Manhattan RE -- worst yet to come

good article but one part worries me:

"The savviest minds on Wall Street say it's not."

it is hard to count on the "savvy minds of wall st." these days...after all, a lot of them are the people who caused the mess and the people they talk about in the article who don't have the salaries and bonuses to support the nyc re market anymore.

question is how long does it take? I think the decline should start gaining pace becuase people that were just holding on in 2008 are reaching the breaking point.

I agree I don't trust the opinions of those on 'savvy minds on wall st.' either but I do trust the actual numbers about the market. How anyone can look at those and still say NYC Real Estate isn't dropping in value boggles the mind.

I actually blame the dems for the housing debacle because they started sub prime lending which let the genie out of the bottle so to speak. wall st just threw the gas on the fire.

It ultimately doesn't matter who started the fire, whether it be republicans or dems, our economy is in serious, serious trouble and as of yet, I see no light at the end of the tunnel.

yes, but as someone said in another thread "real estate moves like a glacier...and the 'time' seems infinite to those who are waiting."

Nonsense, marco_m. It was George W. Shrub who pushed the "ownership society" in his 2004 election bid.

Newsweek
http://www.newsweek.com/id/163451

End of the 'Ownership Society'
[...]
Such a country would be more stable, Bush argued, and more prosperous. "America is a stronger country every single time a family moves into a home of their own," he said in October 2004. To achieve his vision, Bush pushed new policies encouraging homeownership, like the "zero-down-payment initiative," which was much as it sounds—a government-sponsored program that allowed people to get mortgages without a down payment. More exotic mortgages followed, including ones with no monthly payments for the first two years. Other mortgages required no documentation other than the say-so of the borrower. Absurd though these all were, they paled in comparison to the financial innovations that grew out of the mortgages—derivatives built on other derivatives, packaged and repackaged until no one could identify what they contained and how much they were, in fact, worth.

I'm just grateful to be able to live in a rent stabilized apartment while I wait. I saw an article in the Daily News today about the current rent rates in my neighborhood. My rent stabilized one bedroom is $450 less per month then the current market and that's even with the downturn. I can imagine how much I would be saving if the market were actually 'good'.

dems were pushing for lending in thier low income neighborhoods. thats where it all started

let's not turn it into dem/repub.
the issue is - are guys like roubini right? is there another 20%+ and if so, how long will it take?

Amen Sniper. I think arguing over who started this and who's responsible is a mute point. We are in it now and the question is how do we best navigate waters we've never been in before?

yes, but i think you mean "moot" as in:
http://menino.com/wp/2005/10/19/the-question-is-moot/

dumb dems

(click the link on that page for the video)

lol yes I did mean moot. Thank you for the correction.

How long do you think the decline in prices will take sniper?

marco - constructive comment!

we didn't point out that you can't spell or use proper punctuation like in this sentence you posted above:
"dems were pushing for lending in thier low income neighborhoods. thats where it all started"

let's not have it devolve into calling people dumb or blaming sides.

i wish i knew. i just sold my apartment (in contract in january, closed last week) and i have been waiting to see prices to come down further. you do see cases of very discounted prices here and there but as a whole i think there is more to come. it is taking longer then i would like - that i know.

