Dave,

I agree. However, I think you are ridiculously optimistic. I have absolutely no confidence that the House will reject the "bipartisan" bailout, or that anything useful will be done, by either house of the Congress.

I would like to construct a cave here on our farm, similar to the one you must have there in the Republic of Dave. Can you let me know how to get a copy of the plans?

Dan(Miller)

I also agree. But until the people rise up and get cranky, those brave House Republicans (and Democrats) will fall by the wayside. Most people don't know who their elected officials are, much less how to get in touch with them. And the rest? Well, I think the rest don't care.

Another nod of agreement.

My fear is that congressmen who voted nay the first time think they could get away with an aye vote this time. "I held out as long as I could." "The second bill addresses some of my concerns." "This bill has more bipartisan support." Never mind that those are lousy reasons; they sound like they could be true.

This whole thing has been a reminder that conservatives don't need Republican congressmen who say conservative things every two years. They'll mostly do what I mostly want, but when the chips are down, they make huge mistakes because they're not driven by conservative principles.

Arrow manufacturers?

A bailout for the rum industry I can get behind any day of the week but unless they are intent on re-fighting Agincourt - WTF?

Dan, you were dead on. The house passed the wretched thing earlier today.

And Deano, that's actually just a subsidy for wooden practice arrows for kids. The draw length and strength are limited to below adult limits. Makes it even weirder, really.

Dave

The CRA was the source of the whole problem????

I have to disagree with you on that. The CRA only applies to FDIC institutions. 80% of subprime loans were offered by financial institutions not subjected to CRA requirements. Countrywide for example was not subject to the CRA.

Here are some things to consider:

How exactly did the CRA force Moodys, S&P, etc to rate junk paper as Triple AAA???

Did the CRA force banks to make "Interest Only" loans???

Did the CRA, or any other law, require banks to not verify income or credit history???

What about "No Money Down" mortgages? Were these required by the CRA????

Even Business Week and the Wall Street Journal have shot down the idea that CRA is to blame.

You're missing an important aspect of the influence of the CRA. It is what caused lenders to first look at ways that they could offset the higher risk of these mortgages by changing terms to make them more profitable. Without the CRA lenders would never have felt the need to develop practices as predatory as they did and regulators would not have turned a blind eye to some of those practices which let lenders offset some of those risks.

Plus, despite the limited scope of the CRA itself, it is just one of a number of similar acts which did apply the same principles of giving loans to unqualified borrowers to other parts of the industry.

And I didn't say the CRA was the entire problem, just that it was the starting point.

Dave

Dave,
Please go back and read what you wrote.(page 1)
You said it was "the source of the whole problem".
And thats exactly what I accused you of saying.

As for my post. I stand behind the questions posed, whether you chose to answer them or not. They are very fair questions.

Here is a BusinessWeek article stating that to blame the CRA for the financial crisis is ludicrous.

Dave,

And how did the Dow Jones Average react? Down 137 points a few minutes ago.

Dan(Miller)

Well... per C-span, I obviously got up too late today, the House passed the 450 page turd.

Here is a link to an historical perspective on why and how we got here. Of course, it's from Fox News, and so was doubtless "photoshopped" or perhaps actors were used. Oh well.

Dan(Miller)

well, not from fox, but Here's one reason it passed.

Cannonshop,

Please, please tell me it is all lies. How could even one of our "honorable members" be influenced by bribes campaign contributions? It just doesn't make sense. If I read/see any more of this stuff, I may become disillusioned.

Dan(Miller)

Disillusioned? I'm starting to know what 9/11 Truthers must feel like, waking up every day to see what the Federal Reserve did to ruin the country.

Heh...wish I could. Obviously 1994 wasn't enough of a lesson. These bozos need to be driven out of office in November. They won't be, but...

Here, in the interest of putting some of this stuff further (see my Comment #12) into historical perspective, is some musical entertainment. Fewer liberties were taken with the libretto than is often the case with G & S.

Dan(Miller)

My favorite provision.

FINALLY, KIDS WILL HAVE WOODEN ARROWS!

Oh, is that what the wooden arrow thing is about?

I was all for that; I thought they were exempting the tax on wooden arrows for shooting children.

Damn!

