I like this ad

Americans United For Change is running a hard-hitting ad against Boehner, McConnell, and Cantor for their opposition to the stimulus package (via Ben Smith):

These guys deserve to be taken apart for their bullshit, caveman-like attitude towards the stimulus package. It’s a disgrace. And I certainly wouldn’t say that about their possible opposition to the Geithner “plan” (which may very well be fatally flawed, if it even deserved to be called a plan) or about their positions on a lot of other issue. What’s disgraceful here is that they have no alternate plan, that we’re facing the worst recession since WWII, and that the stimulus package proposed by Obama is right out of a macroeconomic textbook (albeit with too many tax-cuts), as Paul Krugman puts it.

To let them off the hook because they’re Republican or southern, or whatever the excuse is, is almost like some kind of racism. They know better, they can do better, and they need to be held accountable, the same way that normal adults are supposed to be held accountable when they make cynical, selfish decisions that hurt other people. It really is that simple.






78 replies
  1. 1
    PaulB says:

    Ah, but they do have a plan: tax cuts. Three trillion dollars worth of them, to be exact. It won’t help and it will massively increase the national debt, but it is a plan.

  2. 2
    Amanda says:

    a big amen to your last paragraph.

    i’m so sick and tired of right wing exceptionalism/ victimization syndrome.

    these folks need to be mocked; that’s the best their behavior warrants, seems to me.

  3. 3
    Jess says:

    The ad could have been a lot better. It’s so routine that it’s easy to tune out. We’ve all heard a zillion ads with pretty much the same script, and much better visuals, so I don’t see this one working to enlighten or persuade. But it’s good they’re getting something out there, at least.

  4. 4
    DougJ says:

    It won’t help and it will massively increase the national debt, but it is a plan.

    I mean, say what you like about the tenets of National Socialism, Dude, at least it’s an ethos.

  5. 5
    David says:

    "a hard-hitting against Boehner"

  6. 6
    DougJ says:

    @David

    Thanks. I fixed it.

  7. 7

    Has anyone run an ad asking the simple question: "if tax cuts alone make us rich, why aren’t we rich?"

  8. 8
    Annie says:

    Republicans don’t want Obama to succeed. If his administration succeeds, they have nothing to run on in 2012 and beyond.

    Their strategy is to pour on the rhetoric, gain as much media attention as they can, stop any plans that might work, hope the economy tanks even more — more foreclosures, more unemployment, more difficulties accessing loans, more failed businesses, etc. — and then blame the Democrats.

    All the while reitering their claim to be the party of values — family values, marriage values, business values (whatever that means), and any other set of values they can through into the mix.

    Watch, we are just at the beginning. Maybe this explains Tunch’s frustration. He watched Fox News and went crazy….

  9. 9
    Samuel says:

    Republicans Democrats don’t want Obama Bush to succeed. If his administration succeeds, they have nothing to run on in 2012 2004 and beyond.

    Welcome to politics.

  10. 10
    Brian J says:

    It’s important to remember that the stimulus plan and the bank bail out/financial system rescue plan are different, even if they are related. One is about causing demand to pick up and prevent things like deterioration in employment. The other is about restoring stability to the financial system so institutions can lend and invest with confidence.

    The Republicans have a plan for the former, even if it is only tenuously connected to the definition itself. But as far as I know, they haven’t issued any sort of recommendations about what should be done, aside from some vague platitudes about getting government out of the way, to make the financial systems sound again. The first is sad but all too typical, the second is simply pathetic.

    Regardless, to confuse the two is to allow these idiots to claim that we’ve already tried large stimulus measures. Outside of those rebate checks, that isn’t true, fiscally speaking.

  11. 11
    PaulB says:

    Welcome to politics.

    Oh, by all means, point us to the equivalent obstructionism and sheer pigheaded stupidity of Democratic politicians that took place during the Bush administration. We’d be simply fascinated to hear what you have.

  12. 12
    Zach says:

    Two things to keep in mind:
    1. Republicans just voted, in unison, against one of the biggest middle-class tax cuts in history. For the bottom 80% of tax payers, the cuts in the stimulus are roughly as large or larger than the 2001 Bush cuts.
    2. Most of the tax cuts in the bills as passed were inevitably going to be passed this year. 85% of the tax cuts in the Senate bill and 90% of the tax cuts in the House bill, by my calculations, were promised to be made law during Obama’s campaign. In decreasing order of cost, Obama promised the Making Work Pay credit, the AMT patch, renewable energy tax credits, the American Opportunity education credit, making the child credit refundable, increasing the EITC, and changing small business expensing rules during the campaign.

