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The 'Big Short' gets the financial crisis right: Barry Ritholtz

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Mortgage Professional America | 07 Jan 2016, 06:30 AM Agree 0
It tells the tale of an epic battle between the forces of light and darkness, filled with arrogant but lovable characters, some of whom, despite their obvious flaws and shortcomings, redeem themselves by taking on and winning against an evil empire
  • Snowed in--in Flagstaff | | 07 Jan 2016, 01:14 PM Agree 0
    Legislative blunders and subsequent regulations (or lack of) have caused the domino effect of many (most?) of the swings in our economy over the decades. When the rules are changed, somebody usually figures out how to make the new rules work for them. 2 often the rule makers don't see the possible "unintended consequences". So let the law makers and the bureaucrats make new rules and watch somebody get clobbered and somebody else come out "smelling like a rose"!
    Remember that it will always be the consumer who gets hurt--one way or another--no matter how hard they try to help or protect them.
  • David Abrahamson | | 07 Jan 2016, 01:47 PM Agree 0
    There are many to blame: Washington for putting into place a regime of regulation to compel bad decisions. Greed of Wall Street and mortgage professionals. Most of all borrowers who knew they could not afford the mortgages long term.
  • Rodwell | | 07 Jan 2016, 01:54 PM Agree 0
    New rules will always open doors and avenues until too many begin to abuse them. What is to blame? The consumer will bear the brunt - the more consumers use those routes established by the "new rules" the more they become abused and legislation closes them. Lets grow...
  • NoSpin JustFacts | | 19 Jan 2016, 12:42 PM Agree 0
    Barry Ritholtz's false claims that the Federal Government was not the root of the housing crisis has been so thoroughly debunked over the years that they are not worth spilling more than a few pixels here. The stated income mortgages and negative amortization mortgages that the federal bureaucrats opened up to unqualified applicants, code for "under-served", had been used successfully for many decades. When President Clinton and his democratic congressional leaders wanted to provide a reward of homeownership to their voting constituents that could not clear the prevailing underwriting guidelines, their instructions to Wall Street and the rating agencies was to get it done, we will look the other way at the absurdities these two groups took to achieve the "under-served" homeownership mission. Yes, the Big Short showcased the absurdities.

    No where in "The Big Short" is mentioned Senate Bill 192 of the 109th Congress' Federal Housing Enterprise Regulatory Reform Act of 2005 - Amends the Federal Housing Enterprises Financial Safety and Soundness Act of 1992. If you want to see where Barry's false claims of government not at the root of the problem, read the Bill and the comments of each party in debating the bill in Senate Banking, Housing, and Urban Affairs committee. The Republicans debated that if not enacted we will have an financial crisis. The Democrats debated that this was an attack on homeownership of the "under-served". The Bill came out of committee to be voted upon by the Senate on a party line vote 12 Republicans for the Bill and 9 Democrats against the Bill. The Republican Senate Majority Leader Bill Frist, lacked the courage to take on the Democratic Party's "under-served" media machine and Fannie/Freddie/Wall Street's deep pocket political contributions. Thus, the Bill introduced in January 2005 to shut down the forth coming financial crisis could not move forward politically.

    So Barry, your cognitive dissonance provides us with a textbook case of what occurs when facts intrude on an ideology that has failed real- life tests.
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