You may recall back to last fall, when then Secretary of the Treasury Hank Paulsen got Congress to pass his $800 billion TARP (Troubled Asset Recovery Program) proposal, almost overnight. The idea was this: Banks have huge volumes of mortgage-backed securities in their portfolios. These securities are CDOs (collateralized debt obligations), CDOs-squared (CDOs of CDOs), CDSs (credit default swaps), and numerous other highly leveraged structured securities designed by brilliant financial engineers just a few years ago. These securities are now being called "toxic assets" or "toxic waste," because they're worth a lot less than thought. There's no market for these securities any more, and when forced to sell via a "fire sale," banks are getting 20 or 30 cents on the dollar. If banks are forced by "mark to market" rules to mark down the values of these assets to 20-30 cents on the dollar, then many banks immediately become essentially bankrupt, for all practical purposes. So the TARP program was supposed to purchase the toxic assets at something like 60-80 cents on the dollar, so that banks can get them off their balance sheets, and still survive. Paulsen got his $800 billion, but unfortunately he never got around to buying up all those toxic waste securities. For some strange reason, he just never got around to it. I guess he must have spending too much time working out at the gym, or something. Anyway, early in February, President Obama gave a press conference at which he announced that the shiny, brand new Secretary of the Treasury, Timothy Geithner, would announce the details for how the banks would be saved. The next day came and and Geithner gave his own press conference but, for some strange reason, he provided absolutely no details whatsoever. I guess he must have spending too much time celebrating the inauguration, or something. I've said repeatedly what the problem is. The problem is that there are many tens of trillions of dollars worth (nominal value) of this toxic waste, perhaps over a hundred trillion, and there isn't enough money in the world the buy them all. That's the ice water reality that keeps striking these government officials. People keep saying, "Why doesn't the government just buy these things up?" Or, "Why doesn't the government just nationalize the banks?" Or, "Why don't we just let these banks fail, and the market will dispose of the toxic waste?" The problem is that none of these "solutions" has any chance of working. When you're talking about many tens of trillions of dollars of toxic waste, there's literally no way to deal with it, without massive and widespread homelessness, bankruptcies, poverty, and starvation. The dot-com, real estate, credit and stock market bubbles took almost 15 years to grow. By using leverage, and leverage on leverage, and leverage on leverage on leverage, there are now well over $1 quadrillion worth of structured securities in the world. All those bubbles have to deflate before things can return to normal. And it can't be done overnight. If it took almost 15 years for the bubbles to expand, then it will take a similar period of time for the bubbles to deflate. This crisis has barely begun. So finally, Tim Geithner had to do SOMETHING. The investors were demanding it. The Congress was demanding it. The public was demanding it. The President was demanding it. So he came up with a "public-private partnership" that tries to use allow the market to dissolve the toxic waste. The Treasury won't buy the toxic waste from banks, as it would have with the TARP plan. Instead, a bank can sell the toxic waste to certain third party investors, and the Treasury will put up 86% of the purchase price. The purchaser need put up only 14% of the purchase price, providing 6 to 1 leverage. But by another arrangement, the FDIC will put up half of the remaining price. So the investors only puts up 93% of the purchase price, providing 13 to 1 leverage. It wouldn't be a straight sale. Instead, several of these investors would bid on the toxic waste at an auction. That way (it is hoped), a realistic market value for the toxic assets will be established. If the value of the toxic waste assets goes up, then the investors will make money. If the value goes down, then the investors lose less than they would have otherwise. This doesn't solve the size problem in any way that I can see. There are still many tens of trillions of dollars worth of these things, and now the US government only has to pay 93% instead of 100%. That isn't going to make any difference.

I don't take any of the repub/dems stuff personally. I'm a registered Independent and have been since I was old enough to vote b/c I realized early on that both sides have good and bad in their party. So rather than vote along one party line 'for the sake of the party'. I vote for who I think will best solve the problems we face. Sometimes that person is a republican, sometimes they are democrat and, on the rare occasion that an Independent gets elected, sometimes it's even one of my own.

Glad you were able to sell you place Sniper Now you'll have a nice cash reserve when the market drops to the price you'd like to pay. In the meantime I think we are making the best use of our time while we wait by paying close attention to the market and learning as much as possible.

yeah - i just wish they would fall off a cliff because the waiting game is no fun. if i was single i wouldn't give a sh*t but i have a family and two kids who i want settled somewhere.

mchale - good post and filled with info but could you break it down into some practical info or opinion? it is late and i can't process all that into what it is telling me to do or not do.

Wow sniper that's a good point. I'm lucky in that it's still just me. Are you all happy in the current rental you're in? I really can't complain about mine. My landlord takes excellent care of the building and even let me paint each of the rooms the colors I wanted to paint them. I would just like to buy something of my own before I turn 30

i am still in my apartment that i sold - i have a post closing occupancy agreement until july.
here is my deal: http://www.streeteasy.com/nyc/talk/discussion/11953-open-book-sale-at-425-east-79th-street-11k
i am done for the night

Ok sniper. Good night, thanks for the info.

Robuinis prediction doesnt sound so dark at all. Prices should ultimately fall 50% to 65% percent. Cap rates (equity return) are still below mortgage rates (debt return). If you think equity should return 200 bps or so more than debt, then we are looking at 8% cap rates....50% down from here, which is already 30% down....65% total compounded.

