so are you), but not government employees!

This is sickening:

http://www.youtube.com/watch?v=_MGT_cSi7Rs&feature=related


Barney Frank was literally "in bed" with a Fannie Mae executive named Herb Moses and fought any attempts at regulating Fannie Mae and Freddie Mac.

http://www.youtube.com/watch?v=9gK13b9lV7E

I hate crooks. I don't care who they are. Here, it is even worse, because the guilty go free, while their shills at the NY Times attempt to cast aspersions elsewhere!

[ibstolidude]

But once again, what is the point when the housing market (at least in my area) is so overvalued?

0% on a house that is over priced by 200k is still a terrible idea.
Not quite how it works.

[Laworkerbee]

Not quite how it works.

How so,

Why buy into anything that is overvalued and is due to be corrected over time?

[ibstolidude]

How so,

Why buy into anything that is overvalued and is due to be corrected over time?
0-25% is the Fed Rate - not consumer rates for mortgages.

[Laworkerbee]

I see, though my point was and still is; what difference does the rate make when the homes I'm looking for are still way over valued?

And I mean really over valued! We have some here in East Los Angeles that are still priced out at 750K that have; little to no city services, crappy emergency response times and God awful schools.