Talk:Subprime mortgage crisis/Archive 2

TED Spread graphic
I like the TED spread chart. But I am curious where the data comes from. Is the data source cited? If so, I guess I missed it. If not, can the contributor add a citation? Bond Head (talk) 11:47, 3 October 2008 (UTC)
 * support - You are right that graph is unsourced, unless a source is added that graph will be removed. EconomistBR  15:22, 3 October 2008 (UTC)

I added one that is sourced.Farcaster (talk) 03:52, 8 October 2008 (UTC)

WTF???
Why is Barney Frank or Chris Dodd either mentioned in this entire article? Or the rest of the democrats that fought legislation to regulate Fannie and Freddie back in 2003? Why is the only tid bit about pushing legislation to reform this companies reflect Ron Paul?

I suggest a complete re-write leaning blame towards Barney Frank, Chris Dodd, and other key democratic players, along with Republican Roy Blunt. 68.143.88.2 (talk) 18:48, 9 October 2008 (UTC)


 * Oh, but luckily that Obama campaign had enough sense to "let go" of their VP Selection Committee Chairman, Jim Johnson, since he was the VP of the largest. http://articles.latimes.com/2008/jun/12/nation/na-johnson12 68.143.88.2 (talk) 19:13, 9 October 2008 (UTC)


 * I always enjoy chatting with Republicans, who love to make up garbage, like tax cuts increase government revenues (total B.S.) Have any facts?  Like Fannie and Freddie only bought "conforming" loans, of a higher credit quality?  Or that over 98% of their assets were paying on time (vs. a 35% default rate for subprime loans industry wide?)  Or that investment banks were deregulated by the SEC (executive branch=President Bush) in 2004, so that they could leverage up like crazy on this garbage and pawn it off across the entire banking system?  Blame the Republican cronies in the investment banks first before you go there. Fannie and Freddie are maybe 20% of this problem--an important part, but not THE part.Farcaster (talk) 19:31, 9 October 2008 (UTC)

Mortgage Insurance Requirements
Can anyone help me understand why Private Mortgage Insurance (PMI) was apparently not in place to protect lenders when borrowers could not make a downpayment of at least 20%? Did the requirements for PMI change at some point in time? —Preceding unsigned comment added by 75.185.66.119 (talk) 02:41, 10 October 2008 (UTC)

OpEd or another Inconvenient Account of the Truth?
HAHA touche, Brutus! Shall we destroy Pliny's accounts of the destruction emanating from Vesuvius as well? Do not belittle the power of primary sources. I have not yet begun to write. This is now listed as current event. "He who controls the present controls the past and he who controls the past controls the future." - George Orwell. I look forward to going through all of the Financial Times articles I have saved up since November. The Truth about this despicable Leveraged Buyout of the American Public will manifest itself over the next few months. It will be documented and digitized for everyone's edification. Best Regards. DavidMSA (talk) 20:09, 19 March 2008 (UTC)

A guy on Bloomberg who advises Senator McCain said too much regulation caused this whole mess. I thought I heard it all until I heard that one. He's from AEI, which is an anti-regulation think tank in need of some horsepower. Got a good chuckle from that. You're at least a well-read guy. If you have a series of sources that develop an alternate hypothesis on how this came about, perhaps write it as a separate article. We can then add a paragraph to this article and link it in. Traffic on this article is extremely high based on the number of edits recently, so it will get some visibility without distorting this article, which is approaching 200 sources now. This is one of the best articles for starting to research this topic and hence its #1 Google search position on the topic. Further, there is a related timeline article that could use an update. We could use your help on that if you want to contribute.Farcaster (talk) 23:28, 19 March 2008 (UTC)


 * Thank you my friend. It is interesting that you bring up a McCain adviser, since McCain was prevalent in the Keating Five scandal which was instrumental in 'opening the floodgates' for the S&L scandal to come rushing through in the late 80s.  I am working on a book which will draw parallels between both scandals and demonstrate that the problems derive from the way banks securitized the debt as well as the weakness in the housing market.  It is interesting to note that states which had a ton of regulation for issuing mortgages did not see such a destructive 'bubble' effect in their real estate markets.  When I worked at Countrywide we were discouraged from doing loans in Texas due to the restrictive underwriting guidelines for the state.  The no income/no documentation loans were super easy to get in places like Florida and California.  Furthermore the role of home appraisers in this whole mess is completely overlooked and I will have some sources to cite on that, since I have no professional experience in that field.  I will start some other topics after Easter and then we can work on tying them all into this master article.  What will be interesting is if/when the debt which was securitized from prime loans starts to get hit, or if there is a serious problem with the Credit Default Swap market.  I will post some interesting information from the CBOT website on this talk page for everyone can take a gander at, I need to edumacate myself on my Wiki technique.  For now I recommend checking out this list:

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1048+50088,00.html

Then reference that list against this one:

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1048+55035,00.html

I'm not a CPA, just a peon futures trader but these lists are showing everyone who was CDS exposure. I predict that the non-FOMC entities with CDS exposure are going to experience 'liquidity' issues (like Bear Sterns) and get snapped up by the FOMC-member entities at super low prices. This happened with JPM buying Bear Sterns on the US taxpayers' dime. Now I need to do more research but I bet that these 14 or 15 companies that are being 'investigated' (like Lehman) are either going to run into 'liquidity' issues or be scandalized to the point that they get super cheap and then the FOMC-member banks can buy their assets below market value, thus gaining assets that will help to offset the CDS exposure for all the firms involved.

If the CDS future were trading more freely (I'm pretty well-connected at the CBOT and no one will talk to me about this) then the yahoos in Chicago would have too much control over such a big debt market, which is not what the folks in NYC and the FOMC want to see happen. A la prossima =) DavidMSA (talk) 17:07, 20 March 2008 (UTC)

Rationale for deleting the write-down table
Bloomberg posted a complete table containing all subprime related write-downs and losses. http://www.bloomberg.com/apps/news?pid=20601087&sid=aK4Z6C2kXs3A&refer=home Because of Bloomberg's table we now had 2 options:
 * 1) -Quote Bloomberg's write-down number and delete our table since it is now redundant and incorrect?
 * 2) -Copy, which is illegal, Bloomberg's table since it's far more complete and has the correct write-down numbers? Our numbers are in most cases summations which if kept would constitute original research.

I am in favor on Option 1. Get Bloomberg's write-down number and delete our table since:
 * Our table is around $80 billion below Bloomberg's number.
 * Our table occupies too much space and distorts the text format.
 * Our table has become a source citation hell with over 70 source citations, making the article heavier.
 * The table is hard to keep up to date and it is, unfortunately, incomplete.
 * Our table has number disparities that are very hard to explain. For example, Bloomberg's table doesn't include AIG's $11 billion write-down.

Deleting the entire table is kinda sad since I worked hard into keeping it updated since November 2007, at that time the write-downs totaled just $20 billion. Basically all that time was wasted now ouch.... but it has to be done, the time has come to let go of it so I deleted it.

I many ways I am glad though, having to visit Google News every other day to check for news was a real pain and now I can move on. ⇨ EconomistBR ⇦  Talk  07:02, 20 May 2008 (UTC)


 * FOR FUTURE REFERENCE - HERE IS THE LAST PAGE REVISION CONTAINING THE OLD WRITEDOWN TABLE:


 * EconomistBR, I wanted to keep it in view for two reasons. One is that Bloomberg's table is unsourced, whereas yours documented sources for the individual figures. Also, Bloomberg's own figures will eventually become obsolete. Mporter (talk) 09:40, 9 June 2008 (UTC)
 * I have little doubt that Bloomberg's table are sourced on the actual bank reports rather than on News articles since Bloomberg has very easy access to information. Our table is sadly no longer the best estimation available.
 * Another thing, Bloomberg updates that table every few months or so, we should expect an updated version of that table in a few months. ⇨ EconomistBR ⇦   Talk  20:01, 17 June 2008 (UTC)
 * In fact, I would consider recreating it as a separate page, e.g. 'List of writedowns in 2007 credit crunch'. Bloomberg's table can be just another source of figures. If it disagrees with the Wikipedia figure, that can be noted, but again, all the Wikipedia numbers are sourced, all the Bloomberg numbers are unsourced. Mporter (talk) 09:44, 9 June 2008 (UTC)
 * As I said, most of our numbers are simply summations of 3Q/07, 4Q/07 and 1Q/08 writedown numbers, they are not sourced on anything. I kept them because they were the best estimation available until the Bloomber table came along. ⇨ EconomistBR ⇦   Talk  20:01, 17 June 2008 (UTC)
 * I appreciate your selflessness and integrity EconomistBR, but have you considered that Bloomberg copied your table, then made a couple of changes to claim it as their own ? ;-) -- John (Daytona2 · Talk ·  Contribs) 09:48, 9 June 2008 (UTC)
 * Thanks for the compliment. Bloomberg would never do that, they have instant access to whatever information they may need, just imagine their database. Also their list is way more complete, it has information on banks that I've never heard of. ⇨ EconomistBR ⇦   Talk  20:01, 17 June 2008 (UTC)


