Talk:Government policies and the subprime mortgage crisis

instability
Under outdated regulatory framework is there any more detail on what is out dated and what is needed? JJ —Preceding unsigned comment added by 69.248.160.191 (talk) 22:18, 14 January 2009 (UTC)

In the following paragraph fragment the statement about them causeing instability in the global financial system is not clear, at least to me. If there is an explanation as to what was the mechanism that caused the "instability" and what theat instability was or what was its consequence.

Also the statement regarding investment vs commercial bank could either use explanation of the difference or a link to other articles on these two different types of banks or links to the relevant regulations or an explanation of the differences.

"Three of the five either went bankrupt (Lehman Brothers) or were sold at fire-sale prices to other banks (Bear Stearns and Merrill Lynch) during September 2008, creating instability in the global financial system. The remaining two converted to commercial bank models, subjecting themselves to much tighter regulation.[12]" —Preceding unsigned comment added by 69.248.160.191 (talk) 22:26, 14 January 2009 (UTC)

Missing Info
The following info mostly is missing from this article. See refs and more info here. Carol Moore 17:56, 14 November 2008 (UTC)Carolmooredc
 * 1977: Community Reinvestment Act which can be enforced in part with onerous sanctions under [[Equal Credit Opportunity Act’‘ in terms of loans to different types of neighborhoods, as well as to individual borrowers.
 * 1980: The Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980 granted all thrifts, including savings and loan associations, the power to make consumer and commercial loans and to issue transaction accounts and exempted federally chartered savings banks, installment plan sellers and chartered loan companies from state usury (unlimited interest rates) limits.
 * 1982: Alternative Mortgage Transaction Parity Act of 1982 (AMTPA) preempts state laws allows lenders to originate mortgages with features such as adjustable-rate mortgages, balloon payments, and negative amortization and "allows lenders to make loans with terms that may obscure the total cost of a loan".
 * 1986: Tax Reform Act of 1986 (TRA) prohibited taxpayers from deducting interest on consumer loans, such as credit cards and auto loans, while allowing them to deduct interest paid on mortgage loans, providing an incentive for homeowners to take out home equity loans to pay off consumer debt.
 * 1992:Federal Housing Enterprises Financial Safety and Soundness Act of 1992 required Fannie Mae and Freddie Mac to devote a percentage of their lending to support affordable housing increasing their pooling and selling of such loans as securities; Office of Federal Housing Enterprise Oversight (OFHEO) created to oversee them
 * 1994: Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (IBBEA) repeals the interstate provisions of the Bank Holding Company Act of 1956 that regulated the actions of bank holding companies.
 * 1995: New Community Reinvestment Act regulations allow community groups that market loans to collect a broker's fee.
 * 1997: The Taxpayer Relief Act of 1997 expanded the capital-gains exclusion to $500,000 (per couple) from $125,000, encouraging people to invest in second homes and investment properties. Freddie Mac helped First Union Capital Markets and Bear Stearns & Co launch the first publicly available securitization of CRA loans, issuing $384.6 million of such securities.
 * 1999: Fannie Mae eases the credit requirements to encourage banks to extend home mortgages to individuals whose credit is not good enough to qualify for conventional loans. Gramm-Leach-Bliley Act "Financial Services Modernization Act" repeals Glass-Steagall Act, deregulates banking, insurance and securities into a financial services industry allow financial institutions to grow very large
 * 2000: Fannie Mae and Freddie Mac start buying billions in subprime mortgages, in part because of new Department of Housing and Urban Development (“HUD”) requirements it to dedicate 50% of its business to low- and moderate-income families"
 * 2000: Commodity Futures Modernization Act of 2000 defines interest rates, currency prices, and stock indexes as "excluded commodities," allowing trade of credit-default swaps by hedge funds, investment banks or insurance companies with minimal
 * 2000-2001: US Federal Reserve lowers Federal funds rate 11 times, from 6.5% (May 2000) to 1.75% (December 2001),
 * 2002: President G.W. Bush sets goal of increasing minority home owners by at least 5.5 million by 2010 through billions of dollars in tax credits, subsidies and a Fannie Mae commitment of $440 billion to establish NeighborWorks America with faith based organizations.
 * 2003: Fannie Mae and Freddie Mac buy $81 billion in subprime securities.
 * 2003-2007: The Federal Reserve fails to use its supervisory and regulatory authority on lenders, emphasizing instead lender's ability to securitize and repackage subprime loans.
 * 1995: Clinton's "The National Homeownership Strategy" http://theaffordablemortgagedepression.com/2010/03/11/origin-of-the-housing-bubble-the-national-homeownership-strategy.aspx
 * Thank you for the list. --Gogino (talk) 23:40, 27 November 2008 (UTC)

