So there's this Occupy Wall Street protest in Manhattan today

[GasBandit]

Heh.

Ok yeah I guess I am nitpicking a bit. The CRA did have a role in this. But it was one of many different issues:

-Fannie/Freddie Securitization of CRA loans
-Repeal of Glass/Steagal and other deregulations
-Automated Undewriting/Reduced Loan Documentation
-Speculators shift from the internet boom to the housing boom

Ok, that sounds a little more in the realm of feasibility.

 

[Necronic]

They're set up to be terrible for the borrower. ARMs are set up so that when the rate increases the banks get more money and the lendee would be required to borrow more money from the bank and pay the prepayment penalty.

If the housing market is growing fast enough, and prime interest rates are low enough (and there is no reason to see them increase), you will never be under water on your mortgage. If you lose your job or whatever, you can resell the house and actually turn a profit on it.

In fact, with an ARM (without a prepayment penalty), if the prime interest rate decreases or stays the same then the ARM is actually a cheaper financing option that a traditional fixed rate loan.

This is why a lot of businesses operate using the commercial equivalent of ARMs. Not just in cost of capital, but cost of anything. Sometimes a company will choose to lock in a price on a commodity, like Southwest did with fuel, and it works out amazing. But that's not the only way things are done, in fact it's the exception, not the rule.

Now, what's good for a company may not be good for an individual. For individuals the security of a fixed rate loan is a good thing.

And yeah, most of the ARMs being sold were not even remotely in teh interest of the individual, but at that point they weren't in the interest of the banks either.

They're set up to be terrible for the borrower. ARMs are set up so that when the rate increases the banks get more money and the lendee would be required to borrow more money from the bank and pay the prepayment penalty.

ARMs with prepayment penalties are definitely predatory and incredibly stupid to take out (to the point that I would assume that anyone that has one doesn't understand what they have signed.) No disagreement there.

Why do you keep on talking about the banks when you have no idea what the hell you are talking about?
Subprime mortgages are mortgages that didn't meet the Fannie and Freddie underwritting guidelines. That is the exact definition and due to them having to meet Fannie and Freddie guidelines the banks couldn't tie in all the little things they used to gouge thousands of Americans out of billions of dollars.

I'll admit to being self-taught. But that is by no means a definition of it I have ever heard (in that exact sense). The way I understood it there were two uses of "subprime", the first describing any loan with interest rates above the prime rate, and the other describing the high risk loans like ARMs and 100% LTVs and whatnot.

I'll assume that your definition is the definite one though. Lets look at the statement, that subprime loans do not follow fannie and and freddie underwriting requirements, and therefore (I assume) wouldn't be securitized.

Which is funny considering the fact that Fannie/Freddie securitized billions of dollars of subprime/ARM loans from CRA (and other sources).

It's true that they won't touch ARMs with prepayment penalties though, but are all ARMs "subprime" or only the ones that have the prepayment penalties?

 

[Dubyamn]

If the housing market is growing fast enough, and prime interest rates are low enough (and there is no reason to see them increase), you will never be under water on your mortgage. If you lose your job or whatever, you can resell the house and actually turn a profit on it.

Same exact thing with a 30 year prime loan. However with a Subprime you have to refinance every couple of years when your monthly payment jumps up.

In fact, with an ARM (without a prepayment penalty), if the prime interest rate decreases or stays the same then the ARM is actually a cheaper financing option that a traditional fixed rate loan.

ARMs only make sense when you are working to flip a home. Otherwise your monthly payments are going to balloon a couple years in forcing a refinance on their terms. Once again it's shit for home owners who are buying an asset not something they are going to flip.

This is why a lot of businesses operate using the commercial equivalent of ARMs. Not just in cost of capital, but cost of anything. Sometimes a company will choose to lock in a price on a commodity, like Southwest did with fuel, and it works out amazing. But that's not the only way things are done, in fact it's the exception, not the rule.

