bigjon, if you have you head so deep in the ass of the GOP that we can't even see your feet anymore do you really expect anyone to take notice of your completely baised threads?

Good stuff here.
but it's not just about Rep. vs. Dem.
Each have their agendas and they have their faults.
but in this case, I don't know how Dem. leaning people can deny what happened.

bigjon, here is a clip of Bush, in 2002, calling for the same kind of government intervention that you blame for the current crisis:

Note that Republicans controlled the House from 1994 to 2004, the Senate from 1994 to 2006, and the White House from 1980 to 1992 and from 2000 to 2008. If Democrats alone caused this mess--overriding the objections of Republicans--they only could have done it between 1992 and 1994, right? So what happened during those two years to cause this current crisis?

Seriously, because a few congressman resisted regulations on Freddie Mac and Fannie Mae means that is the cause of the market crisis?

Investment have ALWAYS been loosely regulated. This is the way it has always been so don't act like the democrats resisted something that republicans had been pushing for years. By 2004 the markets were already screwed, they were sitting on mortgage backed CDO's without really having an exact value of their worth.

And the Gramm-Leach-Bliley Act in itself maybe didn't cause the whole crisis, but it did create higher instability in the financial market. For you all that don't know, during the Great Depression Congress made is so Investment banks and commercial banks had to be separate. The Gramm-Leach-Bliley Act allowed those two groups to be associated together. This is when Citibank and Travelers Group combined to make Citi Group. Anyways, what this allowed is for more people to get in to the field of trading mortgage back securities. What SHOULD have happened with the issuance of G-L-B Act was an establishment of more market regulation, whether it be the SEC or some new group, which should have oversaw this section of the market.

This all gets kinda confusing from here, but the bottom line is that by 2004, nearly every major financial institution would have been using the mortgage backed CDO's to raise capital for futher investments. CDO's are like super-bonds backed by mortgage, with higher returns than any other commercial bonds, it was all extremely lucrative but the risks were extremely high since every customer who defaulted on a loan would tag the credit of the bond and effect the payout.

2004 was way too late, and it was the fault of the repulican congress in the 90's and Bill Clinton for this mess. Any action by Congress at that time would have triggered what is happening now back then. It was a fragile situation and no one wanted to "burst the bubble". We were prospering until we weren't, but this all could have been avoided if we had set stronger regulations on this whole banking process back in the 90's.

The problem was caused in the 90's, but I think efforts to fix it in 2003/2004 would have been far better than letting it explode in 2006 ... House prices increased 22% from the 2004 until they peaked in 2006, and have only fallen 11% from the 2004 price. Realistically, the problem (should) have been fairly obvious between 2000 and 2002 but no one seemed to see the danger in allowing a massive bubble in the housing market

I have been thinking about how to explain this without writing a term paper, but seriously this issue was nearly unavoidable since the stock market crashed in 2001.

CDO's are the BEST way to gain quick capital for big companies. What made them even worse, the highest payout came from the lowest credit graded CMO's. For instance, while someone with low credit will most likely default before someone with better credit, they will still be paying double what the property is actually worth. This should have been regulated from the get go.

Subprime loans only existed because these higher level institutions were willing to pay for them because of the high returns. Regulation needed to be increased as SOON as we saw the housing market being the backbone of our economy. CDO's were the highest issued bonds by value and were based on an unregulated security, which no one knew the real value of. It was stupid and this was going to happen as soon as the economy slowed down since people would no longer be investing in houses as heavily. I don't know if many people will understand all this lingo, but this could have been avoided if new regulations were applied in the 90's.

@Happy

Thats true, but what could have been the potential effects of making such a move in 2004? The market was still wobbly from the crash in 2001. Housing was the basis of our entire economic structure.

With as many lobbyist around at that time from investment banks and things of that sort, who do you really think would hinder economic growth and the housing market to "do the right thing", when the housing market was still on the rise. I think in hindsight we wish they would have done it, but it wasn't going to happen then. No one wanted to touch what they didn't understand, and no one understood the complexity of the economics, not even the central bank(obviously).

The low interest rates, the G-B-L Act, the continuation of loose management was geared towards one thing, housing growth. What should have been enacted from the early 90's when this took off was regulation. CDO's are unregulated entirely, yet we have huge financial institutions investing billions upon billions in these assets, whose primary source of profits relies on payment from subprime loans? That makes no sense, and should have been jumped upon early on, not after it becomes on of the biggest source of new commercial bond issuances. Freddie Mac and Fannie Mae aren't the chief cause of this, and regulating only them and not the other companies would have crippled them.

Edit:

And to be fair it isn't entirely Republicans fault either. Bill Clinton pushed deregulation as well (he was very close to the middle, probably one of the conservate democratic presidents ever.) I really liked Bill Clinton, and I see why many people during the 90's wanted to "unleash the beast" and watch as the economy prospered. It happened according to plan, but without regulation the after effect was potentially disasterous, as we are seeing right now. The free market can't be left entirely free because greddy people exist. You can leave it free to an extent, allowing the flow of our entire economy to be in the hands of people who are only concerned about YOY profits will always eventually lead to a crash. Its not a sustainable process without government regulation of the extremes.

Except McCain called for more oversight back in 2005.

Well before Obama thought there was any porblem.  Heck even when he through there was did he try to pass a law?  No all he did was write a letter.

I think it's more accurate to say the republicans broke it, but then when some tried to fix it the democrats didn't let them. (along with corrupt republicans.)

Sub Prime morgages has a lot of positives for Democrats... as they allowed people who couldn't get loans before (the poor and minorities) get loans.

Because doing so would fit his political agenda.  That is why.  Its more convenient to forget which party had control over both the executive and the legislative branch of government.

You cant have your cake and eat it too.