Our reps and senators voted for "Welfare for the Elite", moonravurn. That's what communism is, too, ultimately, even when it's billed as a boon to the working class. I suppose, in the end, that's what all political systems end up being.

Maybe America really will have another revolution, a bloodless one, let's hope, so as to start fresh. Or, there might be a few less stars on Old Glory, as people in states like Vermont think about setting out on their own.

In the words of Secretary Paulson, "The strength and stability of our financial markets is important to every American, to their household budget, to their ability to find affordable financing for a home, a car, a college tuition, children's arrows, and to finance small business expansion."

Not to mention Wool uniforms for the army of the Potomac, windmills, and Carbon-Trading Schemes.

Sounds like the thug who comes around to collect his protection money Baronius.

Now Cannon, let's be fair, the current wool subsidy only dates to the 1870s. It's for uniforms for the cavalry fighting against the wild savages in the great plains.

Dave

I can't believe Dave actually has the nerve to blame lenders' predatory practices on a law designed to help people get legitimate loans. In a long line of disingenuous distortions of fact, this is one of his worst.

"But, officer...we just had to sell thousands and thousands of no-down-payment loans to people who couldn't afford to pay them. Did we warn them of the risks? What, are you nuts?"

Handy. Lenders were denied access to federal backing like FHA if they refused to give out loans to unqualified applicants. And thsse are not people getting "legitimate loans" they are people who could not qualify for loans on the basis of income or credit history being given no fault loans with no downpayment at the order of the government.

Your attempt to misrepresent and minimize the irresponsibility of this sort of program insults all of our intelligences.

Dave

"No fault loans with no down payment at the order of the government"????????
No Dave!!!
I gave you a pass in my comment up above, but not this time.
YOU HAVE JUMPED THE SHARK!!!!

Thank God! For a minute I thought they were talking about exempting those arrows with the all wood shafts that don't have laminations.

EXEMPTION FOR CERTAIN WOODEN ARROW SHAFTS.--Subparagraph (A) shall not apply to any shaft consisting of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as a part of a finished or unfinished product) of a type used in the manufacture of any arrow which after its assembly (i) measures 5/16 of an inch or less in diameter and (ii) is not suitable for use with a bow described in paragraph (1)(A). The amendments made by this section shall apply to shafts first sold after the date of enactment of this Act.

Finally I can write a dystopian novel without actually having to think of any fictional ideas!

From the Sarah Palin election to the bailout, I don't think even Jack London's Iron Heel could compete.

Brilliant reporting by CNN:

The two candidates were nearly even in total number of words spoken. The normally voluble Biden restrained his tendency to ramble by uttering just 5,492 words during the 90-minute debate, versus 5,235 for Palin, Payack said.

In last week's debate between Sen. Barack Obama and Sen. John McCain, Obama spoke 8,068 words during the 90-minute event, while McCain spoke 7,150, Payack said.

This will make a great chapter.

Always have thought CNN is vapid and sophomoric...

Thanks to Mathew who gave this citation from WSJ which debunks the idea of the borrowers causing the problem:


Capitalism sure is fragile if subprime borrowers can ruin it.


...for all their failings, Fannie and Freddie didn't originate any of the bad loans -- that disastrous piece of work was done by purely private, largely unregulated companies, which did it for the usual bubble-logic reason: to make a quick buck.

Cindy commented:

"..I don't think even Jack London's Iron Heel could compete."

Good book, and I think it's out of copyright and available free from Project Gutenberg in glorious ASCII text. For free! That's where I got it a few years ago.

The question is how many loans lenders were 'obligated' by law to make, and how many more they just happened to find very profitable, as long as the bubble lasted. The proportion of the latter to the former is probably very large indeed.

Doesn't the CRA date from 1977? Weren't most of the questionable loans from the period that ended last year -- a period of high home prices combined with low interest rates? Blaming the crisis on a law you can conveniently label socialist is unfortunately too convenient to be accurate.

[This is just too similar to your oft oft oft repeated claims that Freddie, Fannie and the Democrats did it all, and the angelic Republicans tried and tried to stop those awful Dems...although the GOP did control both houses of Congress and the White House during the period in question.]

Insult your intelligence indeed! Just try dealing in facts rather than ideological caricature, on one issue, once? Are you even capable of it, even interested in it?

I thought not.

