nice! thanks for keeping it election free, short and "meaty"....didn't have to fforward through anything. also, thanks to dan for talking about the large capitol flows as part of the problem during the meltdown. i'd heard paulson mention this. two people with credibility and not much bias makes for a good talk!

I hope that call wasn't something bad. I was enjoying the conversation. And I am fond of Dan.

Clearly, the lack of regulation credit default swaps and the securitization of loans (or at least a regulated exchange like the stock market) is/was a huge problem that needs to be rectified. And certainly this was a case of under regulation. I am still amazed, however, that none of the recent guests have even discussedhow over regulation of Fanny Mae and Freddie Mac started the snowball effect. By forcing them to buy billions of subprime loans and giving banks a huge incentive to make those loans, all the risk was just passed on to Fannie and Freddie. If over regulation hadn't created such a huge incentive to make subprime loans, then they could never have been "securitized" in the first place.

Quoting gwlaw99: Clearly, the lack of regulation credit default swaps (or at least a regulated exchange like the stock market) is/was a huge problem that needs to be rectified. And certainly this was a case of under regulation.

I am still amazed, however, that none of the recent guests have even discussedhow overregulation of Fanny Mae and Freddie Mac started the snowball effect. By forcing them to buy billions of subprime loans and giving banks a huge incentive to make those loans, all the risk was just passed on to Fannie and Freddie. If over regulation hadn't created such a huge incentive to make subprime loans, then they could never have been "securitized" in the first place.

they were encouraged to buy sound sub-prime loans, not loans that they pretty much knew would go bad, which is what they did.

"sound sub-prime loans" That is really an oxymoron as by definition sub-prime loans are the most risky. Even if we assume that there is such a thing as a "safe subprime loan," Fanny and Freddie were buying just about everything (and therefore encouraging bad loans) which is why they both went bankrupt.

Quoting kidneystones: ... wants every supporter to donate an entire day. WTF? How long does it take to vote?

In some places, hours. And it's going to take an all-hands effort, nationwide, for the entire day, to keep the GOP's dirty tricks to a minimum and give the American people the landslide we deserve. This applies just as much to the down ticket races and important propositions as it does to the presidential election. For those who want more info on Obama's brilliant call, see here. So, yes. Take the day off and do your bit to protect democracy.

Quoting kidneystones: Touting the candidate with links openly!

Anything to make your pissant little personality more pissed off. Glad to see I achieved my objective. Delighted to trick you into hypocrisy, though I doubt you're self-aware enough to realize the idiocy of complaining about my links when 90% of your recent posts have been off-topic screeds, filled with anti-Obama links; i.e., you're indulging in more electioneering than anybody else on this site. Oh, wait. You're the brave little truth-teller, saving us from That One. I forgot. My apologies. I am worried about the springs on your fainting couch, though. Will they hold up for another week? And your concern for the quality of this site never fails to amuse. Please: More invective. More lies. More purple prose. I can't get enough of your lunacy and hatred.

I, for one, am willing to give that day to do help elect the person I believe is best for our country. In fact, I drove over 800 miles round trip from Texas to New Mexico to help get out the early vote in that swing state. I paid all my own expenses and had to drive all night on Friday to do it. Of course, I also believe paying taxes IS patriotic (it does buy body armor) so I guess I'm one of those in the cult.

Quoting ohcomeon: ... so I guess I'm one of those in the cult.

I think we're a borg now. Oh, wait. That's just me, isn't it? As long as we've got enough Kool-Aid ...

Quoting kidneystones: Dems are quite literally snatching defeat from the jaws of victory.

That the best you got? Your link has nothing to back up your claim. Finding significance in a few points' movement on polling on one issue is about as meaningful as seeing Jesus in a grilled cheese sandwich. Your lies, like your boy McCain's, grow ever more pathetic. Entertain me some more, please.

nitpicking is boring. anyway you just said the same thing i said. also, technically, i don't even think i'm wrong because a "sound" sub-prime loan would just have a "sound" BB rating.

