Unemployment rises again

posted at 10:54 am on August 20, 2009 by Ed Morrissey

The Obama administration got its second straight week of bad news on the job front.  Intial unemployment claims increased this week to 576,000, 26,000 higher than analysts expected, and the four-week average rose to 570,000.  The increasing claims belie the notion that the job market will see any signs of recovery in the near term, and make claims of success from the stimulus package even less believable than before:

The number of first-time claims for unemployment benefits rose unexpectedly for the second straight week, a sign that jobs remain scarce even as other data show the economy is stabilizing.

The Labor Department said Thursday the number of new jobless claims rose to a seasonally adjusted 576,000 last week, from a revised figure of 561,000. Wall Street economists expected a drop to 550,000, according to a survey by Thomson Reuters.

Economists closely watch initial claims, which are considered a gauge of layoffs and an indication of companies’ willingness to hire new workers.

The figures are volatile, and had been trending down, after remaining above 600,000 for most of this year. The new report indicates that the labor market is still weak. In a healthy economy, initial claims are usually around 325,000 or below.

The problem isn’t just with the initial jobless claims.  The Bureau of Labor Statistics tracks the average weeks of unemployment for claimants, and the news there looks especially bad.  The average now stands at 25.1, up from 24.5 in June, and August will likely be higher.  That number is by far the worst in the past decade; in the supposedly “jobless recovery” in 2003-4, the worst that number ever got was 20.1 weeks.

The BLS also tracks “discouraged workers,” those who have left the workforce altogether and are not seeking jobs.  That number has also reached highs not seen in at least a decade, with 796,000 workers currently falling into this category.  Compare that to the last recession and recovery, where that number never rose above 534,000.

Obama has a big problem.  The stimulus package has utterly failed to prevent unemployment from getting above the target line of 8%.  After some initial optimism about the economy, employers are once again shedding jobs and reducing costs, particularly as they see Obama’s expansive — and expensive — legislative agenda work through Congress.  At the time when Obama says, “Trust me to run health care,” voters are realizing that he couldn’t get the economy right while mortgaging the Treasury.  Maybe Obama should focus on fixing what he’s already broken before breaking something else.


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Yep — because there is a history of lending discrimination dating back at least to FDR which caused and hastened the decline of inner cities.

Or, are you in favor of lending discrimination?

Bleeds Blue on August 20, 2009 at 11:46 AM

The decline of inner cities had nothing to do with lending, it had to do with local taxes and government mismanagement.

I am certainly in favor of lending discrimination. The lender should only loan to people it has reviewed and determined can afford the loan.

Vashta.Nerada on August 20, 2009 at 1:16 PM

lorien1973 on August 20, 2009 at 12:28 PM

I guess what I’m saying is. Be a troll if you want. But if you want to stand out, be a troll with at least a small sense of reality to make it interesting for us.

lorien1973 on August 20, 2009 at 12:28 PM

Are you calling yourself a troll?

MarkTheGreat on August 20, 2009 at 1:17 PM

Are you going to answer my question about laws protecting homeowners when they walk away from a mortgage?

There are many reasons for foreclosures, but that is #1.

You guys thought that one up.

Chuck Schick on August 20, 2009 at 1:06 PM

You don’t have a single fact to back up that claim.

And I think anyone who doesn’t walk away from a mortgage that’s deeply under water is a fool. The same morality applies to me as a homeowner as applies to a large institution in financial trouble. Renegotiate or take me to court.

Bleeds Blue on August 20, 2009 at 1:20 PM

Bleeds Blue on August 20, 2009 at 12:49 PM

BoA – one of the companies that needed a bailout, I believe – said that CRA loans accounted for 7% of business but 24% of losses. But hey, let’s not look at the elephant in the room or anything. Come on, dude.

Fact is, CRA pushed banks to relax lending standards to encourage home ownership. Forced banks to make loans to people they would have otherwise. It’s simply undeniable.

If you want to live in a fantasy world where bankers are evil and government is good. Fine. I don’t care. But sit there and pretend that poorly thought out government policy isn’t to blame.

