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Thread: 35 Questions Mitt Romney Must Answer About Bain Capital Before The Issue Can Go Away

  1. #41
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    Quote Originally Posted by Jungle Shift Jet View Post
    Sorry kid. Government Regulation - CRA, HUD, Cuomo, Clinton, Dodd, Frank etc. forcing lenders to make billions in loser loans to people who wouldnt have gotten them otherwise or else be accused of redlining, fined and not allowed to do business unfettered - that caused the problem.
    No.

    http://en.wikipedia.org/wiki/2008_financial_crisis

    Intense competition between mortgage lenders for revenue and market share, and the limited supply of creditworthy borrowers, caused mortgage lenders to relax underwriting standards and originate riskier mortgages to less creditworthy borrowers.[6] Prior to 2003, when the mortgage securitization market was dominated by regulated and relatively conservative Government Sponsored Enterprises, GSEs policed mortgage originators and maintained relatively high underwriting standards. However, as market power shifted from securitizers to originators and as intense competition from private securitizers undermined GSE power, mortgage standards declined and risky loans proliferated.[6] The worst loans were originated in 2004–2007, the years of the most intense competition between securitizers and the lowest market share for the GSEs.


    U.S. subprime lending expanded dramatically 2004–2006
    As well as easy credit conditions, there is evidence that competitive pressures contributed to an increase in the amount of subprime lending during the years preceding the crisis. Major U.S. investment banks and government sponsored enterprises like Fannie Mae played an important role in the expansion of lending, with GSEs eventually relaxing their standards to try to catch up with the private banks.[35][36]
    Subprime mortgages remained below 10% of all mortgage originations until 2004, when they spiked to nearly 20% and remained there through the 2005–2006 peak of the United States housing bubble.[37]
    Some long-time critics of government and the GSEs, like American Enterprise Institute fellow Peter J. Wallison,[38] claim that the roots of the crisis can be traced directly to risky lending by government sponsored entities Fannie Mae and Freddie Mac. Although Wallison's claims have received widespread attention in the media and by policy makers, the majority report of the Financial Crisis Inquiry Commission, several studies by Federal Reserve economists, and the work of independent scholars suggest that Wallison's claims are not supported by data.[6] In fact, the GSEs loans performed far better than loans securitized by private investment banks, and GSE loans performed better than some loans originated by institutions that held loans in their own portfolios.[6]
    Wallison has been widely criticized for attempting to politicize the investigation of the Financial Crisis Inquiry Commission, and his critics include fellow Republican Commissioners.[39] Morgenson and Rosner also highlight the role of the GSEs in non-prime lending.[40] Others agree[41][42] and disagree.[43][44]
    On September 30, 1999, The New York Times reported that the Clinton Administration pushed for more lending to low and moderate income borrowers, while the mortgage industry sought guarantees for sub-prime loans:
    Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers... In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s.[45]

    In the early and mid-2000s (decade), the Bush administration called numerous times[46] for investigation into the safety and soundness of the GSEs and their swelling portfolio of subprime mortgages. On September 10, 2003 the House Financial Services Committee held a hearing at the urging of the administration to assess safety and soundness issues and to review a recent report by the Office of Federal Housing Enterprise Oversight (OFHEO) that had uncovered accounting discrepancies within the two entities.[47] The hearings never resulted in new legislation or formal investigation of Fannie Mae and Freddie Mac, as many of the committee members refused to accept the report and instead rebuked OFHEO for their attempt at regulation.[48] Some believe this was an early warning to the systemic risk that the growing market in subprime mortgages posed to the U.S. financial system that went unheeded.[49]
    A 2000 United States Department of the Treasury study of lending trends for 305 cities from 1993 to 1998 showed that $467 billion of mortgage lending was made by Community Reinvestment Act (CRA)-covered lenders into low and mid level income (LMI) borrowers and neighborhoods, representing 10% of all U.S. mortgage lending during the period. The majority of these were prime loans. Sub-prime loans made by CRA-covered institutions constituted a 3% market share of LMI loans in 1998,[50] but in the run-up to the crisis, fully 25% of all sub-prime lending occurred at CRA-covered institutions and another 25% of sub-prime loans had some connection with CRA.[51]
    An analysis by the Federal Reserve Bank of Dallas in 2009, however, concluded unequivocally that the CRA was not responsible for the mortgage loan crisis, pointing out that CRA rules have been in place since 1995 whereas the poor lending emerged only a decade later.[52] Furthermore, most sub-prime loans were not made to the LMI borrowers targeted by the CRA, especially in the years 2005–2006 leading up to the crisis. Nor did it find any evidence that lending under the CRA rules increased delinquency rates or that the CRA indirectly influenced independent mortgage lenders to ramp up sub-prime lending.
    Economist Paul Krugman argued in January 2010 that the simultaneous growth of the residential and commercial real estate pricing bubbles undermines the case made by those who argue that Fannie Mae, Freddie Mac, CRA or predatory lending were primary causes of the crisis. In other words, bubbles in both markets developed even though only the residential market was affected by these potential causes.[53] Others have pointed out that there were not enough of these loans made to cause a crisis of this magnitude. In an article in Portfolio Magazine, Michael Lewis spoke with one trader who noted that "There weren’t enough Americans with [bad] credit taking out [bad loans] to satisfy investors’ appetite for the end product." Essentially, investment banks and hedge funds used financial innovation to enable large wagers to be made, far beyond the actual value of the underlying mortgage loans, using derivatives called credit default swaps, collateralized debt obligations and synthetic CDOs.[54]
    As of March 2011 the FDIC has had to pay out $9 billion to cover losses on bad loans at 165 failed financial institutions.[55]