WTF are you even talking about? Southwest agreed to pay a rate for fuel that would remain steady no matter where the price of fuel went. If anything that deal better mimics a fixed rate loan. Not to mention how that deal wasn't a loan or anything they need to pay interest on.

Now, what's good for a company may not be good for an individual. For individuals the security of a fixed rate loan is a good thing.

And yeah, most of the ARMs being sold were not even remotely in the interest of the individual, but at that point they weren't in the interest of the banks either.

Not in the long run certainly but in both the long run and the short run they were bad for the individuals.

I'll admit to being self-taught. But that is by no means a definition of it I have ever heard (in that exact sense). The way I understood it there were two uses of "subprime", the first describing any loan with interest rates above the prime rate, and the other describing the high risk loans like ARMs and 100% LTVs and whatnot.

I'll assume that your definition is the definite one though. Lets look at the statement, that subprime loans do not follow fannie and and freddie underwriting requirements, and therefore (I assume) wouldn't be securitized.

Which is funny considering the fact that Fannie/Freddie securitized billions of dollars of subprime/ARM loans from CRA (and other sources).

Funny thing they never actually securitized the subprime loans themselves. They instead invested in securities created by others.

Incredibly stupid but they needed to preform that kind of nonsense because they couldn't actually buy and underwrite the securities themselves.

It's true that they won't touch ARMs with prepayment penalties though, but are all ARMs "subprime" or only the ones that have the prepayment penalties?

Fannie Mae and Freddie don't touch anything but 30 year fixed rate loans. Anything else is subprime by definition.

 

[Necronic]

Same exact thing with a 30 year prime loan. However with a Subprime you have to refinance every couple of years when your monthly payment jumps up.

ARMs only make sense when you are working to flip a home. Otherwise your monthly payments are going to balloon a couple years in forcing a refinance on their terms. Once again it's shit for home owners who are buying an asset not something they are going to flip.

True for both.

WTF are you even talking about? Southwest agreed to pay a rate for fuel that would remain steady no matter where the price of fuel went. If anything that deal better mimics a fixed rate loan. Not to mention how that deal wasn't a loan or anything they need to pay interest on.

Sorry, re-reading my quote I could tell it was a bit confusing. I was comparing the Southwest deal to a fixed rate loan, whereas most companies operate on a variable cost setup for commodoties, more like an ARM. Only point was that ARMs and similarish type things aren't uncommon in the slightest for commercial/corporate stuff.

Funny thing they never actually securitized the subprime loans themselves. They instead invested in securities created by others.

Incredibly stupid but they needed to preform that kind of nonsense because they couldn't actually buy and underwrite the securities themselves

So they bought the securities but did not underwrite them? Ok, that actually makes some sense. To be honest tracking down actual information on this was pretty ridiculous. Some people were saying that F&F securitized hundreds of billions in sub-prime loans. Others were saying they never securitized *any* of it. Then others were saying that they did some, but not a ton, most of what it was were the Alt-A loans, which aren't technically subprime.

To be honest I couldn't really sort it out. Probably should have stopped running headlong.

What I'm seeing a bit is a term called a "conforming" or "conventional" mortgages, which is defined by a 80% LTV for one. Maybe that's what you're defining as the prime/subprime cutoff?

Also, even if they were just purchasing, instead of underwriting the loans, that's still pretty fucking stupid. Why would you buy something you were explicitly unwilling to underwrite?

 

[Dubyamn]

Sorry, re-reading my quote I could tell it was a bit confusing. I was comparing the Southwest deal to a fixed rate loan, whereas most companies operate on a variable cost setup for commodoties, more like an ARM. Only point was that ARMs and similarish type things aren't uncommon in the slightest for commercial/corporate stuff.

Well those also aren't really ARMs no more than me filling up my car is taking an ARM. They're paying for commodities at the market rate.

