Good morning fellow Democrats!

good morning. terrible troll stuff last night. can we get a clean up?

i fully expect rush and the trolls to correct the erroneous claims they have been making about the cause of the economic crisis...yeah right!

AP IMPACT: Under pressure, US eased lending rules

By MATT APUZZO, Associated Press Writer

WASHINGTON – The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents.

"Expect fallout, expect foreclosures, expect horror stories," California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job.

Bowing to aggressive lobbying — along with assurances from banks that the troubled mortgages were OK — regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way.

"These mortgages have been considered more safe and sound for portfolio lenders than many fixed rate mortgages," David Schneider, home loan president of Washington Mutual, told federal regulators in early 2006. Two years later, WaMu became the largest bank failure in U.S. history.

The administration's blind eye to the impending crisis is emblematic of a philosophy that trusted market forces and discounted the need for government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s.

"We're going to be feeling the effects of the regulators' failure to address these mortgages for the next several years," said Kevin Stein of the California Reinvestment Coalition, who warned regulators to tighten lending rules before it was too late.

Many of the banks that fought to undermine the proposals by some regulators are now either out of business or accepting billions in federal aid to recover from a mortgage crisis they insisted would never come. Many executives remain in high-paying jobs, even after their assurances were proved false.

In 2005, faced with ominous signs the housing market was in jeopardy, bank regulators proposed new guidelines for banks writing risky loans. Today, in the midst of the worst housing recession in a generation, the proposal reads like a list of what-ifs:

_Regulators told bankers exotic mortgages were often inappropriate for buyers with bad credit.

_Banks would have been required to increase efforts to verify that buyers actually had jobs and could afford houses.

_Regulators proposed a cap on risky mortgages so a string of defaults wouldn't be crippling.

_Banks that bundled and sold mortgages were told to be sure investors knew exactly what they were buying.

_Regulators urged banks to help buyers make responsible decisions and clearly advise them that interest rates might skyrocket and huge payments might be due sooner than expected.

Those proposals all were stripped from the final rules. None required congressional approval or the president's signature.

"In hindsight, it was spot on," said Jeffrey Brown, a former top official at the Office of Comptroller of the Currency, one of the first agencies to raise concerns about risky lending.

Federal regulators were especially concerned about mortgages known as "option ARMs," which allow borrowers to make payments so low that mortgage debt actually increases every month. But banking executives accused the government of overreacting.

Bankers said such loans might be risky when approved with no money down or without ensuring buyers have jobs but such risk could be managed without government intervention.

"An open market will mean that different institutions will develop different methodologies for achieving this goal," Joseph Polizzotto, counsel to now-bankrupt Lehman Brothers, told U.S. regulators in a March 2006.

Countrywide Financial Corp., at the time the nation's largest mortgage lender, agreed. The proposal "appears excessive and will inhibit future innovation in the marketplace," said Mary Jane Seebach, managing director of public affairs.

One of the most contested rules said that before banks purchase mortgages from brokers, they should verify the process to ensure buyers could afford their homes. Some bankers now blame much of the housing crisis on brokers who wrote fraudulent, predatory loans. But in 2006, banks said they shouldn't have to double-check the brokers.

"It is not our role to be the regulator for the third-party lenders," wrote Ruthann Melbourne, chief risk officer of IndyMac Bank.

California-based IndyMac also criticized regulators for not recognizing the track record of interest-only loans and option ARMs, which accounted for 70 percent of IndyMac's 2005 mortgage portfolio. This summer, the government seized IndyMac and will pay an estimated $9 billion to ensure customers don't lose their deposits.

Last week, Downey Savings joined the growing list of failed banks. The problem: About 52 percent of its mortgage portfolio was tied up in risky option ARMs, which in 2006 Downey insisted were safe — maybe even safer than traditional 30-year mortgages.

"To conclude that 'nontraditional' equates to higher risk does not appropriately balance risk and compensating factors of these products," said Lillian Gavin, the bank's chief credit officer.

