The Garn–St. Germain Depository Institutions Act of 1982
An Act of Congress, that deregulated the Savings and Loan industry. This Act turned out to be one of many contributing factors that led to the Savings and Loan crisis of the late 1980s.
The bill, whose full title was "An Act to revitalize the housing industry by strengthening the financial stability of home mortgage lending institutions and ensuring the availability of home mortgage loans," was a Reagan Administration
The bill is named after its sponsors, Congressman Fernand St. Germain, Democrat of Rhode Island, and Senator Jake Garn, Republican of Utah. The bill had broad support in Congress, with co-sponsors including Charles Schumer and Steny Hoyer.[3] The bill passed overwhelmingly, by a margin of 272-91 in the House.[4]
Title VIII, Alternative Mortgage Transactions, allowed Adjustable rate mortgages [5]
Bush Whitehouse Unveils Exotic Mortgage Rules
November 15, 2006
Interest-only and payment-option ARM lenders will have to qualify borrowers at the fully indexed rate with potential negative amortization added to the loan amount under final federal regulatory guidance issued last month. Banking regulators rejected industry complaints that the new underwriting guidelines on programs will be too restrictive. However, these proposed rules are still subject to a 60-day comment period and may be changed before finalization.
Under the mandate, payment-option adjustable-rate mortgage servicers must include in the monthly mortgage statement an “explanation” that if borrowers choose the minimum monthly payment — which many do — it would increase their loan balance. “The regulators stuck to their guns,” said Howard Glaser, a former Department of Housing and Urban Development attorney who runs a consulting practice—
“…. It is rare for federal regulators to step in and regulate a specific product. They are doing so here out of concern that they need to protect both the borrower and the bank.”
These products have been very popular during the recent housing boom and the tightening of these standards at a time when the market is slowing may serve to exacerbate the situation.
FHA Backs More Than Half of Loans for New Homes
By Nick Timiraos Oct 2009
Just how big a backstop is Uncle Sam providing to the housing market right now? Here’s one indication: The number of home buyers relying on low down-payment mortgages obtained via the Federal Housing Administration and other federal agencies.
Some 59% of new home buyers are using government-backed loans from the FHA and other agencies, according to a survey of home builders by John Burns Real Estate Consulting, an Irvine, Calif.-based consultancy. The FHA accounts for nearly half of all mortgages, while loans from the Department of Agriculture and the Department of Veterans’ Affairs account for another 10% of all loans for new homes.
The government’s share of the market rises even higher in certain areas. In Northern California, for example, builders said that the government accounted for 76% of all mortgages, while the government share stood at 65% in the Midwest and 62% in South Florida.
South Florida also has the highest share of all-cash new home purchases, at 22%, largely the result of investor purchases of condos and other attached homes. Southern California and the U.S. Northwest had the highest share of purchases with jumbo loans, at 15% and 13%, respectively.
Sunday, October 25, 2009
Tuesday, May 12, 2009
Deregulation Meltdown Caused By Republicans
FDR comes into the White House around March 1933
· Economy Act of 1933 - enacted March 20, 1933 - cut the salaries of federal workers and reduced benefit payments to veterans, moves intended to reduce the federal deficit in the United States.
· Emergency Banking Act of 1933 - enacted March 9, 1933 - allowed a plan that would close down insolvent banks and reorganize and reopen those banks strong enough to survive. The act also provided for the reopening of banks after federal inspectors had declared them to be financially secure.
· Glass-Steagall Act of 1933 - enacted June 16, 1933 - introduced the separation of bank types according to their business (commercial and investment banking), and it founded the Federal Deposit Insurance Corporation for insuring bank deposits.
· Gold Reserve Act of 1934 - enacted January 30, 1934 - outlawed most private possession of gold, forcing individuals to sell it to the Treasury, after which it was stored in Fort Knox and other locations. The Act also changed the nominal price of gold from $20.67 per troy ounce to $35 per ounce.
Republicans involvement in banking
· President Richard Nixon announced in 1971 that the United States would no longer convert dollars to gold at a fixed value, thus abandoning the gold standard for foreign exchange (see Nixon Shock).
· Gramm-Leach-Bliley Act of 1999 - enacted November 12, 1999 - repealed part of the The Glass-Steagall Act. Allowed commercial and investment banks to consolidate. For example, Citibank merged with Travelers . The bill was created by Phil Gramm (Republican of Texas) and in the U.S. House of Representatives by Jim Leach (R-Iowa).
Deregulation meltdown examples –
Wachovia Merger’s that failed!!
(Golden West Financial)
Wachovia agreed to purchase Golden West Financial for a little under $25.5 billion on May 7, 2006. This acquisition gave Wachovia an additional 285-branch network spanning 10 states. Wachovia greatly raised its profile in California, where Golden West held $32 billion in deposits and operated 123 branches.