Subprime problems versus general consumer leverage
There is a growing consensus that the general level of debt of Americans is a major stumbling block in the economy, including the debt load of non-subprime borrowers. The government has played a significant role in promoting mortgage debt (under the banner of promoting "home ownership"), probably mostly high quality (in the case of conforming agency debt). And commentators have questioned the validity of the homeownership results (e.g., showing little result relative to Canada ). At some point it may be appropriate to broadenn out this article. Deet (talk) 04:51, 23 February 2009 (UTC)

Lead primary focus
The lead on this article is wrong. The subprime crisis was created by the failed regulation of Wall Street and private monies entering the market in the early 2000's, not so much home ownership goals. Primary focus should be failed regulation of rating agencies and Wall Street. They rated 3.2 trillion of the subprimes as AAA and sold them to the world. These were the most toxic of all the subprime. Fannie Mae and Freddie Mac deserve mention - they bought 300 plus billion in Alt-A's they had stopped holding in the nineties adn of course, they bought some of these AAA rated securities. I'll work on this lead sometime within this week unless someone beats me to the task. Scribner (talk) 00:16, 27 March 2009 (UTC)


 * Done. Scribner (talk) 05:31, 7 April 2009 (UTC)

This Article Should Be Re-Written
The problems are legion. The POV is anything but neutral. Articles plainly labelled opinion that come to unsupported and uncheckable conclusions are cited as fact. No attempt whatsoever is made to answer questions as simple as how many subprime loans the GSEs actually own and what their default rates are, although this is easily available. This has far less the appearance of a subordinated article and far more the appearance of a sandbox, in my view. --Dlawbailey (talk) 07:19, 25 April 2009 (UTC)

Outdated regulatory framework
I removed this section. The entire section was nothing more than a series of quotes from two individuals. This particular mention of outdated regulatory framework is simply a POV, original research attempt to reinforce Bush's statement.

From an Obama speach:

"Unfortunately, instead of establishing a 21st century regulatory framework, we simply dismantled the old one – aided by a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight. In doing so, we encouraged a winner take all, anything goes environment that helped foster devastating dislocations in our economy." Scribner (talk) 21:18, 26 April 2009 (UTC)

Paul Krugman's comments
I'd like to defend the edits that I made, which were reverted by Scribner

First of all, regarding my deletion of Krugman's comments about private gains/socialized losses – this ought to be in a different paragraph, as it does not relate to Krugman's much more significant statement that Fannie and Freddie did not engage in subprime lending. The only link between the two statements are the fact that a) they were both written by Krugman, and b) they both appeared in the same column. Beyond that, there is no relevance in the current paragraph.

Regarding the other modifications:

1. The original content misrepresented Krugman's statement. He didn't imply that the GSEs "generally" stayed out of the subprime game – he said they absolutely played no part in it (and I quote: "Fannie and Freddie had nothing to do with the explosion of high-risk lending a few years ago"; also: "they didn’t do any subprime lending, because they can’t.")

2. It is totally inappropriate to delete criticism of Krugman's statement, especially considering the criticism cites very reliable sources such as the Washington Post and even HUD itself. I realize it makes Krugman look like a moron, but that's kind of the point - what he said was ridiculous, and I would have deleted it entirely if not for the fact that it was stated by a Nobel Prize winning economist, and that it's an argument that you hear a lot. Feel free to add any sources that you believe further justify what Krugman said, but please don't delete the criticism again.