  2. #42
    Quote Originally Posted by SafetyBlitz View Post
    From your own post:

    Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers... In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s.[45]

    In the early and mid-2000s (decade), the Bush administration called numerous times[46] for investigation into the safety and soundness of the GSEs and their swelling portfolio of subprime mortgages. On September 10, 2003 the House Financial Services Committee held a hearing at the urging of the administration to assess safety and soundness issues and to review a recent report by the Office of Federal Housing Enterprise Oversight (OFHEO) that had uncovered accounting discrepancies within the two entities.[47] The hearings never resulted in new legislation or formal investigation of Fannie Mae and Freddie Mac, as many of the committee members refused to accept the report and instead rebuked OFHEO for their attempt at regulation.[48] Some believe this was an early warning to the systemic risk that the growing market in subprime mortgages posed to the U.S. financial system that went unheeded.



    The reality is that the CRA got the ball rolling in the mid 90's. Wall Street in their attempt to mitigate the risks from the CRA's mandated created a product that packaged those loans in to CMO's and Credit Risk Derivitives and got them off the books. Once they created those products out of necessity due to the Government mandate to accept sub prime borrowers they realized how profitable that business could be and away we go.

    Plenty of blame to go around on this thing for sure. That said when the Bush administration raised the warning flag in testimony to Congress they were shouted down by the likes of Barney Frank and Chuckie Schumer.

  3. #43
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    Quote Originally Posted by chiefst2000 View Post
    From your own post:

    Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers... In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s.[45]

    In the early and mid-2000s (decade), the Bush administration called numerous times[46] for investigation into the safety and soundness of the GSEs and their swelling portfolio of subprime mortgages. On September 10, 2003 the House Financial Services Committee held a hearing at the urging of the administration to assess safety and soundness issues and to review a recent report by the Office of Federal Housing Enterprise Oversight (OFHEO) that had uncovered accounting discrepancies within the two entities.[47] The hearings never resulted in new legislation or formal investigation of Fannie Mae and Freddie Mac, as many of the committee members refused to accept the report and instead rebuked OFHEO for their attempt at regulation.[48] Some believe this was an early warning to the systemic risk that the growing market in subprime mortgages posed to the U.S. financial system that went unheeded.



    The reality is that the CRA got the ball rolling in the mid 90's. Wall Street in their attempt to mitigate the risks from the CRA's mandated created a product that packaged those loans in to CMO's and Credit Risk Derivitives and got them off the books. Once they created those products out of necessity due to the Government mandate to accept sub prime borrowers they realized how profitable that business could be and away we go.

    Plenty of blame to go around on this thing for sure. That said when the Bush administration raised the warning flag in testimony to Congress they were shouted down by the likes of Barney Frank and Chuckie Schumer.
    You have to continue reading to the paragraph after the two you posted:

    An analysis by the Federal Reserve Bank of Dallas in 2009, however, concluded unequivocally that the CRA was not responsible for the mortgage loan crisis, pointing out that CRA rules have been in place since 1995 whereas the poor lending emerged only a decade later.[52] Furthermore, most sub-prime loans were not made to the LMI borrowers targeted by the CRA, especially in the years 2005–2006 leading up to the crisis. Nor did it find any evidence that lending under the CRA rules increased delinquency rates or that the CRA indirectly influenced independent mortgage lenders to ramp up sub-prime lending.

  4. #44
    Team Obama, 2008: Let's make this election about hope and change.

    Team Obama, 2012: Let's make this election a referendum on Mitt Romney's tax returns.

    Good luck microvetting Romney for the next 4 months, Mr. You Didn't Build That.

