The Gramm-Leach-Bliley Act and the Financial Crisis

[mawilson 2,133]

That New York Times article you sited, said that Bush wanted to create a new agency within the Treasury Dept. to handle the oversight of Fannie Mae and Freddie Mac, thus taking away Congress' power to oversee it. They are the ones who spun it as more regulation when in reality it would have shifted more power to the Executive Branch by taking it away from the Legislative Branch.

Well yes, that would have been disastrous, because Congress has done such a splendid job overseeing it.

[kaydee457 13]

Jabber doesn't get it.... It doesn't matter who it was that allowed the pacakaging and bundling of mortgage securities. The problem was with a defective, liberal, social enginneering policy that encouraged recklessness on behalf of Fannie and Freddie while discouraging regulation of them both by Frank, Dodd, and Shumer and the democrats in general.

Social engineering gone amuk. Wall street was the recipient of bundled MBS's that supposedly had the implied backing of the U.S. Government....They did, as we all know now (as we had to bail out Fannie and Freddie) however what was passed on to Wall Street were products having a lower quality than expected by Wall Street and lower than would would be reasonably expected from a GSE.

Wall street, ever vigilent against losses, insured these MBS's in addition to the implied "safety" of the U.S. backing, hence the AIG debacle.

The root of the problem was the insistance of awarding mortgages to low income familes under the guise of "affordable housing" and then the misrepresentation of the quality of these bundled securities.

This all goes back as far as Lyndon Johson and the "New Society"......Democrats forever playing loose and easy with everyones elses money except their own under the guise of looking out for the poor, and underpriveledged.

[HAL 9000 96]

We can't really call ourselves an Ownership Society if we don't support and regulate a financial system that allows lower income families from owning their own home provided they are credit worthy and can afford it.

Let's not call ourselves that then. If you cannot afford to buy a home, RENT! What a concept!

When the average rent for a family is nearly equivalent to a mortgage payment, they'd be better off owning a home.

No problem. Just need 20% down, sufficient income and you're one step away from becoming a home owner.

What's that, you say? You don't have money for a 20% down payment? Tough #### then. RENT!

Or you could offer better interest terms instead of inflated punitive marks.

Again, I have no problem with enforcing ethical lending practices. It's the "something for nothing"

attitude that I have a problem with.

Even a 0% downpayment isn't exactly nothing for something. Mortgage co's make money in interest.

Perhaps if homes were valued more realistically instead of by ridiculously high market geography and things other than home size and building materials, then perhaps many out there wouldn't be defaulting on their loans either.

Nevertheless, with the current system we have, downpayments are a reality that should honestly be kept in the 3-5% tops, with affordable interest rates.

[HAL 9000 96]

Jabber doesn't get it.... It doesn't matter who it was that allowed the pacakaging and bundling of mortgage securities. The problem was with a defective, liberal, social enginneering policy that encouraged recklessness on behalf of Fannie and Freddie while discouraging regulation of them both by Frank, Dodd, and Shumer and the democrats in general.

Social engineering gone amuk. Wall street was the recipient of bundled MBS's that supposedly had the implied backing of the U.S. Government....They did, as we all know now (as we had to bail out Fannie and Freddie) however what was passed on to Wall Street were products having a lower quality than expected by Wall Street and lower than would would be reasonably expected from a GSE.

Wall street, ever vigilent against losses, insured these MBS's in addition to the implied "safety" of the U.S. backing, hence the AIG debacle.

The root of the problem was the insistance of awarding mortgages to low income familes under the guise of "affordable housing" and then the misrepresentation of the quality of these bundled securities.

This all goes back as far as Lyndon Johson and the "New Society"......Democrats forever playing loose and easy with everyones elses money except their own under the guise of looking out for the poor, and underpriveledged.

If the affordability stopped being affordable, then its not the problem of those that wanted to 'engineer said mortages' to spread ownership to more folks nor is it of those whose owndership became impossible due to market factors that have always been permitted and encouraged by those you seek to ignore in your analysis. You just have a fundamental philosophical disagreement with reason, that's all.

