The Current FReepathon Pays For The Current Quarters Expenses?
Posted on 11/19/2011 5:43:58 AM PST by dangus
The real cause of the housing bubble and collapse is very simple: An Executive Order by Bill Clinton and enthusiastically championed by George Bush, 13166, forced banks to make bad loans or no loans at all. And Newt Gingrich was championing putting an end to EO 13166 years before the collapse of the banking industry.
In the late 1990s, a grand compromise was reached between President Clinton and Senate Banking Chairman Phil Gramm. Long ago, government types decided that home ownership was the key to fiscal stability, but too many blacks didn't qualify for loans. The banking industry argued that blacks were, on average, greater risks that non-blacks, based purely on economic data. The Clinton administration argued that nonetheless, the effect of these policies were discriminatory. Fannie Mae, being a creation of the government, could not engage in policies which had even an unintentional discriminatory effect. Since most housing loans involved Fannie Mae, the Clinton Administration used this leverage to argue that banks themselves, by participating with Fannie Mae, made themselves subject to such anti-discrimination laws.
The compromise was to spread the risk so the bank which made the higher-risk loan to a black family wouldn't absorb the full cost of the loan default, should the family actually default. The problem is that Sen. Gramm had been taken in: President Clinton soon signed an Executive Order ruling on 1964 Civil Rights Act' prohibition on discrimination against someone based on their national origin.
Congressional testimony had made very clear that what had been meant by "national origin" was their ethnic origin. Clinton was twisting it in a new way, equating ethnic origin with linguistic background, and by doing so finding that you could not discriminate against anyone based on their inability to speak English.
Here's the problem: American schools require English. Immigration requires English. Anyone who cannot speak English in America is likely to be either horribly poorly educated, or, more likely, an illegal immigrant. Under the E.O. 13166, the banking law passed to make home ownership feasible for blacks, was being used to demand loans to illegal aliens!
Try finding an illegal alien who qualifies for a loan. A bank is willing to give YOU money, because you can't just disappear. If you change your identity, you lose not only your down payment, but your college education, your professional work history, and thus, your future earning potential. An illegal alien simply goes back to Mexico, leaving the bank hanging.
So, the banks had to scrap loan requirements which differentiate you from an illegal alien. No money down! No work history, no problem, if you speak only Spanish! Home ownership rates exploded, and with them, home prices
The banks were willing to make bad loans for two reasons: If the loan defaulted, they took the house, which was now worth more than it was when the bank made the loan, so the loan really was a way for the bank to directly invest in real estate, not just merely the interest rate of the borrower. And if the bank actually DID take a loss, they could pass it on to other holders of CDOs, the creation of Gramm's law by which banks could trade loans on the open market, so long as no-one could see what the loans were actually on.
In 2007, the Bush administration, stinging from brutal losses in 2006, got the message that the American people wanted immigration enforcement. The explosive flow of illegal immigrants to America slowed to trickle, and even began to reverse. Certain specific counties in America... those with the highest percentages of illegal aliens making up their populations.. started experiencing their housing markets collapse. Prince William's County, imploded, while nearby Prince George's County continued to grow. The difference? "PW's" new homebuyers were illegal immigrants, while "PG's" were black Americans.
In 2008, Every one of the top 20 counties with the fastest real-estate depreciation was also among the counties with the highest rate of non-English-speaking home-owners. But then Bear Stearns fell. And AIG. And banks would no longer risk giving money to illegal aliens, and therefore couldn't loan money to anyone else. And so English-speaking Americans couldn't buy houses, and the housing collapse spread throughout America.
Long before the collapse, a very excellent organization named Pro-English was sounding the alarm about Executive Order 13166. And there was one politician willing to work with them: NEWT GINGRICH.
What you need to worry about is why newt was lobbying to keep this fraud rolling.
I do not see anything wrong or amusing. Newt wants immigrants to speak English in the United States. He is applied the same standard to himself and spoke Spanish in Mexico.
Don’t know whether I buy it. But bookmarking anyway.
The Current FReepathon Pays For The Current Quarters Expenses?
I have just finished reading one of the best books on the subprime crisis: "Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon" by Gretchen Morgenson and Joshua Rosner.
In 1995, Jim Johnson (Fannie Mae CEO) the corrupt liberal SOB responsible for damaging our economy more than any other single person (in my opinion) was in the process of opening up Fannie Mae branches all over the country.
James Johnson saw the company as the cash cow it was for the bureaucrats who ran it, and implemented a strategy that was on the job 24x7 with eyes and ears everywhere. He created Fannie Mae branches in a huge number of cities across America (I think it was between 50 and 100) staffed by like-minded people who served as the canary in the coal mine for any push back. They had armies of powerful lobbyists with lots of important connections.
