FACTS: February 2015

Tuesday, February 3, 2015

Q When did the Bush Mortgage Bubble start?

A The general timeframe is it started late 2004.

From Bush’s President’s Working Group on Financial Markets October 2008

“The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”

Q Did the Community Reinvestment Act under Carter/Clinton caused it?

A "Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "

http://www.federalreserve.gov/newsevents/speech/20081203_analysis.pdf

Q Why is it commonly called the “subprime bubble” ?

A Because the Bush Mortgage Bubble coincided with the explosive growth of Subprime mortgage and politics. Also the subprime MBS market was the first to collapse in late 2006. In 2003, 10 % of all mortgages were subprime. In 2006, 40 % were subprime. This is a 300 % increase in subprime lending. (and notice it coincides with the dates of the Bush Mortgage bubble that Bush and the Fed said)

“Some 80 percent of outstanding U.S. mortgages are prime, while 14 percent are subprime and 6 percent fall into the near-prime category. These numbers, however, mask the explosive growth of nonprime mortgages. Subprime and near-prime loans shot up from 9 percent of newly originated securitized mortgages in 2001 to 40 percent in 2006

https://www.dallasfed.org/assets/documents/research/eclett/2007/el0711.pdf

Q. Er uh, didn’t you notice your link said the explosive growth of subprime mortgages started in 2001?

A. It did kinda say that didn’t it? However, the link below clearly states subprime was 10 % in 2003. 9% in 2001 to 10% in 2003 is only a 1% increase. A 1 % increase over 3 years is flat not explosive. 10 % in 2003 to 40% in 2006 is explosive. So the explosive growth started in 2004 which lines up pretty good but not exactly with the timeframe of the Bush Mortgage Bubble.

“In dollar terms, nonprime mortgages represented 32 percent of all mortgage originations in 2005, more than triple their 10 percent share only two years earlier

FRB: Finance and Economics Discussion Series: Screen Reader Version - 200899

(from Dallas Fed link above)

"Another form of easing facilitated the rapid rise of mortgages that didn't require borrowers to fully document their incomes. In 2006, these low- or no-doc loans comprised 81 percent of near-prime, 55 percent of jumbo, 50 percent of subprime and 36 percent of prime securitized mortgages."

Q HOLY JESUS! DID YOU JUST PROVE THAT OVER 50 % OF ALL MORTGAGES IN 2006 DIDN'T REQUIRE BORROWERS TO DOCUMENT THEIR INCOME?!?!?!?

A Yes.

Q WHO THE HELL LOANS HUNDREDS OF THOUSANDS OF DOLLARS TO PEOPLE WITHOUT CHECKING THEIR INCOMES?!?!?

A Banks.

Q WHY??!?!!!?!

A Two reasons, greed and Bush's regulators let them.

Bush
s regulators not only let banks do this, they attacked state regulators trying to do their jobs. Bush’s documented policies and statements in timeframe leading up to the start of the Bush Mortgage Bubble include (but not limited to)

Wanting 5.5 million more minority homeowners
Tells congress there is nothing wrong with GSEs
Pledging to use federal policy to increase home ownership
Routinely taking credit for the housing market
Forcing GSEs to buy more low income home loans by raising their Housing Goals
Lowering Investment bank's capital requirements, Net Capital rule
Reversing the Clinton rule that restricted GSEs purchases of subprime loans
Lowering down payment requirements to 0%
Forcing GSEs to spend an additional $440 billion in the secondary markets
Giving away 40,000 free down payments
PREEMPTING ALL STATE LAWS AGAINST PREDATORY LENDING

But the biggest policy was regulators not enforcing lending standards.

Right-wingers Want To Erase How George Bush's "Homeowner Society" Helped Cause The Economic Collapse

2004 Republican Convention:

Another priority for a new term is to build an ownership society, because ownership brings security and dignity and independence.
...

Thanks to our policies, home ownership in America is at an all- time high.

