Posted on 12/27/2008 2:20:52 PM PST by fiscon1
Opponents and supporters alike have tried to put some context on Bush's responsibility for the mortgage mess that has turned into a full out economic crisis. The latest foray into this analysis is this piece from the New York Times in which all the blame was place on the Bush administration for the entire crisis. That is far too simplistic. Yet, there is no doubt that as President, Bush deserves plenty of blame for what is happening. The question is how much and for what.
From my perch inside the industry, here is how I see his role in this crisis. I think all of us remember that one of the themes of Bush's first term was the so called Ownership Society. In fact, for years Bush touted that under his administration there was record home ownership. For about three years, this became an integral mantra of Bush's domestic policy.
(Excerpt) Read more at theeprovocateur.blogspot.com ...
“This attempted gift to ACORN (stripped out of the bill after outraged howls from Republicans) demonstrates how little Democrats understand about what caused the mess we’re in. And, unashamed, they then trot out to the TV cameras to declare “the party is over” for Wall Street (Nancy Pelosi)?
“ACORN recognized very early the opportunity presented by the Community Reinvestment Act (CRA) of 1977. As Stanley Kurtz has reported, ACORN proudly touted “affirmative action” lending and pressured banks to make subprime loans. Madeline Talbott, a Chicago ACORN leader, boasted of “DRAGGING BANKS KICKING AND SCREAMING” into dubious loans. [BLU NOTE: Just as she herself was dragged, kicking and screaming from a certain banks’ lobby by the police ]And, as Sol Stern reported in City Journal, ACORN also FOUND A RENUMERATIVE NICHE AS AN ‘ADVISOR’ TO BANKS found seeking regulatory approval.
“Thus we have J.P. Morgan & Co., the legatee of the man who once symbolized for many all that was supposedly evil about American capitalism, suddenly donating hundreds of thousands of dollars to ACORN.” Is this a great country or what? As conservative community activist Robert Woodson put it, “The same corporations that pay ransom to Jesse Jackson and Al Sharpton pay ransom to ACORN.”
“The party should be over for the Democrats who brought us to this pass. If Obama wins, it means hiring an arsonist to fight a fire.
[emphasis added] Thanks Mona, well said!
words to never forget
From the House investigation into FannieMae/FreddieMac 2004:
http://blog.beliefnet.com/reformedchicksblabbing/2008/09/maxine-waters-we-do-not-have-a.html
“We've been through nearly a dozen hearings where frankly we were trying to fix something that WASN'T BROKE. Mr. Chairman WE DO NOT HAVE A CRISIS at Freddie Mac and in particular at Fannie Mae under the outstanding leadership of Mr. Frank Raines.”
-Rep. Maxine Waters, Dem-Calif., 2004
“...as well as the fact that I'm just pissed off at [OFAL], because if it wasn't for you, I don't think we'd be here in the first place and now, the problem that we have and that we're faced with is, maybe some individuals who wanted to do away with the GSEs in the first place, you've given them an EXCUSE to try to have this forum so we can talk about it and maybe CHANGE the direction and the mission of what the GSEs had, which they've done a tremendous job. There's been nothing that would indicated that anything was wrong with Fannie Mae, and Freddie Mac has come up on it's own, and the question that then presents is the competence that your agency has with reference to deciding and regulating these GSEs...I'm VERY UPSET because you know, what you do is, maybe giving a reason, as Mr. Gonzales said, to give someone a heart surgery when they maybe DON'T NEED IT.
-Rep Gregory Meeks, Dem-NY, 2004
“It is indeed a very troubling report...to the taxpayers of this country would would pay the cost of the cleanup of an enterprise failure. The analysis makes clear that MORE RESOURCES MUST BE BROUGHT TO BEAR to ensure the highest standards of conduct are not only required but more importantly to ensure they are actually met.”
-Rep. Baker, Rep., 2004
“In addition to our important oversight role in this committee I hope that we will MOVE SWIFTLY to create a new regulatory structure for Fannie Mae, for Freddie Mac and the Federal Homeloan bank.”
-Rep. Royce, Rep-Calif, 2004
“This hearing is about the political LYNCHING of Franklin Raines.”
-Rep. Lacy Clay, Dem-Missouri, 2004
“There is a very SIMPLE solution, Congress must create a new regulator with powers at least equal to those of other financial regulators such as the OCC or the Federal Reserve.”
-Rep. Royce, Rep-Calif.
“What would make you, why should I have confidence, why should anyone have confidence in you as a regulator at this point?”
Rep. Meeks
“Certain congressmen.... [OFAL] did not improperly apply accounting rules, Freddie Mac did. [OFAL] did not try to manage earnings improperly, Freddie Mac did. This ISN'T ABOUT THE AGENCY engaging in improper conduct, it's about Freddie Mac.”
-Rep Royce
“...you went to the board and put a 48-hr ultimatum on them, without having any specific regulatory authority to put that kind of ultimatum on them; that sounds like some kind of invisible LINE HAS BEEN CROSSED.”
