U.S. Senate See Full Big Line

(D) J. Hickenlooper*

(R) Somebody

80%

20%

(D) Phil Weiser

(D) Joe Neguse

(D) Jena Griswold

60%

60%

40%↓

Att. General See Full Big Line

(D) M. Dougherty

(D) Alexis King

(D) Brian Mason

40%

40%

30%

Sec. of State See Full Big Line
(D) A. Gonzalez

(D) George Stern

(R) Sheri Davis

50%↑

40%

30%

State Treasurer See Full Big Line

(D) Brianna Titone

(R) Kevin Grantham

(D) Jerry DiTullio

60%

30%

20%

CO-01 (Denver) See Full Big Line

(D) Diana DeGette*

(R) Somebody

90%

2%

CO-02 (Boulder-ish) See Full Big Line

(D) Joe Neguse*

(R) Somebody

90%

2%

CO-03 (West & Southern CO) See Full Big Line

(R) Jeff Hurd*

(D) Somebody

80%

40%

CO-04 (Northeast-ish Colorado) See Full Big Line

(R) Lauren Boebert*

(D) Somebody

90%

10%

CO-05 (Colorado Springs) See Full Big Line

(R) Jeff Crank*

(D) Somebody

80%

20%

CO-06 (Aurora) See Full Big Line

(D) Jason Crow*

(R) Somebody

90%

10%

CO-07 (Jefferson County) See Full Big Line

(D) B. Pettersen*

(R) Somebody

90%

10%

CO-08 (Northern Colo.) See Full Big Line

(R) Gabe Evans*

(D) Manny Rutinel

(D) Yadira Caraveo

50%

40%↑

30%

State Senate Majority See Full Big Line

DEMOCRATS

REPUBLICANS

80%

20%

State House Majority See Full Big Line

DEMOCRATS

REPUBLICANS

95%

5%

Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
September 26, 2008 10:50 PM UTC

How Bush, GOP Created The Mortgage Mess

  • 4 Comments
  • by: Nine House McCain

Tip to Balloon Juice for this link to an old Washington Post op-ed from February of this year:

Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers’ ability to repay, making loans with deceptive “teaser” rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.

Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers.

***

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

***

When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.

This was written by Eliot Spitzer, between Call Girls, as John Cole said.

This also doesn’t include the Bush Admins change of the SEC rule allowing Lehman, Morgan Stanley, Goldman, and the others to leverage their bullshit up to 40:1.

Obvious what this calls for is more tax breaks.

Comments

4 thoughts on “How Bush, GOP Created The Mortgage Mess

  1. regulating how much leverage investment banks could have.  

    FDIC regulates leverage in commercial banks, but the whole point of being an investment bank (well, a lot of it anyway) is to be free of the regulatory regimes that applies to commercial banks.

    Are you referring to the repeal of the Second Glass-Steagall Act, which mandated a separation between commercial banking and investment activities from 1933 until 1999?  This was repealed under Clinton Adminstration with legislation originally backed by Republicans only, but converted to a bipartisan bill in conference committee, known as the Gramm-Leach-Bliley Act.

    1. http://www.nysun.com/business/

      The Securities and Exchange Commission can blame itself for the current crisis. That is the allegation being made by a former SEC official, Lee Pickard, who says a rule change in 2004 led to the failure of Lehman Brothers, Bear Stearns, and Merrill Lynch.

      The SEC allowed five firms – the three that have collapsed plus Goldman Sachs and Morgan Stanley – to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults.

      Making matters worse, according to Mr. Pickard, who helped write the original rule in 1975 as director of the SEC’s trading and markets division, is a move by the SEC this month to further erode the restraints on surviving broker-dealers by withdrawing requirements that they maintain a certain level of rating from the ratings agencies.

      “They constructed a mechanism that simply didn’t work,” Mr. Pickard said. “The proof is in the pudding – three of the five broker-dealers have blown up.”

      The so-called net capital rule was created in 1975 to allow the SEC to oversee broker-dealers, or companies that trade securities for customers as well as their own accounts. It requires that firms value all of their tradable assets at market prices, and then it applies a haircut, or a discount, to account for the assets’ market risk. So equities, for example, have a haircut of 15%, while a 30-year Treasury bill, because it is less risky, has a 6% haircut.

Leave a Comment

Recent Comments


Posts about

Donald Trump
SEE MORE

Posts about

Rep. Lauren Boebert
SEE MORE

Posts about

Rep. Gabe Evans
SEE MORE

Posts about

Colorado House
SEE MORE

Posts about

Colorado Senate
SEE MORE

313 readers online now

Newsletter

Subscribe to our monthly newsletter to stay in the loop with regular updates!