Bloomberg: 'Plain and Simple', Congress Caused the Mortgage Crisis, not the Big Banks

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    Nov 02, 2011 3:25 PM GMT
    http://www.capitalnewyork.com/article/culture/2011/11/3971362/bloomberg-plain-and-simple-congress-caused-mortgage-crisis-not-banks

    Mayor Michael Bloomberg said this morning that if there is anyone to blame for the mortgage crisis that led the collapse of the financial industry, it's not the "big banks," but Congress.

    Speaking at a business breakfast in midtown featuring Bloomberg and two former New York City mayors, Bloomberg was asked what he thought of the Occupy Wall Street protesters.

    "I hear your complaints," Bloomberg said. "Some of them are totally unfounded. It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I'm not saying I'm sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn't have gotten them without that.

    "But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it's one target, it's easy to blame them and congress certainly isn't going to blame themselves. At the same time, Congress is trying to pressure banks to loosen their lending standards to make more loans. This is exactly the same speech they criticized them for."

    Bloomberg went on to say it's "cathartic" and "entertaining" to blame people, but the important thing now is to fix the problem.

    The breakfast was hosted at the Hilton in midtown by the Association for a Better New York, an organization of New York City businesses celebrating its 40th anniversary. The event featured former New York City mayors Ed Koch and David Dinkins. Former mayor Rudy Giuliani was in California and sent in a brief video.


  • GQjock

    Posts: 11649

    Nov 02, 2011 5:05 PM GMT
    Ummmmm. ....... You DO know you're quoting the mayor of NYC erstwhile a leading member of e so called 1%

    Just to be clear icon_wink.gif
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    Nov 02, 2011 5:23 PM GMT
    Wow, finally somebody sums up what the original cause was in simple language. I'm surprised this is coming from Bloomberg.
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    Nov 02, 2011 5:34 PM GMT
    mocktwinkie saidWow, finally somebody sums up what the original cause was in simple language. I'm surprised this is coming from Bloomberg.

    the cause was practise of bundling and trading these thing . That was not Congress' doing.
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    Nov 02, 2011 5:42 PM GMT
    Upper_Cdn said
    mocktwinkie saidWow, finally somebody sums up what the original cause was in simple language. I'm surprised this is coming from Bloomberg.

    the cause was practise of bundling and trading these thing . That was not Congress' doing.


    Umm, do not be ridiculous by pretending that isn't part of the same thing. The demand by fannie and gang through order by congress was for bad loans, pure and simple. A number of factors contributed to these loans being "bad" and yet they were bought up en mass by fannie & gang who were setting the standards and the example for the commercial banks whom they were buying the loans from.
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    Nov 02, 2011 5:46 PM GMT
    mocktwinkie said
    Upper_Cdn said
    mocktwinkie saidWow, finally somebody sums up what the original cause was in simple language. I'm surprised this is coming from Bloomberg.

    the cause was practise of bundling and trading these thing . That was not Congress' doing.


    Umm, do not be ridiculous by pretending that isn't part of the same thing. The demand by fannie and gang through order by congress was for bad loans, pure and simple. A number of factors contributed to these loans being "bad" and yet they were bought up en mass by fannie & gang who were setting the standards and the example for the commercial banks whom they were buying the loans from.


    there is plenty of blame 2 go around, e.g., Allied Home Mortgage Corp.

    http://news.yahoo.com/feds-sue-mortgage-broker-alleging-lending-fraud-162126320.html
  • GQjock

    Posts: 11649

    Nov 02, 2011 5:51 PM GMT
    Congress in the form of deregulation set the stage

    ...... But in whose Interest was that stage set?

    Make believe this is CSI Wall Street ...... Or CSI Capitol Rotunda and you're Chris Meloni

    Who made out like bandits during this game ?

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    Nov 02, 2011 5:53 PM GMT
    mocktwinkie said
    Upper_Cdn said
    mocktwinkie saidWow, finally somebody sums up what the original cause was in simple language. I'm surprised this is coming from Bloomberg.

    the cause was practise of bundling and trading these thing . That was not Congress' doing.


    Umm, do not be ridiculous by pretending that isn't part of the same thing. The demand by fannie and gang through order by congress was for bad loans, pure and simple. A number of factors contributed to these loans being "bad" and yet they were bought up en mass by fannie & gang who were setting the standards and the example for the commercial banks whom they were buying the loans from.