At least some regulators didn't buy it. The comptroller of the currency, John C. Dugan, was among the first to sound the alarm in mid-2005. Speaking to a consumer advocacy group, Dugan painted a troublesome picture of option-ARM lending. Many buyers, particularly those with bad credit, would soon be unable to afford their payments, he said. And if housing prices declined, homeowners wouldn't even be able to sell their way out of the mess.

It sounded simple, but "people kind of looked at us regulators as old-fashioned," said Brown, the agency's former deputy comptroller.

Diane Casey-Landry, of the American Bankers Association, said the industry feared a two-tiered system in which banks had to follow rules that mortgage brokers did not. She said opposition was based on the banks' best information.

"You're looking at a decline in real estate values that was never contemplated," she said.

Some saw problems coming. Community groups and even some in the mortgage business, like Welch, warned regulators not to ease their rules.

"We expect to see a huge increase in defaults, delinquencies and foreclosures as a result of the over selling of these products," Stein, the associate director of the California Reinvestment Coalition, wrote to regulators in 2006. The group advocates on housing and banking issues for low-income and minority residents.

The government's banking agencies spent nearly a year debating the rules, which required unanimous agreement among the OCC, Federal Deposit Insurance Corp., Federal Reserve, and the Office of Thrift Supervision — agencies that sometimes don't agree.

The Fed, for instance, was reluctant under Alan Greenspan to heavily regulate lending. Similarly, the Office of Thrift Supervision, an arm of the Treasury Department that regulated many in the subprime mortgage market, worried that restricting certain mortgages would hurt banks and consumers.

Grovetta Gardineer, OTS managing director for corporate and international activities, said the 2005 proposal "attempted to send an alarm bell that these products are bad." After hearing from banks, she said, regulators were persuaded that the loans themselves were not problematic as long as banks managed the risk. She disputes the notion that the rules were weakened.

In the past year, with Congress scrambling to stanch the bleeding in the financial industry, regulators have tightened rules on risky mortgages.

Congress is considering further tightening, including some of the same proposals abandoned years ago.

...so it seems clear that the bushies could have put the brakes on....bent over for their lobbyists and screwed up the world economy....

Here are some words we need to remember from 2004 and 2005. They are words to progressives, things we should not forget.

Howard Dean and Bob Borosage: words to progressive groups from 2004, 2005.....just as pertinent in 2008.

madfloridian on November 28, 2008 at 01:23 PM

As the resident centerist here, let me give you an idea of what the political center looks like from my perspective. Then, we can debate what is center, left, or right.

...

I could go on and if you have any questions, please feel free to ask. But I would respectfully remind you that the majority of Democrats elected in 2006 and 2008, including the President-Elect are either centerist or center-left. VA's two senators, Jim Webb and Mark Warner are a prime example of centerists.

Jim Webb won running on progressive issues, and using progressive views to describe his positions. He didn’t use EVERY progressive view on EVERY issue, but the issues he addressed, and the issues he still addresses, are STILL from a progressive point of view. . His main point was campaigning against the Iraq occupation. That’s what he called it, that’s how progressives see it, that’s how it is seen in the progressive views of “moderates”. If you call it as such to conservatives, they get confused and cry for their daddies.

You, Bob, have defined YOUR positions on certain issues. These are NOT the views held by all “centrists”. Joe Lieberman is also considered a “centrist” by many. (Hush, Pam) Chuck Hagel is considered one also. Their views pretty much don’t agree anywhere.

We will not stand for a repeat of the Carter Administration. We will not stand for blaming America for all of the world's problem nor will we reinstate welfare or affirmative action. With the exception of his trade policy, President Clinton was a good example of a centerist presidency. That seems like a good place to start for me. And considering the cabinet selections of the President-Elect, I think he mostly agrees. Time will tell.

BobVADemocratHawk on November 28, 2008 at 01:41 PM

Nah, Clinton was not centrist. Clinton was progressive in most areas, kinda conservative on trade. Little too loose with regulation and enforcement on those trade agreements.

Look, progressivism is built on a few main values…empathy, responsibility for yourself and others, and the strength to carry out those responsibilities. We have to take care of ourselves and others simply because it is the right thing to do. Because we can FEEL what it is like to be where they are. At the same time, we have to be responsible for choosing the right path, and when we make the wrong choice, we have to be responsible for standing up and owning our errors. We have to be strong enough to enforce our decisions, and strong enough to recognize when we are wrong.