Quoting kidneystones: Joe the Plumber delivers the bomb ...

A guy not actually named Joe who's not actually a plumber is now John McCain's foreign policy spokesman? An image of Wile E. Coyote holding a sphere with a sputtering fuse comes to mind. More please. While we're waiting for kidneystones to wipe the drool off his keyboard and compose his next bit of hilarity, here's a video for those who want to see something with real power: Barack Obama: Closing Argument.

ooh! I now see how comments "disappear" as the secret "hide" button is now appearing on the main page (presumably by mistake) hmmm...interesting

KS, this diavlog is called the "Special Campaign-Free Edition," and yet you insist on importing your Drudge Report nonsense into the comments anyway. Get a life, or just get your own blog.

Quoting bjkeefe: In some places, hours.

Apparently, even for early voting, in some places.

Quoting gwlaw99: If over regulation hadn't created such a huge incentive to make subprime loans, then they could never have been "securitized" in the first place.

Jesus. For real? We're still running this one up the flag pole to see if anyone salutes? Allow me to burn it. The incentive to make subprime loans was the housing bubble. Let me put that another way. The housing bubble gave banks and other financial institutions incentive to make subprime loans. Why? Because who cares if the borrower defaults in such a hot housing market? The bank forecloses on the property, which is worth more than the mortgage would have been. Or, at least, that was the idea. Soak the borrower for as much cash as possible, foreclose on the property, sell the property at a profit, because real estate values increase forever. Lenders to subprime borrowers expected default. What they didn't expect was a massive drop in the assets that the lending institutions believed would replace the value of the default--i.e. housing prices. The same goes for securitization, credit-default swaps, etc. and what-have-you. They were all bets that the housing bubble would never burst. That's it.

Quoting bjkeefe: A guy not actually named Joe who's not actually a plumber is now John McCain's foreign policy spokesman?

I thought I was kidding ... but no. (h/t: Instaputz, and a shoutout to Shepard Smith for a rare moment of integrity from a Fox News personality)

Quoting Ray: Jesus. For real? We're still running this one up the flag pole to see if anyone salutes?

Allow me to burn it.

The incentive to make subprime loans was the housing bubble. Let me put that another way.

The housing bubble gave banks and other financial institutions incentive to make subprime loans.

Why? Because who cares if the borrower defaults in such a hot housing market? The bank forecloses on the property, which is worth more than the mortgage would have been.

Or, at least, that was the idea. Soak the borrower for as much cash as possible, foreclose on the property, sell the property at a profit, because real estate values increase forever.

Lenders to subprime borrowers expected default.

What they didn't expect was a massive drop in the assets that the lending institutions believed would replace the value of the default--i.e. housing prices.

The same goes for securitization, credit-default swaps, etc. and what-have-you. They were all bets that the housing bubble would never burst.

That's it.

As I said the securitization of loans gave banks another way to avoid risk, but subprime loan market were created by the Community Reinvestment Act in 1977. Then in the 80's banks

http://www.nytimes.com/2008/10/05/bu...l?pagewanted=1 close, but not totally true. companies like Countrywide, etc. were threatening them to buy sub-prime loans or lose business. also, they owned most but not all of the market. why try to spin this in favor of Reps? it's not like we're not gonna buy any of this around here

Quoting bjkeefe: Apparently, even for early voting, in some places.

Another example, from early voting in Ohio:

The line moved fairly well and overall the operation was well run. Ultimately it took me over an hour and a half to vote though. This was an eye-opener.

Fed, do you really buy Mr. Mudd's rationalization for buying bad loans? Especially considering how many sources dispute his claims in the very article you cite? And speaking of parts of the article you apparently didn't read:
"Lawmakers, particularly Democrats, leaned on Fannie and Freddie to buy and hold those troubled debts, hoping that removing them from the system would help the economy recover."