I think what McHale is saying is don't buy any kind of property right now. Wait for the toxic assets to escape the off-balance sheet receptacles they've been kept in so far. Then, invest in canned food, a sawed-off shotgun, and gold bars or any other kind of good that can be buried safely and dug out 20 years later.

why do we always leap from toxic assets to the end of the world? i think mchale is pointing out that little or nothing has been done to deal with the issue that started everything. i think the figures quoted are exaggerated in that many positions zero out each other but thereis no doubt that the unrealized losses are easily in excess of a trillion dollars.

I love how 30% down just rolls off peoples tongues. Next week it will be 40%, two weeks 50%, and then everyone on SE will say they were right! Meanwhile, there is a little thing called reality that needs to be addressed.

Nonsense, marco_m. It was George W. Shrub who pushed the "ownership society"

http://www.hobb.org/index.php?option=com_content&task=view&id=2455&Itemid=197

HUD Secretary Henry Cisneros Modifications to Deregulate Lending in '93 and ‘94
Did HUD Secretary Cisneros Deregulation Contribute to Predatory Lending and the Foreclosure Crisis?
February 18, 2008
By Janet Ahmad
On January 7, 1993 HUD issued Mortgagee Letter 93-2, Mandatory Direct Endorsement Processing gave authority to the Homebuilder owned lenders like KB Mortgage and affiliate lenders like Countrywide independence to approve their own loans. Without oversight of the industry by HUD, loan approval for single family direct endorsement, Cisneros officially put the foxes in charge of the henhouse.

Then on November 7, 1994 HUD Secretary Henry Cisneros approved Mortgagee Letter 94-54 that allowed lenders to select their own appraisers. As stated: “The Department (HUD) will rely upon lenders to assure that only knowledgeable appraisers are chosen to perform HUD appraisals and will rely on the integrity of each individual appraiser.”

As Secretary of HUD Cisneros also approved the infamous KB Home Mirasol, HOPE VI project that was to become one of the biggest HUD homeownership scandals ever perpetrated on those who could least afford it.

Then after leaving HUD Cisneros became a KB Home board member as well as a Countrywide board member. He created American City Vista, an affordable housing joint venture with KB Home, as KB Home began construction on the disastrous Mirasol project that cost taxpayers millions, of which $5M is still missing.

and got rid of a good kemp program
http://www.city-journal.org/article01.php?aid=1410

and countrywide?

http://www.mysanantonio.com/news/MYSA021708_01A_Cisneros-Countrywide_3584118_html19567.html
When Henry Cisneros joined the board of directors of Countrywide Financial Corp. in 2001, the real estate industry was poised for a spectacular ride.

All-time records for home sales started to fall like confetti. Mortgage interest rates dropped, prompting a surge in home buying and refinancing.

Countrywide, the nation's largest mortgage lender, boomed.

Cisneros' financial fortunes would soar, too. He was granted — and sold — more than $5 million in company stock as prices climbed from around $10 per share in 2001 to more than $40 per share in late 2006 and early 2007.

Additionally, he earned a base salary of $70,000 per year and received $1,500 for each board meeting attended, $750 for each phone meeting and health insurance. Overall, Countrywide's directors were among the country's best compensated.

I just used my Way-Back machine and got a copy of the New York Times from 1999 before George W was around...very interesting..

http://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

What's the reality check, Juice? Prices are down at least 30% in less than eight months. Real estate downcycles usually last about three years. We are passing out of busy season. Inventories remain high and interest rates remain low (leaving price downside to a move up in interest rates). We are still roughly double year 2000 pricing...with Wall Street is worse shape and condo units completing at a much higher clip in 2009-2011.

Did I miss anything?? Yes, another 30% down from 30% down does roll off the tongue.

"just a notch below" wonder how much he wishes he could take that back.

Clinton's Pardon of Fugitive Trader to Be Probed by House Panel
Washington, Jan. 25 (Bloomberg) -- A House committee will
investigate the pardon of fugitive commodities trader Marc Rich
and his partner, two of 140 pardons President Bill Clinton issued
on his last day in office, the panel's chairman said.