    Obama doesn’t have to actually pass any law to get rid of the top-two-brackets Bush cuts. He doesn’t need to hang onto these cuts to barter with in the future (he’s still saving the no-income-tax-for-seniors-under-50k cut to use against a filibuster at that point, anyway).

    The AMT patch got added in the Senate bill at the expense of a ton of spending; it’s not really a problem that the AMT patch is in there (even though it’s terrible as stimulus, it was going to pass this year anyway), but the spending that got cut should’ve been more strongly defended by folks outside the Senate. For example, NSF funding in the Senate bill out of Appropriations was half the level in the House bill even before the compromise which cut it another 15% or so. Obviously it required a quick reaction but I didn’t hear many people specifically defending the spending shifts between the House and Senate bills. All of the focus was on the tax-cut/spending ratio, which is actually pretty irrelevant.

  13. 13

    The ‘stimulus’ package includes approximately:

    $90 Billion to Labor, HHS, and Education
    $80 Billion to States
    $70 Billion to Transportation and HUD
    $20 Billion to Food Stamps
    $15 Billion to Interior and EPA
    $15 Billion to Commerce and Science

    Gee, I wonder why the Association of Federal, State, County, and Municipal Employees (AFSCME?) paid for this ad. Enlarging civil servant unions will not make America more competitive in the world. I doubt 80% of the American public would support enlarging civil servant unions.

    A protectionist policy, combined with targeted infrastructure projects, that actually have a long term benefit, would make America more competitive in the world. I suspect this is what those 80% of Americans have in mind.

    Obama is getting played by Pelosi and Reid. They are keeping quiet and Obama is running with their legislation.

  14. 14
    DougJ says:

    @Crematorium Bill

    $80 Billion to States

    This may be the single best, smartest part of the whole fucking bill. States don’t have the wherewithall (nor should they perhaps) to do the kind of deficit spending necessary to avoid massive lay-offs in a downturn like this. The whole fucking point of the bill is to prevent massive lay-offs in general. State aid is extremely smart.

  15. 15
    R. Schmidt-Ohren says:

    @Samuel

    Welcome to politics.

    Dumbass, the goopers had control of congress and the executive for years, and even when there was on-paper dem control of congress after 2006, the republicans still got everything they wanted.

    And they still fucking put the country in the crapper. The dems didn’t set Bush or the republicans up to fail, no need to even if they had ever found the balls to make the effort. It was the unfailing preternatural ability of Bush and the goopers to excel at failing that did it, and they did it without any help at all.

    A syphilis-addled cretin could have have found something solid to run on when up against the republican brand of monumental planet-wrecking criminal dumbfuckery.

    Welcome to reality.

  16. 16

    Yeah but, that ad sucked.

    The $20 billion to Food Stamps is pretty awesome. Wait, was that list supposed to be bad?

  17. 17

    So, DougJ, what exactly is Daley going to do with all that money?

  18. 18
    Grover StL says:

    J.D. , I have not heard it put quite like you did
    "if tax cuts alone make us rich, why aren’t we rich?"

    It makes one wonder, why not eliminate all taxes so we can all be REALLY rich?

  19. 19
    Samuel says:

    Shore up the financial system and you’ll give a boost to the economy. The economy won’t even begin to recover until liquidity is restored–the lifeblood of the economy.

    The root cause of this problem is the housing bubble. Cheap money, plus the government insistence that banks make unwise investments with their capital led to this mess.

    Liberals like to ignore the fact that President Obama, in his days as a "civil rights lawyer", was part of the problem. Agitating so that banks would make riskier and riskier loans–sub-prime loans. The IDEA is the problem. And both Republicans and Democrats were complicit in this push for home ownership at all costs.

    I’ve worked in several, small community banks, and the regulations are quite explicit. Make loans in low-income areas, otherwise don’t bother applying for new branches, and when your audit time comes, we’ll fine you for…ahem…whatever we want to fine you for. That’s a reality in community banking–not a media fabrication.

    Of course it didn’t end there. The loans were packaged and secured by Fannie and Freddie, with the IMPLIED guaranty of the federal government. Fannie and Freddie, of course whose balance sheets were allowed to be levered to about 30-40 times, to allow for the insatiable appetite for said loans. These securities were then sold to the banks, which were put into hundreds of billions of investment portfolios throughout the world and…well..we know the rest.