 * I've restored it as a new page, List of writedowns due to subprime crisis, and linked to it from "Effects". It's a valuable resource for researchers, because, as I said, the numbers are individually sourced. Better to keep it around, and update it when someone has the energy to do so. Mporter (talk) 10:15, 9 June 2008 (UTC)
 * Ok, I just want to warn that the table is incomplete and the table's numbers are very unreliable since they are a product of summations which were themselves based on numbers quoted from News articles, and those numbers may vary significantly from News source to News source. This fact means that those numbers are basically unsourced.
 * I only kept them because they were the best estimation available at the time. Neither CNNMoney, nor BBC nor the NYTimes produced lists as complete as ours, had any of them produced a more complete list I would have taken this same decision months ago.
 * I completely vouched for that table's accuracy until the Bloomberg's table came along.
 * I do not vouch anymore for those numbers since they are no longer the best estimation available. ⇨ EconomistBR ⇦   Talk  20:01, 17 June 2008 (UTC)

Delete Countrywide loan section?
Does the section on the Countrywide loan scandal really belong in this article? It's not really about the downturn in subprime mortgages, except the tenuous connection that some of the politicians that got Countrywide loans have some authority over financial markets policy. Its inclusion also tends to sensationalize the article and appears politically motivated. At the very least, some facts need to be corrected, which I will do. Bond Head (talk) 16:46, 1 July 2008 (UTC)


 * Countrywide is widely used as the exemplar of what went wrong in the sub-prime market, so it's quite reasonable that it's included in the article. And, so long as it doesn't dominate the article, a bit on the politics around policies seems very appropriate to me. (The section would make A LOT more sense if it didn't stand alone--if there was some stuff about Countrywide itself to give it context.) Cretog8 (talk) 17:11, 1 July 2008 (UTC)


 * Countrywide is an exemplar of the subprime crisis only to the extent that they made and securitized lots of subprime loans and lost a lot of money in that business, not as a result of making favored loans to Chris Dodd or Jim Johnson. The connection between the subprime downturn and the favored loans is tenuous at best.  If Countrywide belongs in the article, somebody should write about their former subprime business, not about loans to politicians. Bond Head (talk) 17:33, 1 July 2008 (UTC)


 * I'm mixed on this. My feeling is that the section providing a piece of political context is very valid. BUT, if it stands alone without the context on why we should care about Countrywide in the first place, then it's WP:POV via WP:UNDUE and general non sequitur. Cretog8 (talk) 17:44, 1 July 2008 (UTC)


 * I think this is an important part of the subprime crisis and should stay in. The loans are to politicians in positions related to the subprime mortgage crisis. The United States Senate Committee on Banking has jurisdiction over matters related to banks and banking. Chris Dodd is the chairman of that committee. This is a banking related crisis. Jim Johnson was in charge of Fannie Mae. The government sponsored enterprise that make mortgage loans and loan guarantees and is important in securitization of mortgage-backed security bonds.  Also related. Sure the section can be improved, but it shoud stay. (Halgin (talk) 00:54, 2 July 2008 (UTC))


 * I think this section should definitely be deleted. The FOA loans are appropriately discussed in the articles on Countrywide Financial and Angelo Mozilo. There is no evidence that the VIP loans to politicians have any relationship to the subprime mortgage crisis. Malatinszky (talk) 21:39, 26 July 2008 (UTC)


 * That was my thinking. There are plenty of politicians that didn't get loans from Countrywide, like Barney Frank and Paul Kanjorski, who have lots of influence over hosing and capital markets policy.  It's a long stretch to say that the loans from Countrywide to Chris Dodd ot Jim Johnson had a significant influence on housing or capital markets legislation related to the crisis. Bond Head (talk) 20:19, 29 July 2008 (UTC)
 * Congressional ethics panel is examining allegations related to Chris Dodd and Kent Conrad. Halgin (talk) 02:28, 30 July 2008 (UTC)

Continuing effects on equity markets
There needs to be an elaboration of the effect on global stock markets as a result of this crisis. Someone reading this article, when reading the section entitled "Effect on stock markets," would be led to believe that equity markets sold off from July 17, 2007 until August 15, 2007 and then that was it, when in fact equities have continued to sell off since the summer of 2007 as a result of, among other things, the blowup in subprime mortgages and the myriad of credit problems it has caused. Commodities, especially oil, have continued to rally strongly as well for the same reasons. Clinevol98 (talk) 06:44, 4 July 2008 (UTC)
 * I agree that section is problematic, I think the best solution is to get a "financial institutions index" and compare it before and after the crisis. We could also do the same thing to a "house contruction index".
 * The recent downturn on the stock market got contaminated by the oil prices, this will make the task of assessing the impact of the subprime crisis even harder. That's why i think we should focus on the "financial institutions index".
 * ⇨ EconomistBR ⇦  Talk  17:08, 10 July 2008 (UTC)
 * We can state that the stock markets continued to sell off since the summer of 2007 and that the subprime was one reason and high commodities prices was another. I agree with EconomistBR a little information on the financial institutions and house construction indexes would be good. May be a good place for a chart. Halgin (talk) 13:18, 12 July 2008 (UTC)

Effect on global economy??
Let's get real here, there has been equity contagion and some financial contagion by this crisis, but for the most part it is a United States financial crisis. Where has been this global effect on economic growth?? Yes Europe is slowing down but Asia and Latin America have not even seen as much as a blip from the Subprime Crisis. So is it really accurate to state that "the crisis quickly spread throughout the world" ?? In fact it is exports of US goods to growing world economies in Asia, LatAm and Middle East, and to Europe and Japan which have stronger currencies that has helped the US from falling into a deep recession. "It has yet to be seen if the US's stimulus plan will be enough to help the global economy too"... The global economy actually is helping the US, not the other way around. That sub-section should be edited. The dugout (talk) 15:30, 20 July 2008 (UTC)
 * Agreed that its essentially a US crisis, but it has affected many other economies in Europe & Asia. 'throughout the world' is a bit dramatic - I agree on editing this to make it more 'global' in point of view than a US-centric piece. wildT (talk) 06:53, 1 August 2008 (UTC)

HOPE for Homeowners Act of 2008
I'm somewhat surprised that there's not even an article about this, let alone mention here. This really isn't my area of expertise, but I'll try to add some text tonight. Simesa (talk) 02:39, 4 August 2008 (UTC)


 * Found the Act - it's in Housing and Economic Recovery Act of 2008 and I'll make a re-direct to that article. Simesa (talk) 02:49, 4 August 2008 (UTC)

Op Ed? For Deletion?
This article strikes me as being myopic and naive. This crisis that we hear about through the media today has been ten years in the making. It is a product of lax oversight and irresponsible 'shell game' lending practices on the part of major federal reserve banks as much as anything else. What should be noted is that despite the FOMC [FOMC = Federal (Reserve) Open Market Committee--FurnaldHall (talk) 01:06, 28 September 2008 (UTC)] denoting itself as an 'Open Market Committee', the manner in which JPM [JP Morgan Chase & Co., a bank. New York Stock Exchange (NYSE) symbol is JPM. --FurnaldHall (talk) 01:06, 28 September 2008 (UTC) ] was allowed to first buy Bear Sterns for about 50 cents on the dollar on 3/14/08 and eventually took ownership on 3/17/08 at $2 a share via the Fed Discount Window was neither Open nor Transparent. Both actions on the part of the FOMC were taken when the markets were basically closed, which made it impossible for many parties to cover their positions (or intiate new ones) when the news was released through the media.

It should be noted that the liquidity issues brought about by the 'Raptor' stuctures in use at Enron several years ago are virtually the same types of problems brought about by overdependency on Credit Default Swaps to fund the Subprime Lending shell game of the last ten years. If the CBOT Credit Default Swap futures contract had been allowed to start trading on March 1st, 2008 as it was originally slated to do, these two most recent actions by the FOMC would not have been necessary. It should be noted that Goldman Sachs has an enormous amount of Credit Default Swap exposure at this point and they will eventually have to cover that risk.

