Average American household income declines 36% since 2003

posted at 5:21 pm on July 28, 2014 by Bruce McQuain

That’s what the NY Times tells us this morning:

Economic inequality in the United States has been receiving a lot of attention. But it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too.
The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially.

The Russell Sage study also examined net worth at the 95th percentile. (For households at that level, 95 percent of the population had less wealth.) It found that for this well-do-do slice of the population, household net worth increased 14 percent over the same 10 years. Other research, by economists like Edward Wolff at New York University, has shown even greater gains in wealth for the richest 1 percent of households.

Now if you were a low information voter, you might conclude from that excerpt that it is the rotten rich who are responsible for this decline. To do that you have to believe that the economy is a finite pie and when someone takes a big slice, everyone else gets smaller slices. But that’s not the case is it. This really doesn’t have anything to do with income inequality, as the left would have you believe.

Think about it – average income is a total divided by a number. That means that the total income of everyone working is divided by the number of families out there.

So if that’s the case, what’s the key? The number of people working. No work, no income. The families still exist in the same numbers, but the income that has been supporting them is down due to what? Unemployment.

And, of course, because it is bad news for Democrats, we don’t hear much about that anymore. A simple graph, however, will help pinpoint the problem:

 

 

The problem certainly isn’t “income inequality”, is it?

~McQ


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Lean Forward!

Oil Can on July 28, 2014 at 5:27 PM

Graphs are racist

Pegcity on July 28, 2014 at 5:28 PM

Is it just me, or does the headline speak of income, while the story in question references net worth?

If it’s just me, I’ll shut up…

JohnGalt23 on July 28, 2014 at 5:28 PM

Sorry, wrong one (although still valid). Here’s the right one:
 
http://newsbcpcol.stb.s-msn.com/amnews/i/1f/89d11152d8a431cb3e3cdd122cadd/_h0_w628_m6_otrue_lfalse.jpg

rogerb on July 28, 2014 at 5:29 PM

Economic inequality in the United States has been receiving a lot of attention. But it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too.

I just have to say I have no idea what “economic inequality” is. Just like I have no idea what “reproductive rights” are.

darwin on July 28, 2014 at 5:29 PM

The employed population dropped roughly 4%. The average dropped 36%. Something else is going on.

Oh, and it’s not the average income of a US household that dropped 36%. It’s the average net worth–which is different than income.

jim56 on July 28, 2014 at 5:29 PM

COMRADES, comrades is feature not bug. Soon all plebes will be equal (except for glorious party leaders) and Utopian socialist paradise comes.

It is going to be a glorious future comrades, GLORIOUS!!!

jukin3 on July 28, 2014 at 5:29 PM

The families still exist in the same numbers, but the income that has been supporting them is down due to what? Unemployment.

Couldn’t possibly be the right answer, why just ask anyone here, those who are unemployed are only unemployed because they are to lazy to find work and would rather live off the government handouts and free stuff.

oscarwilde on July 28, 2014 at 5:29 PM

Absolutely true. Myself, and everyone else I know did fine under Bush I, Clinton, and GW Bush. There were slight patches of strain, but never like this.

Obama is 8 years of Jimmy Carter Malaise & JFK foreign policy foulups.

portlandon on July 28, 2014 at 5:30 PM

Is it just me, or does the headline speak of income, while the story in question references net worth?

If it’s just me, I’ll shut up…

JohnGalt23 on July 28, 2014 at 5:28 PM

It’s not just you. He’s way wrong.

jim56 on July 28, 2014 at 5:31 PM

I just have to say I have no idea what “economic inequality” is. Just like I have no idea what “reproductive rights” are.

They are socialist terms deeming any income gap as inequality and thus wrong. Like the term social justice declaring society to be inherently unjust.

Pegcity on July 28, 2014 at 5:31 PM

And, of course, because it is bad news for Democrats

This is a great chart for Democrats. “We didn’t cause that employment drop and Wall Street stole your money. Vote donkey.”

Mmm...Burritos on July 28, 2014 at 5:32 PM

Not that I am making an argument that the story is wrong (people not working is NOT good), as one who carefully looks at graphs I find it interesting that the working percentage uses a straight scale, and the profit line uses a logarithmic scale.

Odd that.

JohnD13 on July 28, 2014 at 5:32 PM

And, of course, because it is bad news for Democrats

 
This is a great chart for Democrats. “We didn’t cause that employment drop and Wall Street stole your money. Vote donkey.”
 