-Rep. Davis, Dem.
“Fannie Mae has manipulated, in my judgment, [OFAL] for years, and for [OFAL] to finally come out with a report, as strong as it is, tells me that's got to be the minimum not the maximum.”
-Rep. Shay, Rep.
“... you seem to think, well, these are in areas that could raise safety and soundness problems. I DON'T SEE anything in the report that raises safety and soundness problems”
-Rep. Barney Franks, Dem, Mass
“Under the outstanding leadership of Mr. Frank Raines, everything in the 1992 act has WORKED JUST FINE. In fact ,the GSEs have exceeded their housing goals. What we need to do today is FOCUS ON THE REGULATOR, and this must be done in a manner SO AS NOT TO IMPEDE the affordable housing mission. A mission that has seen innovation flourish from desk-top underwriting to 100% loans.”
Rep. Maxine Waters, Dem.
“I find this to be inconsistent and a RUSH TO JUDGEMENT. I get the feeling the MARKETS ARE NOT WORRIED about the safety and soundness of Fannie Mae as [OFAL] says it is, but, of course, the markets are not political."
Rep. Lacy Clay, Dem.
“"I'VE SEEN NOTHING in here that suggests the safety and soundness of an issue, and i think it serves us badly to raise the safety and soundness as a kind of a general shift of it, when it does not seem to be an issue."
Rep. Barney Frank, Dem.
“...Mr. Raines. 1.1M bonus on a $526K salary,Jamie Gorlic 779K bonus on a salary of %567K, what you said on page 11 is nothing less than staggering. The 1998 earnings per share number turned out to be $3.23 and 9 mils, a result that Fannie Mae made EPS maximum payout goal right down to the penny. Fannie Mae knew the rules and chose simply not to follow them, and if Fannie Mae had followed the practices, there wouldn't have been a bonus that year.”
Rep. Munzullo, Rep - Illinois
“and you have about 3% of your portfolio set aside; if a bank gets below 4% they are in deep trouble. So I want you to explain to me why I should be satisfied with 3%.
Rep. Shays, Rep.
“...there aren't any banks that only have multi-family and single-family loans.”
Franklin Raines
"These assets are so RISKLESS that their capital for holding them should be under 2%."”
Franklin Raines
Clinton weighs in:
“I think the RESPONSIBILITY that the Democrats have, may rest more in RESISTING ANY EFFORTS by Republicans in the Congress, or by me when I was President, to put some standards and TIGHTEN UP a little on Fannie Mae and Freddie Mac.”
Bill Clinton, 2004
best regards, blu
It’s always been my take that a lot of fraudulent loans would not have been made, if Fannie and Freddie wouldn’t have made it very clear they were more than willing to buy these marginal loans.
Nonsense, the mortgage crisis happened because banks lent 60.00 for every 1.00 they had. I have no doubt there was the usual percentage of fraud. The Wall street elite thought that housing would keep going up. When people could not afford high prices in California and other pricey places, the bankers invented no interest loans and all kinds of mortgage goodies to keep the party going. They took these loans and sold them after chopping them into smaller pieces of paper...mortgage derivatives. Wall Street would love to place the blame on politicians,poor people etc, but the truth is they did it themselves and to us. All these million dollar Harvard Business School types with their book learning and little real world experience ran the banks and Wall Street firms into the ground whilst collecting millions and millions. Nope, the Wall street bankers caused the economic meltdown which bankrupted this country and have prospered from it because of the bailout. It’s huge salaries and bonuses for these elite...SOB’s. They are the ‘talent’ all agree must be attracted with millions of dollars...I say fire them all and start over with people who know how to run an economy.
The problem goes far beyond this policy. You are making excuses for those who do not deserve any sympathy...the Wall Street bankers. The loans you are talking about made to formerly red lined districts adds up to less than 1 % of troubled loans...the jumbo no interest loans which were made in Las Vegas and California. This is where many of the foreclosures began. I believe job loss and housing value decline caused the problem...as people lost jobs they could not afford their houses and as home values went down on 0% loans payments went up.
to build on what I posted before, in all fairness, here’s a pretty good video,
http://www.youtube.com/watch?v=vLUbb2DUYGk
some comments I don’t agree with, but, the point is, Bush wanted to help those who’s only barrier to homeownership was lack of downpayment, with grants available thru community fund grants provided by the govt. The onus was on those community agencies to supervise and account for their own fund disbursement. Instead, what he, and we, got, were characters like Madeline Talbot blackmailing banks, and sellers, into a free-for-all. (imo)
Bush also wanted “Section 8” (the govt) to develop a program whereby Section 8 funds previously routinely provided for rent payments to low income, were able to be used by recipients to pay mortgages on LOW INCOME homes, instead of in the customary form of paying rent to someone else. Had the Section 8 plan been implemented, again, the onus would have been on that agency to correctly marry recipients to suitable mortgages into the low income housing that was being built specifically for them, and to accept responsibility for their rate of default.
