So, you're suggesting that the market shouldn't have followed the government's lead, here?

The government didn't take the lead, it just left the door open. The government was negligent, it let people do things they shouldn't have, but it didn't make them do it.

Once again, we hear Otter saying: "Flounder, take it easy, man... You F'd up... you TRUSTED us..."

Yes, but again you have it backwards. You, taking the side of the market, are blaming the government for trusting the market to act diligently instead of opportunistically.

This is what happens, Mcheal, when people try to toy with the free market, who really have no clue about how it works.

Now you're claiming that the CEOs of investment banks had no clue about how it works?

Yes, they were forced into making bad loans. Not, as you insinuate, by the government, but by the market. Once everyone else was writing bad loans, you either did the same or you watched your market share shrivel up and disappear.

So, you're suggesting that the market shouldn't have followed the government's lead, here? Once again, we hear Otter saying: "Flounder, take it easy, man... You F'd up... you TRUSTED us..."

This is what happens, Mcheal, when people try to toy with the free market, who really have no clue about how it works.

Of course! But, also, of course they were forced into such loans.

Yes, they were forced into making bad loans. Not, as you insinuate, by the government, but by the market. Once everyone else was writing bad loans, you either did the same or you watched your market share shrivel up and disappear. If you can't beat them, join them, was the rationalization. This has nothing to do with racism, or the appearance of racism, or the evils of equal opportunity.

It took more than government pushing for minority home ownership to make these people write bad loans, they had to have a way to absolve themselves of the responsibility. Ironically, the government came through for them on this too, allowing them to trade their responsibility on a market closed from regulation, closed from monitoring, and closed from auditing. People thought that they were diluting their risk, when in reality they were just trading their risky investment for someone else's risky investment, only they didn't know how risky the other guy's investments were, because there was no oversight.

So everyone thought they were gaming the system, you win if you are trading out more risk than you are trading in. This led to an incentive to obtain ever more, ever riskier debt in order to keep feeding the system.

Once the door was open, these cats sprinted thru it in pursuit of a fast buck

Of course! But, also, of course they were forced into such loans. think, now;

Once the government puts their stamp of approval on an MO, who are mere bankers to question it, particularly when the rest of the herd is on the 'I'm not racist' train? And how to explain to investors how it is yo're so far behind in the area of home loans when everyone else's values are skyrocketing, without sounding racist?

After all, being seen as an 'equal opportunity lender' is all he rage with the investors, just then, eh?

You speak of force? Trust me, bank officers who dind't make loans that matched the new criteria, didn't have a job next morning. Force enough, I suppose.

But who forced them them down that path, Steve?

Nobody forced them, so your premise is wrong, IMO. Too many were way to keen on these creative home loans, and CDOs and all these other instruments. Throw in Uncle Sugar always riding in and bailing them out, and the psuedo-regulation that lets smaller investors/consumers ignore trying to evaluate risk since the government will cover them and is regulating things.

Bit, tell ya what: We'll just assume you blame liberals for everything, and then maybe you can just post when liberals *aren't* responsible for something. That way, you'd save a lot of wasted breath.

Seriously, think of the things you could do instead of furiously blaming liberals for everything. You could go out and have a beer, kiss a girl, move out of your parent's basement. O the possibilities!!

Once the door was open, these cats sprinted thru it in pursuit of a fast buck. A business opportunity was created, and they took advantage of it, with no regard for the consequences, as long as they were making major scratch.

I think you're both exaggerating, just a little.

The government didn't force anybody to give out bad loans, they just set rules to try and promote home ownership among minorities, a noble cause if nothing else. The problem that they should have foreseen was that the easiest way for lenders to comply with those rules was to give loans to people who shouldn't have gotten them. As Bithead said, the higher-ups usually care more that everything is followed on paper than in practice, so claiming that there weren't enough qualified minorities wasn't going to cut it.

On the other hand, it's not like lenders naturally wanted to take advantage of these people for their own profit, after all there was nothing stopping them from doing that 10 years ago. The problem here is that once a large enough portion of your competitors starts making money hand over fist writing and selling sub-prime loans, you have to start doing it too, just to compete. It's like the doping argument: if it's allowed, even athletes who don't want to dope will be forced into it in order to stay in the game.

Once the door was open, these cats sprinted thru it in pursuit of a fast buck. A business opportunity was created, and they took advantage of it, with no regard for the consequences, as long as they were making major scratch.

All those brokers that were making 250k a year were dragged kicking and screaming into writing those loans

Why, yes, they were.
Why do you suppose a law was needed to accomplish the goal of getting them to write such loans, hmmm?

You either produced numbers that made the bank look good on the "I'm not racist" spreadsheet or you found another job.

You are right. All those brokers that were making 250k a year were dragged kicking and screaming into writing those loans, totally against their will. Jackbooted Democratic thugs where everywhere, intimidating these poor souls. Greed had nothing to do with it. Nothing, I say...

I wasn't saying you were, I was accusing Bithead of that.

Well, gee... guess what?

I am... and the facts back me up, there.

I sat down with a mortgage broker at the height of the real estate boom and for every concern I raised about adjustables, I heard a whole lot of "don't worry about that".

He just blew a bunch of smoke up my butt, and obviously did not care about us beyond making a deal and getting a check. No one from the government was pointing a gun at his head.
...
I well remember brokers at the local bar laughing about the deals they were making that they KNEW were going to fail and bragging about making 20k a month.

Incorrect. You seem to forget, I spent ten years at a national bank. I know.

You either produced numbers that made the bank look good on the "I'm not racist" spreadsheet or you found another job. You fail to understand just how foundationally the MO of lending institutions got changed by the government's tampering. What you describe was all part of that.

That all rests on government, and particularly on the Democrats.

You can argue the government opened the door, but a lot of folks happily rushed through it with $$$ dancing in their heads.

What you seem to keep neglecting is that nobody was given much choice. When the government says investment in loans to people with no credit is a valid thing to do, and requires banks to do this, why, everyone else falls into line or else.

I'm not trying to blame this just on the Democrats.

I wasn't saying you were, I was accusing Bithead of that.

At the very least, can we get a moratorium on earmarks and new government spending for a little while?

I doubt it. Democracy inherently encourages people to choose expedient actions, not correct ones. The only thing that's saved us from worse than this in the past is the fact that we are almost always divided on what we want.

Perhaps we'd do well to discuss your take on what those risky investments were/are. To what degree do they include questionable lending practices... lending to people who have no credit to speak of, for example?

Yes, we all know that you're desperate to blame all of this on the government, specifically the Democrats. You've made it painfully clear that is your agenda.

But in your haste you're overlooking the fact that his isn't just about mortgages anymore. They were the straw that broke the camel, but that camel was already loaded with all kinds of dead weight just waiting to drop, and most of that was not put there by bureaucrats.