That’s not to say that predation didn’t happen and Glass-Steagall being repealed didn’t make things worse as well, but government policy is the heart of this. It’s as clear as day.

lorien1973 on August 20, 2009 at 1:22 PM

MarkTheGreat on August 20, 2009 at 1:17 PM

Always!

lorien1973 on August 20, 2009 at 1:22 PM

DrAllecon on August 20, 2009 at 11:27 AM

The real unemployment percentage is the U6 number. The lame stream media always report the U3 number. The actual percentage was 16.3% in July. It must be up over 17% now.

http://www.bls.gov/news.release/empsit.t12.htm

dogsoldier on August 20, 2009 at 1:23 PM

Anybody remember where the graph of jobs promised versus jobs delivered with the corresponding delta of Obumbler’s fantasies during the porkulus might be?

jukin on August 20, 2009 at 1:27 PM

You don’t have a single fact to back up that claim.

Bleeds Blue on August 20, 2009 at 1:20 PM

Writing in today’s Wall Street Journal, economist Stan Liebowitz reports the results of his careful study of the data on mortgage foreclosures. Liebowitz finds that the chief reason homeowners default is negative equity in their homes (and, hence, not upward adjustments in the interest rates owed on ARM mortgage loans, or any other of the alleged culprits).

Wall Street Journal

Negative equity was twice the reason over subprime.

And thank you for proving my point- if your house is underwater, it’s someone else’s problem.

Fortunately for you, that’s what the law says too.

Is it start making sense now, or should I go get the education puppets my friend uses on her 2nd grade class?

Chuck Schick on August 20, 2009 at 1:28 PM

Laws against lending discrimination have been around for, what, 40 years? And suddenly the real estate market and banking system as a whole collapse in 2007?

That’s because there never was any discrimination in housing.

Then the govt came along and ordered the banks to start lending money to people with bad credit histories.

Bleeds Blue on August 20, 2009 at 12:24 PM

MarkTheGreat on August 20, 2009 at 1:15 PM

Bad news buddy, you’re wrong again. But you’ll like this one, because FDR is the bad guy (I assume you meant there never was discrimination in lending and not housing).

You see, back in the 30s, the Feds started offering mortgage insurance in an effort to get banks to start making mortgages again, spur housing, create jobs etc. Worked pretty well in a lot of ways (much more restrained than Fannie and Freddie, FWIW). But census tracts that contained black people — and, to a lesser extent, Jews — couldn’t get their mortgages insured. So mortgages didn’t get made. So people with money, who wanted their own homes, moved out to segregated suburbs, leaving increasingly poor and discriminated-against minorities behind, with now way to get a stake in their communities, in addition to the other social and economic problems faced back then.

It is this rather shameful legacy — we can agree on that, right — that lending laws, which have been successful and which did not cause the mortgage crisis, were designed to eliminate.

Indeed, under the laws in existence before the CRA, I probably couldn’t have gotten mortgages to live where I have lived for the last 20 years, bringing middle class stability and a tax base to challenging neighborhoods in the inner city.

Bleeds Blue on August 20, 2009 at 1:29 PM

Is it start Did it start

Chuck Schick on August 20, 2009 at 1:30 PM

Chuck Schick,

Is it start making sense now, or should I go get the education puppets my friend uses on her 2nd grade class?

You owe me a new monitor.

Mike Honcho on August 20, 2009 at 1:30 PM

Indeed, under the laws in existence before the CRA, I probably couldn’t have gotten mortgages to live where I have lived for the last 20 years, bringing middle class stability and a tax base to challenging neighborhoods in the inner city.

Bleeds Blue on August 20, 2009 at 1:29 PM

Well as long as you’re happy, the rest of us will just clean up the mortgage mess. And the Medicare mess. And the Medicaid mess. And the welfare mess. And the Social Security mess.

Liberalism’s fun and games till the adults get the bill.

Chuck Schick on August 20, 2009 at 1:35 PM

Writing in today’s Wall Street Journal, economist Stan Liebowitz reports the results of his careful study of the data on mortgage foreclosures. Liebowitz finds that the chief reason homeowners default is negative equity in their homes (and, hence, not upward adjustments in the interest rates owed on ARM mortgage loans, or any other of the alleged culprits).