(APPLAUSE)

Tonight we set a new goal: 7 million more affordable homes in the next 10 years, so more American families will be able to open the door and say, "Welcome to my home."

Why Prosecutors Don't Go After Wall Street

BUSH GAVE A GET OUT OF JAIL FREE CARD SUMMER 2008

Why Prosecutors Don t Go After Wall Street NPR

“When regulators don’t believe in regulation and don’t get what is going on at the companies they oversee, there can be no major white-collar crime prosecutions,”...“If they don’t understand what we call collective embezzlement, where people are literally looting their own firms, then it’s impossible to bring cases.”

http://www.nytimes.com/2011/04/14/business/14prosecute.html?pagewanted=all

The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence.
'
The Two Documents Everyone Should Read to Better Understand the Crisis William K. Black

Dubya was warned by the FBI of an "epidemic" of mortgage fraud in 2004. He gave them less resources.

FBI saw threat of loan crisis - Los Angeles Times

Shockingly, the FBI clearly makes the case for the need to combat mortgage fraud in 2005, the height of the housing crisis:

Financial Crimes Report to the Public 2005

FBI mdash Financial Crimes Report 2005

The Bush Rubber Stamp Congress ignored the obvious and extremely detailed and well reported crime spree by the FBI.

THE BUSH ADMINISTRATION and CONGRESS stripped the White Collar Crime divisions of money and manpower.

http://www.nytimes.com/2008/10/19/washington/19fbi.html?pagewanted=all

DUBYA FOUGHT ALL 50 STATE AG'S IN 2003, INVOKING A CIVIL WAR ERA RULE SAYING FEDS RULE ON "PREDATORY" LENDERS!

Time to bust more right wing MYTHS

Retirement Among Baby Boomers Contributing To Shrinking Labor Force. According to The Washington Post, many economists agree the shrinking labor force participation rate is largely explained by a demographic shift, wherein "baby boomers are starting to retire en masse":

Demographics have always played a big role in the rise and fall of the labor force. Between 1960 and 2000, the labor force in the United States surged from 59 percent to a peak of 67.3 percent. That was largely due to the fact that more women were entering the labor force while improvements in health and information technology allowed Americans to work more years.

But since 2000, the labor force rate has been steadily declining as the baby-boom generation has been retiring. Because of this, the Federal Reserve Bank of Chicago expects the labor force participation rate to be lower in 2020 than it is today, regardless of how well the economy does.

The incredible shrinking labor force - The Washington Post

The Right-Wing Myth That America Was Originally a Theocracy Is So Wrong

They believe the separation of church and state is a modern invention created by liberals and atheists.

This myth--that separation of church and state is a modern invention created by communists/liberals/atheists and shoved down the throats of a Christian America until it forgot its theocratic roots--is a popular one on the right, perhaps the defining myth that created the modern conservative movement. It’s also pure malarkey.

Even just reading the first amendment to the Constitution shows that this line is self-serving nonsense dished out by people who wish to believe they are patriots while standing against America’s grand tradition of secularism. The Constitution explicitly prohibits any law “respecting an establishment of religion,” a phrase that is so obviously about the separation of church and state that even the most literal-minded among us can get that.

The Right-Wing Myth That America Was Originally a Theocracy Is So Wrong Alternet

Yes, He Did: In 1980, Ronald Reagan Called For An Open Border With Mexico.

“I supported this bill. I believe in the idea of amnesty for those who have put down roots and who have lived here even though sometime back they may have entered illegally.”Oct. 21, 1984 debate on immigration bill being considered by Congress

VID FROM 1980

During a 1980 debate with George H.W. Bush, Ronald Reagan called for illegal immigrants to get work permits and for the U.S. to have an open border with Mexico.

