On the one hand:
Obama visited a Ford plant in Wayne, Michigan to kick off a three-state tour ahead of his State of the Union Address later this month.
The president highlighted his administration’s efforts in the wake of the recession, saying “America’s resurgence is real.â€
“Plants like this one built more than cars,†Obama said. “They built the middle class in this country and that’s worth fighting for.â€
but on the other:
Alliance for American Manufacturing President Scott Paul said the president’s visit comes amid “the strongest period of manufacturing job growth since the early 1990s.â€
“But the administration fails to mention that we’ve only recovered one-third of the good-paying manufacturing jobs that were destroyed in the recession,†Paul said. “We still have a long way to go.â€
That reminds me of a wisecrack of Reagan’s: a recession is when your neighbor loses his job; depression is when you lose yours.
The DC environs has fared pretty well over the last eight years. No wonder things look rosier from there.
Steve was right. I don’t know how they did it, but former President Bush is deregulating and blowing up the economy again, and the bankers are deviously forcing unsuspecting saints into liar loans………………all while the social planners stand by innocently.
http://www.zerohedge.com/news/2015-01-08/president-obama-explains-how-fhas-3-down-mortgages-are-great-america-live-feed
And for their next trick……..a subprime-dependent auto industry. I think Dick Cheney got that assignment.
Drew, you’re noticing again.
White Racist Website, Hello!!
Somehow, and this is very surprising, Drew managed to forget the difference in default rates between liars loans (and we really include the option ARMs since they were big also) vs low down payment loans. In the current case, lenders are going to ask the kind of detailed questions they did not ask while they were deregulated. Penetrating questions like….”Do you have a job? Can you prove you have income?”
Anyway, just FTR, if this is coupled with PMI I don’t have much of a problem since then defaults are about same as 20% down loans. However, I don’t see this really taking off since it won’t generate the large fees that exploding ARMs, interest only loans and liars loans did.
Steve
@steve
… while they were deregulated…
I do not know what political hack you get your information from, but all US financial institutions have been regulated for the past 100 years. Financial institutions involved in mortgages can fall under several overlapping regulation bodies.
You may have heard of this worthless sack of shit Timothy Geithner. He was head of the NT Fed, and he was supposed to be regulating Countrywide. He did such a good idea that President Obama made him Treasury Secretary.
Maybe the problem is the regulators not the regulations. No, that would mean thinking for yourself, and why think for yourself when you have a political hack to tell you what to think?
I notice that the “liar’s loans” are now expanding to include others. Your political hack economic experts are too lazy to learn what the hell went on before it happened, and they are damn sure too lazy to do it now. I have outlined the differences between borrowers several times, and I am not doing it again.
The initial problems were in the ARM’s with low teaser rates for the just barely sub-Prime borrowers. (There are standards for sub-prime borrowers, and there is a lower limit.) These were having problems because of the rate jumps. Many were told that if they paid the notes on time, they could refinance as Prime Borrowers. Generally, this is a true statement, but you can only lift your score so much.
In addition to not meeting Prime Borrower requirements, many were in mortgages that had early payment penalty clauses. There were also interest only and less than interest only payment options for some mortgages, but these were mostly in the Alt-A loans.
Alt-A loans are used by contractors, investors, speculators, and others who do not intend for the house to be their primary residence, or they will not be living there very long. Many contractors buy houses, fix them, and sell them. This is how they earn a living, but they do not have a steady income, and they cannot document their ability to repay the loan. It is the same for investors or speculators, you can call them what you like.
When the market sags, the default rates on these mortgages increases. When a recession hits, defaults for all borrowers increase, but they have different expected percentages of failure. These defaults were also impacting the market, and this was further impacting the default rates.
This is only tangentially related to the larger financial collapse. That was caused because the financial system had leveraged these mortgages, and then, they had leveraged those instruments, and so on and so on.
Lending standards vary according to the regulating body, but there are accounting standards that must be met and no bank can be insolvent. In addition, public financial institutions are regulated like all other public corporations, and they have financial responsibilities.
The idea that a financial institution can do what the hell want because they are unregulated is ludacris. The problem is the regulators, regulation bodies, overlapping bodies, regulations, overlapping regulations, confusing regulations.
None of this is difficult to learn, but if you have a political agenda, it is best to keep your head up your ass. I have never been the Chief Loan Officer at any Bank. Nor am I the financial genius at a PE firm, but I do know how to find information. It is not difficult.