Wall Street Journal

Negative equity was twice the reason over subprime.

And thank you for proving my point- if your house is underwater, it’s someone else’s problem.

Fortunately for you, that’s what the law says too.

Is it start making sense now, or should I go get the education puppets my friend uses on her 2nd grade class?

Chuck Schick on August 20, 2009 at 1:28 PM

Touche, you bastard. Though, let me say this:

1) You can’t believe this and believe the CRA caused the crisis, so you’ve gotten on sub-group off my back. Thank you.

2) The piece strongly suggests that shoddy banking practices were a contributor to to the negative equity crisis, sop banks have to eat at least part of that cake.

3) The piece does not address the causes of the net equity crisis: massive speculation, artificially low interest rates and so on.

4) It’s not just the mortgages, stupid! It’s the trillions in mis-valued derivatives that rested on the mortgages that spread the disease through the economy.

5) Yes. If a bank lends me money to buy a house and I slip into negative equity, it’s the banks problem as well as mine. There is nothing to suggest that I should sacrifice my families security on the banks’s altar rather than the other way around. Will the bank carry me if I get laid off and miss payments or will it put my furniture on the curb? We both negotiated a risk; we can negotiate a way out of it or I will do to the bank what it would do to me.

But, good piece.

Bleeds Blue on August 20, 2009 at 1:43 PM

Yep — because there is a history of lending discrimination dating back at least to FDR which caused and hastened the decline of inner cities.

Or, are you in favor of lending discrimination?

Bleeds Blue on August 20, 2009 at 11:46 AM

The problem is not whether discrimination should be favored or not; the problem is measuring discrimination correctly. The old measure was on loan default rate disparity. That is the correct tool when measuring unbiased assessment of risk. The Clinton administration adopted loan application rejection rates as the measure. This lead to making bad loans to avoid being sued even when banks and Andrew Cuomo himself, the Sect. of HUD at the time, admitted that banks would loss money on these loans. (There are many reasons for disparity in loan application rejection rates that are not racist. For example, loans in areas with falling home values are more likely to default than those in areas with rising home values.)

We can debate whether the Federal government should regulate lending practices at all, but if they do, they should use the correct measure of discrimination.

KW64 on August 20, 2009 at 1:53 PM

You don’t have a single fact to back up that claim.
Bleeds Blue on August 20, 2009 at 1:20 PM

The role of recourse loans in stabilizing the housing credit markets deserves a much fuller analysis, and I’m sure it’s received one (I am searching the literature now) but here’s one link comparing the U.S. and Australian cases. Ian Ayres’ analysis of the Feldstein and Zingales proposals is also illustrative, but cites no data apart from noting the uniqueness of the U.S. in structuring mortgages as no-recourse loans.

DrSteve on August 20, 2009 at 2:04 PM

DrSteve on August 20, 2009 at 2:04 PM

I was looking for such an article 1/2 hour ago. Our mortgage laws needed to be updated to give the lender recourse to make up the difference if the sales prices does not cover the mortgage.

WashJeff on August 20, 2009 at 2:12 PM

BO, Pelosi, Reid, Dodd, Frank, and company are not interested in fixing things, they are more interested in exploiting it to their benefit. Virtually everything they’ve done makes that crystal clear. We need to elect fixers, not exploiters. Unfortunately our country keeps electing the exploiters.
 
It’s like taking your car to a mechanic. The fixer mechanic tells you the truth; your car is a heap and needs a complete overhauled that will cost far more than the car is worth. The exploiter mechanic will tell you it just needs a few things. Wanting to hear the good news, you start down the repair path. When it’s all over, you’ve replaced every major component in the car, spending twice what the car is worth. In the end, you got the shaft and the mechanic got rich off your “hope and change”.
 
The exploiter politicians currently in power will nickel and dime us to death. Like fleas on a dog, they’ll only jump ship once the host is dead, or they are forcibly evicted.

