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.
The problem was, though, they DID have the full weight of the government behind them, which gave them a SIGNIFICANT advantage, not to be found in any truly private company.
I would argue that it was a complete facade that they were private, with that guarantee.
When they began their push to get everyone a loan even if the criteria was to be able to “fog a mirror”, that was when things went ballistic. Because Fannie Mae would buy every loan in sight, no matter how flawed, and take the risk away from lenders where it should have been, it was Katie bar the door.
“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.”
There was no legal requirement for the American taxpayer to backstop Fannie and Freddie. It was an “implied” guarantee, meaning we were not required to honor it and the two GSEs could have been allowed to fail. It was Dubya and his cronies who decided we had to foot the bill to save the GSEs.
” You lend money to a dead cat in the middle of the road, sell loan to Fannie Mae,”
Fannie and Freddie dealt bought only low risk conforming paper, even when it was subprime. The non-conforming paper, the NINJA loans, No Docs, OptionARMs, the high-risk high-yield paper was issued and bundled by private sector rivals to Fannie and Freddie.
The F&F bubble loans have failed at around 6% which is close to its historic level. The non-conforming private market paper has failed at triple that rate.
“It was what happened, starting with the seed planted by liberals 1n 1977 by the Community Reinvestment Act.”
The CRA regulated only commercial banks and S&Ls, deposit takers.
It had no power over the shadow banking world of mortgage brokers and pure mortgage lenders, investment banks and hedge funds. The shadow bankers generated and bundled an enormous quantity of high-risk high-yield mortgage paper during the bubble. When you add in the derivatives that they built atop this mortgage paper you are talking trillions of dollars.
The shadow bankers were lending to risky clients entirely because it made them a lot of money. The high risk loans meant high yields. The high-yield mortgage paper was bundled, tranched, and used as grist for the creation of derivatives. Due to the Commodities Futures Modernization Act of 2000 the derivatives market was entirely unregulated.
The CRA played a role but it only affected a small part of the subprime paper created during the bubble. And the CRA paper would have been conforming paper. If every CRA loan ever made had defaulted you couldn’t have brought down the credit markets.
By comparison the non-conforming shadow banking loans and their associated derivatives amounted to trillions of dollars. And when they began collapsing due to their disregard for traditional risk the numbers were big enough to affect all of the world’s credit markets. We shouldn’t kid ourselves about the causes of the bubble and its collapse, it wasn’t just the relatively minor contributions of the CRA.
The original post was Newt, assuring a crowd in Mexico that he'd push for immigration reform...on their turf.
A U.S. elected official on Mexican turf, appeasing the Mexicans....forget the fact he wuz speaking fluent Spanish.
It could have been in English and translated for all I care, the point was Newt's proclivity toward open borders, free trade, integrated societies.
I maintain that even an “implied” guarantee is what made Fannie Mae completely different from every other institution out there.
I think you know, I know, Fannie Mae knew and every investment house knew that even an “implied” guarantee changes the game completely and totally.
Even if someone were to come out and say it was only implied, there would have been cries of “Right!”. “That’s true” and “I know, I know” followed by lots of grins and hugs.
The subprime meltdown is not “Dubya’s” and that of his cronies. The fault is a collective one, running from liberals in and out of government who used the full force of the US government to force lenders to lend money to people they would never have lent to in a million years if they had to assume the risk.
A lot of people like to blame the banks in this mess.
A lot of people like to blame the banks in this fiasco.
Banks are not blameless by any means in this, neither are Republicans by a long shot, but there is no doubt that the primary root causes of this entire mess are:
1.) Liberals in all branches of government and society
2.) Fannie Mae
3.) James Johnson
4.) Derivatives (securitized mortgages sold as investments, boatloads of subprime loans, packed into large bundles and sold as investments)
Liberals implemented this mess beginning with Fannie Mae back in the 30’s. Even though it chugged along under the radar for decades, it was used primarily in a limited type of market, where they provided a mechanism (right or wrong) to allow certain types of more marginal lenders to get loans, which Fannie Mae would purchase from the lender and assume the risk. But it wasn’t a monstrosity, just another government program, most people had only a vague understanding of what it was.
Beginning with the Community Reinvestment act in 1977, liberals in and out of government began pushing legislation under the rubrik of “fairness” to make it easier for unqualified people to get mortgages.
Every step along the way, anyone who threw even the slightest speedbump or raised the most innocuous objection was vilified, branded as a racist and characterized as being against working people.
When James Johnson took over Fannie Mae, this type of activity became codified as policy.
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.