Quoting fedorovingtonboop: http://www.nytimes.com/2008/10/05/bu...l?pagewanted=1

close, but not totally true. companies like Countrywide, etc. were threatening them to buy sub-prime loans or lose business. also, they owned most but not all of the market. why try to spin this in favor of Reps? it's not like we're not gonna buy any of this around here

The republicans are just as at fault because Phil Graham was primarily responsible for the lack of regulation of securitization. My point was is that every guest seems to point out ONLY the lack of securitization and doesn't mention how over regulation was a major factor in this mess.

gwlaw99: Thanks. Your posts on the subject of regulation here are very illuminating. I had not realized the extent to which the reason for the finacial crisis goes back to Clinton's Fannie/Freddy regulation. Since this is the issue that determines how I will cast my critical election-deciding Massachusetts vote, I may have to reconsider voting for Obama. But I still feel the Republicans have put me in such a box that I'm forced to throw them out. The Republicans did so little to understand and control this problem, and the bubble burst on their watch, so they must be punished.

Quoting gwlaw99: but subprime loan market were created by the Community Reinvestment Act in 1977. Then in the 80's banks were sued under the CRA to make subprime loans by groups like ACORN.

Ha ha ha! Awesome! Then Muslims named Hussein securitized the mortgages to fund terrorism, right? First, the CRA had nothing to do with the current crisis. The CRA covers depositor banks only, meaning only depositor banks had to follow that law. And very few depositor banks actually participated in CRA programs. Depositor banks account for less than 20% of subprime lending. Second, subprime lending covered by the CRA has a lower default rate than other subprime lending. Ha ha ha! Your coded anti-minority argument is a joke! The current financial crisis is due entirely to everyone's trying to get a piece of the action of the housing bubble! But you keep trying to blame the blacks, homesnake. Baby Jesus giggles for it. Or is that just gas...?

It's hard for me to believe that Israel's survival depends on the US election. I think you overlook the clarifying effect that actions have; the negative-feedback effects. A sudden outburst of violence against Israel may awaken the Europeans from their slumber and increase support for Israel. And any catastrophe there certainly would hurt Obama. Remember how Hillary turned around on a dime, with respect to her rhetoric about the Palestinian state, when she became a New York senator? She's much more careful with her language now.

Quoting bjkeefe: I thought I was kidding ... but no.

(h/t: Instaputz, and a shoutout to Shepard Smith for a rare moment of integrity from a Fox News personality)

It tells you everything you need to know about the Republican Party and the conservative movement that an uninformed plumber who can't even explain how he arrived at his point of view has become the leading spokesman for the McCain campaign and the leading hope to save the political force that has dominated American politics since 1981. If people haven't been reading Francoamerican's posts, please do; everything he has been saying is proved by this video and Joe the Plumber's elevation to policy spokesman for the Republican Party. To think that these people are within a hair's breadth of winning the White House next week. Be afraid.

Quoting Ray: Ha ha ha!

Awesome! Then Muslims named Hussein securitized the mortgages to fund terrorism, right?

First, the CRA had nothing to do with the current crisis. The CRA covers depositor banks only, meaning only depositor banks had to follow that law. And very few depositor banks actually participated in CRA programs.

Depositor banks account for less than 20% of subprime lending.

Second, subprime lending covered by the CRA has a lower default rate than other subprime lending. Ha ha ha!

Your coded anti-minority argument is a joke! The current financial crisis is due entirely to everyone's trying to get a piece of the action of the housing bubble!

But you keep trying to blame the blacks, homesnake. Baby Jesus giggles for it. Or is that just gas...?

I generally agree with your point of view. But I've debated gwlaw99 on this topic, and he hasn't made any of the racial arguments you're imputing to him. It really is possible to argue the other side of this without racist motives behind your arguments.

