The American Spectator

Bob| 4.8.09 @ 5:02PM

I see, Joseph, that you polls still don't understand what happened. It was securitization and the sale of derivatives thereof with absolutely no capital reserve requirement -- basically, a Ponzi scheme. Furthermore, if mortgage originators had been required to keep some of the risk, they would not have given loans to unqualified homeowners. I know, I was in the industry in the 90's. Furthermore, Greenspan allowed the use of cheap capital to accelerate this whole thing. Fannie and Freddie only had about 30% of the subprime mortgages in 2007.

Was Barney Frank negligent in recognizing these problems and regulating against them? Absolutely. But in the large scheme of things, he was a minor player. We all knew there was a housing bubble and the very smart hedge funds shorted the mortgage market and got billions of dollars.

So was Frank "guilty as anyone"? Technically, yes. But you make it seem as if he was a major player in this movie. He wasn't....

By the way, I don't particularly like Barney Frank, but I don't use my feelings about him to color the facts.

Cookie| 4.8.09 @ 5:22PM

Barney Frank, the Black Caucus, Chris Dodd and Fannie/Freddie are all implicated in the financial meltdown. Their malfeasance played a pivotal role in our economic crisis. Now, Rahm (never waste a good crisis) Emanuel and TeamObama are using this crisis to make major power-grabs. Fascists.

Tim| 4.8.09 @ 7:33PM

"Was Barney Frank negligent in recognizing these problems and regulating against them? Absolutely. But in the large scheme of things, he was a minor player. "

[rolls eyes]

Roy| 4.8.09 @ 7:47PM

If we all knew there was a bubble, who took the long end of those hedge fund short sales?

We'd have been better off if the hedge funds had started shorting sooner - they could have kept the bubble from getting so big.

Daphne| 4.8.09 @ 9:15PM

We'd have been better off if the leftist libs would've stopped their stupid social engineering disasters. Frank should be frog-marched to jail.

Becky| 4.9.09 @ 6:57AM

That's why he got his panties knotted up. Rep. Frank had a problem with such a straight forward question, no pun intended. Like the president, if his grandma would have asked it, the blabbering would have been the same.

Bob| 4.9.09 @ 7:04AM

Tim, it would be nice if you really understood the issue. You obviously don't understand securitization, derivatives, leverage, and monetary policy.

Roy, the long end of the hedge fund sales were the derivatives. Worldwide, it is estimated that these mortgage derivatives totaled over $50 trillion. The short side is estimated at about $10 billion. I did a lot of shorting over these past couple of years primarily with retailers. I never imagined the banks being hit so hard because I didn't know the extent of the derivatives at that time. I just played the housing bubble. You know I'm into charts. This is the chart I was looking at:

http://mysite.verizon.net/vzeqrguz/housingbubble/

(This is actually slightly better than the one I was looking at).

The hedge funds started doing some shorting in 2004 when it looked like a bubble was starting. GS was also heavily into shorting. You could not have shorted successfully much sooner.

Daphne, during the last 8 years it was Bush and the Republicans pushing the housing market. The housing bubble had very little to do with social engineering and had a lot to do with Wall Street profits. It was primarily a Republican engineered process. But the Democrats were not complaining. It is obvious that you know very little about economics and what caused the problem.

Vaemar| 4.9.09 @ 10:18AM

The only place for Frank is the dock of a criminal court. I hope someone well-resourced is working to put him there.

Aaron| 4.9.09 @ 10:30AM

Bob,

Your rants to every poster about how they don't know as much about economics as you are pathetic. I and most are not going to laundry list education and achievements like you.

I believe the housing bubble had everything to do with social engineering, particularly liberals. The "everyone deserves to own a home" mantra started the snowball down the hill. Political funded groups leaning on the banking industry to make loans to people who couldn't afford them made the population over the last decade and a half believe that home ownership was a must.

Remember when you needed a down payment? Remember when the banks demanded to know where that down payment money came from? It couldn't be a gift or gambling winnings, it had to be earned and saved. Remember when you couldn't afford a house that was more than twice your gross annual salary? Those rules were thrown out the window under pressure by the Clinton administration and community groups in order to put lower income families into their own homes.