I also find it questionable that the FOMC would make such a huge deal out of this situation and then only cut the FF rate [This perhaps refers to Federal Funds rate? --FurnaldHall (talk) 01:06, 28 September 2008 (UTC)] by 0.25%. This is made even more ridiculous by the fact that there is a scheduled FOMC meeting for this week; if two or three days was that important then I find it hard to believe that 25 basis points is going to really fix anything. In January the FOMC made an intermeeting cut of 50 basis points due to the Societe Generale 'crisis', yet this situation is receiving much more sensationalized press coverage. I have many years of trading experience with various financial instruments, including options on Fed Fund Futures at the CBOT [Chicago Board of Trade --FurnaldHall (talk) 01:06, 28 September 2008 (UTC)], and the way the FOMC is handling this situation is hamfisted and questionable at best. At worst the case could be made for a RICO indictment along the lines of what Enron received. DavidMSA (talk) 03:23, 18 March 2008 (UTC)

''I clarified a few of your acronyms for us beginners. Sorry about the signatures on each, which interrupt the flow. Take them out if you like. Given that this is an article for a general readership it would likely help those of us not working in       finance if you wrote out the meaning of the acronyms in the main text. '' --FurnaldHall (talk) 01:06, 28 September 2008 (UTC)

Whatever. Just cite your sources. Keep your edits short so they can be reversed if your opinions exceed your sources.Farcaster (talk) 04:22, 18 March 2008 (UTC)


 * OK Pro. Sorry if I crashed your party.  If you want to make this into a chicken and egg this we can do so.  However if you were actually in the industry you would understand that the housing 'bubble' is a red herring, over-sensationalized topic.  The real meat on the bone is about the Credit Default Swaps.  Good luck getting the numbers on those without being a registered NASD broker dealer.  Either that or it helps if you actually have some experience trading the stuff.  Don't you agree? DavidMSA (talk) 04:30, 18 March 2008 (UTC)

If you can cite it, I'll back you up 100%. I've had to take about 5 folks with unsupported theories out of this article before. Even if you are right, without sources it must go. I suggest your start with the body; pick a section you want to update and work on that. Plus, this isn't an op ed page for you and your ego. Don't care whether you trade or not, just that you can support your views with credible sources. Main sources are Fed letters from Bernanke, Economist, and other top periodicals. Your time in the trenches doesn't count here, unless you can use it to explain some of the complex topics we're wrestling with. Trying to explain this in simple terms may be the best use of your experience.Farcaster (talk) 04:36, 18 March 2008 (UTC)

My point is not to argue about the outcome, it is obvious for all to see. I am saying that it is oversimplifying the situation to say that the liquidity crisis is just a result of what happened the last six or eight months. I have given a much better outline of how the FOMC injects cash into the system on this page than was previously there. I'm not disputing the facts; I'm disputing the way these facts are being used to connote cause and causation of the problem. If I wanted this to be about my ego I would be vandalizing the article, which I am not doing by any stretch. I will do some serious work on this, it just happened to catch my eye this evening. The parallels to the liquidity issues which brought down Enron should not be swept under the rug. Jeff Skilling is sitting in prison for doing something which many FOMC member banks are getting away with doing via the Credit Default Swap market. I feel like 50 cent writing this stuff, believe you me. DavidMSA (talk) 04:42, 18 March 2008 (UTC)

There are two things I see deserving of mention: 1) The privatization of profit benefits from the socialization of risk and, 2) the fact that the subprime crisis has generated a great buying opportunity and will surely lead to great riches. —Preceding unsigned comment added by Bidness (talk • contribs) 17:54, 6 May 2008 (UTC)

Speculators section
The stuff about speculators driving the price up and leaving the market should be in down turn section. The stuff about speculators being highly leveraged should be in the “Role of borrowers” section. Anybody else have thoughts about this? Halgin (talk) 23:46, 18 August 2008 (UTC)

Role Of Borrowers section
Added necessary context from developing interpretation of the story.

Section presently implies borrowers were the fraudster and banks were somehow "duped" int massively changing their practices to the point that they were no longer reasonable. But these loans were made with "broken" odometers and judges, grand juries and the FBI are not accepting the standard media version of why this happened.

Essential context. --Dlawbailey (talk) 10:36, 23 August 2008 (UTC)

Your text is helpful but belongs under the "Role of lenders." The theme of the comments you included is that lenders lowered there standards or collected less information on these borrowers. We've been putting text like this under the role of lenders. It would be helpful to add a lead-in sentence introducing the theme of the additionFarcaster (talk) 14:34, 23 August 2008 (UTC)


 * I agree that it should be under "Role of lenders" section. Halgin (talk) 23:14, 25 August 2008 (UTC)

Lead
Hi folks, I know the cleanup tags at the top of articles can be unsightly and unwelcome, but can we please aim to get the lead to conform to WP:LEAD, i.e. a maximum of four paragraphs.

It's not impossible, for example Jesus, Evolution, God, Space all manage it. I think we can too. --Jza84 | Talk  19:22, 14 September 2008 (UTC)

Rename article?
This isn't really called the Subprime mortgage crisis anymore. British media mostly calls it the Credit Crunch. Still, if the article is supposed to be renamed, that's of course a too general term. "Late 2000s Credit Crunch"? No. Suggestions? Narssarssuaq (talk) 22:17, 15 September 2008 (UTC)
 * In the United States, this issue is commonly referred to as the subprime mortgage crisis, or some variant. There is no reason to change the name of the article, at least at this time, in my opinion..  Acro  X   00:02, 16 September 2008 (UTC)


 * If that's so, I agree. Narssarssuaq (talk) 08:49, 16 September 2008 (UTC)
 * Also, the credit crunsh is a result of the American subprime mortgage crisis, not another name for it, and it is also more of a catch all term for economic downturn resulting from this. SGGH speak! 12:54, 17 September 2008 (UTC)

Role of Government
This article is way above my paygrade, and I wouldn't presume to argue knowledgeably about economics with anyone conversant with the topic. However, I have heard that somewhere along the line, in the Clinton administration, regulations were passed which threatened banks with revocation of their charters if they didn't provide loans to low-income applicants. That is, a bank was prevented from "discriminating" against someone simply because they had no money or no way to pay back a mortgage. Is there any truth to this? This is not even mentioned in this article, not even to deny its veracity.98.170.199.152 (talk) 00:03, 16 September 2008 (UTC)


 * Somebody put these important factoids so I don't have to :-) The Real Culprits In This Meltdown Investor's Business Daily September 15, 2008. Minus the POV editorializing, it has some good facts. The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but "predatory." Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street. But the seed was planted in the '90s by Clinton and his social engineers. Obviously the Bush administration also was totally complicit. Hopefully other sources will provide more such info soon. Let's have a balanced and accurate article. Carol Moore 17:43, 16 September 2008 (UTC)Carolmooredc {talk}


 * Having studied up further and found other more substantive articles than the Investor's Business Daily article (which by the way has been reprinted in dozens of places), I can see this article has serious problems, even with the couple sentences added on government regulation since these earlier posts. A particularly good article is Mark Skousen's Ride out Wall Street's hurricane - The real reasons we're in this mess – and how to clean it up September 17, 2008 edition of Christian Science Monitor. Says in part: ...did not Congress amend the Community Reinvestment Act in 1995 to require commercial and mortgage banks to lend to high-risk borrowers? Banks that failed to comply were hit with fines and faced rejection when they requested mergers and branch expansions. Suddenly the subprime mortgage business boomed, and Countrywide Financial became its poster child. Furthermore, to encourage homeownership, did not the federal government offer an implicit guarantee to cover the performance of mortgage-securities giants Fannie Mae and Freddie Mac? The result was corporate abuse and a systematic easy-money policy that lasted for more than a decade in real estate. Like all artificial inflationary policies, the overheated property market led inevitably to widespread turbulence. Recently the quasi-private Financial Accounting Standards Board imposed "mark-to-market" accounting regulations on financial institutions, forcing mortgages and other loans to be written down to zero simply because they couldn't be sold, even if they were still being paid by customers. As a result, we've seen financial tornadoes causing institutions to be downgraded and, in some cases, completely collapse.
 * I found a lot of other good stuff searching terms Community Reinvestment Act subprime mortgage in news and web searches.
 * Specific recommendations for this article:
 * Shorten both the lead and the background sections that are very WP:OR and POV; move important material down to relevant sections
 * Make the debate about the role of government regulation as the first listed cause with greater explication of the various viewpoints, hopefully with some statistics thrown in;
 * Rewrite as necessary sections below to reflect these changes;
 * Note the housing downturn itself - any cyclic tendencies aside - largely was caused by the over investment encouraged by govt policies and belongs in effects.
 * Being a bold editor, I sometimes drink too much coffee and end up boldly re-structuring and re-writing articles in the middle of the night. But if someone else gets their first, I'll be delighted :-) Carol Moore 03:01, 17 September 2008 (UTC)Carolmooredc {talk}