GregL on December 1, 2008 at 08:32 AM

gregg,

The conservatives like to forget that the beef at the time of the American Revolution was taxation without representation...not taxation.

246
SandyH on December 1, 2008 at 09:48 AM

Ok slow ones, a state like mine, passes a law to cut off food stamps or health care to illegal aliens, lefties run to court and over turn the law, it is tax money spent on these programs, therefore it IS Taxation Without Representation.

Abortion, how many states have tried to outlaw it only to have a judge come back and force states to provide, again Taxation with no representation.

The few use the courts to force their will on the many, sounds like tyranny of old England to me.

why do you care cactus

HA!

I hope that come January, FOX has their press room seat AND all their credentials taken away and assigned to a rotating list of bloggers. It will be great to see Hannity's and O'Liely's heads explode when Markos gets a seat and FOX Spews has to stand outside, on the curb across the street.

Fox News shut out again at Obama press conference.

So, Obama puts Clinton people all around himself at the Whitehouse, then puts Hilary at the state Dept.

Wow, now he has more knives pointed at his back then turkey at Pammy's sisters house.

cactus get a job and leave this sight alone

I am uneasy at the thought of an Obama White House built on the ashes of the Clinton White House. Having Hillary as Secretary of State might advantages as far as her political connections go but her main connection, that being Bill, will be a distraction to her and Obama.

Bush: Iraq intelligence failure 'biggest regret'

WASHINGTON (AFP) – US President George W. Bush said in an interview set for broadcast Monday that he came to office "unprepared for war" and that his "biggest regret" was the US intelligence failure on Iraq...

http://news.yahoo.com/s/afp/20081201/pl_afp/uspoliticsbushiraqafghanistan

Bush came into this world unprepared for anything. Intelligence failure is what he was born with and his parents cultivated it. I doubt he realizes how much many Americans now regret that they ever voted for him.

It's a good think he was born rich and that others saw him as a easy puppet to manipulate for their own interests. He probably would have died from a drug or liquor overdose long ago if he hadn't been George H. Bush's son. He screwed up even then.

Good riddance, Spunky. We didn't know you well and could care less.

Doo-Bee-Doo-Bee-Doo on December 1, 2008 at 12:58 PM

DPD,

So the cloud lifted and somebody finally acknowledged that Faux News is not a news operation? Imagine that. Murdock should buy a chain of comedy clubs and put his "reporters" to work at doing something they're good at doing...making fools of themselves.

GregL...one reason that "centrists" were elected is because that was who was running. In 3 cases in my state Rahm and the state Democratic chairwoman picked the candidate....and the others were forced out by various means.

Here is an example, just one, but it happened many times over. Remember that the DCCC spent at least a quarter million against Dem candidate in IL 6 Christine Cegelis and were pro Duckworth.

This example though hurt my state so very much, and it lost us a seat in congress this year.

Mahoney vs Lutrin....what was done in FL 16th by Rahm and Thurman.

I don't go much by labels. I judge people by actions. The post I made about Dean and Borosage shows I respect actions they have taken to get our party back on track.

I don't know what label I would use, but the word "liberal" doesn't bother me at all.

It is the actions of the people in power in the party that I either respect or don't.

Panel says US has been in recession since Dec. '07

By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger

WASHINGTON – The U.S. economy has been in a recession since December 2007, the National Bureau of Economic Research said Monday.

The NBER — a private, nonprofit research organization — said its group of academic economists who determine business cycles met and decided that the U.S. recession began last December.

By one benchmark, a recession occurs whenever the gross domestic product, the total output of goods and services, declines for two consecutive quarters. The GDP turned negative in the July-September quarter of this year, and many economists believe it is falling in the current quarter at an even sharper rate...

http://news.yahoo.com/s/ap/20081201/ap_on_bi_ge/recession

So how did the MSM miss this one?

I saw the slide beginning in the marketing and advertising industry in the spring of 2007. When the construction industry bottomed out in the summer of 2007, it would have been a real clue to most intelligent people.