The presidency of Ronald Reagan in the United States was marked by multiple scandals, resulting in the investigation, indictment, or conviction of over 138 administration officials, the largest number for any US president

Reagan administration scandals - Wikipedia the free encyclopedia

'The Republican Mandate': 50 Percent More People Have Voted Democrat Since 2010

According to a study conducted by FairVote, the 46 Democrats currently sitting in Senate have gotten 20.7 million more votes over the 2010, 2012 and 2014 elections than the 56 Republicans. Tallied up, that’s 67.8 million to Dems, and 47.1 million to Republicans. Or, to put it another way:

Democrats got a full 50 percent more votes than Republicans, and lost nine seats. Or to put it yet another way:

If the Senate actually represented the voting public, it would be 68-32 to Democrats, instead of 54-46 to Republicans.
The Truth About 8216 The Republican Mandate 50 Percent More People Have Voted Democrat Since 2010 Americans Against the Tea Party

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15 Things The GOP Doesn't Want You To Know About Taxes And The Debt

(Click a link to jump to the details for each below):

So has Obama ignored regulator warnings on an EPIDEMIC of mortgage fraud that would rival the S&L (Ronnie's) crisis? (2004)

Did Obama change a Clinton era rule that stopped GSE's (Fann/Fredie) from using subprime loans to meet their affordable housing goals? (2004)

Did Obama force the GSE's to UP their goals from 50% to 56% (including allowing that subprime part) in affordable housing (2004)

Did Obama FORCE GSE's to purchase $440 billion of MBS's in the secondary market 2004-2007 (2004)

Did Obama fight ALL 50 state AG's who wanted to reign in the 'predatory' lenders, by invoking a civil war era rule? (2003)

Did Obama, AS the actual regulator of GSE's, allow F/F to chase the PRIVATE MARKETS to the bottom on those subprime loans (NOT to meet ANY goals at this point but BECAUSE they had lost so much market share) (late 2005)

Did Obama pass legislation in the GOP Congress to give away 120,000+ FREE down payments 2004-2007 (2004 ADDI)

Did Obama LITERALLY have regulator going to the wall street floor and use a chainsaw to cut regulations (2004)

Did Obama allow the 5 investment Banks, who fed the subprime bubble with easy credit, to lower their net capital rule which allowed the Banksters to go from 12-1 to 35-1+? (2004)

Q When did the Bush Mortgage Bubble start?

A The general timeframe is it started late 2004.

From Bush’s President’s Working Group on Financial Markets October 2008

“The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”

The closest the US has had "laissez faire" was under Ronnie and Dubya over the past 80 years. Before them it was Harding/Coolidge. Hmm what 3 things are tied to those 3 periods? Oh right BANKSTERS giving US credit bubbles AND busts!

(Re-)Introducing: The American School of Economics

When the United States became independent from Britain it also rebelled against the British System of economics, characterized by Adam Smith, in favor of the American School based on protectionism and infrastructure and prospered under this system for almost 200 years to become the wealthiest nation in the world. Unrestrained free trade resurfaced in the early 1900s culminating in the Great Depression and again in the 1970s culminating in the current Economic Meltdown.

Closely related to mercantilism, it can be seen as contrary to classical economics. It consisted of these three core policies:

protecting industry through selective high tariffs (especially 1861–1932) and through subsidies (especially 1932–70)
government investments in infrastructure creating targeted internal improvements (especially in transportation)
a national bank with policies that promote the growth of productive enterprises rather than speculation.

It is a capitalist economic school based on the Hamiltonian economic program. The American School of capitalism was intended to allow the United States to become economically independent and nationally self-sufficient.

Frank Bourgin's 1989 study of the Constitutional Convention shows that direct government involvement in the economy was intended by the Founders.

The goal, most forcefully articulated by Hamilton, was to ensure that dearly won political independence was not lost by being economically and financially dependent on the powers and princes of Europe. The creation of a strong central government able to promote science, invention, industry and commerce, was seen as an essential means of promoting the general welfare and making the economy of the United States strong enough for them to determine their own destiny

American School economics - Wikipedia the free encyclopedia

September 27, 2010

So How Did the Bush Tax Cuts Work Out for the Economy?