    We can keep pretending that that’s not an issue, that its right wing media or mainstream media propaganda, all we want. But until we recognize that this is where the problem started and this is where the rot is….no amount of executive salary caps will stop that.

  20. 20
    DougJ says:

    @Crematorium Bill

    So, DougJ, what exactly is Daley going to do with all that money?

    You do realize he’s a mayor, not a governor? I can see how you’d forget that, given how infrequently Illinois governors have been in the news recently.

  21. 21
    TenguPhule says:

    Welcome to politics.

    Fuck you, Mr. Up or Down votes.

    Here’s to the Conservative Half of the Supreme Court dropping like flies so that we can get enough liberal judges in that your head explodes.

  22. 22
    DougJ says:

    I’ve worked in several, small community banks, and the regulations are quite explicit. Make loans in low-income areas, otherwise don’t bother applying for new branches, and when your audit time comes, we’ll fine you for…ahem…whatever we want to fine you for. That’s a reality in community banking—not a media fabrication.

    Bullshit. I know plenty of people who work at small, community banks and they all say that’s not true.

    I doubt you’ve ever worked at a bank.

  23. 23
    TenguPhule says:

    Agitating so that banks would make riskier and riskier loans—sub-prime loans.

    JFCNTZYM.

    This just taking the art of lying to the level of Picasso.

    Sub-primes were thrust on the poor banks who were forced to make shitloads of high interest gains from them?

    Fuck it already, release the Obama Stormtroopers and wipe out the People Too Stupid to Live on the other side.

  24. 24
    TenguPhule says:

    I’ve worked in several, small community banks, and the regulations are quite explicit. Make loans in low-income areas, otherwise don’t bother applying for new branches, and when your audit time comes, we’ll fine you for…ahem…whatever we want to fine you for.

    And your little dog too!

    This troll needs to be thrown back till it ripens a little more.

  25. 25
    Zach says:

    @Samuel – I’m failing to see where anyone was forced to value the loans you were forced to make to poor people without verifying whether they had a job, assets, or income more than they were actually worth. Without the "well and we know the rest" part the situation wouldn’t be so dire, and that part was totally avoidable.

    And I personally know plenty of people who got loans who shouldn’t have who weren’t helping their bank make quota.

  26. 26
    TenguPhule says:

    $90 Billion to Labor, HHS, and Education
    $80 Billion to States
    $70 Billion to Transportation and HUD
    $20 Billion to Food Stamps
    $15 Billion to Interior and EPA
    $15 Billion to Commerce and Science

    All of which is fucking stimulus, BOB you dumbass.

    Do we need a fucking qualifying test for voting rights?

    All it needs is one question:

    "Is Spending Stimulus? Yes or No."

  27. 27
    Samuel says:

    @DougJ: Actually, I’ve helped start two of them.

    As a matter of fact, loans need to be coded to comply with Federal call reporting–so the Federal Reserve keeps track of a bank’s asset size, what type of loans they approve, etc. Part of the coding includes census tract data, so that it’s in compliance within your CRA-designated area. Your CRA designation expands as you grow, hopefully.

    That’s where banks got in trouble with redlining in the past. Prior to that there was no CRA designation and you could just block off locations that were risky or cared not operate in. For most bankers, not lending in certain areas was a business decision–no sense in employing capital when there’s the risk you won’t get it back. Basic financial decisions, really. But the government threw a monkey wrench into that with the CRA.

  28. 28
    TenguPhule says:

    Basic financial decisions, really.

    Which explains absolutely nothing about what actually caused the problems. Such as bank regulators sleeping on LIAR loans, derivatives and debt swapping and chopping up thousands of shitty loans to make them AAA grade.

  29. 29

    Here, I’ll help.

    “Yes, we do, we have our list, we’ve been talking to people. We did not put that out publicly because once you start putting it out publicly, you know, the newspapers, the media is going to be ripping it apart," Daley said.

    "It’s very controversial. Yes, we have ready projects from the Board of Education to the City Colleges to the Park District to the CTA and the city of Chicago. Oh yes. Us and New York decided not to do that. We thought we could go directly into the federal bureaucracies and the different departments," the mayor added.

    Later, Daley was asked why he wasn’t being more transparent.

    "Read some of your newspapers. Heh heh," he replied.