Washington, Jan. 25 (Bloomberg) -- A House committee will
investigate the pardon of fugitive commodities trader Marc Rich
and his partner, two of 140 pardons President Bill Clinton issued
on his last day in office, the panel's chairman said.
The pardons list contained persons with close ties to
Clinton, including Susan McDougal, a figure in the Whitewater real
estate scandal; former Central Intelligence Agency chief John
Deutch; former Housing and Urban Development Secretary Henry
Cisneros; and Clinton's brother, Roger.

Kaufman And Broad Elects Henry Cisneros To Board of Directors Page 1/4
LOS ANGELES, Aug. 7 /PRNewswire/ -- Kaufman and Broad Home Corporation
(NYSE: KBH) today announced that Henry Cisneros, one of the nation's pre-
eminent housing experts, has been elected a director of the Company. Cisneros
is the former president of Univision Communications and former secretary of
the U.S. Department of Housing and Urban Development. His election brings the
total number of the Company's directors to 11.

damn bleeding heart liberals. ruined it for everyone

what did they ruin? according to you they are going to be responsible for housing coming back down to the most affordable prices in years.

"Prices are down at least 30% in less than eight months."

Where?

and acorn
http://anitamoncrief.blogspot.com/2009/06/schumer-gutierrez-and-waters-honored.html

Sniper....that's what I've been thinking.

969 Fifth Avenue 7th floor. Quite a tangled history here, spanning three listings on Streeteasy. 35% drop from the prior same-unit sale, and now an attempt to generate buzz with a $950K price cut.
11/01/2005 Listed in StreetEasy by Prudential Elliman at $4,950,000.
08/11/2006 Listing is no longer available.
02/13/2007 Re-listed by Prudential Elliman.
04/14/2007 Listing entered contract.
07/12/2007 Sale recorded for $4,550,000.
05/03/2008 Listed in StreetEasy by Prudential Elliman at $6,200,000.
05/20/2008 Price decreased by 4% to $5,950,000.
07/10/2008 Price decreased by 22% to $4,650,000.
08/07/2008 Delisted temporarily.
09/09/2008 Re-listed by Prudential Elliman.
09/26/2008 Delisted temporarily by Prudential Elliman. Last priced at $4,650,000.
02/03/2009 Listed in StreetEasy by Prudential Elliman at $3,900,000.
03/19/2009 Price increased by 2% to $3,975,000.
06/01/2009 Price decreased by 2% to $3,900,000.
06/18/2009 Price decreased by 24% to $2,950,000.

It was not Wall Street that got us into the mortgage mess.

Its the RE brokers who told people to buy and were giving "investment advice" that is ILLEGAL for them to give and that they have NO CLUE about

It was the people who were making $40k a year who thought they could buy a $1M property

It was the mortgage brokers and banks who loaned the money (but NOT the investment bankers who DONT issue loans)

It was the policies of the govt who let the banks loan money that should never have been given out.

It was the speculators who thought they could flip houses forever

Right, securitization had nothing to do with it.

i thought we established earlier in this thread - who gives a shit who is responsible! if you are stuck on that, that is your problem. what is important to me - and i think many others - is how best to play it and not necessarily profit from it but find a place we want to live at the best price possible.

semantics and blame isn't gonna get me the best possible home at the best possible price and time.

well...you know the old saying: you can have it cheap, you can have it fast or you can have it done correctly--never all three and two if you're lucky.

Im just messin around. everyones to blame and Im only lookin forward to buyin my shoebox

I've looked at probably 100 units in the last year, mostly in Harlem, Williamsburg and the UWS of which 95% were still priced at/ very near peak. The most interesting moment is when you ask a seller (especially an individual seller) about their flexibility and the majority still shows none. This has certainly improved a bit over the last few months but the powerful anchoring http://en.wikipedia.org/wiki/Anchoring that takes place is stunning. People still hold on to what something was worth. And as long as they don't face external pressure (e.g. job loss or the bank becoming impatient) - the prices won't start to fall quickly. But fall they will - if you calculate rent-to-buy ratios you're still much better off renting than owning. My best guess is 20% down by summer 2010 and then a new bottom with activity picking up in late 2010. Unless Obama starts subsidizing buying houses in new ways of course...

but as overhyped as The Tipping Point has become, Gladwell makes an important observation:" the levels at which the momentum for change becomes unstoppable." He couldn't explain how or when (which is frustrating) but he certainly provided numerous examples to support his thesis that change tends to come in discrete steps rather than in gradual incremental ways.