"No fault loans with no down payment at the order of the government"????????
No Dave!!!
I gave you a pass in my comment up above, but not this time.

I don't need a 'pass' from you, Matthew for just stating the facts.

I suggest you read Ross Kaminsky's excellent article on the subject.

Even Bill Clinton has openly admitted the culpability of congressional Democrats in protecting Fannie Mae and Freddie Mac from regulation and reform.

It was Fannie Mae which issued the Flex 97 and Flex 100 loans which required 3% and 0% down respectively. Look up some of the other pertinent acts like the Housing Opportunity and Responsibility Act of 1997 or the various HOPE acts. It's not just the 1978 CRA act, but a whole series of acts stemming from it which built up the whole system of promoting ridiculous forms of loans with no serious consideration of qualifications.

Sure, there were Republicans involved, but Fannie Mae was basically run by and for powerful congressional democrats and Republicans generally turned a blind eye to it. It fed them massive campaign donations, provided sinecure jobs for their friends and allies, and in return they protected it.

Seriously, look at the transcripts from the 2003 hearings on oversight of Fannie Mae. It's obscene and ridiculous.

This is for you too, Handy. The biggest blame for Republicans is that they allowed the demos to keep running Fannie Mae the way they did. It's a common practice in Washington to let the opposition party keep some perks to buy off some cooperation and Fannie Mae was one of those. Even if the Democrats were out of power, they kept control over Fannie Mae and milked it for all they were worth. Republicans should have put their foot down, but that would have violated the quid pro quo system they use in DC, so nothing serious was done about it.

Dave

And let me add that contrary to what Handy suggests, the CRA does have enforcement elements. Under changes implemented by the Clinton administration in 1995 if banks didn't get a good rating under the CRA the FDIC would bar them from expanding or merging with other banks, basically strangling them to death for not giving out enough non-qualifying, no-money-down loans.

Dave

Dave has gone completely around the bend on this stuff. His partisan rationalizations are so intricate and frail that they defy credulity, except for Dave and his fellow True Believers.

His mad reasoning is revealed by use of the classic liars gambit "my fault was that I trusted him too much", or "my fault was that I loved her too much"...

Bliffle, you make so little sense that I really have no idea what you're talking about here.

Maybe my mistake is that I just can't believe you partisan lunatics don't see how obvious the mountain of corruption is here. It's like you're looking at a painting with a giant rip down the middle and you're complaining about the quality of the brushstrokes.

The evidence of the way that the democrats have nurtured disaster in the housing industry, profited from it, and protected it against any oversight is so absolutely overwhelming that your ability to ignore it verges on some sort of insanity.

I guess I should rein my frustration in and start over again. Maybe an article that takes it by baby steps is what you need. Clearly links to the overwhelming evidence are wasted on you.

Dave

Dave is simply unable to accept the truth of the failure of his pet ideas, though that failure is evident to most.

Friedman Free Market Fundamentalism is bankrupt.

It stands revealed as just another excuse for brutal exercise of power. The Fundamentalists themselves tore the mask away the moment they had to, to invoke Market Socialism to save themselves.

Save yourself, Dave. Abandon Potemkin Capitalism.

Dave,
I went to the Ross Kaminsky blog and read many of his articles. Just like you, he prefers to use economics simply as a vehicle to further his right wing political agenda. There was no mention of deregulation, Phil Gramm, John McCains WSJ interview in March 2008 etc. Another convenient omission was the number of Fannie Mae lobbyist in the McCain campaign.
On a humorous side note, Mr Kaminsky was also still desperately trying to link Iraq with the September 11 attacks, as recently as July 2005.

Call me an elitist, but I will stick with the Business Week and Wall Street Journal articles.
Too much is at stake!!!

By the way, Fannie Mae did not/does not "issue" loans. It bought them from lenders and guaranteed them, serving as an insurer of sorts.

Excellent article in today's NY Times that helps explain some of this stuff, from the point of view of deposed Fannie CEO Mudd.

It points out that as long as the loans were 'plain vanilla,' Fannie's guarantees actually worked the way they were supposed to...expanding the universe of home owners while still managing risk.

But all the complicated new mortgage products [weird mathematical formulas, derivatives, balloons and the rest], plus entities like Goldman Sachs buying up mortgages in competition with Fannie, motivated Fannie to take on more and more risk - but without being able to measure or control it as they did before.