If any legislator, bank or agency even breathed a trace of opposition or conveyed any interest in rolling back or limiting what was going on at Fannie Mae, they were attacked immediately, unhesitatingly and with the full force of the liberal machine (which is what it was) often within an hour of making a statement or phone call.
In tandem with this iron fist, they would sweeten the pot for legislators to oppose, waffle or simply not vote on various proposals (at all levels of government) by making campaign donations, a lot of them.
There were very few politicians who could withstand both ends, which shows how corrupt they have become, or how effective a smear campaign can be. It is another manifestation of the liberal approach of “You don’t want this because you are against the working man/children/insert race here...”
Even Speaker of the House Gingrich, who was supposed to be for small government and against entities like Fannie Mae, even got up on the podium with James Johnson in 1995 to sing the praises of Fannie Mae and their fulfillment of their manifest to provide mortgage access for minorities and such.
Nobody wants to be branded a racist, and even some people viewed as strong and principled didn’t want to fight that battle.
James Johnson turned Fannie Mae into a fully functioning cash machine for Democrats in full view of everyone. A part of the book I read this morning described how, when a piece of proposed legislation came out that would tie the hands of Fannie Mae in even a small instance, it was countered by a massive email and letter campaign. It turned out that in one focal area, the Fannie Mae office had purchased a list of constituents in an area, made up letters with their names as constituents, and emailed and mailed them to the legislators. When it was discovered (the first nine constiuents who were called about the letters denied ever writing them, knowing anything about them or even agreeing with what they said) Johnson was called in front of a committee where the legislator for those constituents demanded a signed apology be mailed directly to each of his constituents in his district. Johnson not only did not agree to do this, but even caught red handed, came out aggressively and said he would do no such thing, but would send letters to those constituents asking them if they wanted a representative who was against providing the dream of home ownership for minorities (or some wording like that)
Just amazing arrogance, but that is how he ran it, because he was making scads of money there.
He lobbied congress relentlessly to change rules that allowed even more dangerous and shady practices, at each point along the way providing assurances (and getting the rating houses in bed with him to back him up) that these changes would have no deleterious effect.
(Note: as to the point of whether Fannie Mae was a private entity or not, this is a good indictor of the reality, in my opinion) A good example was a paper in 2002 (Johnson was no longer there, I think it was Raines by then) published by Joseph Stiglitz and Peter Orszag (who would, amazingly after publishing this piece of crap in 2002 become the HEAD of the OMB under Obama!) This paper dealt with risk management at Fannie Mae and Freddie Mac (who had much lower capital cushions than did other financial institutions) and concluded...get this...that the risk of some catastrophic incident or sequence of events requiring a bail-out by the government was between 500,000:1 and 3,000,000:1!!!!!!!!!! Geez, you think they could have made the range any broader??????
Anyway, they concluded that the cost of providing an EXPLICIT government guarantee on $1 Trillion in debt (that was Fannie Mae’s target...a trillion dollars for people who couldn’t afford loans!) was only $2 Million.
Amazing. This dimwit who put out this paper to buttress an effort by liberal dipsticks to throw more gasoline on the fire in 2002 was actually appointed to the HEAD of the Office of Management and Budget under Obama!
And the securitization and bundling of loans allowed this crisis to not only metastisize throughout the entire US economy, but the world economy as well.
Bankers and Wall Street are complicit because, due to changes put in place by liberals, they no longer had to perform that nasty, time consuming and contentious underwriting task to find out who was safe to lend to. Now, they used automated tools that would let a dead cat buy a $250K house, and simply sold those loans to Fannie Mae or other entities who could now tie them all up in nice bundles to sell to investors.
Fannie Mae and the liberals made damn sure the rules were written in such a way that nobody could look inside those bundles before they purchased them to see the nature of the loans, which were all bad.
Wall Street and Bankers, doing what comes naturally to people who encounter a spigot with money flowing out of it, took advantage of it and put their mouths under it.
Gingrich, Bush and other Republicans, went along with it so as not to be villified, and went out of their way to assist. Why go halfway, right? They are complicit as well for not standing up, even though I do give some credit to the Bush administration for trying back in 2003-2004 to bring this issue to light. The OFHEO official in front of Barney Frank and the Banking Committee was essentially raped in public, and that was that.
It was like a perpetual motion money making machine...everyone wins and gets rich.
Not.
Bush was not a good man making bad decisions.
One cannot talk about the effect of illegal aliens on the US housing market and not mention Bush's involvement in it and the results of his actions on the economy.
The government didn't force the banks into the illegal alien market. It was the other way around. US banking laws and regulations were slackened because that's what the banks wanted.
The only miscalculation was how quickly the wheels were going to come off the wagon. That wasn't supposed to happen until the Oh!Brother administration.