Had a certain hurricane not knocked me back several notches, I would have been able to use that knowledge, but from the final scope, it was probably best I was never able to start shorting those idiots.
You are also dull and boring, and I am rather tired of you.
Attempt to obfuscate if it makes you feel better, steve. It’s government sponsorship of credit to persons not capable of servicing the loan. That is, un creditworthy wrt the loan. The single most important underwriting criteria by a wide margin in a home mortgage is loan to value. 97% is reckless no matter the terms or rates. Period, full stop.
You are only fooling yourself.
@steve
I forgot to ask about the student loans.
Are the greedy Wall Street Bankers sneaking in at night and tricking the students into taking out loans for worthless degrees that they are not qualified to begin the courses?
Please explain.
@steve
One more thing that I keep forgetting about is the actual Alt-A Borrowers (“liars”). Because the political hacks you think are housing experts, they do not have a clue about the who, what, or how of a “liar loan”, and therefore, they do not understand that a high credit score is required.
Usually, these types of borrowers are not unsophisticated first time home buyers. They may have been unsophisticated first time speculators, but oh well. Too bad so sad, or tough f*cking luck.
Of course, the political hacks you consider experts are part of the same income bracket as the speculators who lost a ton of money. These types of loans should be called “speculator friends who got burned by the housing bust loans”.
Now, they are trying to place the blame for their friends dumb ass financial loses on somebody else.
Also, not everybody qualifies as sub-prime. There are standards. While we are at it, shadow banking sector is private banking, and it is no different than a physician’s private practice. He/she sees a patient, and they do not surface until they prescribe a medication, order a test, refer to a specialist, or need to operate. Nothing nefarious. No meeting in back alleys.
@Drew
I guess I am being whatever you are accusing me of this week, or my version of why there is so much hype over “liars loans” is closer to reality. There were abuses, but you know (or can find out) whether I am correct.
The real abuses were with the bottom sub-prime borrowers. Some things were probably taken for granted – refinance at prime during reset, but other things were evil – prepayment penalties. I contend that most of the badness was not necessarily evil, but it was necessary.
Except for the bubble, student loans are following housing loans, but in this case, it is not the evil greedy Wall Street Bankers. Well, it could be, but I am still waiting for an answer. For the record: It would not surprise me to find them involved, but like the political hacks, I am too lazy to find out. I have the balls to admit it.
The free/almost free access to government backed currency that is available to financial institutions to create credit. (NOTE: Consumer debt is not credit. Credit is an asset.) In the case of student loans, these are government run, but they have the same goal. They intend to create as much credit as possible, and they need to find buyers of their product.
The buyers are students and parents, and instead of a housing industry creating overpriced houses, we have an education industry creating overpriced degrees. The same types of sales tactics are being used. The buyers will be able to graduate, get a high paying job, and repay the loan. In essence, the borrower will be able to flip the degree.
As the supply of qualified students is used, the supply will need to be increased, and the academic standards will be lowered. There will be a push for unqualified students to go to a Community College, and to then reapply as a qualified student. In an effort to increase the supply, the schools will become more creative, and this will result in more students dropping out with nondischargeable loans.
Instead of Credit Rating Agencies, the government is going to create a credit rating system to eliminate fraud and abuse. Eventually, there will be an alphabet soup of regulatory bodies, and it will work as well as every other government scheme.
Are you getting the picture. Is everybody else getting the picture.
If the student loans could be securitized and leveraged, guess what would happen? They would become a bubble. PhD’s would no longer be the highest degree. There would be PhD.2, PhD.3, … PhD.n, PhD.n+1 (for you @Icepick). The education industry and the government financed industry would create jobs that would employ all the newly graduated students.
The problem is the free/almost free access to government backed currency that is available to financial institutions to create credit. If they did not have this access, their ability to lend would be severely limited. The government can push college all it wants, but without available financing, the student loan problem cannot manifest.
It is no different whether it is a government financial institutions or private financial institutions. The dynamic is the same.
Drug dealers do not want their product legalized. They understand that legalization means regulation and lowered profit. They prefer the legal wall between the public pharmaceutical industry and the private one. It keeps the government out of their business and profits high. You would think that highly educated people would understand this, but apparently not.
You stick to your version of reality where the do-gooders are really interested in doing good, and I will stick to mine where they are hustlers like everybody else.