Arkansas Blog

In all fairness, in May the DJIA was over 13,000 nearly half the trading days.

So from 12,200 up 800 to 1,000 points in 3 months would have been a good return.

Did Greenberg say buy and hold till December 1st?

ARK. BLOG: Feb. 2007, not 2008

Funny how we give our experts and leaders a year or two to admit to inflation and recession and we're given less than a week to cough up $700,000,000,000 to bail them out.

The larger point here is the fact many people like Krugman predicted this with specificity.. long before '07 for that matter... and they were right. Yet they are still on the outside for the most part. We are still championing the criminals, bailing them out (rewarding them instead of indicting them) and looking to them to fix the very problems they created.

It's like giving Osama a trillion bucks to bomb us again so we can wage needles wars on millions of innocents... just to keep MIC in business.

It's that stupid.

I hope Paul bailed out of the market back in May, unlike a lot of folks. Or maybe retirement has been put off a wee bit longer? I don't know how I did it, but I had the experts beat by months.
The person I'd really like to hear from is the guy who, early last year, predicted gas was going to be $4 by August. Remember somebody asking George Bush about it and he replied he hadn't heard that? Someone find out who the guy who made that prediction was talking to.
(Who, me? Suspect a conspiracy? What makes you think that?)

"WASHINGTON - The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents.

"Expect fallout, expect foreclosures, expect horror stories," California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job.

Bowing to aggressive lobbying - along with assurances from banks that the troubled mortgages were OK - regulators delayed action for nearly one year. . . ."

All together now! One more rousing chorus by the die-hard Bush apologists . . . "IT"S NOT OUR FAULT!"

Click for the whole article

"Bowing to aggressive lobbying - along with assurances from banks..."

What we need is a special prison for bankers and lobbyists. Is there any room at Gitmo?

The recession has been evident to most of us for quite some time. It isn't all tied to the stock market. The talking heads and experts live in bubbles and don't have a clue what is really going on. No one told us anything we hadn't known for a very long time.

Greenberg is the biggest idiot I've ever heard. I've refused for years to buy the DG because of his ignorant self. Time for him to go on an extended vacation and decide he's so far out of it that his words are meaningless..... Retire!

Knowing Walter Hussman's cold and ruthless approach with employees, a real modern-day Ebenezer Scrooge, I doubt Greenberg will ever retire. He can't afford to retire. Meager pension to begin with, now clobbered by the economic policies of his beloved Republicans. The Inky Wretch is likely to hang on to the end. After all , he won a Pulitizer, don't you know?

Ci.Ci, honey, I'm with you. I mean, I'm glad Greenberg's had a job all these years, and I hope he has a comfortable retirement (though I suspect PVNasby's right about THAT).

Still, I'd KILL to know what Greenberg's got on Hussman, to maintain his job lo these decades.

Or, as I posted in another earlier thread, "Roy Reed said to me several years ago, 'Paul Greenberg used to be good. I don't know what happened to him.' Well, it's obvious: Mr. Greenberg knows who butters his bread."

You nailed Greenberg, Ci.Ci. "Meaningless."

On those rare occasions I actually read somebody else's copy of the D-G, I inevitably turn to the Editorials and Letters section, peruse Greenberg and think, "Why?"

Different topic.

Black and White.

Click on Cato

Isn't it wonderful to know that the Congress no longer has oversight responsibility for the banking and mortgage industry. I must have missed it when they changed the Constitution and gave that authority to the Executive Branch. I always thought that the Banking and Finance Committees had some say in laws and regulations concerning those issues. I guess when the auditors reported to the Congress in 2000 about the lax and questionable operations being done by Fannie and Freddie just showed how little they knew about government. Silly rabbits, they should have reported to the President so he could have taken action. I guess barney 'cupcake' frank was just shooting his mouth off when he criticized the auditors for questioning those venerable organizations. I wonder why he tried to get the auditors fired for their criticisms of Fannie and Freddie. Oh well, what is a body to do.

THE REAL SCANDAL
By STAN LIEBOWITZ

February 5, 2008 -- PERHAPS the greatest scandal of the mort gage crisis is that it is a direct result of an intentional loosening of underwriting standards - done in the name of ending discrimination, despite warnings that it could lead to wide-scale defaults.
At the crisis' core are loans that were made with virtually nonexistent underwriting standards - no verification of income or assets; little consideration of the applicant's ability to make payments; no down payment.