ClanDerson on August 20, 2009 at 2:21 PM

I don’t think the banks are blameless in all of this, at least not the investment banks like Goldman and Lehman who were buying up bad paper by the truckload and re-packaging them as derivatives or whatever the heck was going on. As for the banks doing the direct lending, of course they have to take some of the responsibility for not checking incomes and the like but I think this a vast oversimplification of what happened. For one thing, if you’re pressuring banks to loan to people who you’re pretty sure aren’t in a position to pay the note, then it stands to reason you’re going to try to offset your losses elsewhere. When when a bank guaranteed someone else is going to buy their debt anyway, what do they have to lose?

I would also submit that a good number of those flippers wouldn’t have defaulted had the sub-prime market not cratered first. And that ordinary borrowers wouldn’t be underwater now if they weren’t borrowing against their own equity to buy new cars and take fancy vacations.

However the situation mushroomed into what it is today, the point is that the genesis of the problem can be traced back to one thing, and that’s CRA. It was CRA that set off a whole new slew of relaxed lending practices that has led us to where we are now. Just another example of how, when the govt. starts meddling in the marketplace, the cost goes through the roof for everyone and eventually implodes.

Bottom line: If you want to own a home in this country, you have to earn enough money. If a $700,000 shack in Orange County is out of your reach, then move somewhere else. We can’t all have what we want just because we want it.

NoLeftTurn on August 20, 2009 at 2:24 PM

This is also interesting. This discusses some dynamics present in the recourse setting (as in the UK).

DrSteve on August 20, 2009 at 2:39 PM

Ball’s in your court.

Bleeds Blue on August 20, 2009 at 1:13 PM

Yes, the Community Reinvestment Act Really Did Help Cause the Housing Crisis
March 17, 2009 09:42 AM ET

link

In 1994 the Riegle-Neal Interstate Banking and Branching Efficiency Act loosened up the regulatory barriers to bank mergers. Consequently, said Bernanke, “As public scrutiny of bank merger and acquisition activity escalated, advocacy groups [like ACORN] increasingly used the public comment process to protest bank applications on CRA grounds.” In other words, there was a burst of additional legalized extortion perpetrated by the Fed and its pet “activist organizations” beginning in the mid-1990s. As a result, says Bernanke, “banks began to devote more resources to their CRA programs.” What an understatement.

Also in 1995, the US Treasury Department created the multibillion-dollar “Community Development Financial Institutions” fund to “provide banks with access [i.e., taxpayers' dollars] to new opportunities to finance community economic development” as “encouraged” by the CRA, said the Fed chairman.

link

The cause and effect is clear. As ex-Fed chief Alan Greenspan recently testified: “It’s instructive to go back to the early stages of the subprime market, which has essentially emerged out of the CRA.”

It strains credulity for top regulators to now say the CRA had “absolutely nothing” to do with the subprime crisis. It smacks of political spin and bureaucratic CYA.

link

The problem is summed up succinctly by Stan Liebowitz of the University of Texas at Dallas:

From the current handwringing, you’d think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards–at the behest of community groups and “progressive” political forces.… For years, rising house prices hid the default problems since quick refinances were possible. But now that house prices have stopped rising, we can clearly see the damage done by relaxed loan standards.

link

the BS is coming from your court.

right4life on August 20, 2009 at 2:45 PM

Ball’s in your court.

Bleeds Blue on August 20, 2009 at 1:13 PM

Yes, the Community Reinvestment Act Really Did Help Cause the Housing Crisis
March 17, 2009 09:42 AM ET

link

In 1994 the Riegle-Neal Interstate Banking and Branching Efficiency Act loosened up the regulatory barriers to bank mergers. Consequently, said Bernanke, “As public scrutiny of bank merger and acquisition activity escalated, advocacy groups [like ACORN] increasingly used the public comment process to protest bank applications on CRA grounds.” In other words, there was a burst of additional legalized extortion perpetrated by the Fed and its pet “activist organizations” beginning in the mid-1990s. As a result, says Bernanke, “banks began to devote more resources to their CRA programs.” What an understatement.