So they bought the securities but did not underwrite them? Ok, that actually makes some sense. To be honest tracking down actual information on this was pretty ridiculous. Some people were saying that F&F securitized hundreds of billions in sub-prime loans. Others were saying they never securitized *any* of it. Then others were saying that they did some, but not a ton, most of what it was were the Alt-A loans, which aren't technically subprime.

To be honest I couldn't really sort it out. Probably should have stopped running headlong.

Well this article I found to be very helpful. http://www.washingtonpost.com/wp-dyn/content/article/2008/08/18/AR2008081802111.html

And if you want a complete overview of the financial collapse " All the Devils are Here" is a very in depth overview of the financial collapse from the birth of the securities market to the utter ruination of an economy. http://www.amazon.com/All-Devils-Ar...438X/ref=sr_1_1?ie=UTF8&qid=1318555760&sr=8-1

I've read it twice and how Fannie and Freddie were able to get into the subprime market still doesn't make any real sense to me. Since the subprime were a great thing for the bank since Fannie and Freddie weren't able to get into that market until they did.. right in time for the bottom to fall out of the market.

What I'm seeing a bit is a term called a "conforming" or "conventional" mortgages, which is defined by a 80% LTV for one. Maybe that's what you're defining as the prime/subprime cutoff?

I do have to admit I'm using prime and conventional interchangeably. Are they different?

Also, even if they were just purchasing, instead of underwriting the loans, that's still pretty fucking stupid. Why would you buy something you were explicitly unwilling to underwrite?

Same reason why Merrill Lynch executives refused to listen to their risk managers. If they didn't they would lose market share and would stop making money and fees hand over fist and then their investors would get angry. Greed and stupidity.

 

[Dave]

Expect a riot tomorrow. Bloomberg says he's clearing out the park. This is gonna get ugly fast.

 

[Charlie Don't Surf]

Should it be called a riot if it is the police going after non-violent protesters?

 

[Dave]

Should it be called a riot if it is the police going after non-violent protesters?

Probably not, but it only takes one moron to escalate. So far the protesters have been amazingly restrained. I hope they stay that way in the face of enormous pressure and oppression.

 

[Krisken]

Probably not, but it only takes one moron to escalate. So far the protesters have been amazingly restrained. I hope they stay that way in the face of enormous pressure and oppression.

You and me both, Dave. Despite the large amount of disparity in the protesters, they've been fantastically disciplined.

 

[AshburnerX]

I'm actually hoping it escalates, if only because it means the protestors are serious in their convictions. People are going to get hurt and that's awful, but suffering seems to be the only language the authorities seem to understand if you want lasting change.

This isn't a call to violence mind you... it's more a call to let the police have their way with them. Nothing shows a clearer contrast between sides than one side abusing it's power and people getting hurt by it.

 

[Dave]

Protesters 1 - NYC 0

http://news.blogs.cnn.com/2011/10/1...rs-vow-to-block-park-cleaning/?iref=allsearch

 

[Chibibar]

For the housing market I personally it is a conspiracy + stupidity

I mean these financial people want to ride the wave and earn as much as they can, but realistically how can they NOT know this is not going to last. Any basic economic class could have taught you that that economic come in waves.

Most banks was hoping to make big bucks and get out and let someone else take the falls, but the bubble burst too quickly and early.

 

[Dave]

The problem to me has nothing to do with housing and everything to do with the way that corporations have been deemed people and are now even more openly able to purchase policy decisions. There have always been backroom deals, but the level of corporate ownership of our government has not only skyrocketed but has come out of the shadows.

The housing bubble - while a terrible thing - is a smokescreen and has nothing to do with the current state of inequality.

 

[Chibibar]

The problem to me has nothing to do with housing and everything to do with the way that corporations have been deemed people and are now even more openly able to purchase policy decisions. There have always been backroom deals, but the level of corporate ownership of our government has not only skyrocketed but has come out of the shadows.

