HILLARY BLAMED HOMEOWNERS FOR THE 2008 FINANCIAL CRASH, "Should Have Known"

[appalachiablue]

This discussion thread was locked as off-topic by tammywammy (a host of the General Discussion forum).

According to Hillary Clinton, if you were a victim of the foreclosure crisis, it was probably your fault.

The only problem with that argument is that it’s not even close to factually correct.

Clinton in 2007: Homeowners “should have known they were getting in over their heads”

When Clinton ran for president during her second term as New York’s U.S. Senator, she gave a tepid speech at the NASDAQ headquarters on December 5, 2007 — before the financial crisis reached a boiling point — about reforming Wall Street’s housing loan practices, largely excusing financial criminals for their behavior.>“Now these economic problems are certainly not all Wall Street’s fault – not by a long shot,” Clinton said early in the speech. Clinton’s NASDAQ address amounted to essentially asking the financiers assembled to take voluntary action or else she would “consider legislation” to stop banks from kicking families out of their homes. But early on in the speech, Clinton placed equal blame for the subprime mortgage crisis on low-income homeowners alongside Wall Street.
“Homebuyers who paid extra fees to avoid documenting their income should have known they were getting in over their heads,” Clinton said.
One YouTube user found video of the statement and put it side-by-side with her claim at the first Democratic debate in which she said she went to Wall Street before the crisis and told them to “cut it out."
To her credit, Hillary Clinton did indeed give several detailed speeches criticizing Wall Street for the dishonest practices that led to the boom and burst of the subprime mortgage bubble. She also put forth a concrete proposal to crack down on predatory lending, although that bill died before even going to a committee vote. Clinton is a great orator and knows how to make a convincing argument to a captive audience. But what the former New York U.S. Senator says she’ll do is different than what she’s actually done when given the opportunity.

-Banks, not homeowners, caused financial crisis- Out of all 50 states, Hillary Clinton’s constituents in NEW YORK were some of the hardest hit by the foreclosure crisis. The U.S. Department of Justice’s $13 billion mortgage fraud settlement with JP Morgan set aside an entire $1 billion in restitution just for New York homeowners, out of a total $4 billion allocated for consumer relief. The bank was sued for selling mortgage-backed securities to investors, knowing full well the investments were bogus.
-In 2014, Bank of America paid a larger $16 billion settlement for committing the same crime in the years leading up to the financial meltdown. While Bear Stearns helped package mortgage-backed securities for JP Morgan, Bank of America’s partner-in-crime in peddling bogus securities was Merrill Lynch. Out of the $16.65 billion, $300 million was set aside for New York homeowners. The loans Hillary Clinton referred to in her December 2007 speech, in which potential home buyers pay extra fees to not disclose their income, accounted for 40 percent of new mortgages between 2006 and 2007, according to Forbes.
But unlike Clinton, financial experts put 90 percent of the responsibility for the housing crash on the backs of Wall Street banks. The subprime mortgage bubble was built as Bank of America and JP Morgan gave out home loans with no underwriting, meaning homeowners weren’t required to prove they could pay back the loans. This means, effectively, the banks knew the loans were destined for foreclosure before a loan was even granted.
In one instance, a JP Morgan home loan officer admitted to making up an applicant’s income level to make the income-to-loan ratio work. One applicant emailed Marc Bristol, a senior home loan officer for JP Morgan, telling him he had “concern” about the applicant’s income listed on the official mortgage loan application: I do not make $34,000 a month or anything close to this figure. I am not comfortable signing a document with a number I can not document in some form. Bristol responded by acting as if inflating the applicant’s income was standard procedure: This is a stated-income deal. We had to state an amount that will be consistent through each deal. There are certain ratios that have to be met for income to debt. With taxes and insurance on your current, this is the figure that made the ratios fit.

Besides, nobody forced the banks to make those loans in the first place: People shouldn’t be sympathetic to banks that effectively say: “Hey, we knew the applicants were lying and wouldn’t be able to repay the loans. We didn’t care because we didn’t hold onto the loans. We offloaded the risk to investors through the securitization process. But so what? Blame the deadbeat borrowers for the volume of foreclosures today.” When those homeowners went into foreclosure, the banks then refused to accurately modify mortgages, dooming families to eventual homelessness. These banks then bundled these bogus home loans, had them securitized by Bear Stearns and Merrill Lynch and rated AAA by the top ratings agencies, then turned them over to investors and ensured stockowners that they were making a solid investment, pocketing the profits and inflating the bubble they knew would eventually burst.

