Bloomberg Lies Through His Teeth; Says Banks Did Not Cause Mortgage Crisis

ORLY?

Michael R BloombergMayor Bloomberg reanimated the dead “banks didn’t cause the mortgage crisis” horse and beat it to death again:

“I hear your complaints,” Bloomberg said. “Some of them are totally unfounded. It was not the banks that created the mortgage crisis. It was, plain and simple, Congress, who forced everybody to go and give mortgages to people who were on the cusp. Now, I’m not so sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn’t have had them without that.

“But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it’s one target, it’s easy to blame them and Congress certainly isn’t going to blame themselves.”

As Think Progress points out, that’s a load of crap:

While the government sponsored mortgage giants were certainly not blameless, Federal Reserve data shows conclusively that it was private mortgage brokers, not Fannie and Freddie, who drove the subprime housing bubble:

– More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

– Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

Got it? Not only was it not the banks fault, but it wasn’t even necessarily bad policy!

Oh, and also, the Occupy Wall Street protestors should quit complaining and try to change the world and make it better. You know, because the protestors are out there braving police brutality and sleeping on the sidewalk because it’s “fun” and “entertaining.”

Mayor Bloomberg? Your pants are on fire.

[via Think Progress]

[cross-posted at Angry Black Lady Chronicles]

71 replies
  1. 1
    Sly says:

    You shouldn’t expect much else from a man who made a fortune catering to social parasites, especially considering that such a history makes one well suited for the NYC mayoralty.

    Upton Sinclair… difficult to get a man to understand something if his job depends on not understanding it… etc.

  2. 2
    MeDrewNotYou says:

    Now I’m not saying pre-Civil Rights Movement was peachy, but how many housing crashes happened with redlining? Huh? What do you say to that libtards!
    /Pat Buchanan wingnut

    Seriously, though, this is a zombie lie that works two ways. Racists get to blame blacks and hispanics while the run-of-the-mill assholes can just blame poor people. The sad thing is this is a semi-respectable lie. Fortunately OWS and anger at the TBTF banks makes the position look ridiculous.

  3. 3
    Mnemosyne says:

    Let’s face it, pretty much the only chance Republicans have of winning in 2012 is convincing white people that the financial collapse happened not because of the banksters, but because of Those People. If middle-class white people finally wake up to the fact that most of their problems are due to the machinations of super-rich white folks and not poor black and brown folks, the Republicans are totally fucked. So I’m not surprised they put Bloomberg back up on that pony to try and sell it.

  4. 4
    Loneoak says:

    Shorter Bloomberg: It’s the government’s fault for listening to our highly paid, well-connected lobbyists and relenting under a decade of intense efforts on our part to rig the system!

  5. 5
    Yevgraf says:

    Shorter dogwhistle from Bloomberg: “loans went to negroes and latinos, and they blew it all up”.

    I’m really warming to the idea of sending crates of cool looking legal semiautomatic rifles to OWS protestors (along with maps to various bankster hangouts and homes, media personality homes, and the places where Bloomberg likes to go to raise money).

    Didn’t SCOTUS say something about being allowed a gun in every hand?

  6. 6
    Svensker says:

    Bad loans were partly behind the bubble, but the huge crash was because the banks and financial institutions leveraged that debt up the wazoo with no accountability. So when the bubble popped, all the leverage turned out to be based on poo.

    Screw Bloomberg.

  7. 7
    kindness says:

    I think Bloomberg isn’t THAT stupid so I have to assume he thinks Americans are that stupid.

    I used to think Bloomberg had more lines of communication out there & wasn’t so insulated as most the rich can be. I must be wrong. And while I can admit to being wrong, on this issue it isn’t me that’s stupid.

  8. 8
    vtr says:

    Am I the only one who never heard a single complaint before a year or so ago about bankers being forced to sell mortgages to people who couldn’t them?

  9. 9
    scav says:

    Yeah, that geographic pattern of there only being foreclosures in low- and medium-rent areas just jumps out at one, doesn’t it?

    I really can just see the Bushie Congress standing over the cowering Bankers threatening “Ve Have Vays to Make You Lend. You Vill Lend. You Vill Lend to Those On Ze Cusp!”