The 2008 income tax data are now in, so we can assess the fulfillment of the Republican promise that tax cuts would produce widespread prosperity by looking at all the years of the George W. Bush presidency.

Just as they did in 2000, the Republicans are running this year on an economic platform of tax cuts, especially making the tax cuts permanent for the richest among us. So how did the tax cuts work out? My analysis of the new data, with all figures in 2008 dollars:

Total income was $2.74 trillion less during the eight Bush years than if incomes had stayed at 2000 levels.

That much additional income would have more than made up for the lack of demand that keeps us mired in the Great Recession.

Tax Analysts -- So How Did the Bush Tax Cuts Work Out for the Economy

The Bush Era Tax Cuts Didn't Create The Wealth They Were Supposed To

The Bush tax cuts were a test of these claims about supply-side economic policies. To justify the tax cuts the nation was, in effect, given a business prospectus from the Republican Party.

We were promised that cutting taxes on the wealthy would result in much higher economic growth and broadly shared prosperity. For those who wondered how we would pay for such a large cut to the government’s revenue stream, the Republican prospectus had a remarkable claim.

The tax cuts wouldn’t cost us anything. Growth would be so strong that the tax cuts would more than pay for themselves. Even those who admitted that the tax cuts might not be fully self-financing still made strong claims about faster economic growth offsetting much of the lost revenue from the tax cuts.

The reality, of course, has been quite different

Bush Era Tax Cuts Didn t Fix Economy - Business Insider

Supply-Side Economics Sounds Good But It Hasn't Worked

Supply-Side Economics Sounds Good But It Hasn t Worked Byron Williams

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The legacy of the Bush tax cuts, in four charts

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The legacy of the Bush tax cuts in four charts - The Washington Post

Non-Partisan Congressional Tax Report Debunks Core Conservative Economic Theory

The conclusion?

Lowering the tax rates on the wealthy and top earners in America do not appear to have any impact on the nation’s economic growth.

This paragraph from the report says it all—

“The reduction in the top tax rates appears to be uncorrelated with saving, investment and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.”

Non-Partisan Congressional Tax Report Debunks Core Conservative Economic Theory-GOP Suppresses Study - Forbes

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James Kennedy and Alan Greenspan, on the effect of mortgage equity withdrawals (MEWs) on the growth of the US economy.

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Notice that in both 2001 and 2002, the US economy continued to grow on an annual basis (the "technical" recession was just a few quarters). Their work suggests that this growth was entirely due to MEWs. In fact, MEWs contributed over 3% to GDP growth in 2004 and 2005, and 2% in 2006. Without US homeowners using their homes as an ATM, the economy would have been very sluggish indeed, averaging much less than 1% for the six years of the Bush presidency. Indeed, as a side observation, without home equity withdrawals the economy would have been so bad it would have been almost impossible for Bush to have won a second term.

The Economic Blue Screen of Death - Thoughts From The Frontline - Investment Strategies Analysis Intelligence for Seasoned Investors.

Conservatives Can't Escape Blame for the Financial Crisis

Q When did the Bush Mortgage Bubble start?

A The general timeframe is it started late 2004.

From Bush’s President’s Working Group on Financial Markets October 2008

“The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”

Q Did the Community Reinvestment Act under Carter/Clinton caused it?

A "Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "

http://www.federalreserve.gov/newsevents/speech/20081203_analysis.pdf

"Another form of easing facilitated the rapid rise of mortgages that didn't require borrowers to fully document their incomes. In 2006, these low- or no-doc loans comprised 81 percent of near-prime, 55 percent of jumbo, 50 percent of subprime and 36 percent of prime securitized mortgages."

Q HOLY JESUS! DID YOU JUST PROVE THAT OVER 50 % OF ALL MORTGAGES IN 2006 DIDN'T REQUIRE BORROWERS TO DOCUMENT THEIR INCOME?!?!?!?

A Yes.