    This is why I support solid, transparent projects, like electrifying the railroads at $500,000 per mile, or $1.5 billion per transcontinental run.

  30. 30
    Samuel says:

    @Zach: Banks were generally over-cautious about those types of loans to comply with regulations. That pretty much changed in the 1990s with the advent of NINJa loans, 100% financing, 90% LTV loans. When the mortgage brokers got involved, the spigots came loose. They made loans to anyone and anything under any terms. That’s when the party really started.

  31. 31
    LaDonne says:

    McCains alternative is the right one. It has the stimulus without the pork. But we have little power and we have no one to blame but ourselves.-TexasSparkle

    There are some hardcore types out there that will never listen to reason.

  32. 32
    Leo says:

    Liberals like to ignore the fact that President Obama, in his days as a "civil rights lawyer", was part of the problem. Agitating so that banks would make riskier and riskier loans—sub-prime loans.

    Just thought I’d pull this out just to remind everyone that zombie lies cannot be killed . . . especially if the zombie has a slightly swarthy countenance.

  33. 33
    Samuel says:

    derivatives and debt swapping and chopping up thousands of shitty loans to make them AAA grade.

    The investment banks did that. I’m talking about commercial banks. Regulated by different agencies and bodies. There’s a difference.

    At least there was a difference anyway at the time.

  34. 34
    Ninerdave says:

    Liberals like to ignore the fact that President Obama, in his days as a "civil rights lawyer", was part of the problem. Agitating so that banks would make riskier and riskier loans—sub-prime loans. The IDEA is the problem. And both Republicans and Democrats were complicit in this push for home ownership at all costs.

    Gee where have I heard that before? Oh yeah NRO back in September

    The CRA empowers the FDIC and other banking regulators to punish those banks which do not lend to the poor and minorities at the level that Obama’s fellow community organizers would like. Among other things, mergers and acquisitions can be blocked if CRA inquisitors are not satisfied that their demands — which are political demands — have been met. There is a name for loans made to people who do not have the credit, assets, income, or down payment to qualify for a normal mortgage: subprime."

    I’ve worked in several, small community banks…

    No you haven’t. If you did you’d know the banks were giving money away to anyone and everyone, housing prices would never go down you see. This had nothing to do with IDEA or the CRA and everything to do with greed and shortsightedness

  35. 35
    Mnemosyne says:

    That pretty much changed in the 1990s with the advent of NINJa loans, 100% financing, 90% LTV loans. When the mortgage brokers got involved, the spigots came loose. They made loans to anyone and anything under any terms. That’s when the party really started.

    And that was the fault of poor people … how, again? Did they march on Washington and force the Republican Congress to pass those laws even though the Republicans fought against such fiscal irresponsibility with everything they had?

    Or, as usual, is the story that the banks and mortgage brokers thought they could exploit poor people indefinitely and it would never backfire on them? The credit card companies sure thought the gravy train would never end.

  36. 36
    DougJ says:

    But the government threw a monkey wrench into that with the CRA.

    Thirty years ago. I guess it was a time bomb, right?

    Just out of curiosity, which Democratic president do you blame for the subprime crisis?

  37. 37
    Samuel says:

    Think what you want. The government DOES have the authority to block mergers and other forms of expansion (applying for new branches is the real problem), not to mention the fines, like I noted earlier.

    Again, its easy to just ignore this about the CRA requirements–it doesn’t flow into the Republicans-are-the-only-cause-of-this-crisis narrative. But I also noted that both the Republicans and Democrats have a hand in this nonsense.

    If you did you’d know the banks were giving money away to anyone and everyone

    Never said they WEREN’T lending money to anyone and everyone. And housing prices, like all markets are susceptible to bubbles. No mortgage modifications or 4% government backed loans will stop that from ever happening and neither will artificially propping up home prices.

  38. 38
    wb says:

    Cheap money, plus the government insistence that banks make unwise investments with their capital led to this mess.

    You are aware, aren’t you, that no less than Helicopter Ben hisownself put an end to this nonsense some time ago?

    The loans were packaged and secured by Fannie and Freddie, with the IMPLIED guaranty of the federal government. Fannie and Freddie,

    Nope, I guess not.

  39. 39
    DougJ says:

    And housing prices, like all markets are susceptible to bubbles. No mortgage modifications or 4% government backed loans will stop that from ever happening and neither will artificially propping up home prices.

