Originally intended as a family blog it is now a more extended family place for civil discussions of religion and politics – you know those things we shouldn’t talk about and need to. It is also a free forum for any and all ideas included recent cat stories. Please share and comment as you see fit. You may contact me at hughdrennan@gmail.com to ask for writing privileges.
In this case, the donkey had a lot to do with the breaking of the vase in the first place (Barney Frank and his Fannie and Freddie policies). And instead of trying to fix it, they announce a 'plan' while they grind the pieces of the vase into even tinier pieces under their hooves.
Nice try, but the driver of the subprime mania was the private-sector subprime loan sharks, not Fannie and Freddie. As tempting as it might be to blame some 'big government' thing here, I'm afraid that dog just won't hunt. The private sector was the early arrival to this party, and in fact Fannie/Freddie's market share actually began shrinking starting in 2003 -- Which was about the same time that the Bush administration used an obscure 1800's banking law to actually BLOCK state attorneys general from enforcing anti-predatory lending laws that could have slowed down the mess before it got out of hand.
Meanwhile, Frank worked together with Oxley worked to craft much more rigorous oversight of Fannie and Freddie in 2005, but it then got saddled with a number of politically odious amendments (such as killing the affordable housing fund) such that it ultimately went down in flames, 53-17.
The driver of subprime mania was Fannie and Freddie. Why? Because they backed up the bad loans, which encouraged banks to make more and more of them. It is definitely a "big government" thing. Left to the free market, the loan sharks would have been no factor at all. Without bad government regulation to back the activity up, the free market frowns on bad loans, and discourages such lending.
"The private sector was the early arrival to this party"
To get real early, you have to look at Andrew Cuomo, the < architect of the bad policy. People tried to end it, but Barney Frank specifically said there was nothing wrong and nothing bad could happen. Frank BLOCKED oversight.
"enforcing anti-predatory lending laws"
Predatory lending has no reward. If you lend to undeserving people who can't pay back, you lose money. So the system discourages it. That is, unless there is bad government intervention (over-regulation) to encourage banks to do this.
From
"In fact, here's a New York Times story from September 2003, clearly showing that the first substantive Fannie and Freddie reform from inside government came from the Bush administration. Spurred by worries that Fannie and Freddie were cooking their books and taking too many risks, Treasury Secretary John Snow proposed placing the companies under Treasury oversight with strict controls over risk and capital reserves. The NYT labeled the proposal "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago"
And here is Frank's specific quotation:
""These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."
"(such as killing the affordable housing fund"
It's a no-brainer to pass this one. Not "odious" at all. Policies like this contributed to the crash.
In this case, the donkey had a lot to do with the breaking of the vase in the first place (Barney Frank and his Fannie and Freddie policies). And instead of trying to fix it, they announce a 'plan' while they grind the pieces of the vase into even tinier pieces under their hooves.
ReplyDeleteNice try, but the driver of the subprime mania was the private-sector subprime loan sharks, not Fannie and Freddie. As tempting as it might be to blame some 'big government' thing here, I'm afraid that dog just won't hunt. The private sector was the early arrival to this party, and in fact Fannie/Freddie's market share actually began shrinking starting in 2003 -- Which was about the same time that the Bush administration used an obscure 1800's banking law to actually BLOCK state attorneys general from enforcing anti-predatory lending laws that could have slowed down the mess before it got out of hand.
ReplyDeleteMeanwhile, Frank worked together with Oxley worked to craft much more rigorous oversight of Fannie and Freddie in 2005, but it then got saddled with a number of politically odious amendments (such as killing the affordable housing fund) such that it ultimately went down in flames, 53-17.
The driver of subprime mania was Fannie and Freddie. Why? Because they backed up the bad loans, which encouraged banks to make more and more of them. It is definitely a "big government" thing. Left to the free market, the loan sharks would have been no factor at all. Without bad government regulation to back the activity up, the free market frowns on bad loans, and discourages such lending.
ReplyDelete"The private sector was the early arrival to this party"
To get real early, you have to look at Andrew Cuomo, the < architect of the bad policy. People tried to end it, but Barney Frank specifically said there was nothing wrong and nothing bad could happen. Frank BLOCKED oversight.
"enforcing anti-predatory lending laws"
Predatory lending has no reward. If you lend to undeserving people who can't pay back, you lose money. So the system discourages it. That is, unless there is bad government intervention (over-regulation) to encourage banks to do this.
From
"In fact, here's a New York Times story from September 2003, clearly showing that the first substantive Fannie and Freddie reform from inside government came from the Bush administration. Spurred by worries that Fannie and Freddie were cooking their books and taking too many risks, Treasury Secretary John Snow proposed placing the companies under Treasury oversight with strict controls over risk and capital reserves. The NYT labeled the proposal "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago"
And here is Frank's specific quotation:
""These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."
"(such as killing the affordable housing fund"
It's a no-brainer to pass this one. Not "odious" at all. Policies like this contributed to the crash.