Why did all the news operations go along with Bush's rosy take on the economy the same way they did with the Iraqi invasion? Were all the corporate MSM outlets embedded domestically with the oil industry, too? Of course, they were.

The media had to prop up the war profiteers at the cost to everything else...so citizens wouldn't realize they were being stolen blind on the financial level.

We had a corrupt administration being enabled by a corrupt free press.

It's time to take away the license of any of these enablers to use the public airways and phone lines....they belong to we the people. Why do we tend to forget this? Murdock should be kicked back across the Pacific and made to take the Rev. Moon with him.

12 SandyH on December 1, 2008 at 02:56 PM

Did you read the part in that article where Chimpy said he wasn't prepared for war?

Well DUH! As a commenter at Think Progress pointed out

A Patriot Acting Says:

Let’s see if I can run this down:
He wasn’t prepared for college (Yale or Harvard)
He wasn’t prepared for the Texas Air Nat’l Guard
He wasn’t prepared to run Arbusto Energy
He wasn’t prepared to run the Texas Rangers
He wasn’t prepared to be Governor of Texas
He wasn’t prepared to be the War Presnit
He wasn’t prepared for the chewing and swallowing of a pretzel

He HAS however been preparing for some time now to flee to Parguay and hide from war crimes tribunals directly after January 20th 2009!
December 1st, 2008 at 11:43 am

What a miserable POS. I can't wait for 1-20-09. The end of an ERROR.

Then the sane people and the adults can take over.

OOPS, sorry. The "Think Progress" link:

Bush admits ‘I was unprepared for war.’

CactusBarrack on December 1, 2008 at 12:46 PM

We knew you had a problem with justice for all, but how that relates to women having babies and taxation is a mystery to me. You're beginning to sound more and more like Sarah Palin. I'd get that coherence thing fixed before people start laughing.

* * * *

Paulson just said he's not The Decider. Now there's another conservative that has lost all his credibility. Blame your incompetence on The Great Incompetent? Come on, Bush isn't holding a gun to your head...but Cheney might be?

The end of an ERROR.

Doo-Bee-Doo-Bee-Doo on December 1, 2008 at 03:18 PM

DPD,

I think I'll use that if you don't mind. It pretty much sums up the whole situation, doesn't it? What a riot.

LincolnParkLiberal on December 1, 2008 at 02:18 PM

LPL,

Obama will keep Clinton around as long as she and her connections are useful. One mistake or misstep by Bill and the deal is off. I think Hillary might kill him if he does. I wouldn't convict her.

You noticed that pretzel logic, too, Sandy?

NONE of his "examples" has anything to do with "taxation without representation". He has representatives so I don't know where his bizarre argument came from. If he doesn't like what they legislate, he has the opportunity to vote them out next election cycle. Or stop paying his taxes, like Schmo the Dumber.

Which reminds me, there is a company that has a Palin impersonator doing commercials for their Alaskan King Crab sale. I heard it a few times, but I have no idea what it's for. Maybe Red Lobster.

She starts out "Finally! A winner from Alaska, yew betcha...".

It's just funny that she has become an advertising caricature so soon after being the VP nominee. Even corporate America know she's a joke.

Afternoon Dems.

Taxation without representation meant that America still had to pay taxes, here in the US, even though they were not represented in England any longer.

NOW, each state has 2 Senators and Representatives based on number of people in the state to represent them in the Federal government. Each State itself, has legislatures divided by districts to represent the people for the state and state taxation. Towns have town councils who represent them and vote in town taxes.

Isn't it wonderful that we can now pay our taxes that our elected representatives put into law? Taxes are the price of a civilized society. Without them, we would be right back to cavemen!

20
SandyH on December 1, 2008 at 03:31 PM

A Republican friend of mine gave me a t-shirt with that printed on it last Christmas. I have no idea what to give her this year. Maybe a Palin "Chatty Cathy"-like doll. Pull the string and she says something stupid, "yew bercha".

From the same Think Progress link that DPD posted above:

Jackie Says:

...What’s funny is now Americans are making demands on Obama while for 8 years never asking Bush/Cheney one question.