[Ban Hammer 13,352]

We can't really call ourselves an Ownership Society if we don't support and regulate a financial system that allows lower income families from owning their own home provided they are credit worthy and can afford it.

Let's not call ourselves that then. If you cannot afford to buy a home, RENT! What a concept!

When the average rent for a family is nearly equivalent to a mortgage payment, they'd be better off owning a home. Economic prosperity is fundamentally tied to home ownership as a home over the long haul has always been considered one of the best investments a family can make. It's ridiculous to not recognize government's hand in creating economic prosperity for corporations but to say to American families with limited income who are renters, that the government has no business in helping them become homeowners.

steven, owning a home isn't an investment.

[mawilson 2,133]

Even a 0% downpayment isn't exactly nothing for something. Mortgage co's make money in interest.

0% downpayment is what caused this crisis.

It allows the owner to walk away if the value of her home goes down and they end up

owing more than the home's worth.

[one...two...tree 2,762]

Gramm-Leach-Bliley Act Undermines CRA

By Eugen Lowe

According to the National Community Reinvestment Coalition (NCRC) and a number of other national organizations, the Gramm-Leach-Bliley Financial Services Modernization Act of 1999 will undermine much of the progress that has been made in lending to low- and moderate-income communities. The Act chips "away at major provisions of the Community Reinvestment Act (CRA) ... and misses a vital opportunity to greatly expand access to credit and capital to underserved neighborhoods by modernizing CRA as Congress modernizes the financial services industry" states a fact sheet distributed by NCRC.

Two of the most serious faults of the bill with respect to CRA are the limited oversight of small banks and thrifts and a sunshine provision that requires annual reports of CRA agreements to Federal banking agencies.

Small banks and thrifts are now examined every two years. But with the passage of Gramm-Leach-Bliley, these institutions (with assets under $250 million) will now be examined every four or five years. There exists 8,600 small banks and thrifts in urban and rural areas which are 80 percent of all banks and thrifts. NCRC says: "Small banks will become adept at gaming the CRA process. They will relax their CRA lending in underserved communities for four years, and then hustle to make loans the last year before a 'twice in a decade' CRA exam."

While the sunshine provision requires banks and community groups to report their CRA agreements (bank commitments and pledges to provide loans and investments to minority communities) annually to Federal agencies, the Federal agencies are prohibited from following up to see if the banks are indeed fulfilling their promises. According to NCRC, "In its recent approval order of the Fleet-BankBoston merger, the Federal Reserve Board stated that Fleet's compliance with its $14.6 billion pledge will be monitored in future CRA exams. This type of follow-through by regulatory agencies will be stopped by the sunshine provision. Without accountability to meet goals established in CRA agreements, banks can announce grand sums of reinvestment and then fail to actually make the loans and investments." In addition, NCRC asserts: "By requiring special reporting requirements only of those groups which comment on applications and the CRA records of banks, this bill provides a disincentive for community groups to participate in the CRA process."

http://www.usmayors.org/uscm/us_mayor_news...h_Blileytxt.htm

Edited October 7, 2008 by Jabberwocky

[kaydee457 13]

Jabber doesn't get it.... It doesn't matter who it was that allowed the pacakaging and bundling of mortgage securities. The problem was with a defective, liberal, social enginneering policy that encouraged recklessness on behalf of Fannie and Freddie while discouraging regulation of them both by Frank, Dodd, and Shumer and the democrats in general.

Social engineering gone amuk. Wall street was the recipient of bundled MBS's that supposedly had the implied backing of the U.S. Government....They did, as we all know now (as we had to bail out Fannie and Freddie) however what was passed on to Wall Street were products having a lower quality than expected by Wall Street and lower than would would be reasonably expected from a GSE.

Wall street, ever vigilent against losses, insured these MBS's in addition to the implied "safety" of the U.S. backing, hence the AIG debacle.

The root of the problem was the insistance of awarding mortgages to low income familes under the guise of "affordable housing" and then the misrepresentation of the quality of these bundled securities.

