Kris, No doubt Clinton's policies effected the leveraging of loans beyond the normal limits. No argument there.
The purpose was to help people who worked and live on the margins. A noble cause, arguable.
The Bush Bill failed in a republican congress, no? No doubt he knew it would.
If you examine the failures and foreclosure rates of fanny and freddy before the bubble you may discover that they were lower than the market average. Although the Mac loans were going to people on the margins the qualifications were high and so was the oversight. That's why Bill pushed harder, he thought that there was more wiggle room, he thought that the banks were not taking enough risk since the risk was being leverage by the Fed. He thought he could push the envelope, he did, and still the failure rates were low. To me that's the key,... were the Mac Loans failing, and from my observation they were not. Yes they had too much paper out on loan, but it wasn't foreclosing at a high rate, it was lower than average so the risk was worth it. Along comes a need to invest with an over liquid economy. There was tons of money and no place to put it. The tech market was saturated, 9-11 shifted huge borrowed funds to the pentagon, the economy was stagnant so property was stimulated, not by demand, but by lower rates and speculation. It was a windfall until Katrina and reality set in. My property value quadrupled in 5 years, which made me laugh and scream because i knew it was a fabrication and now I was forced to pay a huge insurance bill on a fabricated price and a tax increase to boot. The states, counties and local communities loved it, they had money to burn, they weren't about to regulate anything.
I got 5 offers a week to sell, 10 to buy, and that wasn't nothing compared to friends who lived on the beach and picked their mail off the ground because the box was too full to hold it. Their property increased 700%, how's them apples? And, the people who were buying up the properties were not home owners, they were speculators. They just passed the property back and forth between them for 5 years and not with freddy/fanny money. You had to be here to appreciate it. Loan sharks walking the streets giving out second morgages like milktoast and folks driving home in their new Escalades. These were smart people being convinced that they needed to get on the band wagon, it was so stupid. the cars were being sold with 0 down and no payments for 3 months, some were 6 months....please....my sides were killing me from laughing so hard. Welcome to Disney Town.
This area, like so many developing regions, were targeted by professionals. The failure here were by speculators not folks living on the margins buying houses beyond their means.
I'm sure as the economy begins to dry up, that more marginal people will fail, they are the first to loose, but they weren't the cause of our local crisis nor do I suspect they caused the failures in Nevada, California, or any other high impacted region. Property held in other states were not effected, it was only in developing or re-developing areas of the country. The first planned bailout was a joke, Paulson should be ashamed of himself for trying to bailout the speculators.