Now we have families that think that it is their God given right to live in their own home and to rent, (OH DEAR GOD!) if you mention such a thing you are evil.

This did start in full force in the Clinton era (fact), it was allowed to continue in the Bush era and how could you stop it without a bubble crash? To say its a Republican engineered process is a baldfaced lie.

ARealist| 4.9.09 @ 11:10AM

Everyone please recall the following remarks of Barney Frank during congressional hearings in which Bush govt. officials were asking Congress to restrain Fannie/Freddie and impose tighter restrictions on these two GSEs:
".......I want to roll the dice a little more."

And of course, the statements of Maxine Waters in which she stated that there was nothing wrong with Fannie/Freddie esp. given the superlative leadership of Franklin Raines; she insisted that Bush govt officials were attempting to "create" (that is the word she used) a problem where none existed.

Of course, a few years after these hearings, where all efforts to rein in Fannie/Freddie were rebuffed by DEMOCRATS , these two GSEs exploded.

Whenever govt. gets in bed with big money on Wall Street (most of big money on Wall Street,by the way, are DEMOCRATS) the result is disaster.

Yes, securitization contributed to this mess, but if Fannie/Freddie had refused to buy up toxic mortgages (the purchased about 50% of all issued) others would have taken note.

Also, it was the politicians - mostly Democrats with the aid of their good pals ACORN - that instructed Fannie to issue mortgages with no verification of employment and earnings.

Of course, Wall Street saw they could make a buck off this, so they were willing participants and must be held accountable. But the govt aided and abetted the issuance and marketing of toxic mortgages and they too must be held accountable.

Unfortunately, since it was Frank, Dodd, Waters, etc. - all DEMOCRATS - who were receiving kickbacks from Fannie/Freddie AND the BIG WALL STREET BANKS !!!!! rest assured that no congressional hearings implicating Fannie/Freddie will occur.
Best just to have Stalinesque show trials of half the culprits - the big bankers (most all democrats , by the way. ).

Govt and big Wall Street Money in bed together will always lead to disaster. It is a symbiotic relationship geared to enriching and maintaining the power of corrupt politicians and big money Wall Street banks.

Of course, the taxpayer in the end gets screwed.

Bob| 4.9.09 @ 11:17AM

Aaron, again you don't know what you're talking about. Securitization started in the 80's under Reagan/Bush. The housing market took off in the early 2000's not because of social engineering, but because of the creation of derivatives and swaps. When the mortgage originator has no risk in the mortgages they provide, then they will lower standards to the point when they can no longer securitize those receivables.

THIS was the major cause of the problem, not social engineering. Wasn't it George Bush who pushed housing as well as the Dems? Are you trying to rewrite history?

There is no question that both the Democrat and Republican politicians greased the ropes here -- and that did make it politically acceptable for the Wall Street people to push derivatives even more. But it was NOT the cause of the problem -- not even close.

If you have any educational achievements, they are not evident in your post.

Larry| 4.9.09 @ 11:24AM

No comment - this video does the talking:
http://hubpolitics.com/2008/09/25/in-2003-barney-frank-said-fannie-and-freddie-were-financially-sound-opposed-regulation-and-reform/

Bob| 4.9.09 @ 11:46AM

Aaron, again you don't know what you're talking about. Securitization started in the 80's under Reagan/Bush. The housing market took off in the early 2000's not because of social engineering, but because of the creation of derivatives and swaps. When the mortgage originator has no risk in the mortgages they provide, then they will lower standards to the point when they can no longer securitize those receivables.

THIS was the major cause of the problem, not social engineering. Wasn't it George Bush who pushed housing as well as the Dems? Are you trying to rewrite history?

There is no question that both the Democrat and Republican politicians greased the ropes here -- and that did make it politically acceptable for the Wall Street people to push derivatives even more. But it was NOT the cause of the problem -- not even close.

If you have any educational achievements, they are not evident in your post.

Aaron| 4.9.09 @ 11:52AM

Bob, in your first post you stated "very little to do with social engineering..." in your second post you stated it was not social engineering. which was it?

You originally stated "It was primarily a Republican engineered process" and then went on to state that in your second post, "There is no question that both the Democrat and Republican politicians greased the ropes here".