Mmm…Burritos on July 28, 2014 at 5:32 PM

 
+1, except for that problem with the (D)s taking over Congress in ’07.
 
Let’s see, where is 2007 on that graph… Oh, there it is. Wow, look at that.

rogerb on July 28, 2014 at 5:35 PM

On closer look, scale is interesting too. Working percentage ranges between 58 and 64.5, whereas profit and S&P range from about 150 to almost 2,000!

Gosh, if you have a good story to tell, don’t muck it all up with a bogus graph!

Stocks up (a lot), employment down (a lot) – but on totally different scales…

JohnD13 on July 28, 2014 at 5:37 PM

this all started before obama was even president.

ThisIsYourBrainOnKoch on July 28, 2014 at 5:38 PM

Hey! King Barack the Magnificent has been focused “laser like” on job creation!

As a matter of fact, he proposes to “legalize” SEVERAL MILLION additional workers so that they to ‘can have a piece of the pie’.

GarandFan on July 28, 2014 at 5:38 PM

All by thought, ideology, intent, plan, and implication of policy…

… But it’s OK, the ruling class is doing pretty well, so shut up or else you will not get your ration of gruel!

Seven Percent Solution on July 28, 2014 at 5:38 PM

2003 is indeed when significant economic decline set it. The Iraq war started up and thereafter Bush and both parties in congress began shelling out the money like there was no tomorrow, paid for courtesy of the Federal Reserve. Prices rose and have remained steadily high, as a consequence, since.

rickv404 on July 28, 2014 at 5:40 PM

Is it just me, or does the headline speak of income, while the story in question references net worth?

If it’s just me, I’ll shut up…

JohnGalt23 on July 28, 2014 at 5:28 PM

It’s not just you. He’s way wrong.

jim56 on July 28, 2014 at 5:31 PM

The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline,

So the headline used “income” instead of “net worth”. Are you saying a 36 percent decline in net worth is a good thing?

Mitoch55 on July 28, 2014 at 5:44 PM

The Great Depression saw a decline of 40% in Average Household Income. The President has almost nailed the record!

MTF on July 28, 2014 at 5:44 PM

ThisIsYourBrainOnObama’sKoch on July 28, 2014 at 5:38 PM

You’re right..it started when the Dems took control of the House and Senate. Thanks for pointing that out.

fortcoins on July 28, 2014 at 5:45 PM

So the headline used “income” instead of “net worth”. Are you saying a 36 percent decline in net worth is a good thing?

Mitoch55 on July 28, 2014 at 5:44 PM

No. I’m saying that “Income”=/=”Net worth”.

I think it is important when discussing such matters that we keep our terms straight…

JohnGalt23 on July 28, 2014 at 5:46 PM

I make it a rule never to accept economic economic analysis from someone too stupid up know the difference between “household income” and “net worth, as Bruce here seems to be.

urban elitist on July 28, 2014 at 5:47 PM

Think about it – average income is a total divided by a number. That means that the total income of everyone working is divided by the number of families out there.

But median is not.

Stoic Patriot on July 28, 2014 at 5:47 PM

Think Iraq and Afghanistan.
Another by product of wars.
Ron Paul warned us because of you wouldn’t listen.
The decline in the American way of life is directly tied to the wars we cannot afford.

weedisgood on July 28, 2014 at 5:49 PM

The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline,

So the headline used “income” instead of “net worth”. Are you saying a 36 percent decline in net worth is a good thing?

Mitoch55 on July 28, 2014 at 5:44 PM

No, but I’m saying a 3-4% decrease in employment didn’t cause a 36% decline in the average (or median) household net worth. If you multiply $87,992 by 96% (which would represent the 4% decreased employment), you get $84,472. Something else is going on to account for most of the average net income change.

jim56 on July 28, 2014 at 5:49 PM

So the headline used “income” instead of “net worth”. Are you saying a 36 percent decline in net worth is a good thing?

Mitoch55 on July 28, 2014 at 5:44 PM

Obviously you have never had a talk with libfree, we are on the road to Utopia.

