Posted on 03/01/2009 1:44:52 PM PST by Neil Braithwaite
President Obama has proposed a foreclosure bailout for millions of people about to loose their homes. With that in mind, let’s take an in-depth look at how we got in this mess and how Obama’s foreclosure bailout proposal is designed to prop-up another failed liberal social program called “Affordable Housing.”
An article written back in 1999 by Steven A. Homes in the New York Times titled; “Fannie Mae Eases Credit To Aid Mortgage Lending,” gives a great account of what actually started this whole housing mess.
The following excerpts from the article should be a real eye-opener for even the most ardent skeptic regarding who is mostly to blame for the current foreclosure problem.
“Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans…”
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer.
Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
Now if that doesn’t blow your mind, then maybe you should go back and re-read it, if you haven’t already.
Did the name Clinton ring a bell? What about the word “pressure” with regard to Fannie Mae “expanding” mortgage loans to “low and moderate income people.” The “pressure” from Clinton was to get Fannie Mae, “to spur banks to make more loans to people with less-than-stellar credit ratings.”
It was especially enlightening to discover that the main motivation to make these loans by Fannie Mae was not as much to help low income and minorities purchase a home, as it was to “maintain its phenomenal growth in profits.”
It also didn’t matter to Franklin Raines, Fannie Mae's Chairman and CEO, that these previously unqualified people “whose incomes, credit ratings and savings are not good enough to qualify for conventional loans” might have a tough time paying their mortgages. Raines seemed proud when he said, ''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements." What seemed to matter more to Mr. Raines however, was getting the most profit for Fannie Mae stockholders.
We all know that hindsight is 20-20, but this prophetic article is a clear indictment against liberal politicians who continue to prop-up and endorse social programs while ignoring credible warning signs of their impending failure.
All of America witnessed the Affordable Housing program crash and burn this past year. The effects of the crash will be both severe and costly to our economy for years to come.
However, despite the overwhelming evidence confirming why Affordable Housing failed and why it will never work, President Obama has become its savior.
That’s right America. Standing in the midst of the Affordable Housing wreckage, President Obama is proposing to resurrect another failed social program on the backs of responsible Americans.
Obama is proving, beyond a shadow of doubt, that he is a true socialist.
Responsible Americans need to stand up and fight for their freedom.
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