Also in 1995, the US Treasury Department created the multibillion-dollar “Community Development Financial Institutions” fund to “provide banks with access [i.e., taxpayers' dollars] to new opportunities to finance community economic development” as “encouraged” by the CRA, said the Fed chairman.

link

The cause and effect is clear. As ex-Fed chief Alan Greenspan recently testified: “It’s instructive to go back to the early stages of the subprime market, which has essentially emerged out of the CRA.”

It strains credulity for top regulators to now say the CRA had “absolutely nothing” to do with the subprime crisis. It smacks of political spin and bureaucratic CYA.

link

right4life on August 20, 2009 at 2:46 PM

The cause and effect is clear. As ex-Fed chief Alan Greenspan recently testified: “It’s instructive to go back to the early stages of the subprime market, which has essentially emerged out of the CRA.”

It strains credulity for top regulators to now say the CRA had “absolutely nothing” to do with the subprime crisis. It smacks of political spin and bureaucratic CYA.

link

The problem is summed up succinctly by Stan Liebowitz of the University of Texas at Dallas:

From the current handwringing, you’d think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards–at the behest of community groups and “progressive” political forces.… For years, rising house prices hid the default problems since quick refinances were possible. But now that house prices have stopped rising, we can clearly see the damage done by relaxed loan standards.

link

its more than obvious that CRA had a great deal to do with the current housing crisis, coupled with fannie and freddie and their bundling of these bad loans.

right4life on August 20, 2009 at 2:47 PM

talk about calling it, this article from 2000 sure does…

The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation’s banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being.

link

right4life on August 20, 2009 at 2:57 PM

Bernanke: “Our own experience with CRA over more than 30 years and recent analysis of available data, including data on subprime loan performance, runs counter to the charge that CRA was at the root of, or otherwise contributed in any substantive way to, the current mortgage difficulties.”
link

Speaking of CYA, I wonder if Fed Chairman Greenspan, who was asleep at the wheel as the crisis developed, might have motives for shifting attention away from his own contributions.

The American Spectator Article offers a completely different argument than those complaining that the CRA attempts to increase minority home ownership caused the crisis:

“The point here is not that low-income borrowers received mortgage loans that they could not afford. That is probably true to some extent but cannot account for the large number of sub-prime and Alt-A loans that currently pollute the banking system. [added] It was the spreading of these looser standards to the prime loan market that vastly increased the availability of credit for mortgages, the speculation in housing, and ultimately the bubble in housing prices.”

What he’s arguing is that bankers, once forced to surrender their virtue to a relatively small number of low-income home buyers, decided they may as well put out for everyone, for fun and profit. Again, it’s hardly the CRA’s fault that bankers have no judgment or restraint, apparently. The piece seems, in fact, to suggest that more regulation is necessary, not less, since bankers can’t be trusted to use decent judgment while making economic decisions. (Or break them up — even a liberal can dislike “too big to fail”).

The US News piece is a bit anecdotal.

Bleeds Blue on August 20, 2009 at 3:16 PM

The US News piece is a bit anecdotal.

Bleeds Blue on August 20, 2009 at 3:16 PM

and your pieces are just bureacratic CYA.

oh please, yeah the big bad bankers wanted to just give everyone loans…and then have them fail…right banks are known for giving away money for nothing..sure.

your ‘analysis’ doesn’t pass the smell test…and your articles are from liberal bureacrats trying to cover their ass.

CRA WAS responsible for this housing mess…and people like OBAMA used it, when he worked for ACORN to sue citibank into making more bad loans.

its rather obvious to anyone but a liberal.

right4life on August 20, 2009 at 3:36 PM

its more than obvious that CRA had a great deal to do with the current housing crisis, coupled with fannie and freddie and their bundling of these bad loans.

right4life on August 20, 2009 at 2:47 PM

I would love to be able to blame it on the CRA, but you can’t. Banks want to make as much money as possible with as small a risk as possible, and so with a little financial slight of hand, and some help from the gov(deregulating) they were able to completely remove the “risk” from lending to poor candidates. Once this change had happened banks would have lent money to your house pet, because they didn’t believe they faced any risk. The CRA may have pressured banks, but they would have got to these people eventually. Greed is not racist.