-Tough talk and soft treatment from Senator Hillary Clinton -As the Daily Beast pointed out, Clinton’s tough talk doesn’t jibe with her Senate record. When a sweeping housing reform passed the Senate in 2008, it did so without Clinton’s leadership. Senator Clinton didn’t even vote in favor of a bipartisan bill that would have repealed the carried-interest tax loophole often exploited by hedge fund managers and Wall Street executives, something she’s campaigned on as recently as last year. One reason Hillary Clinton makes tough talk about the financial firms but stops short of meaningful action might be due to her representing the same Wall Street banks that played a major role in the financial crisis as New York’s junior U.S. Senator. In addition to being former constituents of hers, JP Morgan and Bank of America are also some of Hillary Clinton’s main campaign donors. Throughout the course of her political career, JP Morgan contributed nearly $700,000 to her campaign war chest, making them her 4th-largest all-time donor. After Clinton left the State Department, she was paid $225,000 by Bank of America for just one speech. Bear Stearns contributed approximately $50,000 to Clinton’s campaign between 1999 and 2004. Merrill Lynch gave over $33,000 in that same time cycle.

If you plan on voting in the Democratic primary and you want a candidate to be tough on Wall Street, it’s important to compare Hillary Clinton’s words to her legislative record and her campaign finance filings before making your decision.

http://usuncut.com/politics/video-surfaces-of-hillary-clinton-blaming-homeowners-for-financial-crisis/

[Zorro]

1. If you took out a much bigger mortgage than you could reasonably afford

just because you could, well yeah then you own a share of that responsibility.

[appalachiablue]

2. The banks, investment firms, regulators, Fannie and Freddie, Mortage and Insurance

companies, underwriters, Real Estate Companies, the predators who collectively pushed and profited from the entire mass fraud, knew full well the outcome, not only in the US but in Ireland, Spain, Greece and other countries. I saw it first hand, know very well what took place and that the documentation exists. The global damage was tremendous and devastating, for decades to come.

[Mnpaul]

3. You don't expect Hillary to blame the owners of those golden handcuffs, do you?

It's much easier to blame minorities who don't have a voice. It's disgusting that Democrats are so dishonest on this issue. Poor people getting bad mortgages had little to do with this. It was the wide scale fraud that happened with these mortgages after they were written that was responsible for the crash.

[JDPriestly]

5. Mortgage companies and banks are supposed to check your tax returns and pay slips to make

sure you don't. That's part of their jobs.

The banks and mortgage companies were mostly at fault.

The value of housing can only, overall and in general, rise at the rate at which wages rise.

The value of housing rose and rose, and wages did not rise. That doesn't work, and the bankers should have known and I believe did know that.

Did you watch the Big Short?

It explains this.

[The2ndWheel]

22. Everyone had a hand in it

The government, mortgage companies, and banks just wanted the financial growth of selling homes, and if you limit those sales to those that only sit above some high cutoff, then you won't be selling too many houses. On the other hand, it's basic adding and subtracting. The people buying the houses aren't so dumb that they just walk in and have no idea of what's going on. Everyone wants to own a home, so enough people were more than willing to take advantage of what the government, mortgage companies and banks were doing.

As long as everyone is benefiting, more homes are being built and sold, more people are owning homes, nobody bats an eye to the situation.

[underahedgerow]

13. Absolutely, 100%. Yes, the banks were the bad guys in the overall debacle

but the origination of all of it was the bush regime deregulating mortgage regulations.

BUT MAKE SURE EVERYONE BLAMES MRS. CLINTON SO BERNIE CAN WIN.

Cause that just ain't happening. Sorry Bernie. You're a good guy, but trying to paint Mrs. Clinton as the evil witch isn't going to work.

[jtuck004]

4. That's an overly simplistic but predictable lie.

Examining the big lie: How the facts of the economic crisis stack up
Barry Ritholtz

...
•Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom. Check the mortgage origination data: The vast majority of subprime mortgages — the loans at the heart of the global crisis — were underwritten by unregulated private firms. These were lenders who sold the bulk of their mortgages to Wall Street, not to Fannie or Freddie. Indeed, these firms had no deposits, so they were not under the jurisdiction of the Federal Deposit Insurance Corp or the Office of Thrift Supervision. The relative market share of Fannie Mae and Freddie Mac dropped from a high of 57 percent of all new mortgage originations in 2003, down to 37 percent as the bubble was developing in 2005-06.