At the opening of one of these newly opened, metastatic evil Fannie Mae branches in Atlanta NEWT GINGRICH got on stage with that damned CRIMINAL, and this is what he said:
GINGRICH: "Fannie Mae is an excellent example of a former government institution fulfilling its mandate while functioning in the market economy...Fannie Mae has had a regional presence in Atlanta for over 40 years and the announcement of a partnership office demonstrates its continued commitment to affordable housing in the Atlanta metropolitan area."
(Note that as the authors state, it was COMPLETELY FALSE AND INACCURATE to characterize Fannie Mae as a "former government institution".)
More to the point...Newt shouldn't have been up on the stage with this guy because he was a crook and a damned evil liberal hack, he shouldn't have been up there because he was for small government (and Fannie Mae was the complete ANTITHESIS of that) and he shouldn't have praised Fannie Mae, which more than any other institution has damaged the economy immeasurably.
In my opinion, there is a lot to like about Newt and the way he changed the political scene when he entered it, but I have a hard time explaining his support for Fannie Mae, the epitome of the government food trough and wealth redistribution while enriching the pockets of those who run it and those who politically support it (Like Gingrich and President Bush). Gingrich wasn't in 1995 even and isn't in 2011 the same guy he was in 1994.
Maybe I was just being dense. I should probably have some coffee.
Yes, that's what Sodpoodle was referring to.
I'm sorry, but this article shows a woeful lack of knowledge about what Bush actually did during his first term to accommodate the banks' own desires to tap into the illegal alien market.
Fast-forward to 2006? You completely glossed over Bush's first term and that's the one where all the damage to the economy was done.
Why did Bush meet with El Presidente de Mexico, Vicente Fox on February 16, 2001, just 3 weeks after his inauguration?
Exactly what was the purpose of the US/Mexico Partnership for Prosperity Agreement?
New Alliance Task Force?
American Dream Down Payment Act?
Why did the Bush Justice Dept. and Treasury Dept. give their blessings to the change in banking regulation to allow banks to accept the Matricula Consular card as ID?
Why did the Bush Administration change the rules to allow banks that served the 'minority' market through international remittances to claim CRA credit?
Why did Bush champion amnesty for Mexican illegal aliens?
Why did the Bush administration claim that national security was a priority and form the TSA and DHS while supposedly fighting a "War on Terrorism", then leave the southern borders wide open by ordering border and interior immigration enforcement to the lowest levels in years?
Why didn't the Bush administration complete the southern border fence despite the signing the appropriations into law?
The answer is simple.
Here's the Cliffs Notes version. If you want to see more details, visit my FR home page.
On February 16, 2001, just 3 weeks after his inauguration, President George W. Bush met with Mexican President Vicente Fox to discuss the terms of the Partnership for Prosperity Agreement (with Mexico). (See: Partnership for Prosperity Agreement (with Mexico))
The P4P agreement was signed on September 6, 2001.
On June 17, 2002, Bush held a press conference. In this press conference he said that by 2010 he wanted to see 5.5 million new 'minority' home owners.
He called on Fannie Mae and Freddie Mac to increase commitments to the 'minority' market by $440 billion. (See: President Calls for Expanding Opporunities to Home Ownership)
Why would a President, supposedly concerned with Fannie and Freddie overspending call on them to increase their outlays to the tune of almost $500 billion dollars?
The answer is he wouldn't.
On October 26, 2001, Bush signed the USA PATRIOT Act of 2001 into law. Contained in section 326(b) was the provision that allowed US banks to accept the Mexican Matricula Consular card as valid ID for opening a bank account.
Congress sent a request for opinion to Bush's Treasury Dept. about 326(b). Bush's Treasury responded:
| “The proposed rules set forth the requirement that financial institutions would have to establish a customer identification and verification program applicable to all new accounts that are opened, regardless of whether the customer is a U.S. citizen or a foreign national. While the proposed rules prescribe minimum standards for such programs, they leave sufficient flexibility to permit financial institutions to tailor their program to fit their business operations. The customer identification program would have to contain reasonable procedures for identifying any person, including a business, that opens an account, setting forth the type of identifying information that the financial institution will require. At a minimum, for U.S. persons the proposed rules would require financial institutions to obtain the following information: name, address, taxpayer identification number, and, for individuals, date of birth. While a taxpayer identification number is not required for non-U.S. persons, a financial institution must describe what type of information it will require of a non-U.S. person in place of a taxpayer identification number. The regulations state that financial institutions may accept one or more of the following: a U.S. taxpayer identification number; a passport number and country of issuance; an alien identification card number, or the number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard.” |
This also contained a footnote (17):
| “Thus, the proposed regulations do not discourage bank acceptance of the ‘matricula consular’ identity card that is being issued by the Mexican government to immigrants.” (See: Treasury Department Issues USA PATRIOT Act Report to Congress) |
Note that no Mexican banks accept their own government's Matricula Consular card as valid ID for opening a bank account because the bearer's identity is all but untraceable. In contrast, thanks to Bush's Treasury Dept., almost all US banks accept it.
