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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (177783)	1/18/2009 6:50:51 PM
From: James Hutton	Respond to of 306849

"how come they changed the laws?" It's actually a regulation they changed, not a law. Thus, it did not require Congressional action. It only required action by the SEC. "the banks lobbied." Yep. They lobbied Chris Cox and the SEC in 2003 and 2004? "why did the banks lobby?" Uh, cause they wanted to make a lot more money and they had a friendly audience. "why didn't they do this lobbying before clinton's bubble economy?" Cause no regulator in their right mind before Chris Cox would have allowed the investment banks such leverage.

To: Skeeter Bug who wrote (177783)	1/19/2009 11:29:38 AM
From: GraceZ	Read Replies (1) \| Respond to of 306849

how come they changed the laws? the banks lobbied. why did the banks lobby? Back in 1987 I bought a house using 1:74 leverage with a government sponsored, government insured, lending program called FHA. Banks wanted the same leverage that ordinary people, like myself, could utilize in RE transactions. The thinking was if residential RE had such a low level of risk, that you would allow ordinary individuals these very high ratios of leverage, then the opposite side of the transaction (the securitization side) must also carry a similar very low level of risk! Well we all know the end of that story, all leverage, no matter who employs it, magnifies whatever risk is inherent.