do you know what the federal reserve is?

[CA renter]

[quote=SK in CV][quote=investor] Barney frank was also having an affair with the head of either freddie or fannie at the same time they were being pressured to allow low income people (minorities amoung them) access to mortgages that they could not pay back. [/quote]

In debate we’d say that begs the question. In court we’d say you are presuming facts not yet in evidence.

Frank acknowledged his relationships, it wasn’t an affair. Both were single, and it lasted most of the ’90s. How was that relationship even related to the subprime crisis? (It ended many years ago.)

I’m reasonably sure there is no evidence that either Fannie or Freddie were ever “pressured to allow low income people (minorities amoung them) access to mortgages that they could not pay back”. Who is “they” that applied the pressure for that specific action? Precisely when do you believe this happened? Was it when Frank was sponsoring legislation to limit that very thing in 2004? Or was it in 2002 when the foreclosure rate on almost all loans was close to zero? Or was it even earlier, while he was voting against Gramm–Leach–Bliley and he actually had a relationship with a Fannie employee?[/quote]

I am also of the belief that Fannie, Freddie, and the CRA had very little to do with the “mortgage crisis”/credit bubble. They’ve all been around for a long time, and we’ve never had a credit bubble like the one in 2001-2006.

Fannie Mae was established as a federal agency in 1938, and was chartered by Congress in 1968 as a private shareholder-owned company.

http://www.fanniemae.com/kb/index?page=home&c=aboutus

Freddie Mac, one of America’s biggest buyers of home mortgages, is a stockholder-owned corporation chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing.

http://www.freddiemac.com/corporate/about_freddie.html

The Community Reinvestment Act (CRA), enacted by Congress in 1977 (12 U.S.C. 2901) and implemented by Regulations 12 CFR parts 25, 228, 345, and 563e, is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate.

http://www.ffiec.gov/cra/
———————-

Personally, I think the causes of the credit bubble are due to a few things:

1. The creation and widespread use of derivatives (credit default swaps, to be more specific) hid the price of risk from the more transparent bond market, and transferred it to the much more opaque derivatives market — which can also be far more leveraged. CDSs hide the price of risk which is usually visible in the bond markets. The low interest rates that resulted from unprecedented growth in the CDS market forced normally conservative investors further out on the risk curve. When that wasn’t enough, even these investors (like pension funds) had to get into the CDS market because it was the only way for them to more effectively manage the risk and earn greater returns.

Some interesting info…

From 2006:

Calculating this package of risk, which is likely to be correlated, still presents the market with
a challenge. With 30% of users taking risk on margin the question that remains unanswered is
whether the dealers could unwind fast enough following a severe market shock.
Credit Event Preparedness
As the universe of traded names grows into the thousands, the credit derivative market meets
a new challenge; how to monitor credit events? Whilst a default by a large well known
corporate is unlikely to be missed, a restructuring or even a failed payment by a smaller
corporate could be overlooked by the main-stream media sources. The solution for an
increasing number of users has been the use of electronic news feeds and intelligent search
engines. Nevertheless, this still throws out a considerable amount of data that will have to be
further filtered by human intervention.

http://www.eurexchange.com/download/documents/publications/Reoch_Eurex.pdf

AND (from 2008):

This past five years of historically low risk spreads was essentially caused by redefinition of ‘acceptable leverage’ in a post Sarbanes-Oxley world, where off balance sheet opaque bond derivatives positions became the de facto method of amping up revenues for insurers and financial institutions of all sorts.

http://www.istockanalyst.com/article/viewarticle/articleid/2629663

[For these reasons, I personally think we need to ban credit derivatives, or have a highly regulated — and very small — derivatives market that has strict capital requirements and very low leverage. It’s questionable as to whether or not we really need a CDS market, as risk is **supposed to be accounted for via higher interest rates.**]

2. The Fed’s monetary polcies (lowering interest rates well below where they “should” be…and holding them there for a prolonged period of time) also forced normally conservative investors further out on the risk curve, and encouraged ever-greater leverage.

3. The growth of the financial industry — to a point where excess capacity in the financial industry forced everyone to take on more risk in order to compete. This was exacerbated by the Fed’s actions when they lowered rates to 1% (and less, as they’re currently doing). IMHO, the growth of the derivatives markets is a direct result of this overcapacity.

A simple general equilibrium model is developed in order to separate
demand and supply factors in the market for financial intermediation. The demand
parameters accord well with historical evidence on the importance of entrants during
technological revolutions. The supply parameters suggest financial regress in the 1930s
and progress in the 1990s. The model accounts for much of the variation in the income
share of the financial sector from 1860 to 2001. Only the period 2002-2007 appears
puzzling.

http://pages.stern.nyu.edu/~tphilipp/papers/finsize.pdf

4. The repeal of Glass-Steagall also coincides with the beginning stages of the bubble.

5. …and the “Taxpayer Relief Act of 1997” also likely had a hand in it, as it encouraged more investors to turn their sights toward real estate as an investment…right before the relaxed lending standards set off a frenzy.

