Do you blame Bush?

[Sheherezade]

Re: Do you blame Bush?

I do think there is equal blame for each party. I'd still like to (purely partisanly) stand behind Obama.....because I think he has been on the regulation/raise taxes war path since he started campaigning. The pendulum is swinging back after my entire lifetime of deregulation.

Regulation for industry is an unpopular position. As long as the American people were convinced that deregulation/getting government out of the way/free-r markets made our economy stronger, there was no counter weight to that argument that would allow for controls. Now that we've seen the downside, there is a counterweight.....maybe, just MAYBE we can get an appropriate level of regulation/oversight for the system. I'm heartened that everyone (Republican and Democrats) have found a common enemy to fight. I just hope there are some smart economists in there looking this over. It makes me wish that people campaigned more on skill sets than on "character". We've got soooo many lawyers in there - maybe we need some economists too! (I do like Romney even though he's a stinky Republican. I'd love to see his opinions on this mess.)

I'd just like to add that I heard George Soros speak a few months ago and he made a point that has stuck with me. He said that everyone treats economic markets like biological systems. Like water in two vessels allowed to mingle, we have this faith that nature/physics will bring the system to equilibrium. Supply/demand......it all ballances out. BUT - we've made a huge error in assumption there. Economics are not biological. There is no grand design beyond our understanding that will save us if we go astray. Equilibrium is not a given. Sometimes, you have to step in. Free markets have never sounded the same to me. A bit of regulation is a good thing to steer the ship and it would be nice if we could introduce some ethical behavior to balance out the insane greed. That's too much to ask, though.

[Rapunzel]

Re: Do you blame Bush?

I'd just like to add that I heard George Soros speak a few months ago and he made a point that has stuck with me. He said that everyone treats economic markets like biological systems. Like water in two vessels allowed to mingle, we have this faith that nature/physics will bring the system to equilibrium. Supply/demand......it all ballances out. BUT - we've made a huge error in assumption there. Economics are not biological. There is no grand design beyond our understanding that will save us if we go astray. Equilibrium is not a given. Sometimes, you have to step in. Free markets have never sounded the same to me. A bit of regulation is a good thing to steer the ship and it would be nice if we could introduce some ethical behavior to balance out the insane greed. That's too much to ask, though.

Nice words from Soros - but I don't want to descend into socialism. A "bit" of regulation is OK - but I think Soros and the Democrats would go much, much farther than that. The goal should always be a free market.

[Rapunzel]

Re: Do you blame Bush?

We've got soooo many lawyers in there - maybe we need some economists too!

There are so many lawyers in Washington, even my priest is a lawyer. No joke.

I've been wondering what the representation of various professions is among Republicans and Democrats - both in the senate and in the legislature. I know that Phil Gramm was an economist - and a really good one, too, from my mom's experiences with him. And, I am sure that the vast majority on both sides are lawyers.

But, how many of each side are business owners (particularly those who started out with small businesses)? How many are economists? How many have held a real job in the last decade - or two?

Not to knock lawyers (heck, I've seriously bounced around doing it myself someday) - but how many of those in Congress have any real world experience - and, recent, at that? How many of them know how to "right" a sinking ship in business? How many of them know what it's like to have hard times financially for their families?

I wonder....

As an aside:
I'm starting to see why Palin appeals to people more and more.... And, I am also painfully reminded why Romney still appeals very much to me (and, I believe, much of the public). I'd have a much easier time with this election if it was a Romney/Palin ticket.

[DCJenn]

Re: Do you blame Bush?

All three of my DC renters who are Hill staffers (Ds- and no it's not a rental requirement!) are lawyers.

DC is a skewed population.

Jenn

[PrincessFiona]

Re: Do you blame Bush?

A bit of Googling finds 59 senators with law degrees - 34 Ds and 25 Rs. Obviously, not all of them ever practiced law.

Currently 2 doctors, both Rs.

(An interesting aside: there are 5 LDS senators and 13 Jewish senators, but those two religions combined make up less than 5% of the US population.)

I mean, it makes some sense that the people writing laws study the law first. Still interesting though.

ETA: Actually a more interesting question might be the percentage of the professional staff that have law degrees. I bet that's pretty high. Either way, those people tend to have NO experience outside of congress. And in many (most?) cases, they're the ones really writing the laws and making the decisions.

Sorry for the

Wow. That is interesting.

Kris

[Meenah]

Re: Do you blame Bush?

I voted yes. I blame him for everything. I think he is so evil, though not as evil as Cheney, that if I have a bad hair day I blame them. My feelings are sooooo strong that they are to the point of irrational. I admit it. If he or Cheney needed CPR, I would have a very hard time doing it. There, I said it and I feel better. I will now slink away for awhile, I usually try to avoid the Debates for many reasons, mostly to protect my own BP!!!

