This California-based financial institution was previously doing a thriving business in no income, no asset, interest only, non-owner occupied mortgages with low “teaser” interest rates, but then for some reason they’ve run out of money:
Federal regulators on Friday shut down two big thrifts based in Southern California, saying they fell victim to the acute distress in the housing market in that state.
Yes, they are poor unfortunate victims of circumstances beyond their control. There really should be a government program to rescue companies like this that are so vital to the economy.
“h/t”
“There really should be a government program to rescue companies like this that are so vital to the economy.”
There is. It’s called “liquidate the assets and put the board and the officers in prison.”
This one is Bush’s fault too:
“Two-thirds of all Americans own their homes, yet we have a problem here in America because few than half of the Hispanics and half the African Americans own the home. That’s a homeownership gap. It’s a — it’s a gap that we’ve got to work together to close for the good of our country, for the sake of a more hopeful future. We’ve got to work to knock down the barriers that have created a homeownership gap.
I set an ambitious goal. It’s one that I believe we can achieve. It’s a clear goal, that by the end of this decade we’ll increase the number of minority homeowners by at least 5.5 million families. (Applause.)
Some may think that’s a stretch. I don’t think it is. I think it is realistic. I know we’re going to have to work together to achieve it. But when we do our communities will be stronger and so will our economy. Achieving the goal is going to require some good policies out of Washington. And it’s going to require a strong commitment from those of you involved in the housing industry.
Just by showing up at the conference, you show your commitment. And together, together we will work over the next decade to enable millions of our fellow Americans to own a piece of their own property, and that’s their home.
I appreciate so very much the home owners who are with us today, the Arias family, newly arrived from Peru. They live in Baltimore. Thanks to the Association of Real Estate Brokers, the help of some good folks in Baltimore, they figured out how to purchase their own home. Imagine to be coming to our country without a home, with a simple dream. And now they’re on stage here at this conference being one of the new home owners in the greatest land on the face of the Earth. I appreciate the Arias family coming. (Applause.)…
To open up the doors of homeownership there are some barriers, and I want to talk about four that need to be overcome. First, down payments. A lot of folks can’t make a down payment. They may be qualified. They may desire to buy a home, but they don’t have the money to make a down payment. I think if you were to talk to a lot of families that are desirous to have a home, they would tell you that the down payment is the hurdle that they can’t cross.”
– George W. Bush, October 15, 2002 White House Conference on Minority Homeownership.
The mortage companies only began ‘tarding out when Bush gave them the signal that the federal government would bail them out at the end of his term. Businesses aren’t *that* stupid, and don’t lend to deadbeats – unless the government has indicated that they will pick up the tab. And that is precisely what happened.
Clever observation Kate. You see whats coming.
Minny:
Suddenly the signal has changed to …. red light.
Anybody without a job or a source of income gets no loan.
Just like it is in Canada.
The American Dream used to be about equality of opportunity.
Somehow, it became politically defined as the equality of outcome.
Thanks for this … it confirms that the political culture looked the other way as Wall Street was creating highly-leveraged and worthless paper.
No wonder investors are now on strike. Their trust in government oversight of financial instruments has proven to be misplaced.
Forest Gump Explains the Mortgage Mess
Mortgage Backed Securities are like boxes of chocolates. Criminals on Wall Street stole a few chocolates from the boxes and replaced them with turds. Their criminal buddies at Standard & Poor rated these boxes AAA Investment Grade chocolates. These boxes were then sold all over the world to investors. Eventually somebody bites into a turd and discovers the crime. Suddenly nobody trusts American chocolates anymore worldwide.
Hank Paulson now wants the American taxpayers to buy up and hold all these boxes of turd-infested chocolates for $700 billion dollars until the market for turds returns to normal. Meanwhile, Hank’s buddies, the Wall Street criminals who stole all the good chocolates are not being investigated, arrested, or indicted.
Mama always said: ‘Sniff the chocolates first, Forrest’.
Quote of the day from a fund manager:
“This is worse than a divorce… I’ve lost half of my net worth and I still have my wife..”
The bailout, a different perspective
Back in 1990, the Government seized the Mustang Ranch brothel in Nevada for tax evasion and, as required by law, tried to run it. They failed and it closed.
Now we are trusting the economy of our country to a pack of nit-wits who couldn’t make money running a whore house and selling booze?
Minnesota Slim
Here is the rest of the speech, I could see nowhere Bush was promoting sub prime mortgages, it was more like here in Canada we have the CHMC whose qualifying criteria is harder than the banks, I know I used the CHMC for my first home.
http://www.whitehouse.gov/news/releases/2002/10/20021015-7.html
And in fact it was Carter who stared the Sub prime fiasco.
Minnesota Slim, you think this meltdown started 2002? That’s the stupidest thing I’ve ever seen on this blog. Ever.
Congratulations on winning Troll Of The Year.
“And in fact it was Carter who stared the Sub prime fiasco.”
