Blame speculators for the intensity of the boom and bust

The additional liquidity injected into the market by ever more exotic financial instruments to repackage the risky loans also gave a supply-push (of credit) to housing prices. With the philosophy that “anything worth doing is worth overdoing,” the ideas embodied in the pass-through mortgage instrument to provide more capital to lend were extended to the point that the instrument had no relation to the value of the underlying asset, cash flow and risk. Who you want to blame – banks or other financial institutions, the Fed, the SEC, or the borrowers themselves – is up to you. All are culpable.

It is notable that as the bubble subsides, in recovering markets housing prices are approaching values expected by extrapolation of the 1995 – 2002 (or thereabouts) trend line.

Men You are RIGHT ON THE MONEY !!!!! ***Finally I can wholeheartly AGREE.
GOOGLE the AUDIT of the FEDERAL RESERVE.
See 16 Trillion Given to foreign Banks !!!! Zero Interest ,,,,,USA dollars ,,,,in 2008.
Every Realtor Knows the Fed kept rates superlow after 9/11 2001 to create a bubble and make trillions, then raised rates Brutally .5 percent a month,,,,,from 3.0% to 6.75% then keep em so High the markets STOP WORKING….after everyone screams fed drop rates a 1/2 percent A MONTH to where they are today, Stripping the wealth right out of the USA,,but they are happy to lend you money back to you at a massive profit….yikes, I have said too much,,,connecting the dots after 25 years in finance, Look at Chase and the other Banks writing themselves checks, while we work through their mess. MERRY CHRISTMAS***HAPPY NEW YEAR**** 2012 will be the year of stabilization…flat bottom….

Wow! Really? Speculators are to blame for the housing mess? I have seen many trashed properties bought by speculators in my market that they have cleaned up, modernized, rehabbed and sold for a modest profit. I believe that is called capitalism. Speculators either pay cash or put 20-30% down. Actually Frank, the underwriting guidelines were a result of a stupid government that decided banks had better lend to everyone or else. Banks then came up with the loans that would allow them to do that. Many factors led to the destruction of the housing market and subsequently the economy but speculators were only a small part of it.

You guys are right about the Fed! And also, who designed those loan with little or no nown payment???
And who said that we were discriminating when we looked at credit and income for qualifying? (Dodd and Frank)
I think they were trying to put people into home ownership, when they should have remained renters untill they at least had a solid job and down payment.
The government and the Fed are to blame for this mess, and they keep trying to throw the blame to others.

A little cause and effect analysis produces a “flaming arrow theory” – destined to go down in flames but while it’s up, it might shed some light on the subject. “Down in flames” not because it’s wrong but because it will invoke the wrath of Big Government Bigots and the Anti-Capitalism Altruists.

Just so we’re all clear on this, the mortgage crisis was driven from the start by the government and has been many years in the making:

FDR created Federal National Mortgage Association (Fannie Mae) as part of the New Deal. Richard Nixon chartered the Federal Home Loan Mortgage Corporation (Freddie Mac) in 1970 (oops, what’s a Republican doing in this crowd?)

The Community Reinvestment Act was passed in 1977 to prevent “redlining” by banks of low income neighborhoods (oops, Reagan admin but this truly was needed to correct a bad practice that was truly wrong at the time. But then it got distorted…

The Clinton Administration instructed Fannie and Freddie to increase the number of mortgages in their portfolio from poor and minority communities. HUD Secretary Cuomo helped to facilitate a mandate to fund poor families with down payments and low interest mortgages, which amounted to “affirmative action” lending.

Then it really took off when activist groups like ACORN harassed banks and bank executives as well as threatened action under the CRA if the banks didn’t make more money available to poor neighborhoods.

Starting in 2000 Republican members of Congress and other outside groups called for stricter regulations on Fannie and Freddie, but many other members of Congress, predominately Barney Frank, Chris Dodd, etc. said there was no problem and threatened to block any stricter regulation of the two GSE’s (Government Sponsored Entities).

From an interview with Barney Frank, the Boston Globe reported the following:
“Frank, in his most detailed explanation to date about his actions, said in an interview he missed the warning signs because he was wearing ideological blinders. He said he had worried that Republican lawmakers and the Bush administration were going after Fannie and Freddie for their own ideological reasons and would curtail the lenders’ mission of providing affordable housing.”

Fannie and Freddie were exempted from Sarbanes Oxley reporting rules. The Democrats also threatened to filibuster any legislation designed to place stricter regulations on Fannie and Freddie. And no one went to jail when Fannie and Freddie were proven guilty of accounting fraud to the tune of $200 million. Maybe it had something to do with “connections”, e.g., a number of the key executives like Franklin Raines and Jamie Gorelick were former Clinton Administration officials and James Johnson was a Democratic Party Operative.

So not only did the regulators fail to regulate, but they used their political clout to build the house of cards. And when it all came tumbling down, the biggest card dealers in Washington, Frank and Dodd, were chartered to create more cards resulting in the Frank-Dodd bill that is guaranteed to set up the next banking crisis. And more insult-added-to-injury, the Dems and their media buddies are now busy vilifying Wall Street as the cause of all this because they sold flawed Mortgage Backs.

But wait a minute!!! Weren’t those flawed mortgages misrepresented to Wall Street as solid? Yes!. Wasn’t it the federally structured oligopoly of Moody Madness, Standard and Poorness, and Fitch Failures that misrated those mortgages? Yes! Didn’t the feds even admit that it was they did so? Yes!…

“The regulation of the Credit Rating Agencies (CRA’s) by the Securities and Exchange Commission (SEC) and the FED has eliminated competition between CRAs and practically forced market participants to use the services of the three big agencies, Standard and Poor’s, Moody’s and Fitch. SEC Commissioner Kathleen Casey has said that these three CRAs have acted much like Fannie Mae, Freddie Mac and other companies that dominate the market because of government actions. While the CRAs issued ratings that were “catastrophically misleading, these same rating agencies enjoyed their most profitable years ever during the past decade.”

Yeah, that’s what we thought.,,so did someone forget to tell those Occupiers on Wall Street that they should be occupying Washington?