[Amiens]

Re: Do you blame Bush?

I voted no, and here's why.....

Bush cannot be blamed for the government sector entities (GSE) Fannie Mae and Freddie Mac crisis. Seventeen times over the last year he has called for major reform of the two institutions. Here are the quotes put out by the White House http://www.whitehouse.gov/news/relea...080919-15.html Congress did nothing to heed these warnings or the President's advice.

Sen. John McCain and three other Senate Republicans in May 2005 tried to introduce legislation that would have reformed GSE, as well as limit golden parachutes, and other things that we are facing in this crisis. Summary of the bill- (1) in lieu of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development (HUD), an independent Federal Housing Enterprise Regulatory Agency which shall have authority over the Federal Home Loan Bank Finance Corporation, the Federal Home Loan Banks, the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac); and (2) the Federal Housing Enterprise Board. Sets forth operating, administrative, and regulatory provisions of the Agency, including provisions respecting: (1) assessment authority; (2) authority to limit nonmission-related assets; (3) minimum and critical capital levels; (4) risk-based capital test; (5) capital classifications and undercapitalized enterprises; (6) enforcement actions and penalties; (7) golden parachutes; and (8) reporting. (http://www.govtrack.us/congress/bill.xpd?bill=s109-190) This bill never made it out committee as Christopher Dodd (D-CT), who was in 2005 the ranking member on the Senate Banking Committee and now its chair. At the time Dodd was receiving preferrential loan treament from Countrywide Mortgages, as well as lobby money from, guess who? Fannie Mae and Freddie Mac.

I find it really interesting that of the $4.8 million in political donations from Fannie Mae and Freddie Mac, that 57% of it went to Democratic Congressional members. Obama is ranked at the 2nd highest recipient of funds ($126,349) from Fannie Mae and Freddie Mac, right behind Chris Dodd ($165,400), and these totals are over their careers. To be fair McCain in his 20 year career took in $21,550, six times less than Obama. Where was Obama in 2005? He was serving in the Senate with John McCain. Where was his support, speaking out, or joining in the cosponsorship? His silence speaks volumes. Of course why would you want to support legislation that would reform and shake up the very entity that is providing a large amount of campaign funds? Obama says he hates lobbyists, but this type of hypocrisy is the very essence as to why he can't get my vote. I was inspired by his message of Hope and Change, but all I see is it will be the same old politics with him in office for 4 years. Anyway, I digress. Obama blames John McCain and goes as far to say that "Despite his eleventh hour conversion to the language of reform, Senator McCain has subscribed to this philosophy for twenty-six years in Washington and the events of this week have rendered it a colossal failure." (http://thepage.time.com/obama-statement-on-aig-bailout/) Obama should go back and look at the reform that John McCain has been working for for the last 3 years regarding this issue.

We could go even before George W. Bush was elected president to see that this financial crisis was not set into motion by him but by President Bill Clinton. A little history: in 1979, under President Jimmy Carter, the Community Reinvestment Act was passed. This law put pressure on Fannie Mae and Freddie Mac to lend more aggressively to minority and low-income communities. In 1995, President Bill Clinton revised the rules for Fannie Mae and Freddie Mac which made it even easier for people to take out mortgages. When President Clinton said “More Americans should own their homes,” he meant just that. The revisions allowed for less regulation on lending money, one of the items was accepting welfare payments as a source of proof of income. For banks to receive a satisfactory rating based on the CRA, they had to have an increase number of loans to minorities and low-income families. At the same time banks knew that Fannie Mae and Freddie Mac would buy up the mortgages. For it was during this time that Andrew Cuomo, Clinton’s HUD Secretary, made the decision to allow Fannie Mae and Freddie Mac to become involved in the subprime mortgage market, thus the birth of no documentation and no income loans.

Now these loans are going bad, Fannie Mae and Freddie Mac do not have the cash to pay the loans, because President Clinton allowed Fannie and Freddie to have only 2.5% capital to back their commitments. So banks are not getting any return on their investment except a bunch of empty houses which no one is buying. The promise of backing from Fannie and Freddie has evaporated. Banks do not have the liquidity to continue their business.

So if you ask me who is to blame- first Jimmy Carter, followed by the Democratic Congress of 1992, President Bill Clinton, and all of the corrupt CEOs of Fannie Mae and Freddie Mac, who made off with tens of millions of dollars.

(to show how everything is tied together- AIG had $600 million in Freddie and Fannie, which is why it is all coming down like a house of cards).