    Bundling and trading the mortgages did not cause people to default on their loans, which is what lead to the crash. Bundling and trading these things made it so when the mortgage market crashed, so did the stock market, hence why everyone is now cray cray.
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    Nov 02, 2011 6:02 PM GMT
    tailgater_3 said
    mocktwinkie said
    Upper_Cdn said
    mocktwinkie saidWow, finally somebody sums up what the original cause was in simple language. I'm surprised this is coming from Bloomberg.

    the cause was practise of bundling and trading these thing . That was not Congress' doing.


    Umm, do not be ridiculous by pretending that isn't part of the same thing. The demand by fannie and gang through order by congress was for bad loans, pure and simple. A number of factors contributed to these loans being "bad" and yet they were bought up en mass by fannie & gang who were setting the standards and the example for the commercial banks whom they were buying the loans from.


    there is plenty of blame 2 go around, e.g., Allied Home Mortgage Corp.

    http://news.yahoo.com/feds-sue-mortgage-broker-alleging-lending-fraud-162126320.html


    Of course multiple entities were guilty but we are talking about the issues, the underlying issues that got this whole ball rolling.
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    Nov 02, 2011 6:03 PM GMT
    Bloomberg is right though, instead of us constantly worrying about who we are going to blame in the past (since there's plenty to go around), let's focus on making sure that congress and our president are not successful in their attempts to get banks to "loosen" their lending standards again (disguised as help for the poor) so that we can avoid yet ANOTHER housing crisis.
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    Nov 02, 2011 8:18 PM GMT
    mocktwinkie saidBloomberg is right though, instead of us constantly worrying about who we are going to blame in the past (since there's plenty to go around), let's focus on making sure that congress and our president are not successful in their attempts to get banks to "loosen" their lending standards again (disguised as help for the poor) so that we can avoid yet ANOTHER housing crisis.


    no worries, the housing market won't recover in 4 yrs.
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    Nov 02, 2011 8:37 PM GMT
    tailgater_3 said
    mocktwinkie saidBloomberg is right though, instead of us constantly worrying about who we are going to blame in the past (since there's plenty to go around), let's focus on making sure that congress and our president are not successful in their attempts to get banks to "loosen" their lending standards again (disguised as help for the poor) so that we can avoid yet ANOTHER housing crisis.


    no worries, the housing market won't recover 4 yrs.


    But will we learn from our mistakes and not repeat them, that is the question.
  • roadbikeRob

    Posts: 14395

    Nov 02, 2011 8:47 PM GMT
    Both Congress and the big banks are rightfully to blame for the financial crisis. Mayor Bloomberg is only half right.
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    Nov 02, 2011 8:59 PM GMT
    roadbikeRob saidBoth Congress and the big banks are rightfully to blame for the financial crisis. Mayor Bloomberg is only half right.


    I think he's identified the cause but realistically if you want to point fingers I think it was Mary Meeker who got it most right then - that it was 1/3 government, 1/3 big banks and 1/3 consumers. There was a lot of outright fraud on loan applications but there was even more unsustainable borrowing by people who were gambling that their homes would appreciate in value.
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    Nov 02, 2011 9:16 PM GMT
    http://rortybomb.wordpress.com/2011/11/01/bloombergs-awful-comment-what-can-we-say-for-certain-regarding-the-gses/

    I especially love part 4 where he details how Cato and AEI were saying in 2000 exactly the opposite of what they say now.icon_lol.gif
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    Nov 02, 2011 9:27 PM GMT
    q1w2e3 saidhttp://rortybomb.wordpress.com/2011/11/01/bloombergs-awful-comment-what-can-we-say-for-certain-regarding-the-gses/

    I especially love part 4 where he details how Cato and AEI were saying in 2000 exactly the opposite of what they say now.icon_lol.gif


    And of course now we know the regulations did the exact opposite precipitating a collapse in the financial system. A pyrrhic victory if ever I've heard one. icon_rolleyes.gif. Do you seriously want to go through all the times liberal commentators were wrong like Paul Krugman especially when he was for example on the board of Enron?

    The point of the critiques today and previously is that regulations that seek to remedy or push operational constraints result in unintended consequences. Somtimes they can be predicted and sometimes you can be right in those predictions. This isn't to say that it started out that these regulations resulted in fewer loans being made until they figured out how to get around the embedded costs such that the financial benefits were much greater.