The housing bubble - while a terrible thing - is a smokescreen and has nothing to do with the current state of inequality.

Agree. It is just a tip of the ice berg IMO. There are so many things going wrong that is coming out of the woodwork. Unlike 20 years ago, where people can hide these things, the internet age allows us to gets new almost 10 seconds after it happen.

IMO, I think the "old business man" want business as usual, but you can't really have it like that anymore. I say let the economic wheel turn on its own instead of trying to slow it down with needless bailout (again that is my own opinion. I am no economic expert, but it it seems that everyone is trying to fight against the natural turn of events)

 

[strawman]

 

[Krisken]

I love gross generalizations.

 

[GasBandit]

I love gross generalizations.

So do the 99%. Pretty much everybody does. Which, I guess, is a redundant statement.

 

[Dubyamn]

Yeah sounds about right coming from the baby boomers. Worst generation ever born.

I'll concede that the housing bubble hasn't been growing for decades.

Are you still saying that the recent housing bubble and the recent economic collapse are due to subprime mortgages?

Yes. The crazy availability of credit caused housing prices to rapidly increase causing the housing bubble. Then the fact that banks thought this was the never ending money through blinded them to the risks and leveraged themselves to the hilt in order to maximize profits and when housing prices dropped they didn't have enough liquid reserves to remain solvent and couldn't borrow any money from the other banks because they didn't have enough money to remain solvent much less loan it out.

How on earth do you explain either the housing bubble or the economic collapse in the absence of subprime mortgages?

 

[Tress]

Cracked had an interesting column about the protest today. I know it's a comedy site, but that list makes a lot of sense.

 

[Necronic]

I'm actually hoping it escalates, if only because it means the protestors are serious in their convictions. People are going to get hurt and that's awful, but suffering seems to be the only language the authorities seem to understand if you want lasting change.

This isn't a call to violence mind you... it's more a call to let the police have their way with them. Nothing shows a clearer contrast between sides than one side abusing it's power and people getting hurt by it.

Good god no.

Just no in every way shape and form.

No. Non. Niet. Nein. Ne. Mo. Bo.
....actually I'll just let this site fill in the rest:

http://users.elite.net/runner/jennifers/no.htm

 

[SpecialKO]

I had heard that the protesters had moved to Liberty State Park in Jersey City over the weekend, so I went biking out there in hopes of some funny pictures. Alas, there were either long gone, or there were too few of them to raise the slightest fuss.

 

[AshburnerX]

Thirteen Observations made by Lemony Snicket while watching Occupy Wall Street from a Discreet Distance

1. If you work hard, and become successful, it does not necessarily mean you are successful because you worked hard, just as if you are tall with long hair it doesn’t mean you would be a midget if you were bald.

2. “Fortune” is a word for having a lot of money and for having a lot of luck, but that does not mean the word has two definitions.

3. Money is like a child—rarely unaccompanied. When it disappears, look to those who were supposed to be keeping an eye on it while you were at the grocery store. You might also look for someone who has a lot of extra children sitting around, with long, suspicious explanations for how they got there.

4. People who say money doesn’t matter are like people who say cake doesn’t matter—it’s probably because they’ve already had a few slices.

5. There may not be a reason to share your cake. It is, after all, yours. You probably baked it yourself, in an oven of your own construction with ingredients you harvested yourself. It may be possible to keep your entire cake while explaining to any nearby hungry people just how reasonable you are.

6. Nobody wants to fall into a safety net, because it means the structure in which they’ve been living is in a state of collapse and they have no choice but to tumble downwards. However, it beats the alternative.

7. Someone feeling wronged is like someone feeling thirsty. Don’t tell them they aren’t. Sit with them and have a drink.

8. Don’t ask yourself if something is fair. Ask someone else—a stranger in the street, for example.

9. People gathering in the streets feeling wronged tend to be loud, as it is difficult to make oneself heard on the other side of an impressive edifice.

