I did not watch the Gibson Bush interview

[question everything]

we normally watch the ABC News but deliberately switched to NBC the other day.

Anyway, I saw a few clips on the Daily Show and wonder: Did Bush really blame "decades before me" on the Wall Street meltdown?

All he had to do is read regular newspapers to find out that:

1. After 9/11 Greenspan lowered interest rates to revive the economy and, indeed, for a while real estate was the only industry that kept us from going into recession

2. With prices going up on houses, many wanted to play the game and lenders were too eager to help them with sub prime and other creative loans for people who should have never purchased these houses. Of course, Bush was too happy to talk about he "ownership society.'

3. Lenders did not take any risks. They just issued the loans and then "bundled" them and sold them on the stock market. They had no incentives to issue loans only to worthy customers. Exactly the opposite. Their brokers earned fees on every loan issued.

4. Each group thought that someone else was in charge.

5. Practically every business writer in publications from left and right warned about the bubble. They predicted that the collapse would come in 2007 and 2008, since all those "teaser" loans for 2 years were issued in 2005 and 2006.

So what is he talking about?

[sandnsea]

1. You are missing the key factor

The resetting of interest rates which is where the increase in profit came. Most of the people could afford the homes and still could if it weren't for the interest resets. Real people with real mortgages are not the problem. The realization that the investments were not going to pay off because the resetting scheme was never feasible is what created this crisis. And no it did not start decades ago because the low income loan program is not the problem.

[question everything]

3. But the resetting is what made the house unrealistically affordable

Instead of having a conforming loan at, say, 5%, they were offered 1.95% which was an optional interest only. While people were paying the 1.95% loan, the real amount was added to their principal. And when, after two years, the loans were reset for the market rate, with higher amount of loans - they could not afford it. Meanwhile many found themselves in the same boat and wanted to sell their houses, prices were falling and homeowners could not refinance the loan.

Plus, too many loans were "zero down" so they had no equity and finally just walked away, not losing a dime.

[sandnsea]

7. Exactly. But that was the investment vehicle

That's what they were selling, the profit from the interest reset. If they had been happy to just write traditional mortgages and collect the interest, like they have forever, then none of this would have happened. The down payment has nothing to do with it. Plenty of realtors used trumped up "charities" to cycle down payments through, so the equity was there for many. That isn't the problem. Nobody is going to walk away from a home with a fair monthly mortgage. The reset is what caused the problem and the financiers planned it all along.

[Doremus]

2. "Their brokers earned fees on every loan issued." To clarify: The commission rates were WAY higher

for exotic loans.

In our county, there are whole streets in foreclosure where slime bags went door-to-door peddling easy money. No need to pick up a phone or get in the car to get scammed -- just open your front door and voila! Foreclosures for sale! Just sign right here!

:grr:

[mountainvue]

4. Actually the commissions were not higher for

sub prime loans. You could and still can make up to 5% commission on and FHA loan. I never saw anyone make that much on a sub prime loan. I don't even think the Alt A loans offered that much back in the day. Leave it to George to stick it to the independent brokers while his friends at Ameriquest, Countrywide etc. got away with making billions on so called exotic loans. Countrywide Full Spectrum lending was one of the most predatory operations I've ever seen. They were truly sickening.

[Doremus]

9. Yes they were.

"Because mortgage brokers do not lend their own money, there is no direct correlation
between loan performance and compensation for them. Brokers also have financial
incentive for selling complex ARMs because they earn higher commissions on them."

http://74.125.45.132/search?q=cache:Vf9c_0SfRl4J:business.cch.com/bankingfinance/focus/news/Subprime_WP_rev.pdf+subprime+loans+%22higher+commissions%22&hl=en&ct=clnk&cd=1&gl=us&client=firefox-a

"As the front page story in the December 3, 2007 edition of the Wall Street Journal points out, there’s alotta borrowers stuck in subprime loans because (insert gasp of surprise here) subprime loan originators made higher commissions and profits by steering unwitting consumers to these loans."

http://74.125.45.132/search?q=cache:K1ZoVy2Q2-sJ:www.nowwhatdoyoudo.com/articles/9-most-frequently-asked-questions-about-predatory-lending.html+subprime+loans+%22higher+commissions%22&hl=en&ct=clnk&cd=3&gl=us&client=firefox-a

[mountainvue]

10. Thanks for the links but I am an originator

and I know what I saw. I'm not shocked that the WSJ is trying to pin it on the little guy either. I might have to see if I can dig up any old sub prime rate sheets and post them for you. Now, some companies may have paid a higher commission split on the sub prime loans but I never heard of such a thing. The yield spread premium was never higher for sub prime. A paper always paid better and FHA did and still does pay best.

[silverlil]

5. I did not either

I cannot look at Bush, he makes me angry, so I do not watch him. I might get bashed here, but he had no business putting Saddam to death. He is no better than Saddam - Bush has the murder of almost a million people on his hands in Iraq and to have Saddam put to death on his watch is something we are going to have to live with for the rest of our lives. Saddam had nothing to do with September 11th or any harm to America.

Iraq did not ask for this invasion. Nothing will change my mind on this matter.

[question everything]

8. A commentary earlier today - don't remember where

said that after 9/11 he and Cheney were just looking for a scapegoat to take revenge.

On the other hand, someone told me that before the 2000 elections, he heard Wolfowitz saying that if Bush would win, we will invade Iraq and remove Saddam.

So, it appears that at least PNAC had this plan, all they needed was an excuse.

[Rhiannon12866]

6. Yes. The discussion on KO was whether he was throwing his Dad under the bus...

:eyes:

And he has to blame somebody else, as usual...:grr:

Apparently his closest advisors are brainstorming, trying to come up with a last minute plan to save his "legacy." Good luck to them...:rofl: