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!