Before you revert back to the original version, I'd like you to address these points. I find it kind of disturbing and intellectually dishonest that you deleted them without comment, considering that I took the time to note exactly why I felt the changes ought to have been made. Ssmith619 (talk) 21:56, 16 May 2009 (UTC)


 * Your edit on Krugman is absurd and disingenuous. I checked the cite and he mentions factually that Fanny Mae and Freddie Mac historically applied higher standards to the mortgages they bought, which is true.  That's was Krugman's point, not, as you claim, that Fannie Mae and Freddie Mac made no subprime loans at all, that point is taken out of context, disingenuous at best. Scribner (talk) 04:29, 18 May 2009 (UTC)


 * Here's the quote from the article you keep taking out of context: "Also, they didn’t do any subprime lending, because they can’t: the definition of a subprime loan is precisely a loan that doesn’t meet the requirement, imposed by law, that Fannie and Freddie buy only mortgages issued to borrowers who made substantial down payments and carefully documented their income."  --END--  Make your point without misquoting, thanks. Scribner (talk) 04:38, 18 May 2009 (UTC)


 * I'm sorry, but are you seriously trying to claim that Krugman "they didn't do any subprime lending, because they can't: the definition of a subprime loan is precisely a loan that doesn’t meet the requirement, imposed by law, [...]" cannot be accurately and neutrally paraphrased as "they were legally barred from engaging in subprime lending"? And did you not read the sourced paragraph right above this, where it says that Fannie's share (and Fannie's alone!) of the subprime market has his historically vascillated between 22% and 44%?  Even being charitable and giving Krugman the benefit of the doubt – that he meant that they didn't engage in any substantial subprime lending – the claim still falls flat on its face.  I'm not asking that we remove it, all that I'm asking is that we also mention specific criticism of Krugman's words by another respected economist, from a major economics research university, which is corroborated by other information in the article that you apparently have no issue with.  I moved the Krugman quote from that paragraph (because it wasn't really related to the subject of whether or not Fannie and Freddie engaged in subprime lending).  Please do not change it back - you are being absurdly POV by refusing to allow specific criticism of Krugman's statement. Ssmith619 (talk) 02:09, 1 June 2009 (UTC)


 * The point Scribner is making is that a common definition of a 'subprime loan' is a loan that Fannie and Freddie will not accept. Given that, by definition, Krugman is correct. He was making an observation about what the definition of a subprime mortgage is. LK (talk) 05:56, 26 June 2009 (UTC)

Completely unbalanced
The article represents strictly and strongly only one point of view - those who feel regulation was insufficiently tight. For example, everyone quoted about the CRA says it did not contribute - does this mean noone at all has said it did contribute? —Preceding unsigned comment added by 158.143.136.244 (talk) 11:47, 22 October 2009 (UTC)


 * Yes, strange there is an entry for Bush, but not for Clinton. Clinton created the home ownership bubble. The Wikipedia page ignores the fact that Clinton forced banks to make home loans to unqualified individuals (1990's studies showed Clinton made a mistake forcing loans. No loan bias was found.). Google charts of home ownership and you will see the spike in home ownership around the time (mid nineties) Clinton forced banks to give loans to extremely poor people. Clinton's plan only worked when home prices were increasing. When home prices fell the house of cards collapsed. (Prices generally fell due to oversupply. Oversupply was generally caused by home builders' eagerness to make high profits by using millions of low-paid illegal foreign laborers. In some cases builders were making hundreds of thousands of dollars per home built.)