Quoting AemJeff: I generally agree with your point of view. But I've debated gwlaw99 on this topic, and he hasn't made any of the racial arguments you're imputing to him. It really is possible to argue the other side of this without racist motives behind your arguments.

I appreciate you helping to keep this conversation troll free as our last conversation was . Disagreeing should not involve such ugliness. What I am talking about is the history of subprime lending and how the sub-prime market and the securitization of sub-prime loans were created. I agree the CRA was not the direct cause of the meltdown; it was just a first step that got the ball rolling. It led to Fannie and Freddie expanding the sub-prime loan market to a huge extent in the 90's (to such an extent that they both went bankrupt from owning bad sub-prime mortgages) and the lowering of overall credit standards. Once standards were relaxed sub-prime mortgages became ripe for abuse which led to the current financial crisis. Also, while Fannie and Freddie only owned about 17% of the bad subprime mortgages, these institutions failing had a huge ripple

Quoting gwlaw99: The republicans are just as at fault because Phil Graham was primarily responsible for the lack of regulation of securitization. My point was is that every guest seems to point out ONLY the lack of securitization and doesn't mention how over regulation was a major factor in this mess.

because it just didn't play a big role. it's not some conspiracy; people would mention it if they thought it were a big deal. we're looking at $62 trillion in derivatives vs. only $1 trillion total in subprime loans. then we se that F&Freddie had about 70% of that market...the rest were private loansharks who were also buying. next, we see that they probably would've bought them regardless because of market pressure. even if it were a factor, under reg. would heavily outweight it to the point of insignificance.
--->the bottom line is that they were encouraged by the Feds to purchace loans from poor people would could pay not poor people who would default on their first loan or to give a loan to people with no job and no collateral because that's what was happening. they didn't

Quoting fedorovingtonboop: because it just didn't play a big role. it's not some conspiracy; people would mention it if they thought it were a big deal. we're looking at $62 trillion in derivatives vs. only $1 trillion total in subprime loans. hen we se that F&Freddie had about 70% of that market...the rest were private loansharks who were also buying.

I think you missed my whole point regarding the history of sub-prime lending and securitization of sub-prime loans as well as my final point

If 20% down loans had stayed the norm for a mortgage, can you honestly argue that massive amounts of predatory sub-prime lending, not to mention a massive amount of securities based on those loans, would have been spontaneously created out of thin air in the last few years?."

i think you've misinterpreted what i've been talking about. i'm not defending F&F...i'm defending the decision by congress to encourage them to make loans to low income borrowers.

actually, yes they would exist because of private market purchase based derivatives (not F&F) and most importantly, they're not all mortgage based:
http://www.nytimes.com/2008/09/28/business/28every.html anyway, i didn't respond to what you just added because you put it in a response to another person. and most importantly the quote you highlighted actually supports my argument, if anything, because it's pointing out a dereg. are you mixing me up with amjeff?

Quoting fedorovingtonboop: i think you've misinterpreted what i've been talking about. i'm not defending F&F...i'm defending the decision by congress to encourage them to make loans to low income borrowers.

My point was Fannie and Freddie created the subprime loan market and the securitization of subprime loans which led to the losening of credit standards overall and made abuse of subprime loans and the abuse of the securitization of those loans possible. Also, Fannie and Freddie did not just buy loans from low income borrowers who could pay them back. How do I know this? They both went bankrupt.

Quoting fedorovingtonboop: actually, yes they would exist because of private market purchase based derivatives (not F&F) and most importantly, they're not all mortgage based:
http://www.nytimes.com/2008/09/28/business/28every.html

anyway, i didn't respond to what you just added because you put it in a response to another person. and most importantly the quote you highlighted actually supports my argument, if anything, because it's pointing out a dereg. are you mixing me up with amjeff?

The article you cite proves my point. Credit default swaps were bets on whether sub-prime loans would fail. But if the sub-prime loans were never made, they could not have bet on whether they would fail or not.