  5. #45
    Quote Originally Posted by SafetyBlitz View Post
    You have to continue reading to the paragraph after the two you posted:
    I disagree with that conclusion. Go back and re-read my explanation. It took a few years for Wall Street to figure out how to deal with the bad loans that the Government had been forcing them to make. Once they cam up with CMO's with default swaps they ran with it and away we went. In addition the drop in interest rates that occurred in 2001-2002 as a result of the recession caused by the recession of 2001 fueled the housing boom as well. There was a perfect storm of rising housing prices, virtually no barriers to credit for unworthy borrowers and wall street having created a product by which they could dump the risk on to investors.

    I'm just curious how any of this information jives with the Liberal talking point that says the recession was caused by Bush and his policies.

  6. #46
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    In my opinion, it's clear that the Obama campaign's focus on Bain Capital is a political tactic meant to rally the Occupy crowd. They are trying to leverage the political energy from the recent movement and strengthen their base.

    I do not believe it is working / will work on moderates and independents.

  7. #47
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    Quote Originally Posted by JetPotato View Post


    Romney could answer these and 100 more and the BS from the Obama camp will continue.

    It really is pathetic how desperate they are. This is the best they can do?


    Do you remember the political attacks on Gingrich and Governor Perry during the Republican Primaries?

    Do you think team Romney had nothing to do with them?

  8. #48
    Quote Originally Posted by Buster View Post
    Do you remember the political attacks on Gingrich and Governor Perry during the Republican Primaries?

    Do you think team Romney had nothing to do with them?
    He'll have a lot more ammo to come after Obama -- we'll just have to see if he chooses to do so . . .

  9. #49
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    Quote Originally Posted by chiefst2000 View Post
    I disagree with that conclusion. Go back and re-read my explanation. It took a few years for Wall Street to figure out how to deal with the bad loans that the Government had been forcing them to make. Once they cam up with CMO's with default swaps they ran with it and away we went. In addition the drop in interest rates that occurred in 2001-2002 as a result of the recession caused by the recession of 2001 fueled the housing boom as well. There was a perfect storm of rising housing prices, virtually no barriers to credit for unworthy borrowers and wall street having created a product by which they could dump the risk on to investors.
    I mean, you're discounting the first paragraph too. When GSE's had the a large share of the market, their conservative nature was a regulating force on the market - a benchmark so to speak.

    The mortgage industry then became increasingly privatized and riskier bets with higher short term rewards became the only way to compete.

    Furthermore, banks in this country were completely in their legal rights to lend 40 dollars for every 1 dollar they had in reserve, which is a ridiculous failure of financial regulation in this country.

    Quote Originally Posted by chiefst2000 View Post
    I'm just curious how any of this information jives with the Liberal talking point that says the recession was caused by Bush and his policies.
    It's a talking point to blame Bush just as it's talking point to blame fannie mae and freddie mac. 30 years of financial deregulation of the barriers we setup to prevent another a Great Depression was the culprit. And that deregulation came from both D's and R's. The problem is, R's still support that deregulation today.

  10. #50
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    Quote Originally Posted by Buster View Post
    Do you remember the political attacks on Gingrich and Governor Perry during the Republican Primaries?

    Do you think team Romney had nothing to do with them?
    This has what to do with the topic?


  11. #51
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    Quote Originally Posted by Warfish View Post
    By the way, another good retort from Romney on this is:

    "Hey my liberal friends, you put ALOT of faith in our Government. Well, our Government, int he form of the IRS, has seen all my tax returns, and I've not been had any problems. Are you, my liberal friends, saying the IRS and teh Federal Govt. opinion on my taxes isn;t god enough for you?"
    Not really: its not that he cheated, its that he took advantage of the system and is a mean baby-eating, horse-drugging 1%er who will economically rape the poor. That's much harder to defend against.

  12. #52
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    Quote Originally Posted by SafetyBlitz View Post
    I mean, you're discounting the first paragraph too. When GSE's had the a large share of the market, their conservative nature was a regulating force on the market - a benchmark so to speak.

    The mortgage industry then became increasingly privatized and riskier bets with higher short term rewards became the only way to compete.

    Furthermore, banks in this country were completely in their legal rights to lend 40 dollars for every 1 dollar they had in reserve, which is a ridiculous failure of financial regulation in this country.



    It's a talking point to blame Bush just as it's talking point to blame fannie mae and freddie mac. 30 years of financial deregulation of the barriers we setup to prevent another a Great Depression was the culprit. And that deregulation came from both D's and R's. The problem is, R's still support that deregulation today.
    How did deregulation "specificly" affect the crisis, of course no lib can ever tell you that. They just like to repeat "Glass-Steagall" because it makes them feel smart, maybe they rhyme it with "Steven Seagal".