  10. 10
    Loneoak says:

    @vtr:

    No, you’re not the only person to not hear this previously, because a) it’s entirely false, and b) it’s fabricated to take the blame away from the banksters.

  11. 11
    Rommie says:

    The picture goes perfectly with the caption. “Yeah, I know it’s BS, but I’m getting well-paid to say it, unlike you $smirk$”

  12. 12
    Duane says:

    oh no the banks forced to sell to poor people has been the zombie lie since at least 08…because i heard it all the time going door to door in my campaign for the state legislature… people will believe anything.

    (ETA) well…if sold by the right people, with the right suit……

  13. 13
    Ailuridae says:

    @Loneoak:

    But its even more incoherent than that. The CRA is the piece of legislation Bloomberg is trying to blame for the housing collapse but better than 5/6 of all sub prime loans were made by companies who weren’t covered by the CRA.

  14. 14
    Steve says:

    @vtr: Indeed you did not hear such a complaint. The vast majority of banks subject to the Community Reinvestment Act reported that they were quite happy with their CRA portfolio. And more to the point, over 80% of subprime loans were made by mortgage lenders and other entities not subject to the CRA at all.

  15. 15
    Calouste says:

    Uhm, it’s Bloomberg. The man is so much part of the financial sector that, as mayor of New York, he had to choose between blaming the financial sector and blaming the Yankees, he’d blame the Yankees.

  16. 16
    Warren Terra says:

    Thing is, they get this line pounded into them so many times a day – not just from the screaming wingers of drive-time radio but from theoretically serious organs like The Wall Street Journal and from think-tankers and members of the party leadership – they may well believe them, even smart, supposedly well-informed people like Bloomberg. They may not be consciously lying.

  17. 17
    Robert Waldmann says:

    Bloomberg owns a news mostly business news outfit. I can tell why we are so messed up if that’s where business people get their info.

    He is right that banks weren’t the worst offenders. However, this proves that his claim about Congress and the GSEs are false. The craziest lenders were non bank mortgage companies like Countrywide which were not subject to the community reinvestment act.

    Fannie and Freddie don’t make loans. They buy mortgages from banks. “Sub prime” originally meant a mortgage that didn’t meet their standards (which they lowered as their market share shrank in the naughties).

    Bloomberg is both dishonest and ignorant. He must know by now that the CRA line is bogus. But he also made false claims which did not advance his argument.

  18. 18
    Baron Jrod of Keeblershire says:

    @vtr: I’ve been hearing that since immediately after the big crash.

    The idea is that the Community Reinvestment Act, which was passed in 1977, was the root cause of the whole financial calamity. Of course, there’s nothing in the act that requires lending to anyone with bad credit, only that people can’t be disqualified for being in the wrong neighborhood.

    How an act that’s been in effect for 30 years suddenly started causing trouble is left as an exercise for the wingnut.

  19. 19
    Mnemosyne says:

    @vtr:

    Am I the only one who never heard a single complaint before a year or so ago about bankers being forced to sell mortgages to people who couldn’t them?

    Blaming Freddie and Fannie was all the rage when everything first collapsed in 2007/2008. I’m not surprised it’s making a comeback.

  20. 20
    cleek says:

    this is, of course, a standard wingnut meme.

    the fault rests with the government that relaxed regulations and the people who took out loans they couldn’t afford!

    it does not rest with banks who relaxed their lending standards because they discovered they could make and then sell bad loans to loan processing companies who could turn those bad loans into a thick pink slurry, which could be injected into CDO-shaped molds, baked into a tasty loaf, and then sold to ravenous investment banks as a fat-free substitute for real assets. and when it turned out that fat-free asset substitute was full of dioxin and escolar squeezins, it was still the government’s fault for making it legal for the banks and investment banks to do what they did.

    responsibility: it’s what the other team never has.

  21. 21
    Maude says:

    This has been the rightwing song for at least 6 months.
    Don’t blame Wall Street. Poor little innocent lambs, how dare anyone be mean to them.
    Oh, and thank you Bill Clinton for your support of those whose pain you felt and how you protected them from the wolves.