•Private lenders not subject to congressional regulations collapsed lending standards. Taking up that extra share were nonbanks selling mortgages elsewhere, not to the GSEs. Conforming mortgages had rules that were less profitable than the newfangled loans. Private securitizers — competitors of Fannie and Freddie — grew from 10 percent of the market in 2002 to nearly 40 percent in 2006. As a percentage of all mortgage-backed securities, private securitization grew from 23 percent in 2003 to 56 percent in 2006
...

https://www.washingtonpost.com/business/examining-the-big-lie-how-the-facts-of-the-economic-crisis-stack-up/2011/11/16/gIQA7G23cN_story.html

Feel free to read the book "The Big Short". It was a predatory action by the Bank$ter/jihadists that were big donors to the Democratic Party, several of whom are in this list of the largesgt donors from 2008:

University of California $1,799,460
Goldman Sachs $1,034,615
Harvard University $900,909
Microsoft Corp $854,717
JPMorgan Chase & Co $847,895
Google Inc $817,855
Citigroup Inc $755,057
US Government $638,335
Time Warner $617,844
...
https://www.opensecrets.org/pres08/contrib.php?cid=N00009638


They even made more than one movie about the theft, one of them by Robert Reich, who used to be a Clinton supporter.

Perhaps she was too busy speaking and cashing checks to read the book or see the movies.Then again, it's always easier to blame working people than one's rich friends.

[JDPriestly]

8. This is key:

"These were lenders who sold the bulk of their mortgages to Wall Street, not to Fannie or Freddie."

Banks and mortgage companies and all in the financial sector need to be closely watched and regulated.

[pnwmom]

6. Politifact, the non-partisan Fact Checker, has reviewed her claim that she called

for stronger mortgage regulations before the crisis. They rate her claim as TRUE.

And they say she angered Wall Street with these speeches.

http://www.politifact.com/truth-o-meter/statements/2015/jul/15/hillary-clinton/hillary-clinton-says-she-called-wall-street-regula/

Clinton, still a senator at the time, delivered a speech on the volatility of the subprime mortgage market on March 15, 2007. She said too many people were ignoring warning signs.

"The subprime problems are now creating massive issues on Wall Street," Clinton said. "It's a serious problem affecting our housing market and millions of hard-working families."

She gave specific proposals for addressing subprime mortgages, including expanding the role of the Federal Housing Administration, more borrowing options for underprivileged and first-time homebuyers, more safeguards against predatory lending practices and policies intended to prevent foreclosures.

SNIP

Our ruling

Clinton said she "called for addressing risks of derivatives, cracking down on subprime mortgages and improving financial oversight" early on in the financial crisis.

The crisis hit a peak in summer 2008, though it started to gain traction in 2007. Clinton began addressing the subprime mortgage issue in her appearances in March 2007. Later that year, she took on derivatives. She also proposed specific plans for solving these problems and increasing oversight of financial institutions.

Her statement is accurate, and we rate her claim True.

http://www.nytimes.com/2014/07/08/us/08wallst.html

Several people who advised Mrs. Clinton on her 2008 presidential campaign said the speech angered some of her Wall Street donors, who complained about what they viewed as her increasing antagonism to the industry. Mrs. Clinton has also called for eliminating the carried interest tax loophole.

“If you look at her positions, in my view, she was very aggressive on ensuring that Wall Street was better regulated and her argument about all these proposals is that this is going to be better for all of us,” said Neera Tanden, who was Mrs. Clinton’s policy director during the 2008 campaign.

[Kumbricia]

9. the cost of housing

Some people spend 60% of their income on rent because they have no choice because their income is low and rent is expensive. For years renters been told buying a home is a great way to build wealth. They hear that from coworkers, friends, family, the banks themselves, though nothing about potential risks. They've probably watched friends and family who were homeowners buy a home and build equity over the years. God knows their jobs aren't helping them build any wealth. And the bankers, the experts, whose job it is to inform their customers about the nature of their loans, didn't inform them that the interest rates would rise. In some cases, borrowers were qualified for lower rates but the lenders gave them higher rates - which increased rates of default. Yet homeowners are supposed to know - despite being deceived by lenders and actively encouraged to buy a home from virtually every corner.