As far as Newt riding in to save us from the effects of big business and big government, he showed all I needed to know about him when he decided to prosecute Clinton for MonicaGate instead of ChinaGate.
The government did not force the banks into the illegal alien market.
Banks wanted to tap into that market, so put politicians into place (Bush, for example) who would do their bidding.
Well that is a very long post. Some of your points are well made and some are quite mistaken.
Fannie and Freddy enjoyed an “implied” guarantee because of their origin as government agencies. But they had long since been spun off to the private sector and were listed companies on the NYSE. They were owned by stockholders although they did continue to have access to a line of credit from the Treasury.
There was no obligation of the US taxpayer to backstop those stockholders. The decision to make American taxpayers save F&F was made by Dubya and his cronies, Henry Paulson in particular. The WSJ described this back in September 2008:
http://online.wsj.com/article/SB122117569863425755.html
“A lot of people like to blame the banks in this fiasco.
Banks are not blameless by any means in this, neither are Republicans by a long shot, but there is no doubt that the primary root causes of this entire mess are:”
I have a ‘rule’ when discussing the the mortgage crisis. And the rule is this:
Anyone who mentions “banks” without distinguishing between commercial banks and investment banks lacks the background necessary to understand the issue at hand.
Most people do not know that there is a fundamental difference between investment banks and commercial banks. They have no reason to know unless their field is finance. They hear the word “bank” and it all gets lumped together. I can tell by your post that you aren’t aware that there is a difference, which is not to slight your effort to make sense of it all. But without recognizing the difference between investment banks and commercial banks you are going to come to erroneous conclusions.
Commercial banks are what we normally think of by the word ‘banks’. They have names like Bank of America and Wells Fargo. They can fairly be described as having been compelled by the CRA to make loans that they otherwise wouldn’t have. Being depository institutions they were subjected to a lot of regulation.
This is absolutely not true of investment banks. They have names like Goldman Sachs, Merrill Lynch, Lehman Brothers, they are creatures of the investment world and are not subjected to the regulations imposed on commercial banking. Investment banks made the loans that they did entirely of their own volition. They developed non-conforming subprime mortgages and the derivatives built from them entirely for investment reasons. The riskiest and worst performing mortgage paper was the product of financial engineering in the investment banking and hedge fund world.
“Liberals implemented this mess beginning with Fannie Mae back in the 30’s. Even though it chugged along under the radar for decades, it was used primarily in a limited type of market, where they provided a mechanism (right or wrong) to allow certain types of more marginal lenders to get loans, which Fannie Mae would purchase from the lender and assume the risk. “
Before 1938 borrowers could not get a 30 year mortgage. What you got is a 5 year mortgage, and you would have to roll the balance that you owed into a new mortgage when that one matured.
This was practical until the banking collapse of the Depression. Home buyers who had made all of their payments on time and who still had jobs found themselves unable to roll over their mortgage. They lost their homes and farms through no fault of their own.
The creation of Fannie Mae provided a secondary market for mortgage lenders to sell their paper, allowing them to exchange mortgages for fresh money that they could then use for new mortgages. Mortgages that qualified for purchase by Fannie Mae had to meet high standards, they are “conforming loans”, and they were regarded as an excellent investment by insurance companies, retirement funds, and anyone with large capital who needed a consistent and safe investment.
“Beginning with the Community Reinvestment act in 1977, liberals in and out of government began pushing legislation under the rubrik of “fairness” to make it easier for unqualified people to get mortgages.”
The CRA only regulates deposit takers, meaning commercial banks and S&Ls. They have to have a “community” that they take deposits from, and that “community” is where some of their loans are forced to go. The Act doesn’t mandate mortgages, the qualifying loans could be business or personal. There is no requirement that the loans be subprime. The CRA’s role is greatly exaggerated.
“Bankers and Wall Street are complicit because, due to changes put in place by liberals, they no longer had to perform that nasty, time consuming and contentious underwriting task to find out who was safe to lend to. Now, they used automated tools that would let a dead cat buy a $250K house, and simply sold those loans to Fannie Mae or other entities who could now tie them all up in nice bundles to sell to investors.”
Well first of all Wall Street are “bankers”, investment bankers. And far from having liberals force changes on them, the investment banks lobbied Congress hard to get the changes they wanted in the form of Gramm-Leach-Bliley and the CFMA2000.
Wall Street farmed out mortgage creation to an army of independent mortgage brokers. The brokers got a warehouse line of credit and Wall Street bought the paper they created. The higher risk and higher yield the loans the better. Wall Street invented the NINJA, No Doc, OptionARM loans. Anyone could get one of these loans, unlike the stodgy conforming loan required by Fannie Mae.