Hello Carol, please feel free to expand the role of government piece to discuss the government aspects. But several of us have painstakingly put this article together from hundreds of sources over time. Government regulation is an issue; one can argue there was insufficient regulation just as easily as too much. For example, the government did NOT regulate the shadow banking system. Hedge funds and investment banks borrowed like crazy and made an unbelievable amount of bad loans, but were not subject to the capital requirements of regular banks. They were not subject to the CRA. The taxpayers and investors in stronger banks like Bank of America are now rescuing these bad actors. Further, the government allowed banks and mortgage companies to loan to people without taking a down payment. Feel free to edit the role of government section, but please don't touch the introduction or backgroundFarcaster (talk) 04:06, 17 September 2008 (UTC)Farcaster (talk) 04:23, 17 September 2008 (UTC)


 * I don't believe in removing WP:RS material unless it is irrelevant or unnecessarily redundant. Valuable work may have been done on the article since April 2008, but that doesn't mean there is not a POV slant downplaying the major motivator of this whole crisis - government regulation.
 * There is a lack of recognition that the government starting in 1995 forced banks to lend to unqualified borrowers, opening the field to scam artists - not to mention Countrywide and real estate agents looking for big fees - to pull people out of the woodwork and put them in houses they couldn't afford, driving up prices and luring more solvent people into second mortgages they couldn't afford. It's not some mystical unknowable reason that "The overall U.S. homeownership rate increased from 64 percent in 1994 (about where it was since 1980) to a peak in 2004 with an all time high of 69.2 percent.[29]" - it's US government policy!! That's why I think this issue should be the first section.  If you think this is wrong do tell why in the spirit of cooperative editing :-)


 * I'll also look for WP:RS that would make it clear if "housing downturn" belongs more in effects than causes.
 * Obviously govt regulation like arbitrary separation of banking, investment, etc. is one way to deal with abuses. But these may be inevitable in any kind of huge financial enterprise without an infrastructure of affordable private consumer advisory and protection services so that individuals can get good advice to start and quickly react to problems. (Currently govt. regulations protect accountants and lawyers' overly high fees.)  There's probably a whole bunch of laws and regulations actually inhibiting lenders and consumers from protecting themselves. I'm sure those can be googled up when I take the time :-)
 * Subprime_lending this needs updating also and has tag to that effect. Anyway, I like to get all my ducks and WP:RS in a row before I go in and make significant changes, so comments meanwhile appreciated. Carol Moore 15:15, 17 September 2008 (UTC)Carolmooredc {talk}

Spoken like a true libertarian. I respect your views, but truly over-regulation is a minor issue overall here. You had a huge amount of liquidity in the system due to low interest rates and deflation of dot-com bubble. Housing was the next big thing, with up to 40% of homes being investment properties according to some sources. They were "safe" and increasing in price. Homes got built because funding was available. Securitization/financial engineering played a major part in funding the boom. While the "real" economy is affected by a lack of construction of new homes due to an overabundance of housing supply, Wall Street is teetering on the brink because nobody is willing to take the full hit for the arguably worthless paper on their books. Assets are worth what people will pay for them, and if nobody wants them, they are worth ZERO. They can state that the losses are non-cash and what they think they are worth from an "intrinsic" value standpoint. Disclosure has been abysmal; banks seem lost in terms of what is going on with their books. Nobody believes what they say. Somebody needs to step up and put forth some decent explanations of what they think their assets are really worth--or maybe the Fed can demand it. Hence mark to market accounting. Until balance sheets are purged and loan balances are reduced on homes, this cycle of bad news/stock market tanking will continue. Don't let your small government buddies influence you too much. As they say: "Extreme positions create a lot of heat but very little light."Farcaster (talk) 15:56, 17 September 2008 (UTC)


 * I agree that it was US government policy to increase U.S. homeownership rate. About the 1995 revisions to Community Reinvestment Act, CRA. A quote from the Community Reinvestment Act page. The (1995) revisions allowed the securitization of CRA loans containing subprime mortgages. The first public securitization of CRA loans was started by Bear Stearns in 1997. The number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent. That seems related to me. Stating the newspaper articles claim that the 1995 changes to it was a factor, seems related to me. Halgin (talk) 00:15, 18 September 2008 (UTC)


 * We agree that Securitization/financial engineering played a major part in funding the boom. The question is, what are the mechanisms?  Considering that there are all sorts of govt regulations all over the housing and banking and mortgage and securities iindustries, as well as selective special interest/crony favoring de-regulation, what mechanism is it OUTSIDE of those that you think is responsible? I can see you take an accountant's eye view of the worth of individual assets, but that perhaps is not a wide enough perspective for looking at this issue. Carol Moore 02:08, 18 September 2008 (UTC)Carolmooredc {talk}


 * My understanding is that regulation of non-depository financial institutions (e.g., mortgage companies, investment banks) is considerably less than true depository banks (which are under the FDIC). The big banks (Citi, B of A, etc.) survived the first wave of the crisis in Q4 2007 and Q1 2008 because they had regulation-mandated capital reserves.  They can leverage themselves about 10:1 and were able to get new capital.  They marked their assets down big-time and took huge losses (see bank profit chart in middle of article) but they lived.  However, investment banks do not have deposits or the same capital requirements (if any).  Companies like Bear Stearns, Merrill Lynch, etc. leveraged themselves to the hilt (about 30:1 vs. the 10:1 of depository banks) during the housing boom.  They could borrow cheap and lend high until the credit crunch hit in late 2007, so they did a ton of it.  They owned lots of mortgage backed securities (MBS); lets say they borrowed money at 4% and these things paid 7% for awhile; that spread gave them arbitrage profits.  That is, the more you borrow, the more profit you make.  But then, housing prices and then MBS tanked and they had no assets to cover the losses.  Hedge funds had the same problem.  No capital requirements to cover losses.  One of the key regulations that has to come out of this is minimum capital requirements for lending for companies that are "too big to fail."  ONCE YOU BECOME A PILLAR UNDER THE FINANCIAL SYSTEM, YOU NEED CAPITAL AND CANNOT LEVERAGE IRRESPONSIBLY!  Our regulators need to learn this lesson loud and clear.Farcaster (talk) 02:43, 18 September 2008 (UTC)


 * The other aspect of this that is very tough for me to understand is the credit swaps or credit derivatives used to ensure the bets many companies were making. Many of the investment banks and insurers enter into contracts whereby they agree to pay if a bond or debt instrument of some kind defaults. Well, the MBS are failing left and right and these companies don't have the capital to cover it.  In other words, the were not regulated like insurance companies like Allstate are.  Again, to paraphrase the wonderful quote from Top Gun, "Their egos were writing derivative contracts their bodies couldn't cash."Farcaster (talk) 02:51, 18 September 2008 (UTC)


 * There is no doubt that one "mystical" explanation is the mania that accompanies dealing with large amounts of money, multiplied by its attractiveness to the least scrupulous of individuals and consortiums. And I have been wondering why there has been little discussion of unregulated derivatives and their relation to all this. But I still think a systematic study of relevant govt laws and regulations, and selective exemptions to them, can help explain a lot. I'm sure you are not aware of every of the probably tens of thousands of them yourself and might find answers to many of your own questions in laws and regulations you never knew existed (unless you do specialize as a govt regulatory accountant and lawyer).
 * Solution wise, since you mention it, the assumption is people will always do stupid, manic and crooked things with money. What is the best way to protect yourself? Trusting politicians and bureaucrats who are constantly corrupted by often crooked special interests or hiring an affordable private consumer agency whose researchers are totally on top of which banks, investment houses, insurers are trustworthy and which are not. Bill Clinton and George Bush or Ralph Nader and Consumer Reports?  :-) Carol Moore 04:26, 18 September 2008 (UTC)Carolmooredc {talk}


 * The game is definitely rigged in the short-run, but works out in the long-run. I think the same old-school investing advice is still relevant:  1) Have an emergency cash fund; 2)Pay off debts; 3) Own as much house as you can truly afford; 4) Diversify and hold your investments; don't market time. If you own stocks, bonds, and cash appropriate to your age and have most of your stock money in index funds (U.S. primarily, some international) you should be OK.  If you are well-to-do, it is helpful to create phantom portfolios in different industries and see how individual stocks hold up when this sort of thing hits, to help make sure you are truly diversified.Farcaster (talk) 06:49, 18 September 2008 (UTC)


 * I agree, but one other possible problem is an entire financial, political and societal system based on a set of faulty premises...one of which perhaps is the availability of credit wehenever needed for a variety of purposes and debtors who perhaps should not necessarily be put on credit. --Steve, Sm8900 (talk) 14:20, 24 September 2008 (UTC)

AIG Bailout near?
New York Times

CNN

Bloomberg

Reuters

--Jóhann Heiðar Árnason (talk) 00:44, 17 September 2008 (UTC)

The Fed bails out AIG
http://www.federalreserve.gov/ --Jóhann Heiðar Árnason (talk) 01:29, 17 September 2008 (UTC)