RickB on July 28, 2014 at 5:50 PM

Something else is going on to account for most of the average net income change.

jim56 on July 28, 2014 at 5:49 PM

Oops. Should have written “average net wealth” change.

jim56 on July 28, 2014 at 5:50 PM

ThisIsYourBrainOnObama’sKoch on July 28, 2014 at 5:38 PM

You’re right..it started when the Dems took control of the House and Senate. Thanks for pointing that out.

fortcoins on July 28, 2014 at 5:45 PM

Of course, then you’re also giving the Dems credit for an-almost 300% increase in stock prices during the same time.

jim56 on July 28, 2014 at 5:53 PM

The bear is loose.

faraway on July 28, 2014 at 5:54 PM

Something else is going on to account for most of the average net income change.
jim56 on July 28, 2014 at 5:49 PM

Oops. Should have written “average net wealth” change.
jim56 on July 28, 2014 at 5:50 PM

It’s largely loss in home equity experienced when the Bush housing bubble burst.

This is kind of old news, actually.

urban elitist on July 28, 2014 at 5:56 PM

I make it a rule never to accept economic economic analysis from someone too stupid up know the difference between “household income” and “net worth, as Bruce here seems to be.
 
urban elitist on July 28, 2014 at 5:47 PM

 
+1. It’s almost as bad as hearing some moron referencing “profit and earning ratios”.

rogerb on July 28, 2014 at 5:57 PM

this all started before obama was even president.

ThisIsYourBrainOnKoch on July 28, 2014 at 5:38 PM

Could you highlight the “Recovery Summer” for us in the graph?

NotCoach on July 28, 2014 at 5:58 PM

Median is not the same as average. This statistic does nothing to disprove the increase in income inequality in America. If you want to write an article on this at least get the most basic parts of it correct.

Aquateen Hungerforce on July 28, 2014 at 6:00 PM

The decline in the American way of life is directly tied to the wars we cannot afford.

weedisgood on July 28, 2014 at 5:49 PM

No it’s not. We spend virtually all tax revenue on entitlements.

darwin on July 28, 2014 at 6:01 PM

All the butthurt trolls are here.

This is all your fault.

Heh!

22044 on July 28, 2014 at 6:01 PM

Meanwhile per capita GDP in China has increased by 400%

DarkCurrent on July 28, 2014 at 6:04 PM

jim56 on July 28, 2014 at 5:53 PM

Stock Price =/= Stock Value. How much of a “correction” do you think the DJIA would need to make in order to reflect its true worth? I’d take a stab at 40-50%

fortcoins on July 28, 2014 at 6:04 PM

The sharp decline in net worth is probably attributable to the government created housing market bubble bursting. The flat line since then is all about Onero economic policy.

NotCoach on July 28, 2014 at 6:04 PM

Median is not the same as average. This statistic does nothing to disprove the increase in income inequality in America. If you want to write an article on this at least get the most basic parts of it correct.

Aquateen Hungerforce on July 28, 2014 at 6:00 PM

That’s not quite correct. Median is not the same thing as mean. However, mean, median, and mode are all types of averages. But yeah, he’s obviously talking about the mean when he’s talking about taking a total and dividing by a number, and he’s mixed up net worth and income, so all-in-all it’s not a great read.

Stoic Patriot on July 28, 2014 at 6:05 PM

The decline in the American way of life is directly tied to the wars we cannot afford.

weedisgood on July 28, 2014 at 5:49 PM

Take another toke. Maybe you can regal us with some more gems after killing a few more brain cells.

NotCoach on July 28, 2014 at 6:05 PM

Of course, then you’re also giving the Dems credit for an-almost 300% increase in stock prices during the same time.

jim56 on July 28, 2014 at 5:53 PM

I have no problem with giving Dems the credit for an inflated stock market built upon easy money created by the fed, and businesses unwilling to invest elsewhere under Onero economic policies. What happens when the inflated market comes back to Earth?

NotCoach on July 28, 2014 at 6:08 PM

While we’re piling on to what is clearly an embarrassment, I should point out that if you actually click through to the study referenced by the original article, the data shows that most if the loss in net worth came 2007-2009 and thus on the Bush and not the Obama watch.

urban elitist on July 28, 2014 at 6:09 PM

It’s largely loss in home equity experienced when the Bush housing bubble burst.

This is kind of old news, actually.

urban elitist on July 28, 2014 at 5:56 PM

roflmao. Nice revisionist history.

Midas on July 28, 2014 at 6:11 PM

Of course, then you’re also giving the Dems credit for an-almost 300% increase in stock prices during the same time.

jim56 on July 28, 2014 at 5:53 PM

just because im a little confused, let me ask you..is our side supposed to be in favor of asset bubbles now?