[lancer78]

7. How "Elitist" of her

What did she expect these homeowners to do? Go out and give speeches to Wall Street like she did. Her ignorance of how real life is for the majority of Americans has been, and might be, her downfall.

The problem is/was stagnant wages. People really can't be blamed for buying a house that was more then they could afford if that was all that was available. And I am also sure a lot of the people who got foreclosed on had decent jobs and could afford their home at the time of purchase.

[JDPriestly]

10. Stagnant wages and rising housing prices. Obviously, the stagnant wages do not cover the

cost of the rising housing prices.

And where was the pressure to raise the housing prices coming from? Lax regulation of the mortgage market. And the Clintons and their repeal of Glass-Steagall and the Commodities Futures Act that was hidden in an omnibus budget bill passed at the last minute of the Clinton administration (with help from Gensler one of Clinton's current advisors as I understand it) set the stage for the derivatives that made the sale and purchase of these shaky mortgages attractive.

We do not need Hillary in the White House.

We need Bernie.

[pnwmom]

11. But only Bernie voted to deregulate derivatives, which was the real cause of the housing crisis --

and which Hillary had been warning about in 2007.


http://www.democraticunderground.com/?com=post&forum=1002&pid=7768981

[JDPriestly]

12. It was placed in a drastically necessary omnibus budget bill in the final days of the Clinton

administration and of course was signed by Bill Clinton.

Bernie did not explain that in the debate. I think it was Thom Hartmann who explained this in his show shortly after the debate.

Gensler, one of Hillary's advisors was involved in placing the Commodities Futures Act in that last minute Omnibus Budget bill at the end of Bill Clinton's term.

Hillary should not have gone there. It was not smart on her part. But then . . . . I don't expect that much from her.

The Commodity Futures Modernization Act of 2000 (CFMA) is United States federal legislation that officially ensured modernized regulation[1] of financial products known as over-the-counter derivatives. It was signed into law on December 21, 2000 by President Bill Clinton. It clarified the law so that most over-the-counter (OTC) derivatives transactions between "sophisticated parties" would not be regulated as "futures" under the Commodity Exchange Act of 1936 (CEA) or as "securities" under the federal securities laws. Instead, the major dealers of those products (banks and securities firms) would continue to have their dealings in OTC derivatives supervised by their federal regulators under general "safety and soundness" standards. The Commodity Futures Trading Commission's (CFTC) desire to have "Functional regulation" of the market was also rejected. Instead, the CFTC would continue to do "entity-based supervision of OTC derivatives dealers."[2] These derivatives, including the credit default swap, are a few of the many causes of the financial crisis of 2008 and the subsequent 2008–2012 global recession.[3]

. . . .

(footnote 56) "Accord Ends Dispute Between Regulators", New York Times, September 15, 2000. Remarks by Treasury Under Secretary Gary Gensler to the American Bankers Association Government Relations Council, September 19, 2000 (after describing the previous week's agreement between the SEC and CFTC to permit single stock futures trading and how that opened the way to enactment of the CFMA, Under Secretary Gensler stated "With this historic agreement, the Congress has a tremendous opportunity to complete this important legislation. We should not miss this opportunity to modernize the regulatory structure of our derivatives markets, reduce systemic risk, and promote the competitiveness of our markets.&quot Remarks by Treasury Assistant Secretary Lewis A. Sachs, Alexander Hamilton Awards New York, NY, September 26, 2000 (after describing the OTC derivatives market, Assistant Secretary Sachs promoted the OTC derivatives legislation in Congress because "this legislation would allow the electronic trading and centralized clearing of derivatives, thereby helping to: reduce counterparty risk; promote innovation; make our markets more competitive, transparent, and efficient; and reduce the costs of hedging risk and reducing exposure to other markets. It is important that Congress enact such legislation this year.&quot

. . . .