December 1st, 2008 at 11:46 am

Isn't that the truth?

bbl.

Taxes are the price of a civilized society. Without them, we would be right back to cavemen!

PamB on December 1, 2008 at 03:40 PM

Pam,

I sorta thought our trolls spent a lot of time in cold dark places to come up with some of the things they say...just don't see the light.

I really need to see that movie about the underground city with Bill Murray as the corrupt mayor. Can't remember what it was called. It was based on a book or series of fantasy adventures?

later.

...What’s funny is now Americans are making demands on Obama while for 8 years never asking Bush/Cheney one question.

Isn't that the truth?

25SandyH on December 1, 2008 at 03:45 PM

You have to give it to Bush and his Bushwhackers, Sandy. they used 9/11 to their ultimate advantage, giving themselves Executive Privileges that past Presidents would have been jailed for! they used FEAR and threat of being anti-American if you questioned them.

There are still those out there who are afraid to death of the big bad terrorists, that Bush let get away. London, Spain, India. They are all out there alive and well, thanks to George Bush !

It would be really cool (not to mention precedent setting) if right after giving his inaugural speech, and before the parade to the White House PRESIDENT Obama whips out his pen and signs into LAW a whole boatload of new Legislation.

C'mon, Senators, dust off the Equal Rights Amendment.

Beef up the GI Bill? Done! Hire a Special Investigator to send Chimpy to the slammer? Can't happen soon enough!

Fully fund science? Enact Kyoto Treaty, Scrap No Child's behind left alone by the pervy Pugs? ALL fixed with 1 stroke of a pen.

Talk about hitting the ground running!

Governors press for stimulus bill by Inauguration

Good Afternoon all Good Dems! I hope you all had great thanksgiving holidays and that you are all safe and healthy! I found this article by Krugman on Truthout:

Deficits and the Future
Monday 01 December 2008
by: Paul Krugman, The New York Times

Right now there's intense debate about how aggressive the United States government should be in its attempts to turn the economy around. Many economists, myself included, are calling for a very large fiscal expansion to keep the economy from going into free fall. Others, however, worry about the burden that large budget deficits will place on future generations.

But the deficit worriers have it all wrong. Under current conditions, there's no trade-off between what's good in the short run and what's good for the long run; strong fiscal expansion would actually enhance the economy's long-run prospects.

The claim that budget deficits make the economy poorer in the long run is based on the belief that government borrowing "crowds out" private investment - that the government, by issuing lots of debt, drives up interest rates, which makes businesses unwilling to spend on new plant and equipment, and that this in turn reduces the economy's long-run rate of growth. Under normal circumstances there's a lot to this argument.

But circumstances right now are anything but normal. Consider what would happen next year if the Obama administration gave in to the deficit hawks and scaled back its fiscal plans.

Would this lead to lower interest rates? It certainly wouldn't lead to a reduction in short-term interest rates, which are more or less controlled by the Federal Reserve. The Fed is already keeping those rates as low as it can - virtually at zero - and won't change that policy unless it sees signs that the economy is threatening to overheat. And that doesn't seem like a realistic prospect any time soon.

What about longer-term rates? These rates, which are already at a half-century low, mainly reflect expected future short-term rates. Fiscal austerity could push them even lower - but only by creating expectations that the economy would remain deeply depressed for a long time, which would reduce, not increase, private investment.

The idea that tight fiscal policy when the economy is depressed actually reduces private investment isn't just a hypothetical argument: it's exactly what happened in two important episodes in history.

The first took place in 1937, when Franklin Roosevelt mistakenly heeded the advice of his own era's deficit worriers. He sharply reduced government spending, among other things cutting the Works Progress Administration in half, and also raised taxes. The result was a severe recession, and a steep fall in private investment.

The second episode took place 60 years later, in Japan. In 1996-97 the Japanese government tried to balance its budget, cutting spending and raising taxes. And again the recession that followed led to a steep fall in private investment.

Just to be clear, I'm not arguing that trying to reduce the budget deficit is always bad for private investment. You can make a reasonable case that Bill Clinton's fiscal restraint in the 1990s helped fuel the great U.S. investment boom of that decade, which in turn helped cause a resurgence in productivity growth.