DFCtomm on August 20, 2009 at 3:38 PM

Touche, you bastard. Though, let me say this:

1) You can’t believe this and believe the CRA caused the crisis, so you’ve gotten on sub-group off my back. Thank you.

I never once said the CRA was the cause of it. I’ll let the others here make that case if they want.

2) The piece strongly suggests that shoddy banking practices were a contributor to to the negative equity crisis, sop banks have to eat at least part of that cake.

Agreed… but when Fannie and Freddie grows to almost $6 trillion in loans because they lower their criteria for down payments and start buying equally bad mortgages from the private banks, we have a huge problem. Remember Fan/Fred can’t legally deal in jumbos, so to take advantage of the boom, the only way up was down- and along came all the shady loans.

3) The piece does not address the causes of the net equity crisis: massive speculation, artificially low interest rates and so on.

Cheap money came first, you’re right. But a bad loan is still a bad loan.

4) It’s not just the mortgages, stupid! It’s the trillions in mis-valued derivatives that rested on the mortgages that spread the disease through the economy.

There have certainly been CDS defaults, but they always have come after the mortgage bonds get degraded and the liquidity stops. That was exactly what happened to AIG. They couldn’t get the cash to cover their margins because the lenders all saw AIG holding worthless assets.

The irony of this whole mess is that the unregulated hedge funds have held up pretty well compared to the regulated banks that keep failing. So well in fact that Obama’s P-PIP program offered hedge funds a trillion dollars in all to go into partners with Uncle Sam to try to make money off all the bad mortgage bonds out there.

5) Yes. If a bank lends me money to buy a house and I slip into negative equity, it’s the banks problem as well as mine. There is nothing to suggest that I should sacrifice my families security on the banks’s altar rather than the other way around. Will the bank carry me if I get laid off and miss payments or will it put my furniture on the curb? We both negotiated a risk; we can negotiate a way out of it or I will do to the bank what it would do to me.

But, good piece.

Bleeds Blue on August 20, 2009 at 1:43 PM

But when everybody acts in their own self interest en masse, you get a crash the size of what we’re seeing now.

Chuck Schick on August 20, 2009 at 3:43 PM

DFCtomm on August 20, 2009 at 3:38 PM

think about what you are arguing..you’re saying the banks wanted to lend money they knew would not be repaid…and how could gov deregulation remove that risk???

it couldn’t…it was fannie and freddi that would take those loans…again government agencies…

right4life on August 20, 2009 at 3:43 PM

Bleeds Blue on August 20, 2009 at 3:16 PM

Why is this dishonest vulgar stupid worthless POS troll still allowed to post here? This thread has been hijacked by lies and Demo-Lib talking points.

Janos Hunyadi on August 20, 2009 at 3:44 PM

if the banks were truly deregulated they would have no one to push them to make bad loans, and they would have no one to take those bad loans from them (fannie freddie)

right4life on August 20, 2009 at 3:45 PM

The CRA gives community organizers leverage over banks primarily when they request federal regulatory approval to merge. As the NCRC explains:

1998 was a year of mega-mergers that included the Bank of America and Nations Bank merger as well as Citigroup’s acquisition of Travelers; CRA pledges totaled $812 billion dollars as a result. … CRA pledges shot up again in 2003 and particularly in 2004. The year 2004 experienced watershed mega-mergers as Bank of America acquired Fleet, JP Morgan Chase acquired Bank One, and Citizens gobbled up Charter One.

link

right4life on August 20, 2009 at 3:46 PM

and that article that I posted from 2000 nails it…predicts the problems BECAUSE OF CRA!

The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation’s banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being.

right4life on August 20, 2009 at 3:48 PM

think about what you are arguing..you’re saying the banks wanted to lend money they knew would not be repaid…and how could gov deregulation remove that risk???

it couldn’t…it was fannie and freddi that would take those loans…again government agencies…

right4life on August 20, 2009 at 3:43 PM

Your giving them way too much credit. The smart ones may have realized the loan wouldn’t be repaid, but by that time the loan would have been sold and off their books, and not their problem.