IMHO, it’s this confluence of events that really fired up the housing/credit bubble. Fannie, Freddie, and the CRA are easy scapegoats that likely had very little to do with it.

[investor]

Excellent comments, all. My purpose in starting this thread was to see if anyone had better information than what Griffin had, in his creature book about how the money flows into and out of the federal reserve. IMHO the best way to figure out an investment/company/corruption is to follow the money. What is interesting is that no one had any info better than what griffin had on pages 195 to 201 of his book. As you can tell by reading the posts, alot of opinion about alot of things but the bottom line is you cannot understand the fed, and therefore have an informed opinion about the fed until you know the money flows into and out of the fed. I don’t believe many people understand this but if what griffin says is true, despite his political leanings, which are irrelevant to the facts, the fed probably keeps billions of our money and influences governments to do what is in its best interest, not necesarily the american peoples best interest. I repeat, not one post offered any new information on the money flow through the fed. I find that very illuminating.

[investor]

Excellent comments, all. My purpose in starting this thread was to see if anyone had better information than what Griffin had, in his creature book about how the money flows into and out of the federal reserve. IMHO the best way to figure out an investment/company/corruption is to follow the money. What is interesting is that no one had any info better than what griffin had on pages 195 to 201 of his book. As you can tell by reading the posts, alot of opinion about alot of things but the bottom line is you cannot understand the fed, and therefore have an informed opinion about the fed until you know the money flows into and out of the fed. I don’t believe many people understand this but if what griffin says is true, despite his political leanings, which are irrelevant to the facts, the fed probably keeps billions of our money and influences governments to do what is in its best interest, not necesarily the american peoples best interest. I repeat, not one post offered any new information on the money flow through the fed. I find that very illuminating.

[investor]

Excellent comments, all. My purpose in starting this thread was to see if anyone had better information than what Griffin had, in his creature book about how the money flows into and out of the federal reserve. IMHO the best way to figure out an investment/company/corruption is to follow the money. What is interesting is that no one had any info better than what griffin had on pages 195 to 201 of his book. As you can tell by reading the posts, alot of opinion about alot of things but the bottom line is you cannot understand the fed, and therefore have an informed opinion about the fed until you know the money flows into and out of the fed. I don’t believe many people understand this but if what griffin says is true, despite his political leanings, which are irrelevant to the facts, the fed probably keeps billions of our money and influences governments to do what is in its best interest, not necesarily the american peoples best interest. I repeat, not one post offered any new information on the money flow through the fed. I find that very illuminating.

[investor]

Excellent comments, all. My purpose in starting this thread was to see if anyone had better information than what Griffin had, in his creature book about how the money flows into and out of the federal reserve. IMHO the best way to figure out an investment/company/corruption is to follow the money. What is interesting is that no one had any info better than what griffin had on pages 195 to 201 of his book. As you can tell by reading the posts, alot of opinion about alot of things but the bottom line is you cannot understand the fed, and therefore have an informed opinion about the fed until you know the money flows into and out of the fed. I don’t believe many people understand this but if what griffin says is true, despite his political leanings, which are irrelevant to the facts, the fed probably keeps billions of our money and influences governments to do what is in its best interest, not necesarily the american peoples best interest. I repeat, not one post offered any new information on the money flow through the fed. I find that very illuminating.

[investor]

Excellent comments, all. My purpose in starting this thread was to see if anyone had better information than what Griffin had, in his creature book about how the money flows into and out of the federal reserve. IMHO the best way to figure out an investment/company/corruption is to follow the money. What is interesting is that no one had any info better than what griffin had on pages 195 to 201 of his book. As you can tell by reading the posts, alot of opinion about alot of things but the bottom line is you cannot understand the fed, and therefore have an informed opinion about the fed until you know the money flows into and out of the fed. I don’t believe many people understand this but if what griffin says is true, despite his political leanings, which are irrelevant to the facts, the fed probably keeps billions of our money and influences governments to do what is in its best interest, not necesarily the american peoples best interest. I repeat, not one post offered any new information on the money flow through the fed. I find that very illuminating.

[davelj]

[quote=investor] What is interesting is that no one had any info better than what griffin had on pages 195 to 201 of his book.

[snip]

I repeat, not one post offered any new information on the money flow through the fed. I find that very illuminating.[/quote]

First of all, I doubt anyone here but yourself has bothered to read Griffin’s book (correct me if I’m wrong, “anyone”). Secondly, even if they had, I doubt anyone’s going to spend thousands of words rebutting SIX pages of points made by Griffin regarding the money flow through the Fed.

I could point to some obscure book on finance that spends six pages making some obscure point and then say, “See? No one is willing to refute the author’s point, therefore it must be correct!!”

Speaking for myself – I just don’t care enough what you think or why you think it to bother. And I doubt anyone else here does either. That should not be particularly illuminating.

[davelj]

[quote=investor] What is interesting is that no one had any info better than what griffin had on pages 195 to 201 of his book.