What I was having a problem with was your statement that Republicans were responsible. Now you want to go back to Reagan/Bush? Nope I disagree again, lets go back to Carter and the The Community Reinvestment Act. I also stated it was allowed to continue through the Bush years.

You are correct that the market took off in the 2000s obviously, but it I will stand by the fact that it was spurred on from social engineering. Who in the market wouldn't have taken advantage of what was going on at the time, right or wrong? Its sad to admit, but probably very few if truth be told.

And there you are ending your post with a personal attack, seriously not necessary.

Bob| 4.9.09 @ 11:55AM

Aaron, again you don't know what you're talking about. Securitization started in the 80's under Reagan/Bush. The housing market took off in the early 2000's not because of social engineering, but because of the creation of derivatives and swaps. When the mortgage originator has no risk in the mortgages they provide, then they will lower standards to the point when they can no longer securitize those receivables.

THIS was the major cause of the problem, not social engineering. Wasn't it George Bush who pushed housing as well as the Dems? Are you trying to rewrite history?

There is no question that both the Democrat and Republican politicians greased the ropes here -- and that did make it politically acceptable for the Wall Street people to push derivatives even more. But it was NOT the cause of the problem -- not even close.

If you have any educational achievements, they are not evident in your post.

Bob| 4.9.09 @ 12:04PM

Aaron -- you caught me. I didn't think there was much difference between "very little to do with social engineering" and in a different context, "not social engineering". Let me state it clearly -- social engineering was not the major factor in making this a problem but it was a contributing factor.

Thus, I clearly agree with you that the CRA was a contributing factor, but it was not the major cause. Wall Street does not respond to "social engineering", they take advantage of profit opportunities. When you have 30-1 leverage of derivatives in an unregulated market, you don't need much else to encourage people to take advantage of the situation. Derivatives were made possible by the availability of very fast computers in the late 90's. Even if there was no CRA, this would have occurred. Unless you were actually in financial services as I was, this is not easy to understand.

Think about it this way, if it were just social engineering, wouldn't we have seen this a decade earlier?

Aaron| 4.9.09 @ 12:29PM

Bob,

wow, I think we are coming to middle ground, I can accept that. I'll agree that social engineering wasn't the only factor, the social engineering wouldn't have worked had there been a regulated market. Still in my opinion the primary cause.

Bob| 4.9.09 @ 12:46PM

Aaron, it is not a matter of "opinion", it is a matter of "facts". Remember, it wasn't just the CRA, there was a huge amount of speculation in the housing market of non-subprime loans. How does that fit into "social engineering" and not just "greed"? If you actually think about it, you'll see that social engineering actually played a minor role.

Remember those shows like "Flip That House", and "No Money Down". That had nothing to do with CRA or subprime.

Frosty| 4.9.09 @ 3:37PM

Liberals like Frank, Dodd, the Black Caucus, Rahm Emanuel and Jamie Gorelick are all responsible for the Fannie/Freddie debacle which started our economic crisis. The CRA (with ACORN thugs) was the liberal social enginnering instrument that forced banks to make bad loans to the poor. Many of these same liberals (Emanuel, Gorelick, Dodd) made a fortune off of this mess. Frog march 'em all to jail!

Pauley| 4.9.09 @ 3:41PM

Barney Frank and the Black Caucus wouldn't let republicans regulate Fannie/Freddie. I saw the video--they were calling the repubs racists when attempts were made to rein in risky loans to minorities. The liberals did this--the videos prove it.

FutbolGuru| 4.21.09 @ 4:05PM

I recall clearly in the mid-nineties when Congressional liberals, among them Barney Frank, threatened the mortgage industry at large with federal investigations under anti-discrimination laws, if they didn't approve more low-income mortgages. At the time I knew that nothing good was going to come of this and now that time has come.

LarryG| 6.8.09 @ 10:20PM

Oh, yeah. Good ole' Jimmie, gonna save the dead beats. CRA all the way! Google it. Then, check out Freddie Mac and Fannie Mae and see who the main players were or are. Franklin Raines? Don't worry. Obama? No sweat. Barney Frank? No worries. Christopher Dodd? Fugdaboutit. How much education does a person need?!! Lots more, no time.