 * Fitch once documented that a large percentage of Americans were using home equity loans to pay their mortgage loans (The home equity loans were generated from ever increasing home values due to the bubble, and those equity loans would have never started becoming available if Clinton did not change mortgage lending policies when he first became president) —Preceding unsigned comment added by 76.230.232.51 (talk) 21:56, 14 December 2009 (UTC)

Repeal of Glass Steagall Act Yes, I agree this article is not balanced. For this reason I recently made changes to the "Role of SEC" section and to the "Repeal of Glass Steagall ACt" section. I think changes make article more accurate and balanced. If someone sees it differently please let me know why. Thanks.Nicholas007 (talk) 20:40, 28 October 2012 (UTC)

Article title
Shouldn't this be "US Government policies and the US subprime mortgage crisis"? Philip Trueman (talk) 03:58, 8 October 2011 (UTC)

Zingales and too big to fail
I removed the sentence "This led to politically protected 'too big to fail' banks" because Zingales blames this on a number of factors besides Glass Steagall. Bulk of bank consolidations, for example, took place before its repeal. Professor marginalia (talk) 20:28, 31 May 2012 (UTC)
 * Your summary is fine. I thought his indirect blame was interesting--i.e. it wasn't the repeal that created consolidated risky banks. Nevertheless, he blames the repeal on a subtle alignment in power. I'm not convinced he made his case (my POV) but it is notable and worthy of consideration. Jason from nyc (talk) 21:02, 31 May 2012 (UTC)
 * Thanks. Yes, he seems to be arguing that the industries have over the course of many years cowed politicians to relax regulations and as such politicians have facilitated their becoming an ever increasingly powerful lobby to stand up against, such that they're now both too big fail and too formidable to rein in. Professor marginalia (talk) 23:29, 31 May 2012 (UTC)

Role of SEC
 Role of SEC  I am not sure if I am supposed to add talk at top or bottom of page, so I am using bottom. I made changes to the section titled, "Role of the SEC" because the text seemed one-sided and out-of-date. I have read at least 3 sources that address this subject (including the Eric Sirri source, cited). The 5 investment banks in the CSE program were using a percentage-of-receivables standards - not leverage ratio limits. For this reason and others, the 2004 SEC changes had no immediate impact. That said, the SEC, like other regulatory bodies, probably dropped the ball with regard to safeguarding the financial system. However, before the edits I made, I believe the case was overstated and mistated.Nicholas007 (talk) 20:23, 28 October 2012 (UTC)
 * This is an extensive insert that needs to be discussed. Thanks for starting that discussion here. One concern of mine is what appears to be original research. The 2009 Sirri Speech is a primary document by the party in question. We rely on secondary sources which means critical analysis by a writer or researcher on what Sirri has done and said. You do use a secondary document when you cite the Fried book. Here Fried is quoting Sirri, which implies he has found his statement trustworthy and that paragraph is kosher. Jason from nyc (talk) 20:45, 28 October 2012 (UTC)
 * A second concern is one that is not mentioned by anyone in the SEC section. I read (and can reference) an analysis that says the nominal 12:1 ratio hadn't been changed but that the 2004 rule allowed "risk-based weighting" following the lead of Basel II. This allowed high-rated mortgage bonds (for example) to be weighted less that 100% and in essence enabled the real leverage ratio to increase beyond 12:1. Do your sources comment on that "back-door" means to increase leverage beyond nominal limits? Jason from nyc (talk) 20:45, 28 October 2012 (UTC)

Thanks for the feedback. Sirri (via Fried's book) addresses the matter of risk-based weighting in detail. You are correct that the use of the more complex risk-based weighting enabled banks to increase leverage ratios. However, this fact was irrelevant for the 5 banks in the SEC's Consolidated Supervised Entity program because each one had opted to use a percentage-of-customer receivables standard - an option each one had and used for decades. That is where the confusion came from, and that is what Sirri and Fried were addressing. I think it is important to indicate that the percentage-of-receivables standard existed and was in use by all 5 banks. This fact doesn't mean that the regulation was adequate - it only means that it was wrong for critcs to leap to the conclusion that SEC changes made in 2004 enabled the leverage changes. They did not. If there was a regulatory deficiency (and there probably was) it existed all along. Indeed, Fried points out that bank leverage ratios had been higher in 1998 than in 2006, a fact overlooked by critics. I will try to make revisions to the text that make these points clearer.Nicholas007 (talk) 14:34, 1 November 2012 (UTC)