  22. 22
    Baron Jrod of Keeblershire says:

    @Duane:

    well…if sold by the right people, with the right suit……

    and with the right skin tone…

  23. 23
    Villago Delenda Est says:

    Oh, Mayor Bloomberg? Your tumbrel ride is waiting for you curbside!

  24. 24
    Yevgraf says:

    @Duane:

    oh no the banks forced to sell to poor people has been the zombie lie since at least 08…because i heard it all the time going door to door in my campaign for the state legislature… people will believe anything.

    A steady diet of zombie lies from talk radio and Fox News will do that. You can have verifiable empirical fact available, and it won’t matter – they won’t believe people they actually know, because Rush Limbaugh, Fred Barnes and Chuckles Krauthammer told them otherwise – and they’re substantial white guys who have nice things and speak authoritatively, and would thus never lie.

    I had a really distressing conversation this week with someone I’ve known for 20 years, and who has known my family for even longer. I’d just come back from seeing the polar bears on the Hudson Bay, at Churchill. The guy goes into the litany of “There’s more polar bears than ever, its cold, the ice cap is expanding and (yes, he really said it) Al Gore is fat. I explained that the guys in Churchill were kind of freaking out, as the bay is melting earlier and freezing about 3 weeks later in recent years, which he first denied is happening. He then brilliantly segued into the notion that the seas are hardening more elsewhere, thereby making the polar bears safe. Of course, in his brilliant conservatism, he refused to accept that there might be a problem with bringing the seal population (their food) to those areas that are properly freezing.

    I guess it is the fault of those lazy fucking polar bears and primitive fucking lazy Inuit if they can’t find seals. God forbid that some dimwit fucking Textard might have to replace his incandescent bulbs, turn up the thermostat on his AC or drive something more fuel efficient than a Hummer on his commute from his Plano McMansion to Dallas.

    I do have one little dream – that after the collapse, I live long enough to guffaw at some plastic-tittied exurban McMansion hausfrau as she sobbingly grills Foofy the well groomed Yorkie on a curtain rod (as she’s wearing the curtains for warmth) over the shattered and burning remains of her Ethan Allen dining room set. My dying words should be along the lines of “you sure showed them libruls by voting conservative, just the way your husband told you to”. It’ll be like Khan, my last breath a spit out curse….

  25. 25
  26. 26

    It wasn’t the fault of Congress when a bank approved me for a $350,000 mortgage, even though my wife and I only made a combined $70k. Foruntately, we aren’t that stupid and bought a house for less than half that. They really wanted us to buy a more expensive house ansd encouraged zero down.

  27. 27
    Baron Jrod of Keeblershire says:

    When talking to right-wingers, one thing becomes clear: with the exception of DemoKKKrap run governments, people with wealth and power are never, ever responsible for bad things happening. It’s simply impossible. Rather, problems are always the fault of whoever dwells at the bottom of society.

    This is how the disappearance of jobs in America is the fault of dirty Mexicans picking lettuce for $5 an hour, but never the fault of the owner paying $5 an hour, or the CEO who sends jobs by the tens of thousands to China. This is how the declining middle class is the fault of welfare queens sucking up every spare dollar, never mind that the numbers show very clearly that the money went to the top 0.1%.

    It’s the peasant mentality, and it runs rampant in America.

  28. 28
    Rafer Janders says:

    @Warren Terra:

    Sadly, this is the case. I know many people in the financial sector, very smart, very well-educated people, who should know better but who believe this nonsense.

    Thing is, they don’t read blogs or other news sources, they read the financial press, the WSJ, and catch some TV news. So the zombie lies get planted and they never expose themselves to anything like real information.

  29. 29
    Jay C says:

    Yikes! I don’t know what happened at #24: I meant to copy-and-paste my comment from Steve Benen’s blog on Mayor Mike’s BS, and somehow the whole post got pasted up.

    FYWP.

    THIS is the actual comment:

    Well, it’s no surprise that Michael Bloomberg would spout the stale “minority-loans-caused-the-meltdown” crapola line: he is, first and foremost, a creature of Wall Street (he made his billions off of providing financial data), and, just as importantly, as Mayor of New York, street-junkie-addiction-level dependent on “Wall Street” money as one of main revenue sources for the (very expensive) City he administers.