Q WHO THE HELL LOANS HUNDREDS OF THOUSANDS OF DOLLARS TO PEOPLE WITHOUT CHECKING THEIR INCOMES?!?!?

A Banks.

Q WHY??!?!!!?!

A Two reasons, greed and Bush's regulators let them

Conservatives on the Wrong Side of History on Mandela, Most Other Things

When has the American right ever—ever—been on the right side of history?

The answer is almost never.

...Do you support the American Revolution? I should hope so. You would not have, however, had you been a conservative in 1785. American Loyalists, perhaps 20 percent of the white population of the day, were devoted to king and crown for mostly the usual reasons: They were older, better established, had more money, were scared of change.

How about the abolition of slavery? I reckon you’re on board with that. Well, Lord knows you wouldn’t have been if you’d been among the 1860 conservatives who started a war over it (and whose apologists today insist the Civil War was not about slavery).

In terms of domestic politics, few polemical tasks are easier than demonstrating how wrong conservatism has been about pretty much everything in all of American history. Eradication of child labor? Why, an imposition on business owners to run their factories as they saw fit, you socialist! Giving women the right to vote? Women?! They simply don’t possess the logical faculties to be entrusted with such a responsibility, and anyway where will it end—I suppose you’ll be suggesting that black people get the franchise next? Segregation. Miscegenation laws. Immigration. Civil rights. The environmental movement. Conservatism’s record: wrong, wrong, wrong, wrong, and wrong.

Conservatives on the Wrong Side of History on Mandela Most Other Things - The Daily Beast

Abraham Lincoln Might Have Been a Republican, But He Damn Sure Wasn’t a Conservative

Lincoln also instituted the first “income tax,” and told the Southern states claiming “states’ rights” when it came to slavery that they were completely full of crap.

Could you imagine a Republican today creating a tax and telling states that their claim of “states’ rights” on an issue was absurd?

Abraham Lincoln might have been a Republican, but that was before Republicans became “conservatives.” See, there’s a difference between what Republicans were and what conservatives are. Conservatives have always been conservatives. Decades ago, racist conservatives aligned with the Democratic party. Today these same conservatives call themselves Republicans.

Anyone who knows anything about history knows that long ago Democrats were the party of racists. But those who are honest about history also know that over time, the political ideology of both parties switched.

This isn’t hard to prove – just look at reality. What groups align with the fringe of the Republican party? The KKK, neo-Nazis and people who seek to glorify the confederacy. In other words, racists. You don’t see members of the KKK, Nazi groups or confederate sympathizers siding with modern day Democrats. Oh, no – they vote Republican.

...
Nothing about Lincoln made him a conservative. He fought against “states’ rights,” he created a tax, he bucked tradition, he embraced change and he did all of this by using the power of big government.

Abraham Lincoln Might Have Been a Republican But He Damn Sure Wasn t a Conservative

Jan 9, 2015

The private sector has added 11.2 million jobs over 58 straight months of job growth, extending the longest streak on record

Dubya LOST 1+ million PRIVATE sector jobs in 8 years. Even stopping in Dec 2008, PRE his great recession, it was a pathetic 4 million. That 'loser' Carter had 9+ million in a MUCH smaller economy... Weird right?

Bureau of Labor Statistics Data

U.S. Economy Is Pulling Ahead, towing of Rest of the World & it's not a scam like Bush's sub-prime lending that caused the worlds biggest economic disaster

When hard-working people earn a living wage with benefits, they pay taxes instead of receiving government assistance and actually have more disposable income to spend on growing the (local) economy,

So many people refuse to recognize that poorly-paid workers have no choice but to be dependent on government and/or charities. More jobs with better pay (so people could churn the economy) would solve a lot of our problems.

Companies supposedly compete for people in a capitalist system, at least they used to. All this complaining you hear from companies saying they can't find "qualified" people is just a smoke and mirrors way of saying that they can't get the same people they got 10 years ago to rehire in for what they were making 10 years ago. If there were no minimum wage, believe me, it would be a race to the bottom