It worked, for a while. Then those chickens came home to roost.

Friedman Free Market Fundamentalism is bankrupt.

It stands revealed as just another excuse for brutal exercise of power. The Fundamentalists themselves tore the mask away the moment they had to, to invoke Market Socialism to save themselves.

Bliffle, you might have an argument, had the free market actually been operating here. The problem is not the free market, it is the socialization of markets which began with the creation of institutions like Fannie Mae and Freddie Mac and which they perpetuated and ultimately pursued into corruption and despotism as is always the outcome of socialism.

Socialism always turns into oligarchy and oligarchy becomes plutocracy when there is money as well. By introducing socialism into the marketplace with Fannie and Freddie FDR opened the door to the inevitable corruption of the financial sector.

Had free markets been in operation then they would never have been willing to take the risks they did, or would have had to live with the consequences if they did.

Dave

Maybe Dave really does believe what he just wrote. It's just extreme enough to be sincere. But it is unproven, unprovable ideologically-based nonsense.

Handy, while the viability of a truly free market as an alternative to what we're experiencing here is indeed unproven, the theory would certainly appear to be sound.

But what is NOT unproven is that socializing risk, excessive government control on the economic sector, imposing unrealistic lending criteria for political correctness, and using our financial institutions to underwrite political corruption do NOT work.

This bailout just allows us to whitewash over the root problems and put new institutions in the position which Fannie and Freddie were in. If it's not followed by an investigation which includes holding political figures accountable and some sort of fundamental changes in policy it's all worthless.

Dave

One more thing I will add.
The "McCain tried to warn us in 2005" is bunk!!!!
It was actually Chuck Hagels bill. McCain didnt jump on board until a year later in May 2006 when the bubble was beginning to pop, and the political winds were changing.

Nalle trying to spin his way out of Reality and the irresponsibility of his partisan allies deregulating everything to complete Hell...

mwahahahhAHAHHHAhaahAHAHHAhahaaa...

good to see that even after a long interval, some hypocrisies never change....

it took all of 10 seconds to find...well done indeed

The Texas Sidewinder can't help its nature, nor you apparently old bud.

had to pop in at lunch, to prove a point to a friend, point made...cameo finished, Christopher

i'll not darken your *door* unless i need to show someone proof of something idiotic again

hope all is going well for you, EO and the rest, i'd like to say i miss this place..and in some ways i do...

but i'm very happy to be rid of it, all things considered...

good luck

It is a cold day in hell when I agree with Nalle about anything. This is one of them.

The "McCain tried to warn us in 2005" is bunk!!!!
It was actually Chuck Hagels bill. McCain didnt jump on board until a year later in May 2006 when the bubble was beginning to pop, and the political winds were changing.

The bill was written by Hagel and John Sunnunu. McCain came on board a few months later when the bill was in danger of failing, becoming a cosponsor and making his much quoted and prophetic speech predicting the current disaster on May 25th of 2006. The bill ultimately failed because democrats held it up in committee on procedural grounds until the session expired.

Now what was your point again? That McCain was only 2 years ahead of the rest of the Senate in being concerned about this issue?

Dave

It is a cold day in hell when I agree with Nalle about anything. This is one of them.

Sadly, all too late to do anything about it now.

Dave

Dave is grasping at straws as the mock capitalism he's been championing, implemented by crooks that he's been vociferously alibiing for, is crashing down around his head.

Instead of standing up like a MAN and taking responsibility for the crap he's advocated for the USA and the results that has caused, he whines and blames it on a 1933 FNMA institution!

Come on Dave! 'Fess up. It's a Frankenstein!

And stop whining that it's not 'pure' free markets, and trying to convince us that we need more of the same.

Matthew, that WSJ citation of yours is an opinion piece written by Thomas Frank, author of What's the Matter with Kansas and The Wrecking Crew: How Conservatives Rule. He is an outspoken critic of the Republican Party.

Then there's the BusinessWeek article. It really doesn't stand up to scrutiny. The CRA was passed in 1977 if I recall correctly, but has been modified repeatedly. It was strengthened in the Clinton years, and compounded by similar legislation during this administration. The CRA isn't the only problem, but it is part of a system which encourages risky loans.