This all goes back as far as Lyndon Johson and the "New Society"......Democrats forever playing loose and easy with everyones elses money except their own under the guise of looking out for the poor, and underpriveledged.

If the affordability stopped being affordable, then its not the problem of those that wanted to 'engineer said mortages' to spread ownership to more folks nor is it of those whose owndership became impossible due to market factors that have always been permitted and encouraged by those you seek to ignore in your analysis. You just have a fundamental philosophical disagreement with reason, that's all.

Is this spanglish? "Whose ownership became impossible due to market factors that have always been permitted and encouraged by those you seek to ignore in your analysis....."

And who is it that I'm ignoring and who is it that you purport to be the victim here?

[HAL 9000 96]

Even a 0% downpayment isn't exactly nothing for something. Mortgage co's make money in interest.

0% downpayment is what caused this crisis.

It allows the owner to walk away if the value of her home goes down and they end up

owing more than the home's worth.

Funny- I thought subprime loans was where most of the mess got itself rooted into. Odd we don't agree on that one. Not.

[HAL 9000 96]

Jabber doesn't get it.... It doesn't matter who it was that allowed the pacakaging and bundling of mortgage securities. The problem was with a defective, liberal, social enginneering policy that encouraged recklessness on behalf of Fannie and Freddie while discouraging regulation of them both by Frank, Dodd, and Shumer and the democrats in general.

Social engineering gone amuk. Wall street was the recipient of bundled MBS's that supposedly had the implied backing of the U.S. Government....They did, as we all know now (as we had to bail out Fannie and Freddie) however what was passed on to Wall Street were products having a lower quality than expected by Wall Street and lower than would would be reasonably expected from a GSE.

Wall street, ever vigilent against losses, insured these MBS's in addition to the implied "safety" of the U.S. backing, hence the AIG debacle.

The root of the problem was the insistance of awarding mortgages to low income familes under the guise of "affordable housing" and then the misrepresentation of the quality of these bundled securities.

This all goes back as far as Lyndon Johson and the "New Society"......Democrats forever playing loose and easy with everyones elses money except their own under the guise of looking out for the poor, and underpriveledged.

If the affordability stopped being affordable, then its not the problem of those that wanted to 'engineer said mortages' to spread ownership to more folks nor is it of those whose owndership became impossible due to market factors that have always been permitted and encouraged by those you seek to ignore in your analysis. You just have a fundamental philosophical disagreement with reason, that's all.

Is this spanglish? "Whose ownership became impossible due to market factors that have always been permitted and encouraged by those you seek to ignore in your analysis....."

And who is it that I'm ignoring and who is it that you purport to be the victim here?

No, its called common sense.

If everything was as black and white as you are trying to paint it, it would perhaps be easier for you to notice that

if the system was properly regulated, the outcome would be very different from what it has been now. Deal with it logically.

[mawilson 2,133]

Even a 0% downpayment isn't exactly nothing for something. Mortgage co's make money in interest.

0% downpayment is what caused this crisis.

It allows the owner to walk away if the value of her home goes down and they end up

owing more than the home's worth.

Funny- I thought subprime loans was where most of the mess got itself rooted into. Odd we don't agree on that one. Not.

If people couldn't just walk away from their mortgages and send the keys to the bank, the banks

wouldn't have lost any money, don't ya think?

[Pinocchio Liberal 268]

I'm sorry, (not really) but I gotta say this, speakin of leaches! Steve quit suckin hickies on Obamas sack! Hes gonna be t-baggin your wallet soon enough! That in itself should show you that he loves you.

[HAL 9000 96]

Even a 0% downpayment isn't exactly nothing for something. Mortgage co's make money in interest.

0% downpayment is what caused this crisis.

It allows the owner to walk away if the value of her home goes down and they end up

owing more than the home's worth.

Funny- I thought subprime loans was where most of the mess got itself rooted into. Odd we don't agree on that one. Not.

If people couldn't just walk away from their mortgages and send the keys to the bank, the banks

wouldn't have lost any money, don't ya think?

And further back there would be no sending of keys anywhere if the mortgage terms were not prone to market failure.