    Can you even stop being partisan and actually think about the stuff you post?
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    Nov 02, 2011 9:31 PM GMT
    riddler78 said
    q1w2e3 saidhttp://rortybomb.wordpress.com/2011/11/01/bloombergs-awful-comment-what-can-we-say-for-certain-regarding-the-gses/

    I especially love part 4 where he details how Cato and AEI were saying in 2000 exactly the opposite of what they say now.icon_lol.gif


    And of course now we know the regulations did the exact opposite precipitating a collapse in the financial system. A pyrrhic victory if ever I've heard one. icon_rolleyes.gif. Do you seriously want to go through all the times liberal commentators were wrong like Paul Krugman especially when he was for example on the board of Enron?

    Can you even stop being partisan and actually think about the stuff you post?



    I'm not a big fan of Bloomberg the gun grabber, but I have to say that I agree with him on this. What gets me is why aren't the occupy protesters against the congress? They should be in Washington protesting at the capital.
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    Nov 02, 2011 9:51 PM GMT
    mocktwinkie saidBloomberg is right though, instead of us constantly worrying about who we are going to blame in the past (since there's plenty to go around), let's focus on making sure that congress and our president are not successful in their attempts to get banks to "loosen" their lending standards again (disguised as help for the poor) so that we can avoid yet ANOTHER housing crisis.


    We won't though. It’s every seven to maybe nine years, whether we need it or not. Sure, different reason each time, but it can and WILL happen again.

    We have a feeding frenzy right now on single tenant, single parcel, NNN absolute, long corporate lease, retail. You know what that's doing to prices. I need product right now for clients in their indentification period for an upleg. We're talking smaller stuff like corporate 7-elevens to bigger stuff like Best Buy, Walgreens, etc. Multi tenant sits, single tenant flies.

    Due to little to no construction financing, almost nothing was getting built so we have very little new supply coming on the market. Is this going to create a price bubble? It already has
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    Nov 02, 2011 9:52 PM GMT
    roadbikeRob saidBoth Congress and the big banks are rightfully to blame for the financial crisis. Mayor Bloomberg is only half right.


    And the CONSUMER.
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    Nov 02, 2011 10:01 PM GMT
    freedomisntfree said
    roadbikeRob saidBoth Congress and the big banks are rightfully to blame for the financial crisis. Mayor Bloomberg is only half right.


    And the CONSUMER.
    And RARELY do I agree with BOTH of you at the same time!
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    Nov 02, 2011 10:06 PM GMT
    TropicalMark said
    freedomisntfree said
    roadbikeRob saidBoth Congress and the big banks are rightfully to blame for the financial crisis. Mayor Bloomberg is only half right.


    And the CONSUMER.
    And RARELY do I agree with BOTH of you at the same time!


    I worked about 2/3rds residential up to about 2003 or 04 at Coldwell Banker in Santa Monica. Big office so we had an in-house mortgage broker, and it was amazing what consumers wanted to do - no hope of being able to pay if the market didn't keep going up by 15-20% /yr and they couldn't flip pretty quickly. It was unsustainable and I’m frankly surprise it went on for as long as it did.
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    Nov 02, 2011 11:14 PM GMT
    roadbikeRob saidBoth Congress and the big banks are rightfully to blame for the financial crisis. Mayor Bloomberg is only half right.


    I agree, but mainly in the capacity of banks taking the opportunity presented to them through legislative enabling. Fixing or preventing a crisis like this is not accomplished by complaining about a criminal on the loose, it's accomplished by keeping them in prison where they can only do so much harm.
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    Nov 03, 2011 1:40 AM GMT
    riddler78 said
    roadbikeRob saidBoth Congress and the big banks are rightfully to blame for the financial crisis. Mayor Bloomberg is only half right.


    I think he's identified the cause but realistically if you want to point fingers I think it was Mary Meeker who got it most right then - that it was 1/3 government, 1/3 big banks and 1/3 consumers. There was a lot of outright fraud on loan applications but there was even more unsustainable borrowing by people who were gambling that their homes would appreciate in value.


    As much as it pains me to agree with riddler78 icon_wink.gif , I concur 100% with the 1/3 government, 1/3 big banks and 1/3 consumers blame-game.

    Tristan