In response to the mandate contained in the P4P agreement, the New Alliance Task Force was formed in May 2003. (See: New Alliance Task Force)
The NATF is a broad-based coalition of 62 members, including the FDIC, Mexican Consulate, 34 banks, community-based organizations, federal bank regulatory agencies, government agencies, and representatives from the secondary market and private mortgage insurance (PMI) companies.
Their goal was to open the Mexican illegal alien market to US banks and visa-versa using low-cost remittances as the bait. As Bush's 2002 speeches show he was talking about hundreds of billions of U.S. tax dollars going to directly benefit millions of Mexican illegal aliens.
The NATF was organized into four working groups that were tasked with the following goals:
|
In Bush's June 17, 2002 speech, he also called for the creation of the American Dream Down Payment Fund. "And so here are some of the ways to address the issue. First, the single greatest barrier to first time homeownership is a high downpayment. It is really hard for many, many, low income families to make the high downpayment. And so that's why I propose and urge Congress to fully fund the American Dream Downpayment Fund. This will use money, taxpayers' money to help a qualified, low income buyer make a downpayment. And that's important."
And, the 108th Congress (2003-2005) responded with the American Dream Downpayment Act:
|
"Amends the Cranston-Gonzalez National Affordable Housing Act to: (1) authorize the Secretary of Housing and Urban Development to make grants to State and local participating jurisdictions for downpayment assistance and related home repair to low-income, first-time home buyers; and (2) limit family assistance to the greater of six percent of the purchase price or $10,000. Requires a participating jurisdiction to include intended grant uses in its fiscal year comprehensive housing affordability strategy under such Act." "Sets forth State and local jurisdiction allocation formulas. Permits fund reallocation." "Requires the Comptroller General to report respecting the impact of such grants on a State-by-State basis." "Terminates grant authority after December 31, 2007. Authorizes specified FY 2004 through 2007 appropriations." "Makes the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 inapplicable to such assistance." |
The act was authorized to appropriate up to $200 million per year of US taxpayer funds between FY2004 through FY2007 to go to Bush's 'minorities'.
The sponsor and co-sponsors of this $800 million giveaway:
Sponsor: Sen. Wayne Allard [R-CO]
Co-sponsors:
Sen. Samuel Brownback [R-KS]
Sen. Conrad Burns [R-MT]
Sen. Ben Campbell [R-CO]
Sen. Michael Crapo [R-ID]
Sen. Michael Enzi [R-WY]
Sen. Charles Hagel [R-NE]
Sen. Lisa Murkowski [R-AK]
Sen. Richard Santorum [R-PA]
Sen. Jefferson Sessions [R-AL]
The truth is that Bush was only concerned with helping out one constituency --Wall Street bankers.
Never forget that like his daddy before him, George W. Bush comes from a long line of Wall Street bankers and it is this constituency that he served from the time he came into office until the day he left.
I’ll concede at the very least that in 1995, Newt liked Fannie Mae. Fannie Mae was not SUPPOSED to be federally funded, which is part of why Newt liked Fannie Mae. In 1995, Fannie Mae had not yet been used as a tool for tying the banks to the federal government. In my article, you’ll note that the Clinton Administration used novel reasoning to make Fannie Mae a tool of tying the banks to federal policies, and that still required the passage of Gramm’s banking bill, the grand compromise I referred to.
Anyone who blames “Ambition, Greed and Corruption” on the failure of a system is someone you should run screaming from. That title alone suggests that Morgenson and Rosner don’t have a freaking clue about how the American system works. Because ambition, greed and corruption are constants in the human condition, which cannot be removed from the human soul by government, and cannot be countered successfully by laws.
What a society CAN do is create laws which redirect the God-given motives which greed and corruption are the perversions of into legal acts which are mutually beneficial for the tempted individual and the larger society. People don’t corrupt governments; governments corrupt people. If someone asserts that a system was ruined by greed, the question is what God-damned idiot — and I mean that literally — designed a system that would rely on the nonexistent altruism of the marketplace or the logically impossible spiritual cleansing of government?
(Please read “Democracy in America.”)
Morgenson is the business and financial editor of the NEW YORK TIMES. Not someone you want to be taking lessons in capitalism from. She has been busted on dozens of times for plagiarizing from blogs, and has been called by Calculated Risk, as “a noxious mixture of fact and hype, information and innuendo.” Business Insider titled an article, “Gretchen Morgenson Officially Blows Her Credibility On Derivatives With Ridiculous Confusion About Swaps.”