What made fiscal austerity such a bad idea both in Roosevelt's America and in 1990s Japan were special circumstances: in both cases the government pulled back in the face of a liquidity trap, a situation in which the monetary authority had cut interest rates as far as it could, yet the economy was still operating far below capacity.

And we're in the same kind of trap today - which is why deficit worries are misplaced.

One more thing: Fiscal expansion will be even better for America's future if a large part of the expansion takes the form of public investment - of building roads, repairing bridges and developing new technologies, all of which make the nation richer in the long run.

Should the government have a permanent policy of running large budget deficits? Of course not. Although public debt isn't as bad a thing as many people believe - it's basically money we owe to ourselves - in the long run the government, like private individuals, has to match its spending to its income.

But right now we have a fundamental shortfall in private spending: consumers are rediscovering the virtues of saving at the same moment that businesses, burned by past excesses and hamstrung by the troubles of the financial system, are cutting back on investment. That gap will eventually close, but until it does, government spending must take up the slack. Otherwise, private investment, and the economy as a whole, will plunge even more.

The bottom line, then, is that people who think that fiscal expansion today is bad for future generations have got it exactly wrong. The best course of action, both for today's workers and for their children, is to do whatever it takes to get this economy on the road to recovery.

The final paragraph from:
Bush's Last Days: The Lamest Duck

In the end, though, it will not be the creative paralysis that defines Bush. It will be his intellectual laziness, at home and abroad. Bush never understood, or cared about, the delicate balance between freedom and regulation that was necessary to make markets work. He never understood, or cared about, the delicate balance between freedom and equity that was necessary to maintain the strong middle class required for both prosperity and democracy. He never considered the complexities of the cultures he was invading. He never understood that faith, unaccompanied by rigorous skepticism, is a recipe for myopia and foolishness. He is less than President now, and that is appropriate. He was never very much of one.

Read the whole thing - It's excellent:
http://www.truthout.org/112708C

President Elect Obama said "We only have one President." Yeah, it's nice to finally actually have a president - and at this moment in time - it's him, President Barak Obama.

Well, they finally admitted that we have been in a recession for the last year. The Market reacted to the news by dropping again.

all those lies by Bush that the economy was just fine!!!

Good afternoon fellow Democrats.

GregL on December 1, 2008 at 12:12 PM

Thank you for your insight. I see where you're coming from.

"Jeopardy" just did an entire category called "Sub-Prime 2008". It's all about Chimpy's economic meltdown. Talk about being current.

MIAMI (AP) - Rabbi Moishe Silverman stood taking inventory of a meat freezer at South Florida Kosher, the supermarket and butcher shop where he works. Dressed in a yarmulke and tie and wearing a plastic apron over his white butcher jacket, he surveyed the piled boxes of chicken and beef.

"Normally, this, on a Monday, this would be stacked up to here," he said, pointing to a mark on the wall above his head.

But the cardboard boxes of beef in the freezer mostly reached his knee. It's a scene being repeated in the freezers of kosher butchers and their customers across the nation.

The shortage is the result of the collapse of Agriprocessors Inc., formerly the largest kosher meatpacking company in the nation. In May, nearly 400 workers were arrested in an immigration raid at the company's Postville, Iowa, slaughterhouse.

Since then, the company has struggled, and the plant has closed. It stopped shipping beef about three weeks ago and chicken in the last week, customers said. Since there are only a handful of processors nationwide who slaughter animals according to Jewish law and under the supervision of rabbis, the shutdown has cut the kosher meat supply to the bone.

Other processors have been swamped with orders and either boosting the amount of meat they produce or refusing to take new clients. Some consumers are paying up to 40 percent more for the same meat. Markets and butchers say they can't get certain cuts of beef for their customers, largely Orthodox Jews, and some have had to rearrange what they do have to fill display shelves...

http://apnews.myway.com/article/20081201/D94PT7QG2.html

So Agriprocessors are folded up after all their illegal laborers got locked up? That's the way the system is supposed to work then. Some other company will step up soon enough.

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