These loans were bundled and tranched by Wall Street into CDOs, CMOs, CDOs Squared, and were sold all over the world. It was a rival and parallel market to Fannie and Freddie and this private securitization market was eating Fannie’s lunch during the bubble.
Fannie Mae not only didn’t have anything to do with this rival subprime market, they were getting creamed by it.
This post is getting too long so I’ll wrap it up. What was wrong with Fannie and Freddie was their leverage, their loans outstanding versus their capital on hand. It has nothing to do with the creation and destruction of the subprime market, of which they were followers and peripheral players. Anyone in the lending business got caught when the mortgage market collapsed, and being the biggest players the two GSEs stand out. But they didn’t invent it and were late to the party. The source of the problem lies in some poorly thought out financial engineering in the investment banking world, where risk was progressively ignored because the returns on capital were so enormous.
I understand completely your point about investment versus commercial banks, and it was my error not to be precise, I assumed it was a given I was talking about commercial banks, who were the ones being impacted by the CRA and the follow-up legislation that came to a peak in 1994-1996 and set us squarely on the road where we are now.
Thank you for making your points so politely, by the way. I am in no way any kind of financial expert. But in my opinion, this is a classic case of government getting involved in things they shouldn’t have, and upsetting the apple cart in the process.
No, actually the government DID force banks to lend to illegal aliens. Illegal aliens are a terrible risk to lend to, but the Clinton administration wanted to inflate the number of Democrats.
What the hell Bush was thinking, God only knows.
No, actually the banks wanted to tap into the $900 billion illegal market and put the people in place in the government to help them achieve these goals.
See: Linking International Remittance Flows to Financial Services: Tapping the Latino Immigrant Market
Banks didn't worry about the risks associated with illegals because they were making money hand-over-fist and were able to pass the risk off onto Fannie/Freddie, i.e.: the US taxpayers.
Not that hard to understand.
Bush was not a good man making bad decisions.
He was working for his true constituents, the Wall Street bankers.
If I were to conclude that the optimal level of regulation here is something other than zero, would I be told to go back to DU?
The whole point is that NO-ONE IN THEIR RIGHT MIND LENDS BIG MONEY TO PEOPLE WITHOUT IDENTITIES!!!!!
And remittance has NOTHING to do with mortgages.
Obama’s still learning how to speak Austrian!
;-)
Au contraire, mon ami.
The whole point is that Bush was the Wall Street bankers' man in the White House and he was doing their bidding.
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.
I didn’t say they didn’t have IDENTIFICATION CARDS. I said they didn’t have IDENTITIES!
Matricular consular card or not, an illegal alien can disappear as soon as his bank-financed investment goes bad. If what you’re saying is true, than why did the banks insist on the creation of the CDO to mitigate risk?
Remittances were the bait to draw the illegals into the US banking and mortgage system.
It's all there in black and white on my FR home page. You only need to read the truth for yourself.
For example,
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)
Here's how Bush described the minorities he wanted to 'help':
| "Three-quarters of white America owns their homes. Less than 50 percent of African Americans are part of the homeownership in America. And less than 50 percent of the Hispanics who live here in this country own their home. And that has got to change for the good of the country. It just does." |
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 June 2004, the FDIC released a report detailing the goals and the progress to date, of the Partnership for Prosperity Agreement (with Mexico)
|
"During the past several years, bilateral agreements and U.S. banking laws and regulations have facilitated remittance transfers for immigrants and helped bring the unbanked into the formal banking system. For example, in 2001 the United States and Mexico launched the U.S.-Mexico Partnership for Prosperity which fosters economic and labor opportunities in less developed parts of Mexico and expands access to capital in Mexico. The Partnership also addresses the high cost of sending money from the United States to Mexico and encourages banking institutions to market accounts that offer remittance features to Mexican workers. In addition, the G-8 countries are promoting programs to alleviate poverty in developing countries, including Latin America.17 These programs facilitate remittances through the formal banking system and, at the same time, attempt to reduce the cost of these transfers." "In June 2004, in an effort to encourage more banks to enter the remittance market and improve access to the U.S. banking system among recent Latin American immigrants, bank regulatory agencies clarified that financial institutions offering low cost international remittance services would receive credit under the Community Reinvestment Act (CRA).18 Regulated financial institutions are required under the CRA to serve the convenience and credit needs of their entire communities, including low- and moderate-income areas. Most remittance senders to Latin America are low- to