    Of the firms that collapsed, most were strictly Investment Banks or Commerical Banks, not diversified. Truth be told without Glass-Steagall the broken pieces of Bear, Lehman, etc would never have been salvaged so quickly. Other countries never had GS or got rid of their version and seem to be managing OK or have problems unrelated to GS. So many Americans would not have access to financial services and instruments previously reserved for the "1%" as well.

    Again, when firms are forced to make loser bets by (D) the recurring pattern is that losses will occur and be socialized (the taxpayer picks up the tab one way or another)

  13. #53
    Quote Originally Posted by Jungle Shift Jet View Post
    How did deregulation "specificly" affect the crisis, of course no lib can ever tell you that. They just like to repeat "Glass-Steagall" because it makes them feel smart, maybe they rhyme it with "Steven Seagal".

    Of the firms that collapsed, most were strictly Investment Banks or Commerical Banks, not diversified. Truth be told without Glass-Steagall the broken pieces of Bear, Lehman, etc would never have been salvaged so quickly. Other countries never had GS or got rid of their version and seem to be managing OK or have problems unrelated to GS. So many Americans would not have access to financial services and instruments previously reserved for the "1%" as well.

    Again, when firms are forced to make loser bets by (D) the recurring pattern is that losses will occur and be socialized (the taxpayer picks up the tab one way or another)
    You nailed it. Liberals love to point to deregulation but the problem is they can't point to what regulation could have prevented the crisis.

  14. #54
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    Quote Originally Posted by Jungle Shift Jet View Post
    How did deregulation "specificly" affect the crisis, of course no lib can ever tell you that. They just like to repeat "Glass-Steagall" because it makes them feel smart, maybe they rhyme it with "Steven Seagal".

    Of the firms that collapsed, most were strictly Investment Banks or Commerical Banks, not diversified. Truth be told without Glass-Steagall the broken pieces of Bear, Lehman, etc would never have been salvaged so quickly. Other countries never had GS or got rid of their version and seem to be managing OK or have problems unrelated to GS. So many Americans would not have access to financial services and instruments previously reserved for the "1%" as well.

    Again, when firms are forced to make loser bets by (D) the recurring pattern is that losses will occur and be socialized (the taxpayer picks up the tab one way or another)
    Actually I spelled it out with no mention of Glass Steagull.

  15. #55
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    Quote Originally Posted by chiefst2000 View Post
    You nailed it. Liberals love to point to deregulation but the problem is they can't point to what regulation could have prevented the crisis.
    It's legal for banks to lend 40 dollars for every one dollar they physically have.

    It's legal for banks to pay those who "impartially" rate their own bonds.

  16. #56
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    In 2004, the U.S. Securities and Exchange Commission relaxed the net capital rule, which enabled investment banks to substantially increase the level of debt they were taking on, fueling the growth in mortgage-backed securities supporting subprime mortgages. The SEC has conceded that self-regulation of investment banks contributed to the crisis.[90][91]

    Financial institutions in the shadow banking system are not subject to the same regulation as depository banks, allowing them to assume additional debt obligations relative to their financial cushion or capital base.[92] This was the case despite the Long-Term Capital Management debacle in 1998, where a highly-leveraged shadow institution failed with systemic implications.

    Regulators and accounting standard-setters allowed depository banks such as Citigroup to move significant amounts of assets and liabilities off-balance sheet into complex legal entities called structured investment vehicles, masking the weakness of the capital base of the firm or degree of leverage or risk taken. One news agency estimated that the top four U.S. banks will have to return between $500 billion and $1 trillion to their balance sheets during 2009.[93] This increased uncertainty during the crisis regarding the financial position of the major banks.[94] Off-balance sheet entities were also used by Enron as part of the scandal that brought down that company in 2001.[95]

    As early as 1997, Federal Reserve Chairman Alan Greenspan fought to keep the derivatives market unregulated.[96] With the advice of the President's Working Group on Financial Markets,[97] the U.S. Congress and President allowed the self-regulation of the over-the-counter derivatives market when they enacted the Commodity Futures Modernization Act of 2000. Derivatives such as credit default swaps (CDS) can be used to hedge or speculate against particular credit risks. The volume of CDS outstanding increased 100-fold from 1998 to 2008, with estimates of the debt covered by CDS contracts, as of November 2008, ranging from US$33 to $47 trillion. Total over-the-counter (OTC) derivative notional value rose to $683 trillion by June 2008.[98] Warren Buffett famously referred to derivatives as "financial weapons of mass destruction" in early 2003.[99][100]
    http://en.wikipedia.org/wiki/Financi...7%E2%80%932010

  17. #57
    Romney should say you will see the tax records as soon as Obama opens up his school records, his passport and why does he have a Social Security from Ct. when he never lived there. Shutup or Putup Obama!

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