10. It is not always the job of people shouting outside impressive buildings to solve problems. It is often the job of the people inside, who have paper, pens, desks, and an impressive view.

11. Historically, a story about people inside impressive buildings ignoring or even taunting people standing outside shouting at them turns out to be a story with an unhappy ending.

12. If you have a large crowd shouting outside your building, there might not be room for a safety net if you’re the one tumbling down when it collapses.

13. 99 percent is a very large percentage. For instance, easily 99 percent of people want a roof over their heads, food on their tables, and the occasional slice of cake for dessert. Surely an arrangement can be made with that niggling 1 percent who disagree.

 

[Overflight]

Damn it! I was just going to post that!

 

[GasBandit]

 

[Krisken]

Gas, I didn't know you played that much Warcraft.

 

[GasBandit]

Gas, I didn't know you played that much Warcraft.

Heh, even at my peak (which would have been back in college, playing EQ), I think the most I could muster was 35 hours a week. And that was not every week, cause it really hurt my studies.

 

[Overflight]

Meh. Prefer this pic:

 

[Espy]

Heh.

 

[AshburnerX]

Apparently Occupy Oakland is getting raided RIGHT NOW. Hundreds of cops are busting heads with tear gas, flash bangs, rubber bullets, and bean bag shotguns. Lots of people getting hurt. Why the fuck isn't this on the news?

It's all over Twitter. look for yourselves. Tag is #occupyoakland

 

[Espy]

Because cops busting heads in oakland is kind of non-news?

I kid, I kid (kind of).
Added at: 08:26
According to this it was actually rather benign. No rubber bullets or shotguns or violence really.

 

[AshburnerX]

Because cops busting heads in oakland is kind of non-news?

I kid, I kid (kind of).
Added at: 08:26
According to this it was actually rather benign. No rubber bullets or shotguns or violence really.

Ahem... from the article.

Several police cars have arrived. The protesters are running around, throwing things at the police. Riot police with batons full riot gear have assembled on the corner of 14th and Broadway.

Police are telling the protesters via bullhorn that "chemical agents" will be used and are repeating that they are illegally camped.

Police have donned gas masks and some kind of smoke has been released.

Police tore down tents and wooden stalls that had housed medical aid and food. Garbage cans are overturned. Some police have shotguns and all have clubs out.

This wasn't mild, by any means.

 

[Espy]

Ahem... from the article.
This wasn't mild, by any means.

Actually it sounds like the definition of mild (at least as far as any protest being cleared out by cops could go). Your own quotes, aside from them using some smoke bombs (which are not "being shot with rubber bullets and beanbag shotguns), don't actually say anything about any violence so... maybe you and I have a different definition for violence? I don't consider riot cops wearing riot gear or standing in a line to be an act of violence.

In fact from those quotes I see 1 actual act of violence. And it's not from the cops. Now if the cops attacked the protestors back thats a different story but the article doesn't say they did...

 

[AshburnerX]

Like I said, it's all over twitter. People have seen shots go off, numerous reports of injuries, and aggrevated police violence.

Looks like the second group of Occupiers (The ones at Snow Park) are getting hit now.

Here's an article that's getting updated, with images.

 

[Espy]

I'm not saying they might not be using rubber bullets, etc, just that so far it's been in several news outlets with no mention of it, only on protestors Twitter posts. I'm not saying they are lying at all, just that a little confirmation beyond twitter would be nice and so far the news doesn't seem to be backing it up. Even that article you just posted only mentions the "rubber bullets, etc" in regards to the occupiers twitter feeds. It looks like very standard riot police work from the news reports, sonic guns, smoke grenades, etc. That's not me saying they are right to clear these folks out mind you, just that I'm not going to attack these cops for doing their jobs unless they use unnecessary force.

 

[strawman]

Depends on your definition of violence. I'm sure people will complain that police overturning empty tents is a violent act. Violence that is, of course, inherent in the system.