ThisIsYourBrainOnKoch on July 28, 2014 at 6:11 PM

While we’re piling on to what is clearly an embarrassment, I should point out that if you actually click through to the study referenced by the original article, the data shows that most if the loss in net worth came 2007-2009 and thus on the Bush and not the Obama watch.

urban elitist on July 28, 2014 at 6:09 PM

I think we can all easily see when the sharp decline occurred by simply looking at the graph. Now, could you highlight the “Recovery Summer” for us in the graph?

NotCoach on July 28, 2014 at 6:12 PM

most if the loss in net worth came 2007-2009 and thus on the Bush and not the Obama watch.

urban elitist on July 28, 2014 at 6:09 PM

yeah, but it was bush-reid-pelosi!!!11!11!

/repuglican retort

ThisIsYourBrainOnKoch on July 28, 2014 at 6:13 PM

It’s largely loss in home equity experienced when the Bush housing bubble burst.
This is kind of old news, actually.
urban elitist on July 28, 2014 at 5:56 PM

roflmao. Nice revisionist history.
Midas on July 28, 2014 at 6:11 PM

Bubble inflated and burst under Bush, a Republican Congress and a Radian Fed Chair.

Facts are tough, sometimes.

urban elitist on July 28, 2014 at 6:15 PM

yeah, but it was bush-reid-pelosi!!!11!11!

/repuglican retort

ThisIsYourBrainOnKoch on July 28, 2014 at 6:13 PM

I don’t know what a “repuglican” is, but here’s my retort:

Report: Government is responsible for housing bubble, not banks

NotCoach on July 28, 2014 at 6:16 PM

…the data shows that most if the loss in net worth came 2007-2009 and thus on the Bush and not the Obama watch.
 
urban elitist on July 28, 2014 at 6:09 PM

 
So we’re back to the president actually being responsible for what happens while he’s in office for this thread?

rogerb on July 28, 2014 at 6:18 PM

Bubble inflated and burst under Bush, a Republican Congress and a Radian Fed Chair.

Facts are tough, sometimes.

urban elitist on July 28, 2014 at 6:15 PM

Here’s How The Community Reinvestment Act Led To The Housing Bubble’s Lax Lending

NotCoach on July 28, 2014 at 6:19 PM

Urban and you cannot connect Bush to the bubble burst as far as causation goes. You know it but you don’t care. You’re a dishonest piece of shit.

CW on July 28, 2014 at 6:25 PM

the data shows that most if the loss in net worth came 2007-2009 and thus on the Bush and not the Obama watch.

urban elitist on July 28, 2014 at 6:09 PM

So we’re back to the president actually being responsible for what happens while he’s in office for this thread?

rogerb on July 28, 2014 at 6:18 PM

Heh.

Urban’s silly as usual. What a little boy.

CW on July 28, 2014 at 6:26 PM

H1-Bs to the rescue!

corona79 on July 28, 2014 at 6:29 PM

Urban , say tell me 3 negative things that Obama owns…

Also, the Dems controlled Congress the last two years of GW’s 2nd term and the first two of O’s- do they own any of this?

Say, why did you guys rebuff the GOPs attempts to regulate Fannie Mae?

http://www.youtube.com/watch?v=NQXbT5ZMYaY

POS.

http://www.youtube.com/watch?v=A_2D4mK95NQ

Trash.

Goose stepping boot licker you are.

CW on July 28, 2014 at 6:33 PM

Urban and you cannot connect Bush to the bubble burst as far as causation goes. You know it but you don’t care. You’re a dishonest piece of shit.

CW on July 28, 2014 at 6:25 PM

Certainly the republicans were running the show and at the very least we’re guilty of doing nothing as the conditions for a crash were created.

But it more the banks than anyone (though this implicates Republican regulatory policy).

The phenomenon that turned this from a real estate crisis was the collapse of mortgage lenders (many if not most non-bank lending companies like countrywide which we’re not subject to the CRA) who lent money recklessly thinking they could offload the risk by bundling and selling the mortgages, and the Bear Stearns/Lehmans of the world who hubristically believed that they had eliminated risk and could make a fortune by leveraging to ridiculous levels and buying all those bad mortgages (thus creating demand for more sloppy underwriting).