[madeintaiwan]

Re: Do you blame Bush?

I voted yes. I blame him for everything. I think he is so evil, though not as evil as Cheney, that if I have a bad hair day I blame them. My feelings are sooooo strong that they are to the point of irrational. I admit it. If he or Cheney needed CPR, I would have a very hard time doing it. There, I said it and I feel better. I will now slink away for awhile, I usually try to avoid the Debates for many reasons, mostly to protect my own BP!!!

I love you.

[Rapunzel]

Re: Do you blame Bush?

Interesting history lesson, Amiens.

[Rapunzel]

Re: Do you blame Bush?

A little history: in 1979, under President Jimmy Carter, the Community Reinvestment Act was passed. This law put pressure on Fannie Mae and Freddie Mac to lend more aggressively to minority and low-income communities. In 1995, President Bill Clinton revised the rules for Fannie Mae and Freddie Mac which made it even easier for people to take out mortgages. When President Clinton said “More Americans should own their homes,” he meant just that. The revisions allowed for less regulation on lending money, one of the items was accepting welfare payments as a source of proof of income. For banks to receive a satisfactory rating based on the CRA, they had to have an increase number of loans to minorities and low-income families. At the same time banks knew that Fannie Mae and Freddie Mac would buy up the mortgages. For it was during this time that Andrew Cuomo, Clinton’s HUD Secretary, made the decision to allow Fannie Mae and Freddie Mac to become involved in the subprime mortgage market, thus the birth of no documentation and no income loans.

Part II.

I don't understand this logic at all. Because the banks were told not to be discriminatory, they suddenly lost all common sense when it came to sound lending practices? These people are in the business of finance. They could have made smart decisions if they wanted to. Blaming this regulation is just absurd.

And Bush kept up the "ownership society" bit just as much as Clinton. We have long favored home ownership over renting - just look at the tax code. Blaming that decision on one party is just illogical. It's easy politics, because a wide swath of America benefits from those mortgage deductions.

It makes sense to me. It's the result of affirmitive action for mortgages. In order for the financial entities to meet the expected increase in loans to minorities they had to loosen up their reasonable income requirements. It is an example of a nice idea that isn't a good idea. And, this isn't a new concept - there were plenty of articles on this particular part of the problem months ago when the 'mortgage crisis' came to a head. This is one of the main contributors to that particular problem.

Re: Do you blame Bush?

I don't think loans made over 8 years ago are the ones defaulting -- I don't know that though. It would be interesting to see some statistics on average length of time a loan is held when it defaults and the type of loan. I think credit was loosened up WAY beyond low-income. There are plenty of mid and high income people who borrow and spend irresponsibly, regardless of minority status. I can see the temptation to pin this -- it was YOU, you low-income people! This whole mess is so far-reaching and like I said elsewhere, there is plenty of blame to go around. If there is no bail-out and bank and credit failures happen, there will be a lot more people affected than just the Wall Street employees and borrowers who were over-extended.

[Rapunzel]

Re: Do you blame Bush?

Oh, there are plenty of upper-income people who screwed up as well.

But, one facet of the mortgage crisis (I prefer fiasco) was the mortgage affirmitive action policies on the part of the lending institutions and encouraged by the federal government.

Re: Do you blame Bush?

And Bush kept up the "ownership society" bit just as much as Clinton. We have long favored home ownership over renting - just look at the tax code. Blaming that decision on one party is just illogical. It's easy politics, because a wide swath of America benefits from those mortgage deductions.

Yes. Just use the "stimulus checks" as a teeny-tiny example. Economy struggling? Let's send everyone below a certian income a check and suggest they go shopping with it. The administration WANTED people to spend the checks - not save them, not put them towards debt. After 9/11? What did Bush say "Keep up your daily lives - continue to shop / spend."

No way this is all Carter and Clinton. NO way.

[SuzySunshine]

Re: Do you blame Bush?

I don't think loans made over 8 years ago are the ones defaulting -- I don't know that though.

Nellie, I believe you're right on this. I read something the other day, I'll see if I can go find it, that says barring some emergency like medical bills that you can't pay if you're going to default on your mortgage its in the first 3-5 years and I don't think this crisis is any different b/c of the ARM loans.

Re: Do you blame Bush?

That is what I was thinking but forgot to say. ARM loans certainly are playing a role in this and most of those are 1-5 years. Even if there was pressure to make riskier loans, the resulting credit default swapping market wasn't necessary and could have been regulated as an insurance product. Also, the exemption of sorts that the SEC granted to a handful of big investment banks (Lehman, Goldman among them) regarding leverage and capital requirements could have been rescinded.