    Indeed, but that’s not what the bulk of the problem is.

    The amount tied up in subprime mortgages is about $400 billion or less. But the banks are on the hook for trillions in large part because the (unregulated) CDO market allowed them to spin a few hundred billion in mortgages into much more than that in securities backed (in some byzantine way) by the mortgages.

    And that’s what makes this a Category 5 economic crisis and not just a Category 3 one.

  40. 40
    Ninerdave says:

    @Samuel:

    The investment banks did that. I’m talking about commercial banks. Regulated by different agencies and bodies. There’s a difference.

    They’ve been one in the same since the repeal of Glass-Steagall in 1999.

  41. 41
    Samuel says:

    @DougJ: Like I said, both Democrats and Republicans have a hand in all this–but Democrats have the "let’s make sure everyone has a house" schtick down pat–it plays to their base of course. That doesn’t stop President Bush from getting blame either, who pushed the same theme in his compassionate conservatism.

    Clinton is more complicit than Carter is, to answer your question. Clinton pushed the easing of leverage requirements for Fannie and Freddie, at the behest of Rubin and friends. You can say that that’s when the air started to pump in….we’re seeing the results of that de-leveraging right now.

    Also, you can blame Phil Gramm all you want on GLB–but Clinton gladly signed it. That added to the growth of the financial supermarkets.

  42. 42
    DougJ says:

    Clinton is more complicit than Carter is, to answer your question. Clinton pushed the easing of leverage requirements for Fannie and Freddie, at the behest of Rubin and friends.

    What about Obama and LBJ? Why are you letting them off so easy?

  43. 43
    Samuel says:

    But the banks are on the hook for trillions in large part because the (unregulated) CDO market allowed them to spin a few hundred billion in mortgages into much more than that in securities backed (in some byzantine way) by the mortgages.

    And that’s what makes this a Category 5 economic crisis and not just a Category 3 one.

    I agree 100%–and thats the power of leverage. That’s also why AIG is so entangled in this crap. Imagine writing insurance on assets you can’t even value, in an industry where hundreds of billions are thrown around like Monoply money.

    And like you said, Geithner’s plan is really not a plan at all. It’s a plan to have a plan….sometime soon.

  44. 44
    Samuel says:

    @DougJ: I actually admire and respect LBJ…

  45. 45
    Ninerdave says:

    Also, you can blame Phil Gramm all you want on GLB—but Clinton gladly signed it. That added to the growth of the financial supermarkets.

    I don’t think anyone is arguing that the Dems haven’t had a hand in creating this crisis, but your NRO talking points are as bullshit now as they were in September.

    Essentially you’re telling me, that from 1977, when the CRA was passed until Bush II, that the CRA wasn’t working? Somehow that under Bush II all the sudden shit just blew up because poor were being helped into houses by the government.

    Bullshit. The CRA has nothing to do with the current crisis. In fact the CRA actually helps people save for a down payment for their house. In fact I’d argue that the CRA actually helps create responsible borrowers by the fact that they help people a save for their down payment.

    The housing bubble was created by greedy, over leveraged banks and greedy over leveraged consumers. Enabled by a whittling away of regulation.

  46. 46
    burnspbesq says:

    @Samuel:

    Fine. The government has authority. Name one documented case in which they exercised that authority in the way you suggest. Just one.

  47. 47
    Samuel says:

    Essentially you’re telling me, that from 1977, when the CRA was passed until Bush II, that the CRA wasn’t working?

    No–that’s not what I’m saying at all.

    The fallout of the CRA is a factor in the subprime mess. The subprime market was essentially created from the Clinton push for homeownership (helped by HUD Secs Cisneros/Cuomo), which continued into the Bush administration, coupled with the advent of these crap loan products. After the market crash in 2000, investors basically fled to real estate further inflating the bubble. And remember, it was Barney Frank who said mid-decade that Fannie and Freddy were fine.

  48. 48
    Samuel says:

    @burnspbesq: What are you referring to?

  49. 49
    DougJ says:

    Sam, you’re making some reasonable points here, but I have to ask: what does this have to do with the stimulus package, which is the subject of the post? What made you think it was a good idea to jump in with a mixture of NRO anti-CRA talking points and more reasonable stuff in a thread about the stimulus package, which doesn’t have anything to do with CRAs or subprime or anything like that?

  50. 50
    Samuel says:

    @DougJ: I think someone asked what, if anything, Democrats did that was so dumb during the Bush Administration that exacerbated this crisis. I just chimed in. My bad.