The swaps market has been unregulated. It has been just a lot of people making bets with one another. Some of them made incredibly fortunate payoff wagers against the mortgage bonds, using credit-default swaps as their wagering vehicle

Quoting gwlaw99: My point was Fannie and Freddie created the subprime loan market and the securitization of subprime loans which led to the losening of credit standards overall and made abuse of subprime loans and the abuse of the securitization of those loans possible. Also, Fannie and Freddie did not just buy loans from low income borrowers who could pay them back. How do I know this? They both went bankrupt.

how did they create it if they had to decide whether to get into it to compete with everyone else or not? the second point is repeating what I said....which was supposed to be answered by you, so....
i'm not sure what's going on here but i think you may be mistaking other parts of conversations with other people for the discussion we're having because you're debating several people at once. your response here was actually made to a response i made to someone else. don't forget to look at the board to see who, specifically, the little line connects the post to, otherwise you'll end up confusing the heck outta me....which has already happened.

Quoting fedorovingtonboop: how did they create it if they had to decide whether to get into it to compete with everyone else or not?

From my previous post In addition, Freddie Mac helped to create the securitized sub-prime loan instrument and the market for them by guaranteeing the first securitzed sub-prime loans in 1997 . This backing gave them "an implied AAA rating" and we all know how that turned out. http://www.wachovia.com/inside/page/...%5E306,00.html

Quoting gwlaw99: From my previous post

In addition, Freddie Mac helped to create the securitized sub-prime loan instrument and the market for them by guaranteeing the first securitzed sub-prime loans in 1997 . This backing gave them "an implied AAA rating" and we all know how that turned out.

http://www.wachovia.com/inside/page/...%5E306,00.html

regardless the lending that's relevant occured in the last few years. dude, where are you going with this? go back and look at your initial post and then look through what we've said and try to convince me you're not insane! your argument has become laughably tangential....other times you're responding to the wrong post. are you more than half paying attention to what your typing?

Quoting fedorovingtonboop: regardless the lending that's relevant occured in the last few years.

I already addressed this point. In fact this is almost my entire point, which makes me think you have read nothing I have written. Subprime lending and securitization of subprime loans would not have spontaneously began in the last 4 years if the groundwork wasn't laid out for it through a decade of reducing lending standards and promoting the securitization of those loans by Fannie and Freddie. If that ground work had not been laid, the meltdown would not have happened unless you think an entire subprime market, securitization of that market and massive amount of credit default swaps betting on that market would have miraculously developed virtually over night.

Quoting gwlaw99: I already addressed this point. In fact this is almost my entire point, which makes me think you have read nothing I have written. Subprime lending and securitization of subprime loans would not have spontaneously began in the last 4 years if the groundwork wasn't laid out for it through a decade of reducing lending standards and promoting the securitization of those loans by Fannie and Freddie. If that ground work had not been laid, the meltdown would not have happened unless you think an entire subprime market, securitization of that market and massive amount of credit default swaps betting on that market would have miraculously developed virtually over night.

Ah, I see whats going on here.... Have fun on your spaceship, man

Quoting fedorovingtonboop: Ah, I see whats going on here.... Have fun on your spaceship, man

Childish personal attacks...you win the argument.

Quoting gwlaw99: Childish personal attacks...you win the argument.

you are autistic. what else could i possibly do when some weird guy intentionally wastes my time by starting with a ridiculous argument (over reg? yes! we lost $3 trillion because there were too many laws, that's it!), then mixes up which person he's arguing with and won't even address it, and then argues in circles by expecting me to respond to a post he wrote to another person and then moves the goal posts by stretching his argument about 3 or 4 steps removed from his original argument? probably one of the least genuine debaters i've encountered. epic fail! *update* ooooh, you're a troll! how could it have taken me so long?? I thought you were just retarded or fing with me. yeah, i guess you got me pretty good then. of course, it will be straight to personal attacks from now on. i'm sure you understand