While Wachovia Chairman and CEO G. Kennedy "Ken" Thompson had described Golden West as a "crown jewel", investors did not react positively to the deal at the time. Analysts have since said that Wachovia purchased Golden West at the peak of the US housing boom. Golden West's mortage-related problems led to Wachovia suffering writedowns and losses that far exceeded the price paid in the acquisition, ending up in the fire-sale of Wachovia to Wells Fargo.
(A.G. Edwards)
In the first quarter of 2007, Wachovia reported $2.3 billion in earnings, including acquisitions and divestitures. However, in the second quarter of 2008, Wachovia reported a much larger than anticipated $8.9 billion loss.
On June 02, 2008, Wachovia Corp, chief executive officer, Ken Thompson was pushed out as head of Wachovia. The board of the Charlotte-based bank said it asked Thompson, 58, to retire and replaced him on an interim basis with Chairman Lanty Smith. Smith had already replaced Thompson as chairman last month in a move the bank said "strengthens independent leadership" at the company.
· Economy Act of 1933 - enacted March 20, 1933 - cut the salaries of federal workers and reduced benefit payments to veterans, moves intended to reduce the federal deficit in the United States.
· Emergency Banking Act of 1933 - enacted March 9, 1933 - allowed a plan that would close down insolvent banks and reorganize and reopen those banks strong enough to survive. The act also provided for the reopening of banks after federal inspectors had declared them to be financially secure.
· Glass-Steagall Act of 1933 - enacted June 16, 1933 - introduced the separation of bank types according to their business (commercial and investment banking), and it founded the Federal Deposit Insurance Corporation for insuring bank deposits.
· Gold Reserve Act of 1934 - enacted January 30, 1934 - outlawed most private possession of gold, forcing individuals to sell it to the Treasury, after which it was stored in Fort Knox and other locations. The Act also changed the nominal price of gold from $20.67 per troy ounce to $35 per ounce.
Republicans involvement in banking
· President Richard Nixon announced in 1971 that the United States would no longer convert dollars to gold at a fixed value, thus abandoning the gold standard for foreign exchange (see Nixon Shock).
· Gramm-Leach-Bliley Act of 1999 - enacted November 12, 1999 - repealed part of the The Glass-Steagall Act. Allowed commercial and investment banks to consolidate. For example, Citibank merged with Travelers . The bill was created by Phil Gramm (Republican of Texas) and in the U.S. House of Representatives by Jim Leach (R-Iowa).
Deregulation meltdown examples –
Wachovia Merger’s that failed!!
(Golden West Financial)
Wachovia agreed to purchase Golden West Financial for a little under $25.5 billion on May 7, 2006. This acquisition gave Wachovia an additional 285-branch network spanning 10 states. Wachovia greatly raised its profile in California, where Golden West held $32 billion in deposits and operated 123 branches.
While Wachovia Chairman and CEO G. Kennedy "Ken" Thompson had described Golden West as a "crown jewel", investors did not react positively to the deal at the time. Analysts have since said that Wachovia purchased Golden West at the peak of the US housing boom. Golden West's mortage-related problems led to Wachovia suffering writedowns and losses that far exceeded the price paid in the acquisition, ending up in the fire-sale of Wachovia to Wells Fargo.
(A.G. Edwards)
In the first quarter of 2007, Wachovia reported $2.3 billion in earnings, including acquisitions and divestitures. However, in the second quarter of 2008, Wachovia reported a much larger than anticipated $8.9 billion loss.
On June 02, 2008, Wachovia Corp, chief executive officer, Ken Thompson was pushed out as head of Wachovia. The board of the Charlotte-based bank said it asked Thompson, 58, to retire and replaced him on an interim basis with Chairman Lanty Smith. Smith had already replaced Thompson as chairman last month in a move the bank said "strengthens independent leadership" at the company.
Sunday, November 16, 2008
Knights of Columbus - PAY TAX NOW
The Knights of Columbus is chartered as a fraternal benefit society, and is set up as a 501(c)8 corporation. They are tax exempt. Somehow they gave $1,425,000 to fight same-sex marriage in California. The donation was to a group called "YES on PROP 8". The group is a PAC "Political Action Committee".
How is giving $1,425,000.00 to PAC fraternal?
Are they going to pay taxes for the $1,425,000.00?
The IRS bans this type of activity (see link)
www.irs.gov/pub/irs-tege/eotopicf04.pdf
How is giving $1,425,000.00 to PAC fraternal?
Are they going to pay taxes for the $1,425,000.00?
The IRS bans this type of activity (see link)
www.irs.gov/pub/irs-tege/eotopicf04.pdf
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