Assistance requested
Hey -- I'm trying to cleanup and expand the List of entities involved in 2007-2008 financial crises, and seeing as this article is closely related to that list, perhaps some of you here would like to help? --Wassermann (talk) 09:02, 17 September 2008 (UTC)

Why isn't Image:Subprime_diagram.png WP:OR/WP:SYN??
I don't see a WP:RS source of the info in the chart, as is true in a couple of the other contributor-created charts. Therefore I assume it is WP:Original research and subject to all the problems of such research and therefore should be removed. Carol Moore 15:27, 17 September 2008 (UTC)Carolmooredc {talk}

The sources are indicated in the diagram. If you read the article, the diagram makes perfect sense.Farcaster (talk) 16:21, 17 September 2008 (UTC)


 * support. I support removal.
 * Although I am aware that Farcaster has been a tireless and responsible maintainer of this article for more than a year now, I am inclined to support the removal of the diagram. [[Image:Subprime diagram v 2.0.png|thumb|Version 2 of the diagram, Version 3 was scheduled for February 11]]
 * Back in January, this problem was already discussed. Halgin sugggested that all the diagrams' sources be listed with the licence. I argued that the current diagram was "fundamentally wrong". Farcaster in another display of flexibility made an improved Version 2 but since then 8 months have passed and none of the issues were addressed, despite Farcaster claiming that he would have a version 3 ready on February 11.
 * I see this removal as a mere suspension, I am sure we will work together and make an improved version of this diagram.
 * ⇨ EconomistBR ⇦ 16:33, 17 September 2008 (UTC)

Let's discuss this again I suppose. Version 2 was just too confusing with all the arrows pointing all over the place. Version 1 has the virtue of simplicity. Hundreds of thousands of people have read this article and we get one complaint (by a virulent libertarian with a clear agenda) who wants to remove it and just put in one box: Government regulation. No way. It has withstood the test of time pretty well and is sourced. I get complements on it from time to time and it has shown up elsewhere on the web (a couple of places). Until we have something better, why remove? Getting the various elements on to one page helps put this into perspective. It will never cover all aspects and nobody can agree and what is the most important cause or effect. Even Nobel prize winners are all over the board. This is a crisis that is absolutely pervasive to the markets and unprecedented. Further, I'm not sure there is only one crisis. We have at least a housing market crisis (boom and bust) plus a credit crisis (boom and bust). They are related through the securitization engine; money from the credit side helped fund demand on the housing side. Foreclosures on the housing side are hitting the credit side. Plus, the nature of these things is that there is enormous feedback among the various elements. You studied macroeconomics; each action has reaction. We can argue all day whether the chicken or egg came first and not reach an answer. It helps people understand what is going on. That is what matters. If there is a particular box you want moved or added, I'm all ears.Farcaster (talk) 17:14, 17 September 2008 (UTC)


 * OMG, you've become attached to that diagram, that's not "your child". And I am sad to say it, but you are so proud of it that you refusing to listen to criticism about it or even to update it.
 * I am quite diapointed to hear that you will not go ahead and make a Version 3 as you said you would or even continue to improve the diagram together with other editors.
 * You basically shoved Version 1 down our thorats since you adopted NONE of the changes suggested. I feel deceived in all honesty because all the discussion was ignored by you.
 * I am sorry to say this, since we have cooperated for so long, but unless you show some flexibility and address the issues being put forth, I will have not option but put that diagram through the Afd process. ⇨ EconomistBR ⇦  17:37, 17 September 2008 (UTC)

List out your suggestions and I'll do what I can with it. Your last round was of the chicken and egg variety. Perhaps update them and I'll do what I can. Or, try to create one on your own rather than complain about a diagram that is 85% there.Farcaster (talk) 17:42, 17 September 2008 (UTC)


 * First let us assume good faith and not go labeling and insulting people. Perhaps that reference to me could be removed? (Per WP:Attack)
 * Second, supporting wiki policies should not generate insults. This is not a place for people to promote their own viewpoints, in text or in charts. I certainly have had material removed many times because people charged WP:OR even though I had WP:RS. So even if 4 other editors like it, unless it is based largely on one WP:RS source (not a WP:Synthesis of several sources) like the other boxes are, it shouldn't be here.
 * Third, I have not proposed removing that box and putting in "just one box" on government regulation. However, if I ran across such a WP:RS chart that made sense I'd certainly support putting it in there.
 * What I have proposed is making it clear that the last 14 years of massive expansion of subprime mortgages and other problems are based in large part on govt regulations - either putting in bad ones or removing good ones or removing people or companies' ability to protect themselves from greedy scam artists or allowing quasi-governmental entities Freddie and Fannie Mac to borrow money at lower rates than private companies and back up irresponsible lenders like Countrywide. One way to do that is to put those facts in the lead, in a much shorter "background", and up front as a major cause of the problems. Meanwhile I study your more cooperative response in the other section. Carol Moore 01:57, 18 September 2008 (UTC)Carolmooredc {talk}


 * Finally that diagram was updated! Also for the first time you addressed the problem of complex interactions between the many elements of the crisis.
 * Still that diagram is nothing like the "CONTINUUM" I asked for 8 months ago and you deceivingly showed intention of creating.
 * Version 2 was a step in that direction, but you prefer to lazily throw the elements on the spreadsheet and ignore completly the relations and interactions between them.
 * I am pragmatic, so despite of the huge WP:OR violations I will not Afd that diagram because I feel that although incomplete it still helps the reader understand the crisis. It would be cruelty IMO.
 * ⇨ EconomistBR ⇦ 13:54, 18 September 2008 (UTC)
 * Just thank me for my hard work and spare me the b.s. You can make a timeline diagram if you want.Farcaster (talk) 14:00, 18 September 2008 (UTC)
 * B.S. is that diagram. The lack of relationship representation makes that diagram incomplete, it is simply a collection of fancy words. Per definition that's not even a diagram.
 * ⇨ EconomistBR ⇦ 14:32, 18 September 2008 (UTC)
 * Subprime_crisis_impact_timeline already exists and should be linked here if not already, and cleaned up or added to as necessary to avoid POV. However, this diagram, in its various incarnations, reflects the current flawed and POV analysis of the whole article - the article lead doesn't even clarify which country or countries are experiencing a "subprime mortgage crisis."  What "AfD" for a graphic would you be doing, by the way? Or just appealing to No_original_research/noticeboard?? Carol Moore 19:44, 18 September 2008 (UTC)Carolmooredc {talk}
 * Carol, with all due respect, its time for you to either go away or begin to make a positive contribution to this article. This is not a blog for you to discuss your views on regulation.  No credible news organization thinks over-regulation is the problem here.  You haven't seen regulation until you see what is about to happen.  There will be a Sarbanes-Oxley like regime put in to address this, rest assured.  So stop it already.Farcaster (talk) 19:53, 18 September 2008 (UTC)
 * Well, since the diagram is text and violates the WP:OR policy related to articles, a possible Afd filing would have to respect the regular Afd process even though it is an image. As pure image, that file complies with Wikipedia policy related to images, that's why I would not do a IfD (Images for deletions). As for the noticeboard, I prefer the regular AfD process.  ⇨ EconomistBR ⇦  20:14, 18 September 2008 (UTC)
 * Thanks Economist for explanation of why you are using AfD. One learns as one goes.
 * Again Farcaster is assuming bad faith and insulting me. Please read No personal attacks. But it has given me an idea of who is editing and how cooperative they are, one reason to engage in talk before editing.
 * This is a complex topic which is poorly described in a number of related articles and I'm showing some respect by not just jumping in and starting to edit away without studying the various articles, their various WP:RS, and looking for good WP:RS so I don't write something POV. When I put in my final edits-now-in-progres I'll start by beefing up the whole govt regulation section and them maybe the history section. Then we can start talking more about rest of article. ;-) Carol Moore 23:00, 18 September 2008 (UTC)Carolmooredc
 * When you make your edits, make them by section so that can be undone if necessary.Farcaster (talk) 23:48, 18 September 2008 (UTC)

New Title? Split Article?
Article has expanded beyond the scope of the original title. Shouldn't a new title like "subprime securities crisis" or "subprime securitization crisis" be used or shouldn't the current article be broken into two with "securitization crisis from subprime mortgage"? —Preceding unsigned comment added by 99.247.28.157 (talk) 20:18, 17 September 2008 (UTC)

How many foreclosures?
The BBC in 11/2007 said that 1.7 million U.S. homes had been foreclosed on in the first 8 months of 2007. Does anyone have a source as to how many total have been foreclosed on in the subprime crisis? Simesa (talk) 01:03, 18 September 2008 (UTC)

Try here; Realty trac has the info monthly and quarterly. The numbers have some computational nuances; see the bar chart on foreclosures near top of article for more info.Farcaster (talk) 01:17, 18 September 2008 (UTC)