LOL. Sure it wasn’t Van Buren? Here is Bush’s HUD head Mel Martinez explicitly admitting that the government has a goal to increase minority home ownership *and* an agreement with the private sector to make that happen:
“WASHINGTON – Miami-based Cuban-American artist Xavier Cortada today unveiled his mural, Stepping into the American Dream, in a ceremony hosted by Housing and Urban Development Secretary Mel Martinez.
Cortada painted the mural at the White House Conference on Minority Homeownership, held on October 15 in Washington, DC. The painting illustrates the Blueprint for the American Dream Partnership, a collaborative effort of the Bush Administration and members of the housing industry to meet the President’s goal of 5.5 million new minority homeowners by the year 2010.
“The Bush Administration is committed to helping people across the country realize the American Dream,” Martinez said at the unveiling ceremony. “We are proud to work with our partners in the private sector to achieve the President’s ambitious goal.”
Note the admission that the Bush administration was “work(ing)” with the “private sector” to “meet the President’s goal of 5.5 million new minority homeowners by the year 2010.” I’d recommend Captain Capitalism’s site and book for further reading.
http://www.cortada.com/projects/2002/white-house/unveiling.htm
Want more? OK:
“Bush seeks to increase minority homeownership
By Thomas A. Fogarty, USA TODAY
In a bid to boost minority homeownership, President Bush will ask Congress for authority to eliminate the down-payment requirement for Federal Housing Administration loans.
In announcing the plan Monday at a home builders show in Las Vegas, Federal Housing Commissioner John Weicher called the proposal the “most significant FHA initiative in more than a decade.” It would lead to 150,000 first-time owners annually, he said.”
http://www.usatoday.com/money/perfi/housing/2004-01-20-fha_x.htm
And it’s worth repeating that Bush asked congress to do this, not the other way around.
Not a heck of a lot of room to argue here, folks. Just admit that Bush screwed over hardworking American taxpayers. Or keep backpedaling and making hi-larious excuses, I’m easy either way.
Both the dems and the repubs were in on these fun and games. It has more to do with the mindset of making money fast than politics.
I remember hearing the salesman-owner of a car dealership talking about a finance employee he had hired from a bank and then fired because the man kept turning down people for credit who he thought were bad credit risks. The owner’s point of view was that the loan officer’s job was to get people money to buy their cars no matter what losers they were because the loans were some financial institutions problem: his problem was getting cars off the lot.
Clearly, in the drive for profits, the salesmen won out over the loan officers, and deregulation helped them do this.
The problem with letting them all go bust is that it leaves us we don’t know where: we’re not talking about one or two banks or thrifts. I’m sure that the reason Bush & Co. were so happy to step up to a bailout was because they didn’t want to step off the edge of a cliff and then see what happened. And if we’re not stepping off that cliff (and can it really be prevented?), then re-regulation is part of the future.
And in fact it was Carter who stared the Sub prime fiasco.
And I’m sure Tommy Douglas made him do it.
To give American minorites an OPPORTUNITY to own homes when they were fully qualified for a mortgage loan, but were turned down for prejudicial reasons was an admirable goal.
To give any American the OUTCOME of owning a home, whether they were able to make payments or not, is pure stupidity.
Any disagreement, manny?
Do you have the constitution, courage, balls, breasts, or whatever it takes to address the issue of slave labour?
slim
you’re an idiot that don’t seen to understand the mechanism at work, this mess started a long time ago, was accelerated by the likes of Reno during slick Willies blow threw the white house (admitted to by him) and aided and abetted by mostly lefties to present time (barny frank told bush back in 06 I think it was, that things were OK, they weren’t with fanny mae), so maybe Bush and crew thought that it was a good thing, it wasn’t and they should have done more in depth probing. But the damage was already done by 2004!!!!
Its a freakin’ troll avalanche! They’re coming out of the walls, kids!
Let me reiterate, Slim. If you think this thing got started as late as 2002, you’re dumber than a bag o’ hammers. The roots of this go back to before Lehman Brothers, Bear Stearns and etc. went private.
The Community RE investment act of 1977 and Mark to market coming from the Enron collapse.
“Here’s the lead of a New York Times story on Sept. 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.”
Bush tried to act. Who stopped him? Congress, especially Democrats with their deep financial and patronage ties to the two government-sponsored enterprises, Fannie and Freddie.
“These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Rep. Barney Frank, then 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.”
It’s pretty clear who was on the right side of that debate.
As for presidential contender John McCain, just two years after Bush’s plan, McCain also called for badly needed reforms to prevent a crisis like the one we’re now in.
“If Congress does not act,” McCain said in 2005, “American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole.”
For anyone who wants to understand money, inflation, and banking, I recommend:
“The Mystery of Banking”, by Murray Rothbard
(available at http://www.mises.org/store/product.aspx?ProductId=528)
“These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Rep. Barney Frank, then ranking Democrat on the Financial Services Committee.”
Wasn’t Barney Frank in a gay relationship with someone who worked for Fannie Mae or Freddie Mac when he made this statement?
batb
yup!!!!
There is a late night tv commercial running in my area that mentions the “bailout” and the cheap and easy refinancing that is now available through this sponsor’s company.
The market is responding, and just pouring gasoline on the fire IMO.