And, don’t forgot the rating agencies.

urban elitist on July 28, 2014 at 6:34 PM

While we’re piling on to what is clearly an embarrassment, I should point out that if you actually click through to the study referenced by the original article, the data shows that most if the loss in net worth came 2007-2009 and thus on the Bush and not the Obama watch.

urban elitist on July 28, 2014 at 6:09 PM

1/3/2007 – Present:
Barack Obama has been in the majority party the entire time, while
George W. Bush was in the minority party from 1/3/2007 – 1/20/2009, and hasn’t been involved at all since.

Majority party defined as the party holding majority control of Washington, D.C. (holding 2+ out of 3 of the House, Senate, and Presidency).

ITguy on July 28, 2014 at 6:35 PM

All you have to do is open your eyes.

Of course, all that light can hurt the eyes at first.

formwiz on July 28, 2014 at 6:36 PM

“That’s good; suck it, trucon rubes” — Ned Pepper

Schadenfreude on July 28, 2014 at 6:42 PM

What will kill the leftist thugs:

- Economy (outside of the 1%rs all lost under obama)

- Security (IS, via open borders, will kill you)

Schadenfreude on July 28, 2014 at 6:43 PM

I love stupid trolls, especially when they talk out of their butts about economics. “Obama can do no wrong, and Bush could do no right.”

Obama and his admin have no discernible talent for solving problems.

non-nonpartisan on July 28, 2014 at 6:46 PM

The housing crisis did indeed cause a lot of the mess we are in. This crisis was created by Democrats, fed by Democrats, and every attempt to ward off the pending disaster was warded off by Democrats. However even the housing crisis couldn’t cause this precipitous of a drop in net household worth. The Fed printing money to finance our debt, on the other hand, continually contributes to our economic demise. Inflating the currency ALWAYS devalues the currency, and when a larger share of said currency is being funneled into the federal government you can expect the private sector, i.e. private citizens, to feel the bite. Unless you live in Section 8 housing and use an Obamaphone of course.

Ms. Anthrope on July 28, 2014 at 6:51 PM

The graph is misleading concerning the employed population of the USA.

The change was bad, around 65% to 59%.

But low information graph readers will see 70% to around 10%.

slp on July 28, 2014 at 6:52 PM

Failing to distinguish between net worth and income is a serious mistake.

Marsili.us on July 28, 2014 at 6:55 PM

It’s largely loss in home equity experienced when the Bush housing bubble burst.

This is kind of old news, actually.

urban elitist on July 28, 2014 at 5:56 PM

Leftist fu*kers, Barney Franks and Clinton, Dodd…imposing that all the ineligible rats buy homes they could never pay the mortgages for…you are so dumb that I hope you’d yell from it. It would be deafening to the world.

Schadenfreude on July 28, 2014 at 6:59 PM

Obama-worshipping illiberals: “Yeah, Obama admits he struggles with math above the 7th grade level, but don’t you don’t think for a moment this says anything about his ability to understand economics.”

non-nonpartisan on July 28, 2014 at 7:09 PM

Absolutely true. Myself, and everyone else I know did fine under Bush I, Clinton, and GW Bush. There were slight patches of strain, but never like this.

Obama is 8 years of Jimmy Carter Malaise & JFK foreign policy foulups.

portlandon on July 28, 2014 at 5:30 PM

Obama is 8 years of FDR’s failed New Deal efforts, 8 years of Jimmy Carter malaise, and JFK’s foreign policy foulups – and using a pen / phone to replace trying to stack the SCOTUS – and doing so in less than 6 years.

Athos on July 28, 2014 at 7:11 PM

Certainly the republicans were running the show and at the very least we’re guilty of doing nothing as the conditions for a crash were created.

Hardly. 14 different reform efforts were attempted and blocked by Barney Frank and Chris Dodd.

But it more the banks than anyone (though this implicates Republican regulatory policy).

So much stupid…. It was really the effects of Fannie Mae and Freddie Mac which asserted, promised, certified to the investment banks that every sliver of mortgage paper they bundled into securities was AAA – when in reality, the vast majority was worst than junk. Even Gretchen Morgensen knew this – and I highly recommend the NYT reporter’s book – Reckless Endangerment as some much needed education.

The phenomenon that turned this from a real estate crisis was the collapse of mortgage lenders (many if not most non-bank lending companies like countrywide which we’re not subject to the CRA) who lent money recklessly thinking they could offload the risk by bundling and selling the mortgages, and the Bear Stearns/Lehmans of the world who hubristically believed that they had eliminated risk and could make a fortune by leveraging to ridiculous levels and buying all those bad mortgages (thus creating demand for more sloppy underwriting).