In other words, at some point, people (sellers, owners) will wake up and realize that the past no longer applies.

sniper, sorry, didn't read the whole thread. marco_m, remember, only a designer shoebox will do.

TGIR, all it takes is a shift in prices combined with major media attention of said downward shift, it will happen. euphoria/fear, neither are rational.

no worries - i think everyone shares responsibility - it just depends what angle you are looking at it from, so the question of blame is:http://menino.com/wp/2005/10/19/the-question-is-moot/

http://menino.com/wp/2005/10/19/the-question-is-moot/

The act that started us down the subprime path

Impact of the Federal Housing Enterprises Financial Safety and Soundness Act

Congress passed the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 in an effort to address the above problems. This act created the Office of Federal Housing Enterprise Oversight (OFHEO) with HUD to oversee Fannie Mae and Freddie Mac (FM2) and to ensure their continued economic stability and safety. It also established housing goals for financing of affordable housing and housing in central cities and other rural and underserved areas to be set and enforced by HUD. In 1993 and 1994, the law established these goals with the goals to be set by HUD in 1995 and onward. This mandated that a certain percentage of loans purchased by FM2 had to be written in low- and moderate-income, underserved, and special affordable areas. In other words, Fannie Mae and Freddie Mac were forced to buy sub-prime loans in considerable numbers.
Unintended Consequences

What are the unintended consequences of these actions? Prior to 1992 and the passage of the Federal Housing Enterprises Financial Safety and Soundness Act if a lending institution wrote a sub-prime loan they essentially had to accept the risk of making that loan, of whether or not that loan would be repaid. FM2 would not purchase the loan because sub-prime loans did not meet their guidelines. Therefore, not that many sub-prime loans were written and those that were written generally performed fairly well. But with the passage of this act, and the resultant lowering of FM2 guidelines to purchase sub-prime loans, these lending institutions could now make them with impunity. The lending institutions could make their money on origination fees and other charges while pushing the risk of the loan actually being repaid onto FM2. Thus, from 1992 onward, the number of sub-prime loans ballooned dramatically. Everyone applauded the great increase in the number of low- and moderate-income homeowners. Very few noticed the risk to FM2 and the entire financial system.

Business Week has a major housing market story on their front cover. In summary, they are predicting that housing prices will INCREASE by about 20% by 2012.

http://www.businessweek.com/magazine/content/09_26/b4137028238311.htm?chan=magazine+channel_top+stories

And when Barney Frank takes no responsibility for the housing crisis...
http://commdocs.house.gov/committees/bank/hba92628.000/hba92628_0f.htm

Mr. GOULD. Oh, I am sorry, 1934. I am sorry, I thought you said 1933. The 1934 Act is as soon as we can. We cannot do that until our financials are current. And that will probably, as Director Falcon said this morning on the first panel, that will probably take into the middle of next year. As soon as our financials are current, we will do so.
The CHAIRMAN. The gentleman's time has expired.
Gentleman from Massachusetts.
Mr. FRANK. Let me ask Mr. Gould and Mr. Raines on behalf of Freddie Mac and Fannie Mae, do you feel that over the past years you have been substantially under-regulated?
Mr. Raines?
Mr. RAINES. No, sir.
Mr. FRANK. Mr. Gould?
Mr. GOULD. No, sir.
Mr. FRANK. And let me ask now the gentleman from the Federal Home Loan Bank, do you believe that the Federal Home Loan Bank System has been substantially under-regulated?
Mr. HEHMAN. No, sir.
Mr. FRANK. Mr. Schultz?
Mr. SCHULTZ. No, sir.
Mr. FRANK. Okay. Then I am not entirely sure why we are here, but we killed the afternoon anyway, so we might as well go forward.
I must say, I am inclined to agree with that. I don't see any financial crisis. You can always make things better, but I do think we should dispel the notion that we are here because there is something rotten that has gone on.
And I am not one who has been impressed with the history of results improved by reorganizing boxes, so I don't know whether OFHEO goes to Treasury or not, whether it makes a big deal, I am not going to fight it.