Most people instinctively understand that such loans are likely to be unsound. But how did the heavily-regulated banking industry end up able to engage in such foolishness?

From the current hand-wringing, you'd think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards - at the behest of community groups and "progressive" political forces.

In the 1980s, groups such as the activists at ACORN began pushing charges of "redlining" - claims that banks discriminated against minorities in mortgage lending. In 1989, sympathetic members of Congress got the Home Mortgage Disclosure Act amended to force banks to collect racial data on mortgage applicants; this allowed various studies to be ginned up that seemed to validate the original accusation.

In fact, minority mortgage applications were rejected more frequently than other applications - but the overwhelming reason wasn't racial discrimination, but simply that minorities tend to have weaker finances.

Yet a "landmark" 1992 study from the Boston Fed concluded that mortgage-lending discrimination was systemic.

That study was tremendously flawed - a colleague and I later showed that the data it had used contained thousands of egregious typos, such as loans with negative interest rates. Our study found no evidence of discrimination.

Yet the political agenda triumphed - with the president of the Boston Fed saying no new studies were needed, and the US comptroller of the currency seconding the motion.

No sooner had the ink dried on its discrimination study than the Boston Fed, clearly speaking for the entire Fed, produced a manual for mortgage lenders stating that: "discrimination may be observed when a lender's underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants."

Some of these "outdated" criteria included the size of the mortgage payment relative to income, credit history, savings history and income verification. Instead, the Boston Fed ruled that participation in a credit-counseling program should be taken as evidence of an applicant's ability to manage debt.

Sound crazy? You bet. Those "outdated" standards existed to limit defaults. But bank regulators required the loosened underwriting standards, with approval by politicians and the chattering class. A 1995 strengthening of the Community Reinvestment Act required banks to find ways to provide mortgages to their poorer communities. It also let community activists intervene at yearly bank reviews, shaking the banks down for large pots of money.

Banks that got poor reviews were punished; some saw their merger plans frustrated; others faced direct legal challenges by the Justice Department.

Flexible lending programs expanded even though they had higher default rates than loans with traditional standards. On the Web, you can still find CRA loans available via ACORN with "100 percent financing . . . no credit scores . . . undocumented income . . . even if you don't report it on your tax returns." Credit counseling is required, of course.

Ironically, an enthusiastic Fannie Mae Foundation report singled out one paragon of nondiscriminatory lending, which worked with community activists and followed "the most flexible underwriting criteria permitted." That lender's $1 billion commitment to low-income loans in 1992 had grown to $80 billion by 1999 and $600 billion by early 2003.

Who was that virtuous lender? Why - Countrywide, the nation's largest mortgage lender, recently in the headlines as it hurtled toward bankruptcy.

In an earlier newspaper story extolling the virtues of relaxed underwriting standards, Countrywide's chief executive bragged that, to approve minority applications that would otherwise be rejected "lenders have had to stretch the rules a bit." He's not bragging now.

For years, rising house prices hid the default problems since quick refinances were possible. But now that house prices have stopped rising, we can clearly see the damage caused by relaxed lending standards.

This damage was quite predictable: "After the warm and fuzzy glow of 'flexible underwriting standards' has worn off, we may discover that they are nothing more than standards that lead to bad loans . . . these policies will have done a disservice to their putative beneficiaries if . . . they are dispossessed from their homes." I wrote that, with Ted Day, in a 1998 academic article.

Sadly, we were spitting into the wind.

These days, everyone claims to favor strong lending standards. What about all those self-righteous newspapers, politicians and regulators who were intent on loosening lending standards?

As you might expect, they are now self-righteously blaming those, such as Countrywide, who did what they were told.

Stan Liebowitz is the Ashbel Smith professor of Economics in the Business School at the University of Texas at Dallas.

To those who prefer facts and not fingerpointing about the mortgage crisis and racial discrimination, click on name.

To those who prefer facts and not fingerpointing about the mortgage crisis and racial discrimination, click on name.

Great post Jake. You wonder how the CRA, enacted in 1977, is now responsible. It's been good
Rwingnut spin, eh.

"Free markets are never free."
John Perkins

And you know if BHO were to walk across the Potomac River tomorrow the Rwingnut spin would be
"Obama can't swim."

.