(footnote 67) "Statement by Treasury Secretary Lawrence H. Summers" ("We are pleased with the agreement reached last night on over-the-counter derivatives. We hope that Congress will now pass this important legislation that will allow the United States to maintain its competitive position in this rapidly growing sector by providing legal certainty and promoting innovation, transparency and efficiency in our financial markets.&quot "Treasury Under Secretary for Domestic Finance Gary Gensler Remarks to the Bond Market Association, New York, New York" ("As the markets turn increasingly to swaps to take on some of the functions played by Treasury securities, it is ever more important to provide legal certainty for these OTC derivatives. We have worked vigorously to pass legislation providing legal certainty for swaps under the Commodity Exchange Act. I am very pleased to announce that we reached agreement late last night with Congress on such legislation, the Commodity Futures Modernization Act of 2000. This legislation, if enacted, will provide legal certainty, promote innovation, and enhance the competitiveness of U.S. financial markets.&quot Michael Schroeder, "Treasury Officials, GOP Reach Accord on Commodities", Wall Street Journal, December 15, 2000 (Eastern Edition) at 1 ("Treasury officials and senior Republican lawmakers agreed on a bill to overhaul commodities regulation. The GOP leaders hoped for passage as early as today as part of a year-end budget bill. But last night, the appropriations committees were resisting inclusion of the complex measure...Federal Reserve Board Chairman Alan Greenspan and Treasury Secretary Lawrence Summers have said the legislation is critical to the nation's $80 trillion derivatives industry. Large banks and major corporations use derivatives to hedge risk. The measure exempts the over-the-counter financial contracts from regulation, settling an important derivatives-contract legality issue…After yearlong negotiations, proponents overcame partisan wrangling and a regulatory turf battle between the CFTC and Securities and Exchange Commission. Lifting a ban on futures contracts pegged to a company's stock was among the most contentious issues. In October, the House overwhelmingly passed a version of the bill. In the Senate, Banking Committee Chairman Phil Gramm (R., Texas) objected to certain provisions. The administration adamantly opposed his insistence on including swaps sellable to individual investors. In the compromise, he dropped his support for including retail swaps.&quot

. . . .

See also footnote 74.

https://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000

[pnwmom]

15. It was the Commodity Futures Modernization Act, a separate bill.

I don't blame him for voting for the Omnibus bill, but he also voted for the CFMA in an earlier, somewhat less toxic but still harmful form -- which never came across Clinton's desk.

After Bernie voted for the CMFA, it was revised and incorporated into the Omnibus bill. Clinton, like Bernie, didn't have much choice but to support the Omnibus bill.

In any case, in 2007 Hillary was warning about the risk and campaigning on a platform to reopen the topic of regulation. What was Bernie doing then?

http://www.huffingtonpost.com/entry/bernie-sanders-wall-street_us_5617f634e4b0dbb8000e5a58

When Sanders voted for the House version of the CFMA in October 2000, the bill was not yet a total debacle for Wall Street accountability advocates. The legislative text Sanders supported was clearly designed to curtail regulatory oversight. The GOP-authored bill was crafted as a response to a proposal from ex-Commodity Futures Trading Commission Chair Brooksley Born to ramp up oversight of derivatives. But the version Sanders initially voted for was more benign than the final, Gramm-authored version, and it didn’t draw any of the protests that the 1999 repeal of Glass-Steagall did. In October 2000, the bill passed the House by a vote of 377 to 4 (51 members didn’t vote), and then sat on the shelf for weeks.

But in December, Gramm — after coordinating with top Clinton administration officials — added much harder-edged deregulatory language to the bill, then attached the entire package to a must-pass 11,000-page bill funding the entire federal government.

[JDPriestly]

16. Bernie is way ahead of Hillary when it comes to voting to regulate Wall Street.

It is absurd to even bother to accuse Sanders of falling down on the job in this respect.

I suggest that those who have questions about Bernie's record read his book, Outsider in the White House. It answers all the questions about whether Bernie is conscientious and honest enough. He is.

[Democat]

14. Donald Trump posting openly on Democratic Underground now?

Can we ban the right wing trolls who do nothing but attack Democrats?

[JDPriestly]

17. Did you listen to the video? This is Hillary. Donald Trump is, for once, not the bad guy.

It's really Hillary who said that.

[VOX]

18. Please, please keep this stuff in GD-P...

So everybody's toxic broadsides can at least be contained in one place.

Thank you!

[mmonk]

19. A main reason for me why the 2016 race is the most difficult one for me

[appalachiablue]

20. That's the same for many people who understand or were affected by the massive

predatory subprime mortgage fraud and Crash of 2008 that caused millions of people to go into foreclosure, lose homes, jobs, retirement funds, life savings, become homeless or live in underwater houses they can't sell for market value. The number is staggering of those who saw the only financial security they had vanish permanently to never recover and be able to pass on anything to their children who will struggle to survive in the new jobless economy.

[mmonk]

21. Well said.

[tammywammy]

23. Locking

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