    Carry on…

  51. 51
    Ninerdave says:

    What made you think it was a good idea to jump with a mixture of NRO anti-CRA talking points and more reasonable stuff

    Yes I agree. You’re confusing me here. Either stick with the wingnut talking points, or with the reasonable stuff. My liberal brain can’t context switch like that. I can’t handle wingnut reality disconnect and reasonable argument in the same thread.

    Or maybe you’ve discovered the ultimate way to Troll….

  52. 52
    TheHatOnMyCat says:

    I doubt you’ve ever worked at a bank.

    Well, we might not have seen him. The cleaning crew generally comes in at night.

  53. 53
    Mnemosyne says:

    I think someone asked what, if anything, Democrats did that was so dumb during the Bush Administration that exacerbated this crisis. I just chimed in.

    Er, no. PaulB pointed out that the Democrats in Congress did not spend their 12 years out of power obstructing every piece of legislation that the Republicans came up with, which, in retrospect, would have been a really, really good idea considering the doozies that Republicans foisted on us. You’re the one who decided that meant that you had to insist that it was really the Democrats who caused all of the problems and the Republicans were, like, totally innocent!

    Democrats may have voted for the Gramm-Leach-Bliley Act but they didn’t write it. But, please, keep insisting that the people who actually wrote the law have no culpability for the consequences of that law and that if the Democrats were unable to prevent the law from passing, that means that the Democrats are fully responsible for what happened next, not the Republicans who actually wrote and championed the law. It’s much funnier that way.

  54. 54
    ChrisB says:

    @Ninerdave:

    The housing bubble was created by greedy, over leveraged banks and greedy over leveraged consumers. Enabled by a whittling away of regulation.

    And by stupid investors who bought the securitized loans, particularly the riskiest tranches.

  55. 55
    ChrisB says:

    To let them off the hook because they’re Republican or southern, or whatever the excuse is, is almost like some kind of racism.

    The soft bigotry of low expectations.

  56. 56
    PaulB says:

    I think someone asked what, if anything, Democrats did that was so dumb during the Bush Administration that exacerbated this crisis. I just chimed in.

    Nope. I just pointed out the silliness of your "welcome to politics" comment, particularly with its remarkably moronic attempt to pretend that the Democrats were equally stupid, equally obstructionist, and equally determined to make Bush fail during his eight-year administration. I challenged you to "point us to the equivalent obstructionism and sheer pigheaded stupidity of Democratic politicians that took place during the Bush administration."

    Naturally, you failed.

    My bad.

    Indeed.

  57. 57

    "a hard-hitting against Boehner"

    Funny, for some reason, I preferred the way it was originally.

  58. 58
    John S. says:

    If our troll Samuel was involved in banking, that would explain A LOT. A few thousand assholes like him would be enough to sink ANY financial system.

    Assholes who think that if they split a dollar and take $.95 while giving a person $.05, that they both are benefitting equally.

    Assholes who think that if a person goes along for a ride with a drunk driver, they are equally responsible for the damage the driver causes.

    I don’t know what causes people to become such assholes, I just know once they do that they vote Republican.

  59. 59
    Napoleon says:

    Did anyone see Lewis Black on the Daily Show last week where he runs a clip of Cantor saying something stupid then he says something like "He comes across as the manager of the a__hole store".

  60. 60

    I’ve worked in several, small community banks, and the regulations are quite explicit. Make loans in low-income areas, otherwise don’t bother applying for new branches, and when your audit time comes, we’ll fine you for…ahem…whatever we want to fine you for. That’s a reality in community banking—not a media fabrication.

    Then why are small community banks solid as a rock, while the non-bank investment houses that weren’t subject to those regulations need $700 billion of my money to keep from collapsing?

    Then why do those banks have lower rates of default and foreclosure on the mortgages in low-mod neighborhoods than the "mortgage companies" operating in the same neighborhoods, which weren’t subject to those regulations?

    Oh, right…because you don’t know what you’re talking about.

  61. 61
    ksmiami says:

    "And by stupid investors who bought the securitized loans, particularly the riskiest tranches."

    This – even I could tell from the beginning that securitized loans on cars and houses was NOT the way to build an economy. Not when you can buy corporate bonds from companies that actually have to show a balance sheet and stuff like that, but the ratings agencies and the banks are culpable here, not to mention Bush’s obsession with teh ownership society and cheap money.

