Thread: Subprime Crisis and the Government

This should be interesting: Countrywide Financial Offered Special Deals To Lawmakers Amid Probe - cbs4.com

Apparently Countrywide, one of the largest issuers of sub-prime housing loans was making special deals with members of the House Financial Services Committee, and others in Washington.

Of course the investigation is on-going, but it will be interesting to see just how far this goes. Might I speculate that a little "quid pro quo" was going on?

I have contended, based on what I've read, that much of this mortgage melt down and subsequent financial crisis was mainly due to government involvement. IIRC Barack Obama was one of the attorneys used by ACORN to sue Countrywide to make then give out loans in redlined communities.

Maybe Countrywide was just trying to get some of these loan pedelers off of their backs? But I'm speculating again. I know the article says Countrywide was trying to get regulators off their backs...

We'll see....

Originally Posted by honedright

I have contended, based on what I've read, that much of this mortgage melt down and subsequent financial crisis was mainly due to government involvement.

That's undoubtedly rue, but I think that component is way overstated. The scope of the whole thing was only made possible because of the the innovative financial instruments which as far as I'm concerned look underregulated, not overregulated. Greed trumping reason is what I see, but of course that's hindsight.

I think it's pretty obvious that the way capitalism works in USA it's not just the romantic world of simple and fair competition. Money and politics is so intertwined that once you have enough money you can influence the government either in or out of your and others' businesses depending on what's beneficial to you.

I thought Obama was just a community organizer and then a teachr, didn't realize he had a career as a lawyer too. But it's easier to perpetuate a rummor than quote a fact.

Originally Posted by honedright

Here you go. Lest we perpetuate a rumor, god forbid....As lawyer, Obama was strong, silent type :: CHICAGO SUN-TIMES :: 44: Barack Obama

Gosh Gugi, turns out I was quoting a fact. What do ya know!!

Thank you! So it was Citibank not Countrywide, and he worked $23000 worth on the case, which Citibank had to pay, because apparently they were found in the wrong. No mention of ACORN in that article either.

I guess the facts don't quite support the spin, do they.

Of course, now Citi is what 30% or so government owned? Could it be a double whammy that caused it - not only did they have make the bad loans, but also pay penalties for refusing to make them initially....
Or instead of speculating we can just look at what those 'bad assets' actually were and how did Citi get them in the first place.

I firmly believe it was a case of greed on the part of banks, pressure from the bank stock holders, government deregulation, and dumb ass consumers accepting loans they could not afford.

Why do I believe this? Because when I was searching for my first car, the salesperson kept pushing cars on me that I could not afford. Then they had me falsify my income. Predatory lending at work.... Government did not force the auto dealers to sell cars.

I make no claim to personal knowledge regarding predatory land purchases.

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