 * I still have questions about the Fried book. It is published by a vanity press, Algora Publishing, which is run with 3 employees out of an apartment on Riverside Drive. Is this a reliable source? The only reviews I can find for the book are on the book cover by Wallison and Pinto. This source is worrying. Jason from nyc (talk) 12:01, 13 March 2017 (UTC)
 * Nicholas007, I'm also bothered that Fried's analysis hasn't been taken up by others in subsequent books and articles since we've talked about this 5 years ago. It seems like an outlier. Jason from nyc (talk) 13:48, 13 March 2017 (UTC)

need to address more government policies
Since this section pertains to government policies related to the subprime mortgage crisis I plan to add some additional sections that have been, perhaps, overlooked. Specifically, I plan to add something about the 1992 legislation establishing affordable housing mandates for Fannie and Freddie, the 1995 100-page "Strategy" document of HUD (it promoted looser underwriting standards), policies of the Clinton Administration (to compliment the section on policies of the Bush Administration) and the role of state and local governments. I will try my best to tie any of my changes to solid sources. Nicholas007 (talk) 16:09, 1 November 2012 (UTC)

To address more government policies it would be helpful to modify the outline of this topic. I propose the following rough outline:

Legislative and Regulatory policies
 * Role of SEC (use existing text)
 * Repeal of Glass Steagall (use existing text)
 * CRA (use existing text)
 * Finl Derivative reg and CFMA (use existing text)
 * Federal regulatory influence of states (use existing text)
 * Inconsistent capital standards (use existing text)

Role of HUD
 * 1992 law created mandates, to be adjusted and administered by HUD. 30% of loans had to be AH; then increased. HUD vigorously promoted AH goals for F&F. Goals were eventually raised to 56%. F&F bought $5 trillion of AH loans.
 * 1995 HUD published comprehensive Strategy document. Hundreds of partners in and out of government, at national and state and local levels
 * 8 million owners was goal – a goal that was achieved
 * Promoted loose standards including “silent seconds,” low DPs, gift programs
 * Banks claimed they were pressured to soften lending standards

Role of F&F

Criticism of F&F

F&F were pushed by HUD, but may have been independently motivated by ideology and profit seeking. Critics claim they had a major, or the major role in creating a crisis. Specific criticisms relate to Fannie Mae’s and Freddie Mac’s…
 * Aggressive promotion of easy automated underwriting standards
 * Aggressive promo of easy collateral appraisal systems
 * Promotion of thousands of small mortgage brokers
 * Creation of the low-quality loan products offered by private lenders
 * Close relationship to loan aggregators, such as Countrywide
 * False reporting of subprime purchases (which misled the market and misled several analysts)
 * Purchase of subprime loans and securities
 * Cheerleading for subprime – even the most aggressive forms that they could not directly buy

Defense of Fannie & Freddie (insert existing verbiage)

Federal takeover of F&F (insert existing verbiage)

Role of the Federal Reserve in the crisis (link to Wiki’s “Criticism of the Federal Reserve,” which examines the role of low-interest rate policy in causing the crisis)

The role of the Federal Home Loan Banks (FHLB) in the crisis (insert existing verbiage)

Federal regulatory influence of states (use existing, and expand?)

Other conservative criticisms of government policies (existing verbiage)

Policies of the Clinton Administration

Policies of the Bush Administration (use existing verbiage)

State and local government programs Nicholas007 (talk) 18:10, 1 November 2012 (UTC)
 * "silent seconds"
 * gifting

=
I just made a large edit, incorporating the basic structure shown above. I tried not to change any existing section - just add more in a different structure. During the next couple days I will recheck citations and typos and try to make sure things are correct. Feedback is welcomed, as I want this to reflect all information that people believe is relevant.Nicholas007 (talk) 15:40, 4 November 2012 (UTC)