[snip]

I repeat, not one post offered any new information on the money flow through the fed. I find that very illuminating.[/quote]

First of all, I doubt anyone here but yourself has bothered to read Griffin’s book (correct me if I’m wrong, “anyone”). Secondly, even if they had, I doubt anyone’s going to spend thousands of words rebutting SIX pages of points made by Griffin regarding the money flow through the Fed.

I could point to some obscure book on finance that spends six pages making some obscure point and then say, “See? No one is willing to refute the author’s point, therefore it must be correct!!”

Speaking for myself – I just don’t care enough what you think or why you think it to bother. And I doubt anyone else here does either. That should not be particularly illuminating.

[davelj]

[quote=investor] What is interesting is that no one had any info better than what griffin had on pages 195 to 201 of his book.

[snip]

I repeat, not one post offered any new information on the money flow through the fed. I find that very illuminating.[/quote]

First of all, I doubt anyone here but yourself has bothered to read Griffin’s book (correct me if I’m wrong, “anyone”). Secondly, even if they had, I doubt anyone’s going to spend thousands of words rebutting SIX pages of points made by Griffin regarding the money flow through the Fed.

I could point to some obscure book on finance that spends six pages making some obscure point and then say, “See? No one is willing to refute the author’s point, therefore it must be correct!!”

Speaking for myself – I just don’t care enough what you think or why you think it to bother. And I doubt anyone else here does either. That should not be particularly illuminating.

[davelj]

[quote=investor] What is interesting is that no one had any info better than what griffin had on pages 195 to 201 of his book.

[snip]

I repeat, not one post offered any new information on the money flow through the fed. I find that very illuminating.[/quote]

First of all, I doubt anyone here but yourself has bothered to read Griffin’s book (correct me if I’m wrong, “anyone”). Secondly, even if they had, I doubt anyone’s going to spend thousands of words rebutting SIX pages of points made by Griffin regarding the money flow through the Fed.

I could point to some obscure book on finance that spends six pages making some obscure point and then say, “See? No one is willing to refute the author’s point, therefore it must be correct!!”

Speaking for myself – I just don’t care enough what you think or why you think it to bother. And I doubt anyone else here does either. That should not be particularly illuminating.

[davelj]

[quote=investor] What is interesting is that no one had any info better than what griffin had on pages 195 to 201 of his book.

[snip]

I repeat, not one post offered any new information on the money flow through the fed. I find that very illuminating.[/quote]

First of all, I doubt anyone here but yourself has bothered to read Griffin’s book (correct me if I’m wrong, “anyone”). Secondly, even if they had, I doubt anyone’s going to spend thousands of words rebutting SIX pages of points made by Griffin regarding the money flow through the Fed.

I could point to some obscure book on finance that spends six pages making some obscure point and then say, “See? No one is willing to refute the author’s point, therefore it must be correct!!”

Speaking for myself – I just don’t care enough what you think or why you think it to bother. And I doubt anyone else here does either. That should not be particularly illuminating.

[jpinpb]

investor – I have not read the book (and I’ve got too much going on to read it – maybe someday when/if I retire).

As I said way back, I did watch Money Masters. I found it an interesting take on history and economics and government. True or not. I tend to think it’s true.

Someone told me the general public can’t be told the truth. There would be anarchy. So I always think of that famous movie line, “You can’t handle the truth.” And some truths are just too horrible to believe it’s true. Much easier to think people are “conspiracy theorists.”

In any case, I have don’t have any better info, nor do I have answers. I only have questions, one which I posed earlier. What can we do about it?

[jpinpb]

investor – I have not read the book (and I’ve got too much going on to read it – maybe someday when/if I retire).

As I said way back, I did watch Money Masters. I found it an interesting take on history and economics and government. True or not. I tend to think it’s true.

Someone told me the general public can’t be told the truth. There would be anarchy. So I always think of that famous movie line, “You can’t handle the truth.” And some truths are just too horrible to believe it’s true. Much easier to think people are “conspiracy theorists.”

In any case, I have don’t have any better info, nor do I have answers. I only have questions, one which I posed earlier. What can we do about it?

[jpinpb]

investor – I have not read the book (and I’ve got too much going on to read it – maybe someday when/if I retire).

As I said way back, I did watch Money Masters. I found it an interesting take on history and economics and government. True or not. I tend to think it’s true.

Someone told me the general public can’t be told the truth. There would be anarchy. So I always think of that famous movie line, “You can’t handle the truth.” And some truths are just too horrible to believe it’s true. Much easier to think people are “conspiracy theorists.”

In any case, I have don’t have any better info, nor do I have answers. I only have questions, one which I posed earlier. What can we do about it?

[jpinpb]

investor – I have not read the book (and I’ve got too much going on to read it – maybe someday when/if I retire).

As I said way back, I did watch Money Masters. I found it an interesting take on history and economics and government. True or not. I tend to think it’s true.

Someone told me the general public can’t be told the truth. There would be anarchy. So I always think of that famous movie line, “You can’t handle the truth.” And some truths are just too horrible to believe it’s true. Much easier to think people are “conspiracy theorists.”

In any case, I have don’t have any better info, nor do I have answers. I only have questions, one which I posed earlier. What can we do about it?

[Author]

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