    It has been a truism for decades that NYC’s budget deficit fluctuates in direct ratio to the levels of Wall Street Bonus money handed out every year: and, since most other revenue-producing industries have fled the region, or been forced away (and nobody has made much effort to replace them), it has made The Big Apple into something of a company town. Though with the FIRE sector in general as the “company”.

  30. 30
    Mnemosyne says:

    @Spencer Neal:

    Well, at least you’re not even trying to pretend to be anything other than a right-wing troll anymore. If you’re not, I’m not sure why you felt so compelled to protect the banksters from their own bad actions that you had to drag a completely unrelated anti-Obama story into the thread like a cat dragging a headless mouse onto its sleeping owner’s pillow.

  31. 31
    Steve M. says:

    Blame Gretchen Morgenson of The New York Times. She’s the one peddling this line to the non-wingnut population.

  32. 32
    Yevgraf says:

    Fannie and Freddie don’t make loans. They buy mortgages from banks. “Sub prime” originally meant a mortgage that didn’t meet their standards (which they lowered as their market share shrank in the naughties).

    Its worse than that – Fannie and Freddie bought up the mortgages and had clear standards. Unfortunately, all those nice local melanin-deprived pudgy guys in Men’s Wearhouse suits created little bitty loan brokerages, and built in fees. Tehy set up operations where you ate what you killed, and if you didn’t kill, you didn’t eat. They, in turn had cozy relationships with underwriters and appraisers who understood how to grease the wheels and to keep the kill rate up – and in the end, what did it all matter? It wasn’t like the originator was going to keep any of the risk, so the broker could fill out the paperwork as if done correctly, put 200 page reams in front of borrowers while gloating about how the house payment is “cheaper than rent”, and then dump the thing off for securitization while tucking away a profit.

  33. 33
    Gus says:

    I’m about ready to go full metal Jacobin on these motherfuckers.

  34. 34
    Woodrowfan says:

    so the CRA forced all those banks in Iceland, Ireland, Portugal, Spain, etc to issue bad mortgages? Huh. Didn’t know a US law could do that.

  35. 35
    Felonious Monk says:

    @Yevgraf: Touching dream you have there, hold on to it. For myself, I dream of not dying in a concentration camp, but yours clearly is the more beautiful.

  36. 36
    Social outcast says:

    But…but..Joe Scarborough wants Bloomberg to be our next great centrist truth-telling make-all-the-hard-choices president.

    These tough choices will include deciding between a flat tax for billionaires and cutting off enough medicare funding to cut down on the supply of elderly.

  37. 37
    Yevgraf says:

    @Woodrowfan:

    so the CRA forced all those banks in Iceland, Ireland, Portugal, Spain, etc to issue bad mortgages?

    Sure. It forced Anglo-Irish Bank to fully fund the purchases of crackhouses, cadillacs and t-bone steaks. Rush told me, so I know its true…

  38. 38
    OzoneR says:

    I was never really sure so many on the left don’t realize the “Stupid libruls let n*gg*rs and immigrants buy houses and that caused the economy to tank” bullshit is widespread in this country. Hell, I’ve heard that at Occupy Wall Street.

    The left bubble is what really bothers me about them.

  39. 39
    rikryah says:

    all I can say is…

    muthafucka please

  40. 40
    singfoom says:

    Test.

  41. 41
    singfoom says:

    Ok, FYWP. 4 comments eaten.

    Nowhere in the CRA does it state that “Lenders must not verify the income of borrowers.” The banks themselves chose to go with “Stated Income” loans to keep the Mortgage => Synthetic CDO gravy train going. Goldman Sachs and others had a voracious appetite for this toxic shit.

    Bloomberg indeed is lying.

  42. 42
    handy says:

    @OzoneR:

    The what?

  43. 43
    Judas Escargot says:

    @Ailuridae:

    CRA dates back to 1978.

    So apparently Jimmy Carter and Barney Frank are evil masterminds, able to crash the economy on purpose as part of a 30-year plan to install a Kenyan Soshulist into the White House.