 * Thank you! I got the data from that link as  saying that there were 2,203,295 U.S. homefore closures in 2007, which was almost 250% of 2005's number (for almost 1,320,000 "excess" foreclosures). Simesa (talk) 20:34, 21 September 2008 (UTC)

Rename to "Subprime mortgage crisis of the late 2000's"
Shouldn't this article be renamed to something like "Subprime mortgage crisis of the late 2000's"?. That would be more accurate to name the state of an economy during a specific period. Wiki5d (talk) 03:26, 18 September 2008 (UTC)


 * "Subprime mortgage crisis of 2008" since that's when it came to a head might make sense. And maybe add "U.S." since it's roots not in world policy and finance, though it's repercussions evidently are.  And 30 years ago they may do it all over again and then they'll be able to call it the 2038 crisis :-) Carol Moore 04:12, 18 September 2008 (UTC)Carolmooredc {talk}


 * oppose oppose renaming, the current name is fine. ⇨ EconomistBR ⇦  17:20, 18 September 2008 (UTC)
 * Support, at some point. Since this article describes a specific event or set of events, it seems perfectly appropriate to add date information in the title, but not necessarily right now. "subprime mortgage crisis" is a descriptive phrase, not a formal or official title, so that title is not sufficient to indicate what we're talking about here. This is different from articles like The Depression, World War 2, or any other historic event at all with an agreed-upon name, since in that case it is ok to simply have a title without a date. --Steve, Sm8900 (talk) 17:27, 24 September 2008 (UTC)

Existence of new article, Financial crisis of 2007-2008
In recent days there are a few people asking whether Subprime mortgage crisis should be renamed or broken up, to reflect the fact that the financial crisis now stretches far beyond the US mortgage market. There is a new article explicitly devoted to the general financial crisis, but it will be very hard to appropiately tease apart the subprime aspect from everything else. One way to proceed would be to use the new article to focus on the very latest developments (GSE bailout, Lehman bankruptcy and subsequent events), and then to work backwards until a unified picture is apparent, at which point how to divide up the subject may become clearer. Mporter (talk) 06:51, 18 September 2008 (UTC)


 * For both articles, did I forget to mention the role of the Federal Reserve in aggressively expanding M3 way beyond the ability of individuals and companies to recoup it in productivity and real trade?? Perhaps the biggest problem of all leading to a speculative frenzy in housing, already revved up by the 1995 changes to the Community Reinvestment Act. (Why else would credit card companies extend tens of thousands of credit card credit to low income and even unemployed people as they have been doing for the last ten years?) There are government-induced boom bust cycles which are far more devastating than any natural cycles which may or may not exist. But instead of allowing companies and individuals who most foolishly jumped on the bandwagon fail, while allowing productive companies and credit-worthy individuals to keep obtaining sufficient credit, governments are now "solving" the problem by printing money and throwing it at the most irresponsible lenders and borrowers. Therefore mass inflation cannot be far behind.  And then there's the day the world totally dumps the dollar and all those millions or billions of hundred dollar bills circulating worldwide start coming home... Carol Moore 12:16, 18 September 2008 (UTC)Carolmooredc {talk}


 * Given that there were other debt instruments beyond mortgages that were used to structure the investment vehicles that are now collapsing, a broader article - perhaps one that gives a higher level of analysis - is in order. Otherwise, this article threatens to become overbroad and stuffed with relevant but peripheral details. Mortage-backed debt is only part of the much larger collateralized-debt obligation (CDO) picture. I have not read the new article amd I'm headed there next... NCimon (talk) 15:16, 19 September 2008 (UTC)


 * Just read Financial crisis of 2007-2008 and it will have to be greatly expanded to cover the aforementioned topics. There does need to be a more general article on the entire subject. The bailout of AIG reflects yet another facet of the crisis, the overextended guarantees by AIG and other insurers offered up on the CDOs. Warnings that the pyramid of debt could collapse quickly given the highly leveraged nature of the debt obligations taken on by AIG and others were ignored. All of this should now be documented. NCimon (talk) 15:00, 19 September 2008 (UTC)
 * Agree that we should split this into several related articles. The subprime mortgage crisis is a longer-simmering problem that has now triggered a wider banking/credit crisis that is both farther reaching and has different sources.  We should pay some attention to the architecture of these articles, and will probably end up with a dozen or two articles related to the subject.  For my contribution I'll probably create a template if none exists to help organize the broader subject.  Wikidemon (talk) 19:36, 20 September 2008 (UTC)
 * I see there's already a template. Well, anyway, organizing the template might help us see how the related articles should be organized.  Wikidemon (talk) 19:38, 20 September 2008 (UTC)
 * Where and should it be put in these couple articles mentioned above? Carol Moore 01:35, 21 September 2008 (UTC)Carolmooredc


 * Our methods and approach will probably evolve based on the fact that this may be one of the first truly major events to occur since Wikipedia became active. I suggest we not be afraid to set up subsections initially for specific events, even if those subsections seem slightly out-of-place in the articles they are placed in. The main goal is to document and describe events soon after they occur, which is when it is easiest to find sources, references and articles. Once everything is in one place, it is always possible to break up articles later and/or create new ones using the existing material and information. --Steve, Sm8900 (talk) 14:28, 24 September 2008 (UTC)

New Section: Emerging Plan to Bailout Financial Institutions
I've added a new section for inclusion of info on the new plan. This probably merits its own sub-article.

On 19 September 2008, the U.S. government announced a plan to purchase large amounts of illiquid, risky mortgage backed securities from financial institutions, which is estimated to involve "hundreds of billions" of additional commitments. This plan also included a ban on short-selling of financial stocks. The mortgage market is estimated at $12 trillion with approximately 9.2% of loans either seriously delinquent or in foreclosure through August 2008.

renamed it to U.S. toxic-debt plan --65.92.102.103 (talk) 03:45, 20 September 2008 (UTC)


 * I think the recent events concerning the financial panic during the week of September 15 and the bailout plan should go in Financial crisis of 2007-2008. Fred Talk 16:32, 20 September 2008 (UTC)
 * The basis for division is events which effect the financial system as a whole, including such things as money market funds or insurance companies which are not transparently related to subprime mortgages, although both are indirectly. Fred Talk 16:37, 20 September 2008 (UTC)

what should go where?
What material should go into Subprime mortgage crisis versus what should be in United States housing bubble Hmains (talk) 04:55, 20 September 2008 (UTC)


 * Well, IMO the subprime crisis is a product of the housing bubble, so in the bubble article deals with the speculation, the price increase and decrease, forecast and so on. IMO the mortgage crisis deals with the consequecences created by the CDO and MBO writedowns.


 * The BBC, for example, considers that the mortgage writedown occurred in February 2007 with the first CDO writedown by HSBC. Up until that point there was no writedown and arguably no crisis. The housing bubble however started to deflate months earlier (confirm?).
 * ⇨ EconomistBR ⇦ 02:24, 21 September 2008 (UTC)

I thank all the authors
Some authors seem to think that this article needs a lot of refactoring. I don't agree. I came to it fresh and it made an extremely complex topic very clear to me. 212.159.107.39 (talk) 20:17, 21 September 2008 (UTC)xjamesb

I agree, well written. I think it could be improved if terms were defined briefly within the article rather than requiring links. The "in article" definitions could remain fairly technical but would help someone with moderate understanding of the topic to get through it in one pass. PAshcroft0 (talk) 20:48, 24 September 2008 (UTC)

Like almost everyone else, I am a financially naive "lay person" and more than a bit vague on what is happening. I read the article looking for estimates of certain dollar amounts and found them, cited from reasonable sources (New York Times, Mortgage Bankers' Association). I think the author deserves credit for at least trying to produce a coherent account under conditions of near universal uncertainty about both what has happened, and what is likely to happen as a result in future. Of course, my being a reader does not mean I endorse all the author's views on this, or particularly his other pages, but I think some discussants are being too assaultively critical of the effort, rather than using any specialist knowledge they may have to selectively improve it. In common with most likely readers, I personally would not have the knowledge to know whether the author's hypotheses implicit or explicit, are either wrong or implausible. If one wishes to offer a rival hypothesis to something the author has proposed, perhaps one should do so in a new section or new article rather than merely be distainfully critical, but give no clear information about what the perceived error might be. --FurnaldHall (talk) 00:38, 28 September 2008 (UTC)

But why create CDOs and MBS anyway
The article may usefully be extended to explain why CDOs are created because the ordinary reader will not know this and without some explanation it is difficult to make sense of the story.212.159.107.39 (talk) 20:17, 21 September 2008 (UTC)xjamesb


 * Thanks. Done; the reason is that banks can transfer credit risks to others, while also freeing up their balance sheets to make other loans.Farcaster (talk) 07:06, 27 September 2008 (UTC)

