Posted on 09/24/2008 5:05:45 AM PDT by XHogPilot
HOW did America wind up in its worst financial crisis in decades? Sen. Barack Obama explained it this way last week: "When sub-prime-mortgage lending took a reckless and unsustainable turn, a patchwork of regulators systematically and deliberately eliminated the regulations protecting the American people." That's exactly backward. Mortgage lending took that "reckless and unsustainable turn" because of regulation - regulation driven by liberals and progressives, not free-market "deregulators." Pushed hard by politicians and community activists, the regulators systematically and deliberately altered financially sound lending practices. The mortgage market was humming along just fine when, in the late 1980s, progressives decided that it needed to be "fixed." Their complaint: Some ethnic groups got approved for mortgages at lower rates than others. In reality, mortgage lenders were simply being prudent - taking care to provide mortgages to those who could best afford to make the payments. The shift began in 1989, when Congress amended the Home Mortgage Disclosure Act to force banks to collect racial data on mortgage applicants. By 1991, critics were using that data to paint lenders as racist by showing that minority applicants were approved at far lower rates. Banks were "Shamed By Publicity," as one 1993 New York Times headline put it. In fact, they found a racial disparity only by ignoring relevant data on applicants' ability to make mortgage payments - such as their assets and credit history. But the political pressure was intense - with few in politics or media eager to speak the truth. And then, in 1992, came a study from four researchers at the Boston Fed, which seemed to bear out the critics' contentions. That study was, in fact, based on quite flawed data - but the authors' political, media and academic protectors stifled most serious criticism, smearing the reputation of one whistleblower
(Excerpt) Read more at nypost.com ...
Time for another transfer of trillions from those who produce to those who do not.
That and unregulated securitization of debt. Mergers, the gutting of Glass-Steagall...There is plenty of blame to go around.
Exactly, they’d better wake up on this issue and start attacking Democrats.
I'd describe it a little differently.
I'd call it "the worst financial crisis since a vulnerable Republican ran for president with the Democrats in control of Congress."
The last time this happened it was called "The S&L Crisis," and had been ginned up so it would hit just as we were going into the election season.
Bigger picture: expect this type of earth-shattering crisis (financial or otherwise) to hit just before election time from now on. There are many powerful folks out there, mostly on the left, who believe they can turn chaos to their advantage, if they can make it hit when the American population is trying to decide who they will vote for.
They only way this can work is due to the utterly corrupt and dishonest media.
They've tried to make America "ungovernable" for decades, starting in the '60's, and have decided that that wouldn't work.
Now they've realized that they only have to make America "ungovernable" for a few weeks, during the run-up to a Presidential election, to get most of the same benefit for themselves.
Could it be that a hallmark of the Bush administration has been the increased number of minority homeowners, due in part to these flimsy loans?
Hmmm. It seems like it is time to help the American people make the connection between Community Activists and Wall Street Woes. McCain needs to get those ads out there staring our most famous Community Activist (the one who isn't a small town mayor.)
--Ludwig Von Mises
Hank Paulson votes for option two.
ping
“why isn’t the GOP hammering this?”
....don’t want to be called “racist” for saying that credit is NOT a civil right.
We need to hammer this. To our friends, families, co-workers. Save the original article. Email to everybody in your address book. Make copies and circulate them. We have to be the media. Can’t count on pathetic GOP or MSM. Let’s just do it. This alone should sink the lousy Dems.
This economic crisis can be traced back to the Carter Administration: http://www.investors.com/editorial/editorialcontent.asp?status=article&id=305938528597493&secid=1501
Because it is not politically correct to point out that it was a stupid idea to force financial institutions to give loans to people who did not earn them. But then the financial institutions should have just ignored the rules and tightened the credit on these low lifes.
EVERYONE was afraid to offend the poor and the minorities. Including the GOP.
BTTT!
Just because some wanted to increase minority home ownership in the beginning does not mean they wanted risky loans to take place. What you are saying is a stretch since Bush, McCain and even Greenspan told the Dem Congress to straighten out the sleazy mortgage market of Fannie/Fredie a few years back and the Dems voted it down.
“Community Reinvestment Act”
....back when the CRA first came out the largest bank in our city was getting hammered in the press....they were accused of failing to put branch banks in black neighborhoods....so to get the newspaper off their back; they opened a branch in one of the worst neighborhoods in town...had a big grand opening with free balloons and lolipops for the kids....lots of local news crews telling us this was something we could all feel good about....two days later masked gunmen with sawed off shotguns cleaned them out...and they never reopened that branch...true story!
You are exactly right!!! I am so frustrated with this! My frustration, is not so much about the bail out but, the fact that the TRUTH is not being told. Again, the liberals with their social engineering and convoluted ideas will skate.
Because they are knee deep in it, too.
Prior to HERA, the Secretary of HUD was the mission regulator for the GSEs, with oversight authority to ensure that both GSEs complied with the public purposes set forth in their charters. HUD had general regulatory authority for oversight responsibilities, which included establishing housing goals; monitoring and enforcing compliance with housing goals; new program approval; collecting loan-level data from the GSEs on their mortgage purchase activities; making available to the public a database on non-proprietary GSE loan purchase data; and ensuring GSE compliance with fair lending requirements.From here.
Next.....
But by 2004, when HUD next revised the goals, Freddie and Fannie's purchases of subprime-backed securities had risen tenfold. Foreclosure rates also were rising.
That year, President Bush's HUD ratcheted up the main affordable-housing goal over the next four years, from 50 percent to 56 percent. John C. Weicher, then an assistant HUD secretary, said the institutions lagged behind even the private market and "must do more."
Bush increased the percentage of sub prime lending required from Fannie and Freddie "each (Clinton and Bush) trying to lay claim to a record percentage of homeowners" here)
There is no question that the problems were created by HUD. Oh, by the way the HUD Secretaries under Bush? Mel Martinez and Alphonso Jackson. Both Bush cronies.
Maybe this is why Bush is pushing just as hard as the dems in using your and my money to bail out Fannie and Freddie.
Go to this thread and read the links.
When HUD released the next set of goals in 2004, it reported that after Cuomo's previous edict, there had been a sudden spurt of GSE subprime investment, "partly in response to higher affordable-housing goals set by HUD in 2000." Fannie had gone from $1.2 billion in subprime-mortgage and securities purchases in 2000 to $9.2 billion in 2001 and $15 billion in 2002. Freddie's numbers were murkier, but clearly also on the rise. In 2003 alone, the two bought $81 billion in subprime securities—which also count against the goals.
That was during Martinez's tenure.
Martinez's successor, Alphonso Jackson, ended up being just as scandalous by receiving sub rate loans from Countrywide.
The whole department appears to be incestuous. Also, note that Martinez and Jackson are both minorities. Did that play a role in their relaxing the loan requirements for Fannie and Freddie? They were obviously put there to appease the minority factions of the U.S.
The whole HUD is corrupt, in my opinion. It's intent has been corrupted by years of abuse and lack of oversight.
I realize a lot of people are trying to deflect blame from Bush but a lot of this stuff happened on his watch under Martinez and Jackson. While I don't expect Bush to be able to monitor every facet of the U.S. govt., he kept putting cronies in charge. They either abused their standing with him or he was too naive to see what they were doing.
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