    Do the Republicans have any shame at all? I mean Octopi don’t even reach their level of suck and to blame this on poor people, most who were unsophisticated and pushed into liar loans by mortgage brokers who had no skin in the game is completely disingenous and unfair.

    Americans are just going to have to accept a different quality of life and lower returns and education and healthcare are going to have to become affordable through deflation…

  62. 62

    When the mortgage brokers got involved, the spigots came loose. They made loans to anyone and anything under any terms.

    But as we can see by the giant, vacancy-strewn suburban subdivisions in places like LA Country, south Florida, and Las Vegas, that had nothing to do with low-mod neighborhoods or the CRA.

  63. 63
    Samuel says:

    sheer pigheaded stupidity of Democratic politicians that took place during the Bush administration."

    "This war is lost"–Harry Reid, April 2007

    If any politician represents pigheaded stupidity, it’s Harry Reid.

  64. 64

    Ah, so you ARE a Republican troll spewing talking points.

    As if it wasn’t clear enough already.

  65. 65
    Samuel says:

    Then why are small community banks solid as a rock, while the non-bank investment houses that weren’t subject to those regulations need $700 billion of my money to keep from collapsing?

    Then why do those banks have lower rates of default and foreclosure on the mortgages in low-mod neighborhoods than the "mortgage companies" operating in the same neighborhoods, which weren’t subject to those regulations?

    Not all community banks are solid—most of them, maybe, but not all. I’m not sure. But the banks that made CRE or residential loans is different from the investment banks looking for bailouts–you’re comparing apples and oranges. And for the most part, community banks tend to be more prudent with their capital–the FDIC, the OCC and OTS generally keep tighter reins on commercial banks than the SEC does on Wall Street.

    The investment banks provide correspondent banking services to other institutions (ie providing liquidity). But since they have these securities on their balance sheets, their ability to facilitiate liquidity into the system is hampered—which is why the TARP was developed (?)

    The mortgage companies you’re referring to are not banks–they originate and process residential mortgages to whoever they wanted to, and yes, its unregulated. But they didn’t keep the loans on their books, they sent them off to Fannie and Freddie, who packaged them up, cut them up and sold them to the investment banks. As the market grew, the government kept loosening restrictions on their capital, allowing them to take on even more debt. These mortgage companies now have trouble originating loans because their market had dried up—Fannie and Freddie were not buying their paper.

    But it’s not because they were unregulated that they went bad–it’s because they made bad loans. The securities that they sold were bad because the underlying assets (the mortgages) were bad. Add in all the leverage—and here we are.

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    Samuel says:

    But as we can see by the giant, vacancy-strewn suburban subdivisions in places like LA Country, south Florida, and Las Vegas, that had nothing to do with low-mod neighborhoods or the CRA.

    That’s more of the case now, yes. But that’s because the real estate market bubble had long already burst–so other areas are affected.

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    DougJ says:

    @Sam

    You just went from possibly reasonable right-winger to lonely, pathetic, Republican douchebag with one comment.

    Now, get the fuck out of here.

  68. 68
    Samuel says:

    @DougJ: Fine, then. But which comment are you referring to? I don’t think I said anything out of bounds?

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    But the banks that made CRE or residential loans is different from the investment banks looking for bailouts—you’re comparing apples and oranges.

    No, Samuel, YOU’RE comparing apples to oranges. YOU’RE trying to conflate the lousy bets an irresponsible actions of the big investments banks with the loans made by community banks in compliance with the CRA. I’M just pointing out that your conflation makes no sense.

    The mortgage companies you’re referring to are not banks—they originate and process residential mortgages to whoever they wanted to, and yes, its unregulated.

    Right, they were unregulated, including by the CRA. It didn’t apply to them – and as we’ve seen, their lending was much more irresponsible, much more likely to lead to default, than loans made to comply with the CRA – which pretty definitively refutes the notion that the CRA was behind the irresponsible lending.

    But they didn’t keep the loans on their books, they sent them off to Fannie and Freddie, who packaged them up, cut them up and sold them to the investment banks.

    An activity which is forbidden by the CRA (as anyone who worked in a small community bank would know). You are not allowed to sell your CRA loans, or you lose your CRA credits for them. In other words, it is impossible for the CRA to have led anyone to make an irresponsible loan, then sell it on the secondary market to Freddie and Fannie.