Remove "alleged" in section titles
Several sections talk about an "alleged" connection of various government departments and GSEs. It's clear from the text that there is a connection although the magnitude is sometimes debated. I have changed the titles from the form "Alleged role of X in the subprime crisis" to a more neutral form: "X and the subprime crisis." Jason from nyc (talk) 13:09, 20 June 2013 (UTC)

reorganization
Farcaster, what do you think of grouping material on CRA, HUD, Fannie and Freddie under an affordable housing section? --BoogaLouie (talk) 20:04, 26 June 2013 (UTC)
 * I think it could work, but not at this level of detail. I'm wrestling too with how to organize this article. I think F&F, CRA, and perhaps "Other Affordable Housing Policies" might be a good separation. Sections 3 (HUD) and 6 could go under that heading.Farcaster (talk) 20:17, 26 June 2013 (UTC)

I also think the "Legislative and Regulatory Overview" should be split out in some way, but don't have an answer there yet. The laundry list doesn't work well and breaks up the flow of the article. Perhaps much of that could be put into sections as well. Whaddya think?Farcaster (talk) 20:24, 26 June 2013 (UTC)
 * I have to agree affordable housing would be a huge section. Tentatively I'd be willing to go along with your suggestion. I haven't completed all my reading on the topic. --BoogaLouie (talk) 21:06, 27 June 2013 (UTC)

sandbox page for rewriting
I've created a subpage for rewriting the Fannie Mae and Freddie Mac section of the article since both Farcaster and myself are working on the article.

https://en.wikipedia.org/wiki/User:BoogaLouie/sandbox/Government_policies_and_the_subprime_mortgage_crisis

I've attempted to organize the section better grouping simalr complaints together, deleting some material not verified in the citation given. --BoogaLouie (talk) 21:49, 30 June 2013 (UTC)

Fannie Mae and Freddie Mac sections - changes I made, and why
To me, this section seemed confusing and somewhat biased. Under the section "Fannie Mae and Freddie Mac" were two sections that pertained to the FCIC. One was titled, "Financial Crisis Inquiry Commission" and the other was titled, "Wallison's Dissent." That seemed clear but the next section, titled, "Debate about the FCIC conclusions on Fannie and Freddie" did not seem appropriate. It really was not about the findings of the FCIC; rather, it was mostly about journalists (e.g., Nocera and Mclean) and economists and lawyers who happened to share the viewpoint of the FCIC. It was entirely a defense of the GSEs, and it was then followed by a large section called "Criticism of Fannie Mae and Freddie Mac." Doesn't it make more sense to put the criticisms first and then have the defense? For this reason I moved the criticisms section to the front.

I also made a few substantive changes. Personally, I think there is far to much quoting of the opinion of journalists, such as Nocera. However, I did not take any of that out. However, how on earth do we downplay the December 2011 SEC charges which: 1) indicate that Fannie and Freddie probably have 10 times more substandard loans than reported and 2) make most of the subprime loan estimates in this article obsolete (because most reporters and even government agencies simply used GSE amounts straight from their (crooked) financial statements? This is no small matter. I realize that GSE defenders don't want to deal with it, but facts are facts and the SEC case is ongoing. Perhaps it will ultimately be dismissed, but until then it is very important, and it has the potential to seriously affect the assessment of the GSEs.Nicholas007 (talk) 01:19, 4 December 2013 (UTC)
 * Thanks for the cleanup. As much fun as it is to talk about F&F&CRA, bear in mind the big 5 investment banks levered 25:1 or so had $4 trillion in liabilities when they collapsed in 2008. No regulations made them do it; they were not subject to CRA. I have yet to see any testimony from their leaders saying they took these risks because government policies made them do it or because F&F were guaranteeing lower quality credit. They took a lot of capital sloshing around due to the trade deficit and put it into housing, making a ton of money in the process.  This was a free market failure of epic proportion; even Greenspan admitted as much. Bear in mind F&F&CRA remains little more than a conspiracy theory right now, with heavy debunking of the already-minority viewpoint of Wallison, an AEI employee. Deregulatory philosophy/failure to regulate the shadow system allowed it to have a bank run much like the Panic of 1907, as Bernanke pointed out recently. This article focuses on F&F&CRA, but bear in mind the weight of the evidence. Are the words spent advocating the 90% majority view in balance to the 10% advocating Wallison's point of view, using FCIC as a model of balance? If the SEC surfaces additional evidence of wrong-doing, then we can layer that in.Farcaster (talk) 06:46, 4 December 2013 (UTC)
 * What you’re saying is generally true. Everyone in government and half of private industry saw no risk circa 2006. They failed to adequately consider nation-wide failing housing prices that could create such risk. Let’s remember that Bernanke, as head of the Fed and regulator of credit, gave housing a seal of good health in early 2006. Many private investors started selling and, by fall of 2006, shorting the housing market. The GSEs took that as an opportunity to buy more and continued through 2007. The FHA continued to underwrite 3.5% downpayment loans through 2008 and 2009 even as the housing market kept falling and these loans went underwater almost immediately. By 2012 the FHA (insuring more than $1 trillion) tore through it’s capital base and, if it weren’t a branch of the government, would have long since been out of business. Sadly, traditional lenders, like Hudson City, which was held as a model of “old-school” lending in 2008 (only high credit loans) was in dire straights by 2012 because it couldn’t compete with GSE lending (which refinanced the highest quality borrowers). John A. Allison explains that you can’t completely ignore areas that go against traditional good lending and stay in business. It’s a tough line to skirt. Jason from nyc (talk) 12:49, 4 December 2013 (UTC)