Mr. FRANK. Well, I agree. I think my colleague may be asking you whether you think the regulator here, in fact, should more resemble the OTS and the OCC than some of the proposed statutes do.
But I would say this, yes, there is that same tension. But it is not the mission of either the OTS or the OCC to promote low-income housing. And that's the difference.
I don't want to treat Fannie Mae and Freddie Mac the same as I treat a regular bank. If I wanted them to be just like a regular bank, then we wouldn't need a Fannie Mae and a Freddie Mac. We could have a regular bank.
The theory is that we have these separate government-sponsored enterprises that do have some statutory advantages in return for which they focus on housing, and, specifically, we give them goals. We have the Community Reinvestment Act. Maybe if I filed a bill that gave every bank the same kind of low-income housing goals as Fannie and Freddie and some ability to—maybe I could get it passed. I don't think so.

Page 157 PREV PAGE TOP OF DOC

And they are very different. OCC and OTS have a safety and soundness mandate entirely, with a little bit of social consciousness with the CRA. But the CRA basically says, ''Do not suck too much money out of the community and do not put any back in.''
It should be qualitatively different than the mandates we have given to Fannie and Freddie.
So I guess that may sum up to me why some of us have some differences on this. I do not want Fannie and Freddie to be just another bank. If they were not going to do more than another bank would because they have so many advantages, then we do not need them.
And so therefore, I do think I do not want the same kind of focus on safety and soundness that we have in OCC and OTS. I want to roll the dice a little bit more in this situation towards subsidized housing.
My time has expired, Mr. Chairman.

Business Week has a major housing market story on their front cover. In summary, they are predicting that housing prices will INCREASE by about 20% by 2012.

http://seekingalpha.com/article/91444-magazine-covers-as-contrarian-indicators

R-sider: this is what i am taking away from your posts:
http://www.youtube.com/watch?v=PoqL76TtJ3c

sniper, i should have known better. that frightened the dog.

hilarious. by the way, you might want to take a closer look at that BW article.

om%2F2008%2F10%2F01%2Fread-the-dems-race-card-attacks-on-fannie-mae-regulators%2F&feature=player_embedded

funny - my 4 year-old daughter came rushing over to the computer and made me replay it from the start 3 times as she stared, jaw-dropped, at the screen.

Just because the dems encouraged lending to low income...how does that carry more blame then levering the banks exposure to those credits so incredibly that you threaten to bankrupt the financial system? If you lever a problem 40-to-1...isn't the lever-er responsible for 39/40ths of the consequences?

If the government says, you should do this or you can do this...And the banks do it in an extreme, irresponsible and unregulated way...I don't get it. Reps done want to protect people from the consequences of their actions... But the banks can say "the government made me do it". Give me a fucking break.

I don't get it
Fannie & Freddie are the mortgage market. If you want to be in it, you play by the rules..

http://online.wsj.com/article/SB122298982558700341.html
Beginning in 1992, Congress pushed Fannie Mae and Freddie Mac to increase their purchases of mortgages going to low and moderate income borrowers. For 1996, the Department of Housing and Urban Development (HUD) gave Fannie and Freddie an explicit target -- 42% of their mortgage financing had to go to borrowers with income below the median in their area. The target increased to 50% in 2000 and 52% in 2005.

this is interesting...

Fannie and Freddie and the banks opposed these policy changes at first through both lobbying and intransigence. But when they found out that following these policies could be profitable -- which they were as long as rising housing prices kept default rates unusually low -- their complaints disappeared. Maybe they could serve two masters. They turned out to be wrong. And when Fannie and Freddie went into conservatorship, politicians found out that budgetary dollars were on the line after all.

The Fed did its part, too. In 2003, the federal-funds rate hit 40-year lows of 1.25%. That pushed the rates on adjustable loans to historic lows as well, helping to fuel the housing boom.

Riversider, what don't you get? Who forced the investment banks to lend on such a narrow equity margin and then sell bonds and insure them against failure on the back end to skirt capital requirements?

Riversider, what don't you get? Who forced the investment banks to lend on such a narrow equity margin and then sell bonds and insure them against failure on the back end to skirt capital requirements?

Any bank that operated on 25% of the leverage of it's peers would've been acquired or forced by its shareholders to have a management change. I also can't imagine a doing well from 2002-2007 on a 100% full doc under 80% LTV lending program.