"I always thought that the Banking and Finance Committees had some say in laws and regulations concerning those issues." -- Strangelove
Laws, yes, Strange. Regulations? Uh, no. That's the province of the agencies responsible for implementing the laws. And who fills the top spots at those agencies? Well, that would be folks who owe their patronage jobs to the sitting president. Right now, George is his name.
You see, the laws passed by Congress and signed into law by the president and those which Congress has managed to pass over his veto form a framework. But the devil -- often -- is in the details. That is, in the regulations.
Anyway, even as we sit in our warm homes typing away, there are federal workers working feverishly to implement Georgie type regulations that will haunt us for a while. Unless. Unless, busy bees in the incoming administration can find legal ways to overturn them.
(Might just be possible, since Georgie and company back in 2001 or so, managed to get a law passed to aid in overturning Clinton administration regulations THEY didn't like. Is that justice, or is that justice?)

"I must have missed it when they changed the Constitution and gave that authority to the Executive Branch." -- Strangelove
Well you know, I missed this one too. For the life of me, I cannot find any place that mentions that the president can pick and choose what parts of a law passed by Congress he deems acceptable and what parts he can lawfully ignore. The "signing statement" argument the Bush administration has put forth really has me baffled.

I've said before. There's plenty of blame to go around in this financial mess. Ultimately, though, I think the Harry Truman quote about the office of the president applies: "The buck stops here." After all, it's been nearly eight years.

I think we can condense what Professor Stan Liebowitz, from that shit-hole state of Texas, and strangelove are saying to this: It's all the fault of them Ni**ers and them damn NI**ger loving bankers and Congressmen. Yeah.....blame it all on the black folks. Every damn time.....blame it on the black folks.

Just take a look around....all you see these days are rich Negroes buying up big houses in the Hamptons, flying around in their private jets, gots them big black cars with shiny hubcaps that keep spinning when the car stops. Rich, richy, richrich black folks done stole all the governments money and caused the fall of Wall Street.

Oh if only the whole world was white! My god....if the whole world was white no one would have to pay taxes! There's be no cancer or AIDS.....money would sure enough grown on trees. But God just had to invent blacks....now why one earth would a white God make black people? And now they've gone and ruined our banks. Sub-prime, thy middle name is negro....tsk tsk.....

Again, here are the facts: (Source YBP - Young Black Professional, 8 Oct 08)

Let's take a closer look, however, specifically, numbers and dates.because that's all I work in.

1.) Ann Coulter is posturing her position based on the Community Reinvestment Act (CRA) of 1977 that aimed to eliminate redlining and discrimination in lending practices. The argument is that the CRA, in an attempt to end discrimination, mandated that communities of color were no longer required to provide all of the standard mortgage documents such as verification of income, proof of employment, credit history, or even provide a down payment.

2.) This act was put into law three decades before this debacle.

3.) 50% of subprime loans were made by finance companies that do not have to comply with CRA, while another 30% were made by savings and thrifts who could voluntarily include the CRA rating.

4.) According to data of the Home Disclosure Mortgage Act from 2005 - 2007, 58% of higher-cost loans were made by White borrowers in contrast to 18% of minority borrowers.

Outside of the numbers, however, is the more important fact that we are all in this together. The tactics to divide our country in times of uncertainty is a dying principle that has never served our interests, as Obama alluded to in yesterday's debate regarding the days after 9/11. NYTimes op-ed columnist Thomas Friedman summoned it up best:

You may not own any stocks, but your pension fund owned some Lehman Brothers commercial paper and your regional bank held subprime mortgage bonds, which is why you were able refinance your house two years ago. And your local airport was insured by A.I.G., and your local municipality sold municipal bonds on Wall Street to finance your street's new sewer system, and your local car company depended on the credit markets to finance your auto loan - and now that the credit market has dried up, Wachovia bank went bust and your neighbor lost her secretarial job there.

We're all connected. As others have pointed out, you can't save Main Street and punish Wall Street anymore than you can be in a rowboat with someone you hate and think that the leak in the bottom of the boat at his end is not going to sink you, too. The world really is flat. We're all connected. "Decoupling" is pure fantasy.

I totally understand the resentment against Wall Street titans bringing home $60 million bonuses. But when the credit system is imperiled, as it is now, you have to focus on saving the system, even if it means bailing out people who don't deserve it. Otherwise, you're saying: I'm going to hold my breath until that Wall Street fat cat turns blue. But he's not going to turn blue; you are, or we all are. We have to get this right.