moderate-income immigrant wage earners who operate outside the formal banking system." "In addition, a growing number of U.S. banks accept alternative forms of identification to help taxpaying immigrants open bank accounts and secure other banking services; these include the Individual Taxpayer Identification Number (ITIN) and foreign government issued identification, such as the Mexican Matricula Consular card. The USA PATRIOT Act allows financial institutions to accept both forms of identification, enabling insured financial institutions to serve unbanked immigrants who live and work in the United States. The ITIN, created by the U.S. Internal Revenue Service (IRS) for foreign-born individuals who are required to file federal tax returns, is a nine-digit number similar to the social security number (SSN) and is issued to individuals who are not eligible for the SSN. The Matricula Consular card is an identification card issued by the Mexican consulate to individuals of Mexican nationality who live in the United States. According to the Mexican government, an estimated 4 million Matricula cards have been issued in the United States." "As an example of the effectiveness of using this form of identification, Wells Fargo opened more than 400,000 new accounts for Mexican immigrants, using the Matricula Consular card between November 2001 and May 2004. In recent months, Wells Fargo has averaged 22,000 new accounts per month, many of which feature the bank's remittance product.20 For example, the bank offers InterCuenta Express, an account-to-account wire transfer service that charges $8 to transfer up to $3,000 per day directly into a beneficiary's bank account in Mexico. Transfers can be initiated at the bank's branch or ATM in the United States, and the receiving party can access monies via the bank's sizeable remittance distribution network of more than 4,000 banking offices and 10,700 ATMs in Mexico. According to the Mexican government, 178 banks in the United States accept the Matricula Consular card to open bank accounts; 86 of these institutions are in the Midwest." |
Keep in mind this is just Wells Fargo and that sub-prime lending would not reach its peak until 2005-2007. This does not include all the other major banks, such as CitiGroup, Bank of America, Chase, Washington Mutual, or the hundreds of other smaller regional banks and lenders who were also taking part in this feeding frenzy.
The IRS says they've issued over 11 million ITINs since its inception. Mexico says they've issued over 5 million Matricula Consular cards.
But, none of this would be workable if ICE was deporting the banks' new customers. Once again, Bush swung into action, hobbling border and interior enforcement.
Worksite arrests of illegal aliens fell some 97 percent, from 2,859 in 1999 to 159 in 2004. Investigations targeting employers of illegal immigrants fell more than 70 percent, from 7,637 in 1997 to 2,194 in 2003. Arrests on job sites fell—precipitously, from 17,554 in 1997 to 445 in 2003. Fines levied for immigration-law violations fell from 778 in 1997 to 124 in 2003. Notices of intent to fine employers fell from 865 in 1997 to just 3 in 2004.
When the USA PATRIOT Act came up for renewal in 2004, some republicans wanted to remove the provision that allowed banks to accept Matricula Consular ID as the consular ID is unreliable.
Barney Frank (D-MA) and some of his Republican and Democrat friends swung into action to protect it:
|
Anti-matrícula proposal defeated; financial institutions can continue accepting consular ID's: In a vote of 222 to 177, the U.S. House of Representatives passed a bipartisan amendment, H.Amdt. 754, introduced by Reps. Michael Oxley (R-OH), Barney Frank (D-MA), Jim Kolbe (R-AZ), Ed Pastor (D-AZ), and Rubén Hinojosa (D-TX) to strike the so-called Culberson amendment that would have prohibited the Treasury Dept. from implementing regulations that allow financial institutions to accept matrícula consular identification cards as part of a valid customer identification program under the USA PATRIOT Act... In countering Culberson’s allegations that the FBI and the Justice Dept. were opposed to the bipartisan amendment to preserve the use of matrícula consular cards, Bachus presented a letter for the record written by Deputy Atty. Gen. James B. Comey and addressed to Speaker of the House Dennis Hastert. The letter, dated Sept. 14, 2004, stated: The Department of Justice fully supports the Administration’s current policy under the USA PATRIOT Act that requires banks and other financial institutions to establish reasonable procedures for the identification and verification of new account holders, which is set forth in regulations of the Department of the Treasury. Therefore the [Justice] Department supports the Oxley-Frank-Kolbe amendment to H.R. 5025 that preserves these regulations. . . . The Department of Justice, including the FBI, continue[s] to work closely with the Treasury Department on this and other issues related to halting all financing of terrorists. In the final roll call vote, 49 Republicans supported the Oxley-Frank-Kolbe-Pastor-Hinojosa amendment and 16 Democrats opposed it. This legislative victory was a joint effort by financial institutions, immigrants’ rights groups, consumer groups, and many others who worked in coalition to defeat, once again, efforts to limit the acceptance of consular ID cards by banks, credit unions, thrifts, and other financial entities. |
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]
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