    But it’s not because they were unregulated that they went bad—it’s because they made bad loans.

    Which they were able to do, and did to a shocking extent, despite the fact that there were utterly untouched by the CRA.

    CRA loans are safer and more affordable than loans made by non-banks in the same neighborhoods. A few years ago, the Big Giant Heads at CATO came out with a paper arguing for the abolition of the CRA, on the grounds that mortgage companies were flooding low-mod neighborhoods with so many groovy, innovative mortgage products that the plain vanilla loans of those boring, regulated banks were no longer necessary.

    The CRA played no role whatsoever in the mortgage meltdown. Quite the opposite, by squeezing some of the irresponsible, non-bank lenders out of that market, they replaces lousy lending with responsible lending. But, as everybody with sense realizes, mortgage lending in low-mod income neighborhoods is such a puny segment of the market that there is simply no way for it to have a significant effect on the larger industry.

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    But it’s not because they were unregulated that they went bad—it’s because they made bad loans.

    When there are no regulations in place to prevent liar loans, exploding ARM loans, and all sorts of other irresponsible practices, it doesn’t take too much imagination to figure out the connection between a lack of regulation and making irresponsible loans.

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    ksmiami says:

    Hey Doug – at least Samuel is an earnest troll… but he is still wrong. The CRA has nothing to do with the current crisis – the repeal of the glass steagal act is way more problematic.

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    former capitalist says:

    In my first life, I worked in a community bank. As much as I hate to admit it, what Samuel says is at least partially correct. The CRA does have rather tight restrictions regarding loans to low-income areas, and there are penalties if a bank fails to neet those guidelines (however vague and interpretive they might be). On the other hand, it is a fact that regulators have "hot topics" that are more closely examined, which are usually the result of external factors (the absolutely onerous, ridiculous, and impossible to comply with, Patriotic Act Provisions) or the administration in charge. The Bush Administration did absolutely nothing to enforce the provisions in the CRA, and a case could be made, I think, that the Bush Administration tried to kill it. Therefore, in that respect, although I agree with Samuel’s premise vis a vis the CRA, I disasgree with his contention that CRA was a major factor in causing the housing bubble.

    Frankly, regulators should have spent the last eight years focusing on asset quality and less time on i’s dotted/t’s slashed issues. The whole regulatory system is fucked up. There are in fact separate sets of regulators for compliance issues and asset quality. Compliance regulation is now considered a career track for FDIC, the FED and OCC. Ridiculous. While the concept of compliance regulation is, in theory, a good one, in practice it’s turned into a monster that has driven banks to concentrate a huge amount of time and money towards issues that have relatively low value as a driver of asset quality and return to stockholders. Again, asset quality should always be the major focus of regulators. Samuel, presumptously, I would gather you agree. If you don’t, then you must have had a lot more friendly regulators than those that I dealt with.

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    Wow, Napoleon, was that ad supposed to be anti-union? Because the takeaways I got were "AFSCME members do a lot of important stuff" and "Eric Cantor is a condescending prick towards working people."

  75. 75

    former capitalist,

    No one is questioning that the CRA has tight regulations. That’s completely uncontroversial. Of course it does; that’s what it’s for.

    It’s Samuel’s contention that it had something to do with the mortgage crisis that’s the problem here. He’s trying to claim that the CRA, with its allegedly loose lending standards, was a significant part of the financial crisis, that those lending standards are what caused the huge defaults on the MBSs, and that just is not possible.

    You can’t sell CRA loans onto the secondary market, because you lose your credits. The banks have to hold them. Banks are going to make irresponsible loans that they have to keep on their books?

    CRA loans have tighter, not looser, lending standards than the unregulated mortgage companies that the banks competed with in low-mod neighborhoods. They didn’t make lending more risky overall; they made it less risky.

    Lending in low-mod neighborhoods is far too small an enterprise to have any discernible effect on the financial sector overall.

  76. 76
    gwangung says:

    Lending in low-mod neighborhoods is far too small an enterprise to have any discernible effect on the financial sector overall.

    Well, duh.

    It doesn’t pass the sniff test–that the bulk of American real estate value is in low and middle income housing areas.

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    PaulB says:

    That’s more of the case now, yes

    That was the case all along, idiot.

  78. 78
    PaulB says:

    If any politician represents pigheaded stupidity, it’s Harry Reid.

    ROFLMAO…. *That* was the best you could do? Oh, you poor thing….

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