Government acts as umpire and writer of the playbook rules.

The government forced banks to write insurance against the bonds they sold in order to skirt the capital requirements?

I enjoyed the mixed metaphor....writer of the playbook rules?

Banks abused the system and brought it to the brink. Complete failure of oversight.

Banks abused the system and brought it to the brink. Complete failure of oversight.

Your point has merit...

http://www.nytimes.com/2009/05/21/opinion/21thu1.html
The financial crisis had no single cause. But everyone knows that regulatory failure played a role and that one of the biggest mistakes was to allow “regulatory shopping” — in which banks and other financial firms were permitted to choose their own regulator.

alpine - from the article you posted:

"In a study of global real estate markets, economists Kenneth Rogoff of Harvard University and Carmen Reinhart of the University of Maryland found that home prices fall for an average of six years after a major financial crisis. That would put the U.S. bottom in 2012, or later."

so if you are touting the "20% INCREASE in 2012" and we are still going lower, where will that 20% be coming from? this doesn't do much for supporting most of what you say on these boards daily. do you realize that you posted an article that says the trend continues down?

Congress passed the Federal Housing Enterprises Financial Safety and Soundness Act of 1992:

In 1992 the George H.W. Bush was President of the United States and, although the Democrats controlled Congress they didn't have a veto proof majority. (http://en.wikipedia.org/wiki/102nd_United_States_Congress)

I think there's plenty of blame for this debacle to share among the Demublicans and Republicrats. When de-regulation was the mantra of the day and Alan Greenspan the Randian high priest of laissez-faire ruled, the Democrats were only too happy to play along (Billary, Scmhuck and Dodd).

regulatory oversight is always the responsibility of the admin in power. you couldn't have done a thing with the admittedly idiotic repeal of Glass-Stegall without those in whatever positions doing whatever they might do. i'll agree Dodd did some real harm, but 80% of the harm lies elsewhere.

No! No! It's not going down! It never goes down in New York! Lies! Damn lies! BNOBPOF -- Buy Now Or Be Priced Out Forever(TM)!!

- I Pretend I Live In Alpine

LuchiasDream:
"I'm just grateful to be able to live in a rent stabilized apartment while I wait. I saw an article in the Daily News today about the current rent rates in my neighborhood. My rent stabilized one bedroom is $450 less per month then the current market and that's even with the downturn. I can imagine how much I would be saving if the market were actually 'good'."

I'm just grateful that I have the opportunity to work 12 hour days to help subsidize your sorry ass.

Actually, I would just be happy with a thank you card every couple of years or so, or let me cut in line at the DMV.

LOL, Patient.

if PCV reverts to RS I'll send you a card, p09. promise.

rent stablized apts. are the biggest scam out there. How many people live in rent stabalized apts. with leases that are on the name of their grandmoter who died in 1985?

Rent stabilized apartments are not the same as rent controlled apartments. But I guess if you actually knew what your were talking about you would already know that.

The savvy minds quoted in the article are NOT the same people who had anything to do with this crises. In fact the article points out these are poeple who PREDICTED the crises. Idiots.

ease up. no reason to call anyone idiots...except alpine.
i know who roubini is. i also know who peter schiff is. apparently he predicted this and still crapped out in his own portfolios.
the point is, yesterday's savvy minds are tomorrow's wall street idiots. predictions are just predictions and if you are in the business of making them you get some right and you get some wrong. i trust roubini's predictions more than i trust those of others these days but he could just as easily be tomorrow's idiot.

My stock portfolio is much better than Schiff's. My total loss is 0%. Why? Because I've never bought a stock in my entire life! I'm not even sure if I feel bad for the fools who think Schiff is God and invested with him.

The man who makes no mistakes does not usually make anything Theodore Roosevelt

yeah, but then how can he afford to buy a PT Cruiser???

credit standards were very lax.

oh, I made a lot of money. And I have a Honda Odyssey, not a PT Cruiser for the 55th time.

Mr. President - are you really Alpine 292, like some people say?

"rent stablized apts. are the biggest scam out there. How many people live in rent stabalized apts. with leases that are on the name of their grandmoter who died in 1985?"

and they all wear their dresses and collect their social security checks, too.