You’re attacking my criticism of Bush by piling on more criticism of Bush?
Why do you presume I have a “woeful knowledge” because my criticisms of Bush are only along one line of criticism? If I wanted to write an article on the bad decisions of the Bush administration, I could go on for books!
No, I was acknowledging you were right, “natuarlized citizen,” would have been better than “immigrant.”
But even more so, in this post, I just want to be sure I understand you, because I think you may have inadvertently got this statement backwards, and I bring it up because it is a key one (heck, the longest part of the title of the book)
You said in your post:
"Anyone who blames Ambition, Greed and Corruption” on the failure of a system..." is incorrect, in my opinion. Your statement should say:
"Anyone who blames the failure of a system on Ambition, Greed and Corruption..." I think it is wrong because your first statement says that the faults of Ambition, Greed and Corruption HAPPENED because the failure of a system occurred. And that is CLEARLY not the case presented by the authors.
In the second case (My rewording, to correctly reflect the authors of the book) is undeniably and unequivocally true. It is CLEAR that Ambitition, Greed and Corruption can and have destroyed many, MANY entities. More than you and I can count, and as far back as these characteristics have been attributable to men.
Fannie Mae was buying up mortgages before 1995, and this was indeed one of the prime functions of Fannie Mae, to allow mortgages be obtained by people who couldn't get them through "traditional" means (originally intended for farmers and other people whose lack of steady income made it difficult to get them loans.) Fannie Mae would BUY these loans with the full support of the US government behind them.
Then,beginning in the early to mid-nineties (and Fannie Mae WAS delivering sub-prime mortgages to "non-traditional" (read "minority or other who could not repay) at that time as part of the "Trillion Dollar Targeted Mortgage Financing" trumpeted by Fannie Mae in 1994
The REAL explosive part here was that FANNIE MAE was a FULLY BACKED GOVERNMENT ENTITY that was seen by ALL investment houses as COMPLETELY SAFE. They were FULLY BACKED by the FULL WEIGHT of the US Treasury. You lend money to a dead cat in the middle of the road, sell loan to Fannie Mae, who then, with the backing and support of places like Standard and Poors (who were in bed with them) Fannie Mae would bundle those dead cat loans into un-openable securities (to make it impossible for investors to look at the guts of the bundle) and sell them as investments to people who took them at their word, because after all, who is safer than someone backed 100% by the power of the US Treasury?
This is not the only book I have read on this, I have read five or six others, and they dovetail appropriately.
If you haven't read the book, you should refrain from condemning it so quickly. I would suggest you read it. It is not in any way a hit piece on Republicans, but neither does it exclude them because they are Republicans, which is as it should be. It is clear the issue is a liberal issue in both its genesis and largely execution.
You are correct: I wrote, “”Anyone who blames Ambition, Greed and Corruption” on the failure of a system...”” when what I meant was “Anyone who blames Ambition, Greed and Corruption” FOR the failure of a system...”
Fannie Mae absolutely for decades bought up mortgages. THAT’S not what created the housing collapse, though. In fact, it probably minimized the Savings and Loans crisis of 1991: the S&Ls had fewer bad loans, and a larger entity, more capable of dealing with the blows took those blows.
Fannie Mae functioned to minimize the effect of any of a number of loans taking down a smaller financial institution. We can debate whether that is a proper role for a government agency, or a government-supported private agency. But what killed it was the sheer volume of defaulting loans, caused by regulations which required banks to make bad loans.
I understand. I think we agree on basic points, that the loans Fannie Mae had been buying for decades didn’t bring things down.
It was what happened, starting with the seed planted by liberals 1n 1977 by the Community Reinvestment Act.
Thanks for the civil discussion, dangus.
Austrians speak German - that was a joke.
Gingrich was speaking Spanish IN MEXICO - respectful to speak in the native tongue.
What's the first thing a low income person does when they get a better job? They move to a better place. What's the best way for a low income person to find a better job, or any job at all? Move to someplace with a job. Getting stuck in a house mortgage in a place with no good jobs is a really stupid idea. Even the auto workers found out that good jobs can be quite temporary in a one-industry town, and you are stuck if you get underwater in your mortgage.
This was a crime against low income folks, locking them yet further into life-long financial troubles.
Advocating an official language does not mean that people.cannot, or even should not, learn another language. Many of our founding fathers were multilingual.
Yes, that all happened...but what started that ball rolling was this bill.
In 1995, Fannie was essentially private, and was working the way it had been working for decades. Before the aforementioned legislation, Fannie and Freddie actually worked rather well, and without federal dollars.
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