 * The high leverage you quote is straight leverage. In 2004 the SEC allowed the big investment banks to use the risk-weighted leverage formulas of Basel II to stay competitive with European Banks. As Conard points out in his book “Unintended Consequences” this allowed greater “straight leverage” by counting bonds with high ratings (by government approved rating houses) to be counted with a lessor weight, still maintaining a reasonable risk-weighted leverage in the eyes of regulators. The banks got rid of the risky “B pieces” and loaded up with “investment grade” tranches (incorrectly rated assuming robust housing prices). In Europe, banks were allowed to load-up on Greek bonds which had a low weight being government bonds (we know how that turned out). All regulators and large banks bought the “new finance” of the “best and brightest” in the regulatory world. The ignorance was widespread. But to say that the large banks, unshackled, took to greater leverage doesn’t convey what they (and regulators) imagined was less risk-weighted leverage with better credit quality. (See Conard.) Jason from nyc (talk) 12:49, 4 December 2013 (UTC)

Global housing prices
Farcaster, it would be interesting to add Switzerland and Germany housing price indexes to the graphs that you recently added for the same period. I say this because UBS (Union Bank of Switzerland) was one of the banks that lost the most from subprime, similar to Citibank (see List of writedowns due to subprime crisis). It would be interesting to see the effect of EU banks on those two banking powerhouse nations. Jason from nyc (talk) 11:42, 13 March 2017 (UTC)

That graph is from the FCIC. A quick search on FRED indicates neither of the two countries had housing bubbles in the 2000's.Farcaster (talk) 13:34, 13 March 2017 (UTC)
 * [Switzerland housing prices % changes]
 * That's interesting. It still should be in the picture of the graphs as the graph shouldn't cherry pick.
 * It's not clear we should be comparing domestic and foreign housing markets. They are different in a number of ways. If I remember correctly, both Germany and Switzerland have less than 50% ownership vs. renting. Their banks are just as aggressive but those nation's anti-inflation record is good since WWII, while we had a bout with inflation in the 70s. I'm not sure a glib comparison should be made and an in-depth comparison is beyond the scope of the article as there are too many differences in policy and history. Perhaps it's best not to add the graph. Jason from nyc (talk) 13:45, 13 March 2017 (UTC)

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 * Added archive https://www.webcitation.org/68F8QZzuT?url=http://www.bloomberg.com/apps/news?pid=newsarchive to https://www.bloomberg.com/apps/news?pid=20601109&sid=aKKRHZsxRvWs&refer=home
 * Added archive https://web.archive.org/web/20090218073608/http://alaskakid.wordpress.com/2009/02/12/derivatives-02-11-09-hr-977-markets-transparency-and-accountability-act-of-2009/ to http://alaskakid.wordpress.com/2009/02/12/derivatives-02-11-09-hr-977-markets-transparency-and-accountability-act-of-2009/
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When you have finished reviewing my changes, you may follow the instructions on the template below to fix any issues with the URLs.