The probable failure of the loan was covered in two ways. They had insurance, which is how they got the AAA and AA ratings, and house prices never fell. Their computer models were incapable of accepting a negative number for home appreciation.

DFCtomm on August 20, 2009 at 3:52 PM

The grim legacy of the Bush era continues. The Wall Street meltdown and housing bubble that sprang directly from Bush Administration policies caused a recession that will not be put behind us quickly. Bankrupt Republican ideology bankrupting Americans

Bleeds Blue on August 20, 2009 at 11:00 AM

disingenuous excuse maker…sigh

NY Conservative on August 20, 2009 at 3:55 PM

Your giving them way too much credit. The smart ones may have realized the loan wouldn’t be repaid, but by that time the loan would have been sold and off their books, and not their problem

and why wouldn’t that loan be repaid…it wasn’t from some imaginary ‘deregulation’ it was because fannie and freddie would take the loan…in other words more government…not less.

right4life on August 20, 2009 at 3:55 PM

so basically the government told the banks ‘go make bad loans to illegals and poor people, then we’ll take those bad loans, bundle them, and spread the risk’ basically a typical government ponzi scheme.

right4life on August 20, 2009 at 3:59 PM

and why wouldn’t that loan be repaid…it wasn’t from some imaginary ‘deregulation’ it was because fannie and freddie would take the loan…in other words more government…not less.

right4life on August 20, 2009 at 3:55 PM

I agree with you. If the gov had stayed out of the sector, and not removed regulations put in place after the great depression this wouldn’t have happened. It’s clearly the governments fault. Placing the blame on the GOP and Bush isn’t really fair. The dems were more than happy to play along, since it fulfilled goals of their own, such as minority lending.

DFCtomm on August 20, 2009 at 4:00 PM

so basically the government told the banks ‘go make bad loans to illegals and poor people, then we’ll take those bad loans, bundle them, and spread the risk’ basically a typical government ponzi scheme.

right4life on August 20, 2009 at 3:59 PM

The government didn’t do it, but they cleared the way and then stood by and cheered while the corporations did what corporations do, which is pursue maximum profit.

DFCtomm on August 20, 2009 at 4:05 PM

right4life:

Basically that is just what they did.

Terrye on August 20, 2009 at 4:20 PM

Placing the blame on Bush and at least some in the GOP would be insane.

They are the only ones who tried to stop the practice.

Troll Feeder on August 20, 2009 at 5:01 PM

Is it start making sense now, or should I go get the education puppets my friend uses on her 2nd grade class?

Chuck Schick on August 20, 2009 at 1:28 PM

Tough sell, Chuck. This nitwit is just another know-nothing liberal troll. It’s hard talking CRA and lending policy with a liberal douche who has never worked in banking, lending, or appraisal and would counsel every American who borrowed 100% of the purchase price for their home to walk away if the value drops a dollar.

Can you imagine the impact on real estate values if this actually happened? There are literally millions of homeowners who now owe more money than their home is worth. Values would plummet again and the economy would go into free-fall.

Jaibones on August 20, 2009 at 5:21 PM

Once libs lose their jobs, THEN some of them learn to think in concrete terms. Liberal Starbucks logic only works when life is good.

Mojave Mark on August 20, 2009 at 7:40 PM

Ok, coming late to this thread, but why shouldn’t I pay my mortgage if my house devalues? Should I pay extra then if the value goes up?

The_Livewire on August 20, 2009 at 10:01 PM

… still waiting for this and other sites to recognize the Depression

corona on August 20, 2009 at 11:58 PM

And when the unemployment rate is 50% folks will be sitting around saying how, “I think Obama’s doing a good job.”

Lemmings.

Dr. ZhivBlago on August 21, 2009 at 5:19 AM

Almost makes it worth it when I visualize some of those Odrama pukes standing in an unemployment line too.

DanaSmiles on August 21, 2009 at 8:22 AM

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