California Assembly Banking and Finance Chair: Bush Falls Short on Subprime Mortgage Crisis

Mr. Lieu,

Please explain to me how it is (yet again) Bush's fault or he isn't doing enough that many individual borrowers decided to go the ARM route and are now in default for their own decisions to do so? Where is the taxpayers "responsibility" here?

Don't misunderstand, I do have sympathy for folks in dire straits but this one is strictly and legally of their own making including a bad decision on what type of mortgage to secure. Obviously, the ARM rate was low when they secured it, they thought they we gonna make out. But like Vegas, they gambled with money they didn't have and/or were living beyond their means. Neither themselves or even the lenders KNEW if or when the ARM rate would go up, but they left themseves wide open in selecting that choice.

Of course, with a $10 Billion state budget deficit with a budget just passed by the legislature a mere couple of months back, these are not unfamiliar waters are they?

Jay Gould,

No doubt the writers of this web page will always point fingers at the Bush administration for every ill whether valid, or not.

If I recall correctly, the loan regulation changes (that led to these problems) in large part came from Congress during the Clinton administration. The pressure came both in part to make available cash for urban/blight renewal, and in part to stimulate the housing market.

One consequence of those regulation changes was the rise of predatory lenders who made such loans to both stay competitive, and to reap the benefits of foreclosing on delinquent buyers, and auctioning homes when in a buyer’s market, there were many takers. Not a great business practice in a sellers market.

You’re absolutely correct in that no one put a gun to someone’s head to make them take loans they knew they could not afford in the long run. I concur, many bought 1st homes, and investment properties on the gamble that the prices would always go up, and many buyers funded their lifestyles on that unsustainable gain. Local government and the state legislature have done so as well.

Like you’ve mentioned, I’m not a proponent of government assistance in bailing out buyers who have made bad decisions, or lending institutions who engage in questionable lending practices.

Bailing either out now sets a trend for the future. I would rather the lending regulations were re-examined so that lenders make sound loans (to risk) where appropriate, and allow the free market to adjust back to where it belongs.

No doubt that will result in some lending institutions to disappear, and some to re-examine their practices. This will happen regardless.

Capital investors will pick up homes. Responsible buyers may be able to re-enter the market, and those of us who have saved will be able to obtain investment properties at a lower price.

You've both missed the point that Lieu is making. It's not to blame the whole mess on Bush. And it's not to say that many who face foreclosures and other problems do not bear responsibility for their actions.

Action is needed at the federal level and at the state level. What Bush is proposing, and what Congress will probably pass, will not be sufficient.

Lenders and those who profit from these transactions also have responsibility--and there are limits as to what they should be able to do and they should be held accountable for when they cross the line.

Just as the stock market crash of 1929 woke many up to the need for government regulation and other action to curb abuses.

I guess some Republicans have not learned some important lessons from the Great Depression. This mortgage crisis has affected us all--not just the parties to the transactions. Fortunately, even Governor Schwarzenegger recognizes the interests of the state and the need for some action.

Russo: Good points. I'm actually not interested in blame, only pointing out that many of the articles I read here often point fingers at the right. It is not healthy, and is partly responsible (in my view) to the polarity of politics, over solving problems.

I believe the Bush administration will propose today some relief for home owners. The proposal is to potentially freezing interest rates for home buyers for 5 years on sub-prime loans.

That should allow home owners some time to re-finance if the can, and allow lenders time to process the applications. Certainly those who should have qualified for better loans will be able to do so.

No doubt some will say that's not enough.

FYI - Most of those regulations after the Great Depression (put on lending institutions) have been removed. I don't find that much comfort either.

Wonderful to see that there are things we agree on.

I'm sure there is plenty of blame to spread around as the banking industry and many of those who have their fingers in this have been a powerful force in Congress and in the regulatory process for decades. While we may disagree on what should be done in replacing the regulatory protections that have been dismantled or neutered into ineffectiveness, it is clear we must look into this.

I applaud Republicans who are open to these ideas and boo those Democrats who are not. On today's page in Mr. Leonard's article is a compliment to the Governor. We'll see what gets done in this state. My prediction is that we will need state action as what Bush is proposing, and what Congress may do, are likely to be less than needed and there is a role for states to act (remember state's rights?)

I appreciate both the contributions of Mr. Russo and Angeldecoys here. I like what you have both brought to the discussion here and appreciate your (strong)points as well.

Just as Mr. Bush and his supporters are readily and willing to absorb all the credits and good news when things go RIGHT to their favor; they should also take and rightfully deserve the critizisms that comes will all failures. The Buck stops at the TOP.

One example of many:

Mr. Bush hastily declare "Mission Accomplished" and went to the extent of raising a banner that says so with the WAR in IRAQ several years ago; to date the end to war is no end in sight. He further assured us that He will not end the war and will leave that up to the next President.

Mr. Bush and his administration IS well aware that IN a high governmental position; comes with it that responsibility for success or failure; even when it is not attributable caused by their direct action or policies. For an elected official that do not understand this level of reponsibility; does not deserve that leadership position and IS NOT a characteristic of a LEADER.

Anon,

I hate (well, not really) to take some of the bite out of your example, but the "Mission Accomplished" banner was hung by the air wing and crew of the USS Abraham Lincoln after THEIR mission, a extra long nearly 1 year overseas deployment, was accomplished. Friends who were there told me this.

The anti-Bush media didn't choose to report this one right as they are getting so much mileage out of this as you are an example of.

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