  44. 44
    batgirl says:

    @Svensker:

    Bad loans were partly behind the bubble, but the huge crash was because the banks and financial institutions leveraged that debt up the wazoo with no accountability.

    And the mortgage brokers and banks actively pursued even bad loans because Wall Street thought they found a way to make lots of money — buy up mortgage loans, dice them up, put the monster together and resell them. Because of this, the originators of mortgage loans didn’t care at all if they made good loans because the money to be made wasn’t in the paltry interest payments but in selling said mortgages to Wall Street.

    This bubble didn’t happen because Washington DC pushed home ownership. It happened because Wall Street came up with a newfangled way to make more money. It was just their luck that it converged with policy goals.

  45. 45
    SenyorDave says:

    Its bullshit and Bloomberg knows it. He’s just peddling this crap because he is ultimately in bed with the bankers. What makes it particularly odious is that the CRA thing is a right-wing dog whistle.

    Bloomberg is too smart not to know exactly what sort of shit he’s peddling. In my book he’s as bad as any of the Republicans when he says this sort of bullshit.

  46. 46
    Yevgraf says:

    He’s a shonda…

  47. 47
    Lurking Canadian says:

    Barney Frank is clearly a supervillain on the level of Lex Luthor or Dr. Doom. Only a mind-control ray could explain the vast destructive power attributed to the CRA.

  48. 48
    Bloix says:

    “People on the cusp” – what a charming new way to say n—.

  49. 49
    KG says:

    the housing bubble was the perfect shit storm…

    Relaxed (or non-existent) underwriting requirements? Check

    Anyone claiming to be a “mortgage broker” (license not necessarily required) getting a warehouse lending line of credit? Check

    Said mortgage brokers making a shitton of bad loans? Check

    Said mortgage brokers fabricating loan info? Check

    Everyone continually driving prices up, up up? Check

    Subprime and ARM loans intended for short term investment being used for primary purchases? Check

    No one exercising their fiduciary duties to buyers and telling them what the terms of the loans actually were? Check

    And that doesn’t even get us to the mess that was the Credit Default Swaps…

  50. 50
    daveNYC says:

    Krugman already ripped him for it too.

  51. 51
    singfoom says:

    @KG: Well, to be fair. The Credit Default Swaps, and particularly the Synthetic Collateralized Debt Obligation was the hungry engine ASKING for bad loans. The incentive to lower standards came from the giant amount of money Goldman Sachs and others were making by turning shit into gold.

  52. 52
    Mr Blifil says:

    Ummm…it’s worse than that, what he did. Be blaming Congress for “forcing” Fannie and Freddie to carry out their mandate and give out low cost loans to minorities he’s basically calling out the n****s. What a fucking putz.

  53. 53
    Villago Delenda Est says:

    @Lurking Canadian:

    It’s good for Barney Frank that he doesn’t reach the fantabulous heights of villany as Dick “Call me Darth” Cheney does.

  54. 54
    Villago Delenda Est says:

    @KG:

    Add in the outright fraud perpetrated by the MERS system, and you’ve got a tremendous pile of shit on your hands that will take literally decades to clean up.

    This is not pretty. A bunch of assholes in suits need to spend the rest of their lives in cells.

  55. 55
    PurpleGirl says:

    Yup, my mayor… “the Education Mayor”… He’d rather let people go, fire teachers and aides, firefighters, police than sign a transfer tax on trades. I’d prefer he stop building all those traffic plazas with chairs and tables than fire teachers aides.

  56. 56
    KG says:

    @Villago Delenda Est: yeah, I forgot about that one… I was lucky in that the litigation I was involved in didn’t drag in MERS, but I did research it just in case, and how’d anyone possibly think that a private recording system that the general public wouldn’t have access to wouldn’t end up being a shitshow is beyond me.

  57. 57
    KG says:

    @singfoom: I know the investment vehicles eventually became a driving force in the mess, but I wonder if they were the driving force at the beginning. My hunch is that they were created after someone on Wall Street realized they had a shitton of bad loans and figured out a way to bleed down some of the losses by making more money on “securities”. When they started making a double shitton of money off the securities, that probably drove the worse loans that followed the initial bad loans, but I could be way off on it.