Cheers.— InternetArchiveBot  (Report bug) 20:20, 21 October 2017 (UTC)

Deletion of citations to widely cited academic article by MrOllie based on Off-wiki personal attack; see wikipedia's page on reliable sources re: Mortgage Securitization
I wrote the following on MrOllie's talk page following his deletion of citations to a particular academic author. Mr. Ollie did not respond on substance but rather responded with ad hominem attacks. Please discuss so that we can reach consensus.

Dear MrOllie,

You recently reverted edits to articles about mortgage securitization, the GSEs, and the subprime mortgage crisis. I believe these revisions reduced the substantive quality of the wikipedia articles and the edits should be restored. My explanation is below. I look forward to working with you amicably to reach consensus. I believe that our goal should be to improve the article and cite to high quality, relevant sources whenever possible.

The edits you reverted included substantive improvements to the articles and cited an award-winning (see also here), widely-cited, widely-read academic journal article by a tenured professor at a leading research university with relevant expertise.

According to Wikipedia's policy on reliable sources:

″Many Wikipedia articles rely on scholarly material. When available, academic and peer-reviewed publications, scholarly monographs, and textbooks are usually the most reliable sources. . . . Material such as an article, book, monograph, or research paper that has been vetted by the scholarly community is regarded as reliable, where the material has been published in reputable peer-reviewed sources or by well-regarded academic presses. . . . One can confirm that discussion of the source has entered mainstream academic discourse by checking the scholarly citations it has received in citation indexes.″

Thus, the source cited is among the most reliable sources under Wikipedia's definition of reliable sources. You reverted it while suggesting that it might be reference-spamming, but given the relevance of the academic article to the wikipedia article, and the high quality of the academic article--demonstrated by its placement, its citations, its readership, its awards and the institutional affiliation and status of its author--it is not a form of spam but rather a legitimate effort to improve the article.

Please note that news articles in journals with an ideological valence, think tank reports and other materials are considered less reliable sources than academic research. See Biased or Opinionated Sources Many of the other sources in the article are editorials and think tank reports, not academic articles, and the inclusion of more high quality and up-to-date academic articles would therefore improve the article.

Many of the think tank reports cited in the article are written by organizations that receive financial sponsorship from private lenders and therefore have an interest in portraying the financial crisis as having been caused by government policies rather than by private financial institutions. One of the few academic reports cited is years out of date, claims to provide a "comprehensive" bibliography of articles, but was published in 2012. Much has been written in the ensuing 7 years--the article is no longer a comprehensive review, if it ever was. And indeed, the author claiming otherwise has a think-tank affiliation.

In addition, self-published material is generally considered an unreliable source, except when published by well-published academic experts. Per Wikipedia policy, self-published material:

″are largely not acceptable as sources. Self-published expert sources may be considered reliable when produced by an established expert on the subject matter, whose work in the relevant field has previously been published by reliable third-party publications.″"

You cited to self-published blog by a self-employed blogger / part time document reviewer which contains an off-wikipedia criticism of a scholar with whom he disagrees about the benefits of legal education.

It may be helpful to understand the context of this post. The blogger apparently posted this criticism as a form of revenge for having been made to appear foolish for making substantive mistakes about legal education and student loans --subjects about which the blogger purports to be an expert--even in a publication to which he has contributed.

Citing to the post you cited violates wikipedia policies including No_personal_attacks and []. Indeed, the author of the post you cited acknowledged "that this post might be construed as an “off-wiki attack” ... that Wikipedians may perceive as harmful to their community."

Edits are supposed to be evaluated on substance based on established wikipedia policies about reliable sources, not based on snap decisions based on []

I recognize that my edits only added one source and that it would be better to include multiple sources. If you would like to add additional high quality academic sources rather than deleting the few high quality citations that are in the wikipedia article, I would encourage you to do so. I have reviewed Wikipedia's Conflict of Interest policies and I am in compliance. Mbs6446 (talk) 16:56, 31 March 2019 (UTC)