Diagram by "contributor Farcaster"
Do we really need the embedded caption reminding us who contributed that graph? AFAIK, it has no precedent in WP for any contribution, be it text or media. 58.88.53.246 (talk) 13:12, 22 September 2008 (UTC)


 * First see Talk:Subprime_mortgage_crisis of this topic.
 * No, especially when the article is eventually restructured to make the web of govt regulations and deregulations to be the leading influence on the debacle, the public domain chart itself will be restructured :-) It doesn't have to be done immediately, but it does need to be done. Carol Moore 01:20, 23 September 2008 (UTC)Carolmooredc

I can't follow the link and I'm not sure I understand what you mean. 58.88.53.246 (talk) 10:17, 23 September 2008 (UTC)


 * The self-promotional embedded caption is definitely unusual and unfair to all other editors that contribute but I am not sure it is illegal that's why I didn't challenge it. I will consult an administrator about it. ⇨ EconomistBR ⇦  04:48, 23 September 2008 (UTC)

I'm not saying it's illegal - in fact of course it's not. It just sets a bad precedent. One can always see who the contributor is and any other meta-information by clicking on the image, if one really cares. 58.88.53.246 (talk) 10:17, 23 September 2008 (UTC)


 * Caption removed Hopefully acceptable username (talk) 12:54, 23 September 2008 (UTC)

Consolidation of contemporary finance articles
There are currently many articles dealing with the current financial turmoil. I propose merging them all into two articles for the present, and then making sub-articles as needed when there is some historical perspective on this. There will be FLOODS of academic and other research into what has gone on these past couple of weeks (and years), and we should wait for that to emerge before breaking all of it into categories.

Since there are so many articles about this, I figured here was as good a place as any to put this.

Current articles include but are not limited to:
 * United States housing bubble
 * Subprime mortgage crisis
 * Financial crisis of 2007-2008
 * Economic crisis of 2008

I think that the first two should be merged into an article titled 2000's housing bubble and aftermath, and that Economic crisis of 2008 be subsumed into Financial crisis of 2007-2008. These past couple weeks have been extremely crazy, and we don't have the perspective to see if they will warrant special attention, or will become a part of some larger, yet-to-unfold narrative. We should keep things in a small number of places to maximize contemporary information aggrigation, and then wait for the verdict of history as to what exactly belongs where. 96.21.86.184 (talk) 07:58, 23 September 2008 (UTC)
 * I was not signed in when I posted that. Here I am. Huadpe (talk) 07:59, 23 September 2008 (UTC)


 * I think we should give it another month and see if some other name emerges in popular terminology for the whole mess. Hopefully one that will reflect the fact the bubble is a result of govt policy and human actions, not a cause so may be we'll all LEARN something. Carol Moore 03:21, 24 September 2008 (UTC)Carol Moore 03:21, 24 September 2008 (UTC)Carolmooredc


 * Hi. i understand your concerns, but I really do think that all four articles are warranted. What may be more relevant to your concerns is that perhaps some information and material may have been placed in the wrong article, so we can try to rectify that as needed. I do feel that, in my opinion, they each have a specific and legitimate focus of their own, as shown below.


 * United States housing bubble - Valuation trends in real estate, nature of speculative economy, popular trends and mindset.
 * Subprime mortgage crisis - Actual dynamics and factors in major economic breakdown and crisis which occurred as result of housing bubble above. in other words "subprime mortgage crisis" is a term for a specific event. "Housing bubble" is aterm for a long-term phenomenon and trend in perception and thinking, not a single specific event.
 * Financial crisis of 2007-2008 - this can refer to the crisis specifically in the financial sector in which a variety of financial entities, companies and players needed to be bailed out or otherwise altered or saved. it deals directly with specific entities and events of major significance.
 * Economic crisis of 2008 - This can refer to all the myriad forms of impact and fallout from the financial crisis referred to above. in other words, it could refer for example to how the reduced availability of credit might have or may affect unrelated industrial sectors, such as small business, retail, or really any business at all which needs credit at some point in day-to-day or regular operations. it also deals simply with the ways that people's lives changed due to the change in the economy. The fact that this started with the financial sector can be dealt with on its own; that doesn't have to change our ability to also deal with this as simply as a conventional economic downturn which can be dealt with more generallty and historically. --Steve, Sm8900 (talk) 15:16, 24 September 2008 (UTC)


 * The Subprime mortgage crisis was a spin off to the United States housing bubble, when it got too large. I don't think they should be recombined at this time. United States housing bubble is about the rise and fall of home prices. Subprime mortgage crisis is about what happen when default rates increased on Subprime mortgages.  The others deal with the credit crunch and global inflation. I don’t think they should be combined with Subprime mortgage crisis at this time. Only time will tell if things can be combined later.  The combined article would be huge. Halgin (talk) 00:03, 25 September 2008 (UTC)


 * Financial crisis of 2007-2008 is redundant, every single financial event so far this year has been tied to the Subprime mortgage crisis, which IS a financial crisis.
 * Economic crisis of 2008 is down right a WP:Syn violation, there is no economic crisis at this point just some countries which are on recession, hardly a crisis. That article should be renamed, to say the least. Every year some countries are on recession, that article bundled them in order to support the crisis argument.
 * But Halgin is right, we must wait. After this crisis is over we wait a couple of months and reorganize everything. ⇨ EconomistBR ⇦  19:22, 25 September 2008 (UTC)
 * I agree with Halgin. I think the Economic Crisis article can be deleted.  Also, the subprime article is getting messy, with all sorts of miscellaneous stuff showing up.  It's getting huge traffic - over 30,000 hits per day since last week.  I'll put a diagram in this space over the weekend with my thoughts on how all the pieces should fit together and we can discuss. I'd like to see editors that care about this article start to think about what can be moved into separate articles allowing deeper-dives on particular topics.  Let's get this thing down to 90K or so in size.  I did that already with most of the background info.  Please try to do the same; thin out the things that aren't the "top 15" drivers of this and move the detail into supporting articles.Farcaster (talk) 19:41, 25 September 2008 (UTC)
 * Well, of course we can't actually make decisions here to delete an entire article, since that would be an RFD. however, we can of course discuss ideas over time on consolidation as things come up. --Steve, Sm8900 (talk) 21:41, 25 September 2008 (UTC)

Unrelated paragraph in "Crony Capitalism"
The Crony Capitalism section has some interesting info which suggests that major players in the subprime market mess greased the palms of politicians who regulated them, which may have contributed to the subprime collapse. That's fine, but the last paragraph in that section doesn't seem to have anything to do with that:
 * "Billionaire Warren Buffet has committed 5 billion to purchase options to invest US$5 billion in the bank holding company Goldman Sachs. [83] Buffett has also contributed money to Barack Obama's Presidential Campaign, and even attended a $28,500 per plate fundraiser for Mr. Obama's campaign on July 2, 2008 in Chicago hosted by Mr. Obama's National Finance Chair, Penny Pritzker and her husband, and Obama advisor Valerie Jarrett. [84] A 2002 report by the United States Treasury Department detailed that while Penny Pritzker was Chair of Hinsdale, Illinois-based Superior Bank of Chicago, the bank "embarked on a business strategy of significant growth into subprime home mortgages."[85] On Thursday September 25, 2008, Mr. Obama met with Mr. Bush and Mr.McCain at the White House to discuss bailout plans."

The catch is, Obama wasn't part of a banking committee, and those associations don't seem to suggest that those Obama campaign contributions may have contributed to the subprime crisis... in fact, the subprime collapse had already occured by the given date (July 2, 2008). Rather, somebody thought that this would be a good place to dump a few associations between Obama and supporters of his presidential bid who are/were in the finance industry. What does it have to do with the events leading up to the subprime crisis? If the point is just to name people in the finance sector who support a presidential candidate, then it would be an extremely long list, but it would still be irrelevant to this article's topic. If any of these associations can be shown to have contributed to the subprime crisis, then they might be relevant. -Eisnel (talk) 21:04, 25 September 2008 (UTC)


 * Please move this material into a separate article; leave a couple of sentences to summarize what will be in that article.Farcaster (talk) 21:37, 25 September 2008 (UTC)
 * Better yet, move it to the articles on the referenced politicians, ( if you have good sources for these allegations having been given importance). --Steve, Sm8900 (talk) 21:39, 25 September 2008 (UTC)
 * I restored the information on ethics panel investigations and former CEO of Fannie Mae. This is related and has good sources. Halgin (talk) 23:09, 25 September 2008 (UTC)
 * agree with Halgin. --Steve, Sm8900 (talk) 14:14, 26 September 2008 (UTC)

Two sections on responses to crisis?
I don’t see why there are two sections on responses to crisis, “Responses to crisis as of September 2008" and "Other efforts and initiatives". They are should be combined.  Halgin (talk) 23:48, 25 September 2008 (UTC)


 * Feel free to combine and create a new article if necessary. Despite Farcaster's efforts this article is still 100k+ in size.


