Foreclosure crisis caused by “bubble fever” not lack of data
The foreclosure crisis was not the result of exploding option ARMs, poor housing policies or a lack of data.
Instead, Paul Willen, senior economist and policy advisor for the Federal Reserve Bank of Boston, blames it on a type of bubble fever that infected borrowers and financial institutions alike.
“It wasn’t the insiders who deceived borrowers and investors,” Willen said when speaking to a panel at the HousingWire REperform Conference in Dallas. “It was the idea that this was one of the greatest real estate booms in American history.”
In fact, Willen suggests all of the common causes typically assigned to the downturn are wrong.
Rest here…
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Please, when you are asserting blame for this fiasco, use the proper terms and definitions. “Broker/Dealers” are at the bottom of the chain. It is the “wholesale lenders” that follow under the TBTF Banks. ‘Broker/Dealers’ do not and cannot define terms or create mortgage programs. They are only the ‘selling arm’ of the wholesale lenders. I am a mortgage ‘broker’ and frankly I am sick to death of those who place the blame at the feet of those at the bottom! Granted, there were some of those brokers out there who went into a frenzy when those programs were issed by the Wall Street lenders because of the high volume dollars that it generated and incentives were generated by that same group of Wall Street (bankers) to promote those programs even further. Most of those same brokers are now out of the market. They lived high on the hog and spent money, lived lavishly and the majority are now broke! I feel sorry for those that got captured by these same people and I don’t feel sorry for those same brokers who are now broke but don’t place blame for one bad egg because there are those of us who still work under the premise that we provide sound practice. Many of those such brokers ‘contributed’ to the bubble but essentially it was the Wall Street banks that put the entire play into action. And nobody, not even this economist, can tell me that it was not planned ahead of time nor that they did not foresee the ultimate end of destruction of the middle class! The Dodd-Frank Act, although the basic ideal was on track, was too far in regulating those at the bottom of the pyramid and not enough to regulate the Wall Street banks. But that’s what happens when you have someone writing legislation who has ties to Wall Street. What we really needed was to have Glass-Steagall put back in place.
There were many carefully planned things that contributed to this PPONZI SCHEME of epic porportions, but not he ones being fed to the so called media (who by the way refuse to even talk about the massive losses the homeowners have taken.)Just another irresponsible attempt to “Blame the victems” akin to blaming the rape victem for being raped. I am not feeling too sorry for the investors at this point as most have already been made whole and the states have hijacked any money intended for distressed homeowners has been hijacked to fill in States budget gaps. Hey either this country is broke or not, which is it? They better make up their minds soon cause there are 60 million votes at stake, enough to sway the presidency one way or another. I have heard neither cadidate say a word about MORTGAE SERVICING & FORECLOSURE FRAUD. Responsible homeowners, what a laugh, 60 million people did not wake up one morning and decide to lose their homes all at once. Thats what smells like Bullshit! Maybe someone with some authority , opps I forgot we are now being governed by the TBTF’s. They have left many victems in their wake, they missed hardly anyone including Active Duty Soliediers and Veterans.Everyone seems to be made whole but the homeowner, not saying that the unemployment situation dosen’t factor into this but come on, many worked in consert to pull this one off right down to the County Recorders offices, whoo by the way take a Oath as “Officers of the Court” to ensure the “integraty and accuracy” of paper being filed in THEIR recorders offices. Too many working in consert to redistribute the weath away from the middle Not that the integraty of that is not in question class, I guess they think we don’t vote! So it was not just loss of income that contributed to this latest debauckele, it is properly coined as “Control Fraud”, couldn’t have happened without the cooperation of many and those who didn’t cooperate, well lets just say that they were shut up in some way, probably threats, Chicago style, and lets see. who in a position of power is from Chicago? Could it be, Ob…., no I must be mistaken, but I haven’t seen him lift a finger to help the very people who voted for him last time. I hope you remember this when you go to the polls this time.He took your jobs, your retirement funds and savings,can’t afford groceries or utilities, or uniforms for kids little leagues, (that is if they can still afford to have those) and now your homes, which have already been paid for many times over by insurance, credit default swaps, and insurance covering the investors (included in their pooling & servicing)agreements. But nobody wants to talk about , why? Because it was a big criminal enterprise started by the TBTF banking Cartels. Wake up America before its too late, your rights as Americans are being eroded dailey, Obama must go, not that alternative is any better to our cause (keeping our paid for homes)but at least we will keep our rights to due process and our constitution and bill of rights. Do the right thing folks or you may find yourself held in indefinate detention w/ no charges, one of the many exectutive orders he has used.Don’t take my word for it, look it up! So unemplyment is not the culprit, try the Housing Ponzi Scheme, had that not happened many would be employed. The only job growth has been in the Federal Goverment. Prctice your goosestepping if the evil one is re-elected.
