"Dave" wrote in message
...
On Fri, 10 Oct 2008 11:30:31 -0700 (PDT), said:

We have a financial crisis caused by the CRA and commercial banks
giving mortgages to unsuitable lenders. But the investment banks have
nothing at all to do with the CRA and they're the biggest part of this
crisis.

You're seeing only part of the picture, Doug. The major players among the
home mortgage originators were neither the commercial banks (which lend
primarily to business) nor the investment banks (who also didn't generally
originate home mortgages). You had a vast universe of mortgage banks, S&Ls
community banks and others who originated mortgages, warehoused them for a
short time, and the sold them to investment banks, who packaged them into
pools, carved up those pools into various risk tranches, and sold the
pieces. Those pieces then ended up in the hands of a number of players,
including both investment banks buying the pieces, often the riskiest
pieces, on the basis of high leverage. Some, but not all, of the mortgage
originators were subject to CRA requirements. In addition, banks could
satisfy CRA requirements by buying into pools of mortgages made to buyers
in
poorer areas. CRA was, if you will, one element that increased the
pressure
to push more low quality mortgages through the pipeline, ultimately ending
up as parts of the pools.

When the high default rates surfaced, the effect was that nobody knew what
the value of the various pieces of the pooled mortgages were worth. Buying
dried up, depressing the value of these pools. Then mark to market
accounting came into the picture and said that since mortgage backed
obligations were being sold at low prices, everybody holding those
obligations had to write down the value of those obligations to the low
prices, whether or not they intended to sell at those prices. Those
write-downs hit earnings and reduced the regulatory capital of the
institutions holding them. Since the amount these institutions can lend is
limited by the ratio of their regulatory capital to their risk-weighted
assets and total assets, they reduced lending (loans are an asset on their
balance sheets), including not just home lending, but lending to
businesses,
and tried to raise capital. You can trace it from there.

I get to see the process first-hand, since I regularly have to wrestle
with
how community banks can stay in compliance with regulatory capital
requirements.

Maybe you can explain just a little further Dave. You may be making a
leap of faith here that I can't follow....

Hope this helped.

Well said.

Dave wrote:
Hope this helped.

Yes, well done & thanks.

Some of what you've written here, I already knew... some is new to me.

I don't have much of a head for business, machinery is much more
straightforward thanks. But I do have at least a bit of a head for
numbers and what a lot of people have been saying does not add up.

The CRA is part of the crash picture, chalk that up to the Law of
Unintended Consequences. But it ain't the biggest root cause.

We should work at raising the level of public discourse, not lowering
it.

Next... how about health care!

I'll start- saw a statistic a few weeks back that the "average" US
household spends about the same on electronics as on health care... I
bet this doesn't include employer-paid or gov't-supplied benefits, but
still it shows where the priority is.

Regards- Doug King

wrote:


Next... how about health care!

Ah now don't do that, Dave is sure that if you had some kind of
universal health care the "po" folks, having nothing better to do with
their time would spend most of their time enjoying the untold comforts
and amusements to found in your nations emergency rooms and physicians
waiting rooms.



I'll start- saw a statistic a few weeks back that the "average" US
household spends about the same on electronics as on health care... I
bet this doesn't include employer-paid or gov't-supplied benefits, but
still it shows where the priority is.
\

Actually I think that you spend about about $12,000 per capita on health
care, about the same that we do, except we all get it up here, not just
those who can afford it.

Cheers
Martin


A

Dave wrote:

Hope this helped.

That's got to be one of the better explanations I've read, thanks Dave.

It would appear that there is a lot of places to lay blame. The phrase
you used earlier (I think it was you) "Perfect Storm" seems most apt.

Cheers
Martin

On 9 Oct 2008 13:51:07 -0500, Dave wrote:

On Thu, 09 Oct 2008 13:26:02 -0500, said:

Really? Please quote the clause in the Community Reinvestment Act that
told investment banks to leverage their position in subprime CD0s to
suicidal heights. This mess isn't because of the CRA, it's because of
greed, and Wall Street group-think. Subprime mortgage defaults are only
the visible cause. A healthy bank can withstand a 25% default rate in
the subprime sector, leverage that risk to 33-1, as one bank did, and
it's bye-bye. Greed and bad business practices brought on this mess.

I think you'd best go take a nap while those who know something about the
topic have this discussion.

There you go, attacking the messenger rather than addressing the
issue. Maybe try throwing in some baby-talk to reinforce your lack of
a real and substantive response.

On 9 Oct 2008 17:08:01 -0500, Dave wrote:

On Thu, 09 Oct 2008 17:19:24 -0400, said:

There you go, attacking the messenger rather than addressing the
issue.

See my reply to Doug.

Didn't see it. This is usenet, Dave. Not all posts make it to all
servers. You are no Mark Twain, and I guess we can add that you are no
Sherlock Holmes, either.

wrote in message
...
On 9 Oct 2008 11:16:01 -0500, Dave wrote:

Generally accurate, but with two exceptions. First, removing the guvmint's


If you would stop spelling government in cutesey baby-talk, you might
gain at least slight credibility, Dave. Not guaranteed, of course...



He's attempting to show contempt for an institution of which he's a part.

--
"j" ganz @@
www.sailnow.com

"Dave" wrote in message
...
On Thu, 9 Oct 2008 10:19:31 -0700, "Capt. JG"
said:

an institution of which he's a part.

I don't think so.


Really? So you don't believe you have any say about how we govern
ourselves....

--
"j" ganz @@
www.sailnow.com

"Dave" wrote in message
...
On Thu, 9 Oct 2008 11:53:04 -0700, "Capt. JG"
said:

an institution of which he's a part.

I don't think so.


Really? So you don't believe you have any say about how we govern
ourselves....

Well, I do go to the polls and vote. Does that mean I'm a part of the
guvmint?


It means you are part of the problem. LOL

--
"j" ganz @@
www.sailnow.com

On 9 Oct 2008 15:28:02 -0500, Dave wrote:

On Thu, 9 Oct 2008 11:53:04 -0700, "Capt. JG" said:

an institution of which he's a part.

I don't think so.


Really? So you don't believe you have any say about how we govern
ourselves....

Well, I do go to the polls and vote. Does that mean I'm a part of the
guvmint?

Only if you believe in Democracy. In a Democracy, the citizens own the
government (that's "guvmint", for all you three year olds)