Did home loans cause the financial crisis?

Today, on Fareed Zakaria GPS, one of the guests was O'Neill. He was a treasury secretary during the Bush (2001-????) years.

O'Neill laid the blame for the housing crash on home loans with little or nothing down. According to him, the crash would not have happened if all home loans had required 20% down.

This seems silly to me. I saw many loans issued that only made sense if you assumed that the value of the house would go up, and then require you to sell or refinance to pay off the loan -- in other words, the loan assumed that the house would pay for itself. Loans that had a low interest rate during the first few years (5 to 7), and then either a large interest increase, or a balloon payment. Loans where your interest rate was higher than your payments (so your balance would increase; in theory, your house value would go up faster).

Why is this bad? If you require that a loan is only issued if it is likely to be paid off, then a high house price will not sell -- no one that wants it can afford the loan. If a house is priced so high that the loan is not likely to be paid off, and therefore cannot be issued, then the house needs to come down in price.

That's how a market makes sense. When prices go up, up, up, people stop buying, and the prices have to come back down. That's functional.

Instead, we had a market where prices went up, up, up, and bankers proceeded to make loans on the assumption that not only would they continue to go up, up, up, but someone else later would buy a loan thinking that it would continue to go up, up up.

Blaming the people who wanted a house loan with little or no down is crazy.
Blame the lenders who decided to issue loans that could only be repaid if the house was sold at a large profit.

Was this a valid drug case conviction? Or was this a denial of a fair trial?

According to the AP news wire today, there was a court case in Cleaveland, where a federal judge refused to grant a new trial to three people convicted of dealing drugs.

(I'm not allowed to copy the actual story, so I'll just give a summary here.)

Apparently, U.S. District Judge James Gwin ruled that, while he did not approve of the way the government handled the case, the defendants failed to show prejudice in their original trials, and so would not be granted a second trial.

Now, this is, in a nutshell, exactly my issues with the federal court system. This country, alone, first, and (as far as I know) unique in the world, operates on the principal that the federal government is not all powerful, and cannot do whatever it wants. The 10th amendment makes it abundantly clear that the federal government is restricted. The 9th makes it clear that we start with the assumption of rights of people (and states). The preamble makes it clear that justice, rather than arbitrarily rulings, is the key. We've got the right of a jury trial stated multiple times.

Yet, rather than letting a jury hear this case, a judge said that, even though the judge did not like what was done, the people accused of a crime, and potentially convicted in error, could not prove that they were not given a fair trial. Not: The government must prove that they followed the rules. The accused, innocent until proven guilty, now have the additional burden of proving that the government failed to follow the rules. Not to a level of proof acceptable to a jury, but to a level that is more than required to convince a judge that something is wrong.

So what is the issue here? Get this. Sit down. Normally I cut these in my RSS feed; this time I'm not cutting this.

The DEA agent who provided testimony against them was on trial for putting false information in his reports.
He was aquitted.
The federal government withheld information/evidence that could have been used against this DEA agent.
The indication is fairly strong that had this evidence been presented, then either (A) the agent would have been found guilty, or (B) the evidence would have been considered tainted, and not permitted in this court case that found these three people guilty.

So, lets see if I understand this correctly:
1. DEA agent falsifies testamony. (a violation.)
2. Government has evidence that it refuses to turn over to the other side in a trial (a violation).
3. Government deliberately misrepresents the agent's work (a violation)
4. The judge agrees that the government did not act properly
5. The judge ruled that, because the prior trial was not proven to be in error, must be held acceptable.

So what possible standard of improper trial can possibly be held here?

Again: No jury was allowed to examine the question of "was this trial fair". The judge did not approve of the government's action. The government failed to provide a fair and unbiased trial. The government withheld evidence that would have harmed its case.

And the convictions were upheld.

A quick and dirty diary

So where are my recent postings?

I just finished and submitted my EEO (equal employment) formal dispute against the commerce department. No action came from the first (informal) dispute. (If you're curious, I was training for the second stage of census work -- non-respondent follow up -- and was not hired despite a perfect score on the written test.)

I have to deal with Capital One (does anyone know how to sue a credit card company? I don't know the first step, and cannot afford any lawyer fees), the IRS, the FTB, etc.

Joy is "We are right, unless you first prove us wrong" that these all use.