  58. 58
    MikeBoyScout says:

    All you say may be true, but why must you hold Mayor Bloomberg to a standard of truthiness which was designed for the bottom dwellers (99%).

    In case you have failed to notice, Mayor Bloomberg is a superior individual (1%)and as such need not be bothered with actual details about who is really to blame.

    Let it suffice that all the Very Serious People and Galtian Overlords ALREADY KNOW that the Confidence Fairies demand that the bottom dwellers (99%) need to suffer and pay for what happened.
    Congress represents the bottom dwellers (99%), so they are clearly at fault. Also too, Barnie Frank is, well, you know, so there!

  59. 59
    mrtmbrnmn says:

    An important thing to remember: Bloomberg is the $20 billion dwarf who bought off the city council to break/change(?)the law and authorize his re-election to a third (!) term, which he also bought. earth to bloomberg: stfu!!

  60. 60
    singfoom says:

    @KG: I’d have to go back and check, but I remember MIchael Lewis in “The Big Short” saying that the desire for loans, ANY loans from the investment banks was the driving force.

    It’s not an easy timeline to untangle though.

  61. 61
    SteveinSC says:

    I’m the first to kick ABL in her balls, but if I hear this canard, this vile fraud about the government forcing banks to give unqualified, low-income borrowers loans, I am going to blow a gasket. These assholes are trying that tired lie again. Our local stores are about to get their “Fresh Cut” christmas trees. Nothing could put me in the “Christmas” spirit more than bankers, and especially investment bankers, festooning lamp posts with red and green ropes around their necks.

  62. 62
    Steeplejack says:

    @Steve M.:

    That disappoints me. Gretchen is usually on the “good” side.

    We all have our blind spots, I guess.

  63. 63
    BobS says:

    @Steve M.: @Yevgraf: Also, as that review of Morgenstern’s book notes, the default rate of Fannie and Freddie purchases and guarantees was only 20-25% that of the private financial firms. It would appear her and Bloomberg share a similar agenda.

  64. 64

    […] Republican™ Michael Bloomberg would like to remind us all that it was gubmint, not those poor banks, that caused the 2008 financial crisis. That […]

  65. 65
    jeoshabadoo says:

    So a billionaire former investment banker lies about bankers being responsible?

    I’m shocked, shocked I say.

    The guy is a billionaire republican, that is basically all you need to know. If you really want to go further Bobo and other assholes started calling him their “centrist” champion so you should realize that this guy is terrible.

  66. 66
    joeshabadoo says:

    So a billionaire former investment banker lies about bankers being responsible?

    I’m shocked, shocked I say.

    The guy is a billionaire republican, that is basically all you need to know. If you really want to go further Bobo and other assholes started calling him their “centrist” champion so you should realize that this guy is terrible.

  67. 67
    Jeff says:

    Bloomberg is wrong that the banks are not at fault; however, you are also wrong about Congress’ culpability.

    Congress authorized, no mandated, that lone be made to people who couldn’t pay the money back. In return for this absurd mandate, Congress guaranteed the loans of private lenders.

    This created a moral hazard (google it) which gave huge incentives to banks to make questionable loans.

    While your numbers show that most of these loans were originated by private lenders, they leave out the important role Congress played in mandating that the banks make those very loans.

    Congress is the most guilty party in this mess. The banks are also culpable.

  68. 68
    Paula says:

    And, don’t forget that SEC Cox permitted public investment banks to greatly increase leverage.

  69. 69
    scav says:

    @Jeff: Ah yes, the epic Federal Mandate for No-Doc Stated-Income loans, loans made and being defaulted on by the full spectrum of economic classes. Because the one thing Fed regulations always lead to is less paperwork. you funny.

  70. 70
    MacKenna says:

    Does anyone else think Bloomberg in that photo looks startingly like The Grinch?

  71. 71
    Luther Brixton says:

    I thought the financial collapse was due primarily to ACORN and the Black Panthers. Oh, and Van Jones And, what the hell, Van McCoy & “The Hustle”. Any other irrelevant, dark-skinned, scapegoats?

    Stay classy, Bloomie!

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