And even more stupid….

The lending challenges directly came from the Democratic efforts to lend / enable home ownership to as a form of AA – as if everyone has a right to own a home even if they lack the discipline, job, income, credit history to warrant the receipt of a mortgage. That failure combined with the Democratic efforts to mask their direct role contributed to the downstream effects and legislative pieces of crap like Dodd / Frank or the DoJ / Treasury extortion of banks – almost all were and remain substantial Democrat political donors.

Athos on July 28, 2014 at 7:25 PM

urban elitist on July 28, 2014 at 6:34 PM

Frankly, you need to stop posting about economics or even cause and effect theories. You are incredibly naive and bad at it – offering little more than the rote doctrinaire and asshattery one would expect from a Soviet economist spinning the 1933-1938 5 Year plan for agriculture in the Ukraine.

Athos on July 28, 2014 at 7:28 PM

A simple graph, however, will help pinpoint the problem:

Note well the red line (Employment-Population Ratio) in the graph above, and note the correlation of which political party held majority control in Washington, D.C. …

Under President Bush with a Republican House & Senate (Jan 2001 – Dec 2006) the Employment-Population Ratio NEVER went below 62%, even in the wake of the Dot Com Bust and the 9/11/2001 attacks.

For 72 straight months of GOP majorities, the E-P Ratio NEVER went below 62%.

On January 3, 2007, Obama and his Democrat peers took majority control of the House and Senate. Since then, we have now gone:
70 straight months below 62%,
66 straight months below 61%,
64 straight months below 60%, and
58 straight months at or below 59%.

Number of months of below 62% employment under 1995-2006 GOP majorities:
ZERO
Number of months of below 62% employment under 2007-2014 DEM majorities:
70 straight months and counting…

(Current: 59%, a LONG way away from 62% employment!)

The worst month under Bush was better than the best month under Obama!

ITguy on July 28, 2014 at 7:57 PM

Certainly the republicans were running the show and at the very least we’re guilty of doing nothing as the conditions for a crash were created.

urban elitist on July 28, 2014 at 6:34 PM

New Agency Proposed to Oversee Freddie Mac and Fannie Mae (article written on September 11, 2003)

The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

_______________________________________________________

Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

”I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said.

tanked59 on July 28, 2014 at 8:01 PM

How the Democrats Created the Financial Crisis: Kevin Hassett

_________________________________________________

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn’t become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn’t even get the Senate to vote on the matter.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0

tanked59 on July 28, 2014 at 8:06 PM

I make it a rule never to accept economic economic analysis from someone too stupid up know the difference between “household income” and “net worth, as Bruce here seems to be.

urban elitist on July 28, 2014 at 5:47 PM

+1. It’s almost as bad as hearing some moron referencing “profit and earning ratios”.

rogerb on July 28, 2014 at 5:57 PM

BAM!!

Hill60 on July 29, 2014 at 1:01 AM

this all started before obama was even president.

ThisIsYourBrainOnKoch on July 28, 2014 at 5:38 PM

And how did the Democrat-Controlled Congress followed by Dear Leader make it any better?

Think about it – average income is a total divided by a number. That means that the total income of everyone working is divided by the number of families out there.

Doesn’t matter how you spin it. Major corporation and bank profits are way up while income and spending power for average Americans is way down. Guess all we can do is sit around and assign blame. Not really helpful.

But, I would hope the Libs get that Obama is a front man for these corporate and banking interests-but, of course, they won’t. They’ll stick to blaming the “Party of the Rich”.

I will also say that these profits may actually be a cheap money (low interest) mirage-that is, there’s a huge bubble waiting to burst.

Dr. ZhivBlago on July 29, 2014 at 2:31 AM

Bubble inflated and burst under Bush, a Republican Congress and a Radian Fed Chair.

Facts are tough, sometimes.

urban elitist on July 28, 2014 at 6:15 PM

Cites a timeline during which Democrats controlled both houses of Congress, calls it “a Republican Congress”, then makes a snarky remark about facts.

*slow clap*

The Schaef on July 29, 2014 at 9:30 AM

Let’s also remember the SEC relaxed the net capital rule for large brokerages. That also contributed to the crisis:

http://en.wikipedia.org/wiki/Net_capital_rule.

jim56 on July 29, 2014 at 12:22 PM