Yes, Bush pushed homeownership. Yes, Bush wanted poor people to own homes, too. (It was a good idea - you and I both know that rental houses never look quite as nice as resident-owner homes). But he wanted low income people in low income housing, paying property taxes and supporting the local homesupply stores, not in mansions they couldn’t even dream of affording. He wanted low income housing built to accomodate those low income buyers, not low income buyers buying into expensive homes they could ill afford.
Had the section 8 program Bush proposed been implimented, and had the community agencies that received billions in grants monitored their own inhouse activities with a sense of civic responsibility, perhaps, the oversight may have been there that would have prevented low income seekers from being married to mortgages they had no real ability to pay. imo
well that brings up a separate problem, yet to really be touched on - banks didn't care what loans they made because they could pay a rating agency, to rate the bundle and they knew, they could sell them to Fannie/Fred, who were buying all submissions. Write it up, ship it out - hands are clean and so is the balance sheet, kind of mentality was born. OTOH, Fannie/Fred never questioned the enormous amount of AAA or AA rated bundles being churned out by Moodys and others, in their haste to create derivatives of those bundles, even when the figures proved that somewhere around 60% of these bundles were defaulting within the first six months of origination - Fannie/Fred figures, btw, so they knew, but they took no action to modify their purchasing practices. imo
Yes.
You are making excuses for those who do not deserve any sympathy...the Wall Street bankers.
I am doing no such thing. If they felt that they were being coerced into financial suicide, they should have stood up for their interests.
The loans you are talking about made to formerly red lined districts adds up to less than 1 % of troubled loans
It is estimated that roughly 50% of the now-troubled loans involve non-Asian minorities. A quick glance at a foreclosure map in an urban area would make it immediately obvious what kinds of communities are hardest hit. Hint: compare the Bronx foreclosure rate with Manhattan.
Likewise, the much-trumpeted minority homeownership rates are plunging much faster than the overall average. This should come as no surprise since minorities accounted for 44% of all subprime loans.
That said, the general trend toward easy lending standards led directly to the price bubble, excessive speculation, and overbuilding that you described. We would not be in this mess if standards had not been lowered across the board.
The loans you are talking about made to formerly red lined districts adds up to less than 1 % of troubled loans
If you were interested in honest discussion you would need a citation for this. Otherwise it looks like you are making up your facts.
I will help you this time....
By 2006, sub-prime mortgage lending accounted for as much as 20 percent of overall mortgage lending.
http://www.aei.org/publications/filter.all,pubID.26550/pub_detail.asp
TWENTY PERCENT not one percent.
Also where is your acknowledgement that Congress FORCED companies to make loans?
Do you remember how we told you that the Democrats and groups associated with them leaned on banks and even sued to get them to make bad loans by abusing the Community Reinvestment Act (see HERE and HERE)? The abuse of this act by ACORN and officials like Janet Reno was a factor in causing the economic crisis. The harasment suits filed under this act were used to get banks to lower credit standards and hand out high risk loans. Fellow bloggers have dug up the lawsuit below while researching Obama’s legal career. It is a typical example of an ACORN harassment lawsuit.
Also, think what kind of quality you get from loans encouraged by my ()(*&^^^ governor in this program ....
Mortgages to Illegal Immigrants Come Under Fire
Produced by Ashley Gross on Tuesday, October 16, 2007
Immigrants have become key to fueling growth in the Chicago area housing market in recent years.
According to a report given to the governor last year, immigrants made up more than 80 percent of new homeowners in suburban Cook County from 2000 to 2005.
But the maelstrom over immigration policy has slowed down one part of that market.
http://www.chicagopublicradio.org/Content.aspx?audioID=14015
Banks Open Doors
To Illegal Immigrants
by Miriam Jordan
From The Wall Street Journal Online
July 11, 2005
Javier and Araceli Garcia, illegal immigrants from Mexico, never imagined that the U.S. government would help them realize their dream of owning a home.
But last year, the couple secured a $54,600 mortgage to buy the gray, 1,158-square-foot bungalow that they had been renting for eight months. The Wisconsin housing authority financed the loan. The Internal Revenue Service gave them an identification number that enabled them to apply for it at local Mitchell Bank, which was happy to take their business.
http://www.realestatejournal.com/buysell/mortgages/20050711-jordan.html
-—It is my understanding that banks do not do business with the poor and impoverished because they don’t have money..
You missed the part where the government told them that they HAD to do business with the poor and impoverished. That’s what the CRA was. Read my post above.
“You want someone to blame?”
The idiots that thought they could buy a home without the income and the down payment to pay for them.
That also goes for anyone buying anything on credit!
Throw them out in the street and reposess their cars!
Yep, and Bush wouldn’t have proposed eliminating down payments for borrowers with bad records if Clinton had already effected the change. It is the corrupt Democrat Congress, the corrupt Clinton administration, and the sanctimoniously clueless Bush administration who are responsible for this debacle.
Yeah, it was mixed in with Hitlery's billing records. Everything is good now, Dan Rather blessed it's authenticity.
Are you new to the planet or just ignorant?
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