Ballotproof

Chrissy wrote:

PkrBum wrote:I was gleaning together a list of the policies that lead up to the crisis... but I got bored knowing it wouldn't matter.


Housing tax policy July 1978, Section 121 allowed for a $100,000 one-time exclusion in capital gains for sellers 55 years or older at the time of sale.

In 1981, the Section 121 exclusion was increased from $100,000 to $125,000.

The Tax Reform Act of 1986 eliminated the tax deduction for interest paid on credit cards. As mortgage interest remained deductible, this encouraged the use of home equity through refinancing, second mortgages, and home equity lines of credit (HELOC) by consumers.

The Taxpayer Relief Act of 1997 repealed the Section 121 exclusion and section 1034 rollover rules, and replaced them with a $500,000 married/$250,000 single exclusion of capital gains on the sale of a home, available once every two years.

This made housing the only investment which escaped capital gains. These tax laws encouraged people to buy expensive, fully mortgaged homes, as well as invest in second homes and investment properties, as opposed to investing in stocks, bonds, or other assets.

Historically, the financial sector was heavily regulated by the Glass–Steagall Act which separated commercial and investment banks. It also set strict limits on Banks' interest rates and loans.

Starting in the 1980s, considerable deregulation took place in banking. Banks were deregulated through:

The Depository Institutions Deregulation and Monetary Control Act of 1980 (allowing similar banks to merge and set any interest rate).

The Garn–St. Germain Depository Institutions Act of 1982 (allowing Adjustable-rate mortgages).

The Gramm–Leach–Bliley Act of 1999 (allowing commercial and investment banks to merge).

This deregulation allowed many risky products to exist (such as Adjustable-rate mortgages) which contributed to the housing bubble and easy credit.

Commodity Futures Modernization Act 2000

Federal mandates to promote affordable housing were applied through the Community Reinvestment Act and "government sponsored entities" (GSE's) "Fannie Mae" (Federal National Mortgage Association) and "Freddie Mac" (Federal Home Loan Mortgage Corporation).

The Housing and Community Development Act of 1992 established an affordable housing loan purchase mandate for Fannie Mae and Freddie Mac, and that mandate was to be regulated by HUD.

Initially, the 1992 legislation required that 30 percent or more of Fannie’s and Freddie’s loan purchases be related to affordable housing. However, HUD was given the power to set future requirements.

In 1995 HUD mandated that 40 percent of Fannie and Freddie’s loan purchases would have to support affordable housing.

In 1996, HUD directed Freddie and Fannie to provide at least 42% of their mortgage financing to borrowers with income below the median in their area.

This target was increased to 50% in 2000 and 52% in 2005. Under the Bush Administration HUD continued to pressure Fannie and Freddie to increase affordable housing purchases – to as high as 56 percent by the year 2008.

To satisfy these mandates, Fannie and Freddie eventually announced low-income and minority loan commitments totaling $5 trillion. Critics argue that, to meet these commitments, Fannie and Freddie promoted a loosening of lending standards - industry-wide.

In the wake of the dot-com crash and the subsequent 2001–2002 recession the Federal Reserve dramatically lowered interest rates to historically low levels, from about 6.5% to just 1%. This spurred easy credit for banks to make loans.

By 2006 the rates had moved up to 5.25% which lowered the demand and increased the monthly payments for adjustable rate mortgages. The resulting foreclosures increased supply, dropping housing prices further.

Former Federal Reserve Board Chairman Alan Greenspan admitted that the housing bubble was "fundamentally engendered by the decline in real long-term interest rates."

You're so smart sometimes you make me wet    

PkrBum wrote:Thank you Chrissy... you can call me the fireman... lol. And FlaTex... I didn't even finish that list... there's much more.

Yes... progressive steps can and do include deregulation... when they line donor pockets and set up crisis/govt solution.

Floridatexan wrote:

Chrissy wrote:

PkrBum wrote:I was gleaning together a list of the policies that lead up to the crisis... but I got bored knowing it wouldn't matter.


Housing tax policy July 1978, Section 121 allowed for a $100,000 one-time exclusion in capital gains for sellers 55 years or older at the time of sale.

In 1981, the Section 121 exclusion was increased from $100,000 to $125,000.

The Tax Reform Act of 1986 eliminated the tax deduction for interest paid on credit cards. As mortgage interest remained deductible, this encouraged the use of home equity through refinancing, second mortgages, and home equity lines of credit (HELOC) by consumers.

The Taxpayer Relief Act of 1997 repealed the Section 121 exclusion and section 1034 rollover rules, and replaced them with a $500,000 married/$250,000 single exclusion of capital gains on the sale of a home, available once every two years.

This made housing the only investment which escaped capital gains. These tax laws encouraged people to buy expensive, fully mortgaged homes, as well as invest in second homes and investment properties, as opposed to investing in stocks, bonds, or other assets.

Historically, the financial sector was heavily regulated by the Glass–Steagall Act which separated commercial and investment banks. It also set strict limits on Banks' interest rates and loans.

Starting in the 1980s, considerable deregulation took place in banking. Banks were deregulated through:

The Depository Institutions Deregulation and Monetary Control Act of 1980 (allowing similar banks to merge and set any interest rate).

The Garn–St. Germain Depository Institutions Act of 1982 (allowing Adjustable-rate mortgages).

The Gramm–Leach–Bliley Act of 1999 (allowing commercial and investment banks to merge).

This deregulation allowed many risky products to exist (such as Adjustable-rate mortgages) which contributed to the housing bubble and easy credit.

Commodity Futures Modernization Act 2000

Federal mandates to promote affordable housing were applied through the Community Reinvestment Act and "government sponsored entities" (GSE's) "Fannie Mae" (Federal National Mortgage Association) and "Freddie Mac" (Federal Home Loan Mortgage Corporation).

The Housing and Community Development Act of 1992 established an affordable housing loan purchase mandate for Fannie Mae and Freddie Mac, and that mandate was to be regulated by HUD.

Initially, the 1992 legislation required that 30 percent or more of Fannie’s and Freddie’s loan purchases be related to affordable housing. However, HUD was given the power to set future requirements.

In 1995 HUD mandated that 40 percent of Fannie and Freddie’s loan purchases would have to support affordable housing.

In 1996, HUD directed Freddie and Fannie to provide at least 42% of their mortgage financing to borrowers with income below the median in their area.

This target was increased to 50% in 2000 and 52% in 2005. Under the Bush Administration HUD continued to pressure Fannie and Freddie to increase affordable housing purchases – to as high as 56 percent by the year 2008.

To satisfy these mandates, Fannie and Freddie eventually announced low-income and minority loan commitments totaling $5 trillion. Critics argue that, to meet these commitments, Fannie and Freddie promoted a loosening of lending standards - industry-wide.

In the wake of the dot-com crash and the subsequent 2001–2002 recession the Federal Reserve dramatically lowered interest rates to historically low levels, from about 6.5% to just 1%. This spurred easy credit for banks to make loans.

By 2006 the rates had moved up to 5.25% which lowered the demand and increased the monthly payments for adjustable rate mortgages. The resulting foreclosures increased supply, dropping housing prices further.

Former Federal Reserve Board Chairman Alan Greenspan admitted that the housing bubble was "fundamentally engendered by the decline in real long-term interest rates."

You're so smart sometimes you make me wet    

You're so stupid sometimes it makes me want to cry.