 * IMO the Government Bailout section and the Effects on Financial Institutions should also be merged since a Government Bailout is nothing more than a help given to affected financial institutions. But bailout is such a charged term that this action might create controversy. ⇨ EconomistBR ⇦  00:16, 26 September 2008 (UTC)
 * Sorry, "govt bailout" refers to 5-10 companies who actually received bailouts. "effect on financial institutions" refers to impacts and effects across an entire sector, which constitutes an economic history event which was at least as important as the sudden stock market downturns. that is why the two are totally different. I feel that nothing is gained by trying to merge two totally different and distinct topics. thanks. --Steve, Sm8900 (talk) 13:43, 26 September 2008 (UTC)
 * Fine but Lehman Brothers, Merrill Lynch and Washington Mutual didn't receive a bailout and yet are incorrectly mentioned on that section. Merging those section would keep all the failed comanies together but it's fine either way, I ma just going to correct that error.  EconomistBR  19:38, 28 September 2008 (UTC)
 * Ok, that's a fair point. perhaps another separate section for bank failures or bank troubles? By the way, WaMu was bought out by the federal Office of Thrift Supervision. --Steve, Sm8900 (talk) 14:03, 29 September 2008 (UTC)
 * WaMu didn't receive a bailout since shareholder equity was wiped out, that was a federal intervention which doesn't equate to bailout. WaMu shares are trading at $0.16. IMO the only true bailout was Bear Stearns, even at AIG's case the $85 billion loan will have to be repaid and the government got 80% of the company. EconomistBR  16:18, 29 September 2008 (UTC)
 * Ok, but then maybe we can simply rename it "Govt interventions" or even just "Govt actions on individual companies'> --Steve, Sm8900 (talk) 13:27, 2 October 2008 (UTC)

Diagram (v. photos, etc.)
I've removed the diagram altogether since it is confusing. For background and in the interest of good faith, a timeline was:
 * Diagram put at top of article
 * I moved photo up
 * Changes reverted as part of revision (some days later)

The description of the edit is just "cleanup", so there's not enough detail to understand the rationale.

My perspective on this is:
 * We need to keep the article lead simple.
 * Photos help to humanise stories. The Northern Rock one is not great, but it's a start.
 * The diagram is very, very complex - too complex to take in for a reader unfamiliar with the topic. It may be appropriate in the body of the article, but not the top.
 * The diagram looks very much like original research (having a list of references doesn't stop something from being original research).

I suggest we discuss here before reinstating the diagram. El T (talk) 15:22, 26 September 2008 (UTC)


 * It's always good to read talk before commenting. Specifically Why isn't Image:Subprime_diagram.png WP:OR/WP:SYN?? (It was also criticized as original research  in this archive. I've been joking around about just changing it to how I think it should look, but Wikipolicy wise I do think it is WP:SYN and should be removed. It's just a matter of getting enough people to vote to delete it. Carol Moore 17:29, 26 September 2008 (UTC)Carolmooredc

Additional diagram removed
Hmm, hope I don't tread on toes with this. I removed another diagram because it too is too complex. I know they're fun to make, but they can be a double-edged sword. El T (talk) 15:39, 26 September 2008 (UTC)


 * You are correct sir and I have put in a Request for Comment here. I believe you are free to post comments there. Carol Moore 17:41, 26 September 2008 (UTC)Carolmooredc

Contentious diagrams need to be decided before they are reinstated in this article
Farcaster's additions to this article are very substantial, but it is not appropriate to immediately revert any attempt to move, or remove, his diagrams. The diagrams are not so obviously valuable or free from contention that that's appropriate to do.

Carolmooredc's suggestion of discussing this here is a good one. I suggest we:
 * 1) Work out if the diagrams are original research;
 * 2) If the decision is that they are not original research, decide if they are valuable contributions to this article.

Because there are therefore two strong reasons the diagrams may be inappropriate for the article, I would suggest we deal with them both before reinstating them. Therefore I will remove in a moment. El T (talk) 09:31, 27 September 2008 (UTC)


 * I think both are original work. Image:Financial Leverage Profit Engine.png is not need since Image:Borrowing Under a Securitization Structure.gif provides a WP:NPOV public domain image of the cash flow and relationships of mortgage lending. There is no need for OR image to show that.  Halgin (talk) 15:48, 27 September 2008 (UTC)


 * There are enough WP:RS diagrams out there in the internet universe that we can probably find one for anything we need. So only when very good and reliable straightforward facts don't have charts should we create them. The ones that were left weren't bad; don't know if WP:RS would have better ones. But complicated ones like those deleted just too likely to be POV. Carol Moore 16:20, 27 September 2008 (UTC)Carolmooredc

Introduction
The article needs a briefer and summarized introduction, instead of a 9-para-intro. Anyone comments?--Bugnot (talk) 13:37, 27 September 2008 (UTC)

Archiving Needed
Maybe from end of August back and settled issues like diagrams. Carol Moore 16:42, 27 September 2008 (UTC)Carolmooredc

User comment
Is it me or is this user Carolmooredc using this page like a blog? Look at her entries and tell me how many are designed to help with this article and how many are simply a chance to blog about problems of government regulation. Do those entries belong on this page?Farcaster (talk) 16:46, 27 September 2008 (UTC)


 * There may be a couple sentences where I got a bit opinionated, and I could spend time going through and striking those if you really want. But for the most part, as I said, I was sharing my views of how to improve the article. I did so at length to gauge if there was support for these views or hostility (and I did ask a WP:ATTACK comment of Farcaster's - just noted above - to be removed) as well as how much energy I should put into this article. Right now I'm working on a few other related articles to get a good overview and good refs together and making minor obvious changes here, like removal of various poorly sourced and WP:OR material.
 * So I would say this nitpicking. Plus using a user's name in a section heading is rather WP:harassing and I'd appreciate it if you removed it, as well as the sentence marked by WP:Attack above. Carol Moore 17:56, 27 September 2008 (UTC)Carolmooredc

Community Reinvestment Act
How can this entire article not mention the Community Reinvestment Act? Yes, yes, I know it's 30 years old, but it was only in the 90's that teeth were put into the act. Banks threatened with denial of branch expansions or mergers, revocation of charters, and civil rights litigation were forced into the subprime market. This insane act may not have been the only cause of the economic crisis, but it certainly featured in the genesis of the problem. Let's face it, as politically incorrect as it may be, the CORE of the current crisis is that borrowers cannot afford the mortgages and loans they obtained. The borrowers were bad risks. They knew it when they got the loans, the banks knew it when they gave the loans, Congress knew it when they insisted that refusing a loan to poor person was "unfair discrimination." Everything else in this article flows from that.98.170.197.141 (talk) 04:38, 28 September 2008 (UTC)


 * It's mentioned here, Subprime_mortgage_crisis, though some of us are working on eventually making the role of government regulations in causing the problem assume whatever prominence it may have. Also see the still in progress, insufficiently sourced Community Reinvestment Act article. Carol Moore 04:44, 28 September 2008 (UTC)Carolmooredc

Bernanke on "Premption of Usury laws"
I fount this little gem in a Bernanke speech: Also, the preemption of usury laws on home loans created more scope for risk-based pricing of mortgages. What is he talking about specifically and should it be in here? The 1994 section 32 of the Truth in Lending Act, entitled the Home Ownership and Equity Protection Act of 1994?? (From predatory lending). This Harvard predatory lending article] seems to apply. Carol Moore 21:25, 28 September 2008 (UTC)Carolmooredc


 * Distilled from usury section on U.S. A lot of people probably don't realize these laws effectively repealed.
 * In 1980, Congress passed the Depository Institutions Deregulation and Monetary Control Act exempting federally chartered savings banks, installment plan sellers and chartered loan companies from state usury limits. REF:The Effect of Consumer Interest Rate Deregulation on Credit Card Volumes, Charge-Offs, and the Personal Bankruptcy Rate, Federal Deposit Insurance Corporation "Bank Trends" Newsletter, March, 1998. The 1968 Truth in Lending Act does not regulate rates, except in the cases of some mortgages, but it does require uniform or standardized disclosure of costs and charges.REF: FDIC, Truth in Lending Act. Carol Moore 01:51, 4 October 2008 (UTC)Carolmooredc

Shortening the article
Last week I created several sub-articles but we need more, to keep this short. I nominate the Government Policies and Government Bailouts sections for summarization in one 3-4 sentence paragraph, with the rest moving to the supporting articles. The info we have is good, just too much for this, which should eventually become the "umbrella" article for this entire mess. What do you guys think? What other sections should be cut down to one paragraph with a separate article for all the detail?Farcaster (talk) 20:25, 2 October 2008 (UTC)