It was the broker/dealers who sold the products. However, their game was not in those sales, it was in the credit default swap insurance the broker/dealers sold & the investors bought. They were all gambling & trying to make it look like they were doing legitamite business. They were not. The SEC, a self regulating entity, weakened the rules and allowed the broker/dealers to do whatever they wanted. As a result of the SEC’s failure to reign in excesses they are blaming others, namely the American people, and protecting their bondholders/shareholders and investors as if they own The United States of America. They do not. The investors bought gambles….not legal ownership. They all made massive amounts of wealth from our initial investments via the U.S. TREASURY..Because of the ORIGINATION FRAUD…the fact the FED never paid back the American people for the Original loan, means they cannot, and do not own anything or anyone in this country….our country…The United States of America. By U.S. LAW the banks, via their broker/dealers cannot SELL OWNERSHIP TO, TRANSFER or HOLD TITLE TO OUR COUNTRY because U.S. TAXPAYERS paid for everything upfront at the ORIGINATION. IT’S ALL FRAUD.
Oops …meant to say the CREDIT DEFAULT INSURANCE THE BROKER/DEALRS BOUGHT & THEIR INVESTORS BOUGHT….
Infected borrowers? Are “people who needed a place to live” included in this diagnosis? The folks on the other side of the table, the brokers and their management knew full well, and didn’t care, what loans they gave out. The borrowers assumed that they were vetted, even after they were preyed upon.
Wilen criticizes an assumption that has already been proven to be less than accurate:”
“that adjustable-rate, exploding mortgages blamed” were the sole cause. That was not the sole cause according to Bill Black, as just one example. So he clearly is making another assumption, with weak evidence. The 80s did not see what was seen in the housing bubble. The entire history of housing in this country, has not experienced such a blatant wave of outright looting. We have never seen our Government capitulate to such outrageous fraud either.
This is Housing Wire that Wilen is speaking to, expect more historical revisions from key players as we move forward. If only we could ram the idea down the parasites throats that BANKS are the ones responsible for prudent lending. That they have a responsibility far beyond what is currently regulated and legal. They set many, many people up to fail. They profited from it, even though they destroyed the very institutions they worked at!
Bankers are not the ones being thrown onto the street, they are not the ones who have lost all, they have not experienced any form of Justice to this day! So why didn’t Banks bother to help borrowers if asset prices go up n’ down Mr Willen? Should we wait for more articles that show how the Banksters were essentially blameless to prevailing economic “headwinds” and other blathering unsupported incoherence? Disgusting.
“It wasn’t the insiders who deceived borrowers and investors,” Willen said…
REALLY? Then how come the FBI itself pins 80% of the blame on “industry insiders”. Willen’s bankster-shill propaganda spin sure does smell like BS and there’s not enough Febreeze in the entire country to cover up the reek of his lies.
Millions of very responsible citizens were paying their mortgage just fine, and had for years lost their job.
It is that loss of income that caused this, not a bubble.
Put the blame where it belongs.