Government Created the Housing and Financial Crises --- and Might Be Doing it Again

It's not in the printed text, but the most revealing words in President Obama's seventh State of the Union address came near the end. After the scripted line, "I have no more campaigns to run," elicited Republican applause, Obama ad libbed, "I know, because I won both of them."

Thus the last quarter of Obama's presidency resembles the first quarter, when he shut off discussion with House Republicans by saying, "I won." But his second winning percentage was lower than his first -- the only American president of which that can be said -- and the House now has a record and the Senate a near-record Republican majority.

The first half of Obama's speech was a deft attempt to, as he said, "turn the page." The year 2014, he said, was "a breakthrough year for America," the economy was finally growing at a respectable rate and U.S. troop deployments in war zones are nearly down to zero.

He was playing on the uptick -- a "small" but real uptick, as FiveThirtyEight put it -- in his polling numbers and in positive assessments of the economy. To give it voice, he quoted, twice, a woman (a former Democratic staffer, it seems) in the gallery.

In contrast to previous Obama speeches, he took some care to cite accurate statistics. No mention of the discredited claim that one in five college women will be raped or the misleading claim that women's earnings are only 77 percent of men's.

He cheered America for being number one in oil and gas production -- something his administration has tried to prevent. He boasted that wages are rising -- though not by much. His brief allusions to Obamacare sparked applause from Democrats -- but the law remains highly unpopular.

Obama's policy proposals were small stuff. More tax cuts for child care -- but discrimination against stay-at-home moms and taxes on 529 college savings accounts. Paid sick leave. Equal pay for women -- on the books already for 52 years. A minimum wage increase. He's all for infrastructure but, in deference to rich donors, will veto the Keystone XL pipeline.

Free community college -- even though it's already free to those in lower-income households, and despite the evidence from student loan programs that colleges and universities sop up all the federal dollars with little gain to students.

Democrats, after applauding loudly in the first half of the speech, stayed mostly mum during much of the rest. There was silence when he called for trade promotion authority and free trade agreements. There was little noise when he called for tax reform -- not surprisingly, given that he has ignored plans Republicans have put forward.

There was silence as well when he turned to foreign policy. Obama received better ratings on foreign than domestic policy in his first term; it's the other way around now.

America, he said, is "stopping [the Islamic State's] advance," is "opposing Russian aggression," is ending a Cuba policy "long past its expiration date," and "our diplomacy is at work with respect to Iran." It is leading "not with bluster, but with persistent, steady resolve." But not, as most in the chamber and watching on TV know, with much in the way of results.

Obama seems finally to have realized that his divisive rhetoric has meant he hasn't delivered on the red-white-and-blue America vision of his 2004 Democratic National Convention speech. He devoted the last 24 paragraphs of his prepared text to addressing that criticism.

But not very convincingly. A president calling for big tax increases this Congress will never pass is not effectively seeking bipartisan accords. A president still blaming his predecessor -- "bluster" -- for foreign problems is not seeking unified support. A president who says "we stand united" with the marchers in Paris but didn't go there himself isn't forging united action against the jihadists whose cause he refuses to name.

It looks like Obama is trying to set a left-wing agenda for his increasingly leftish party and to box in Hillary Clinton. But he hasn't come up with policy proposals that can withstand serious scrutiny. Just with sloganeering he can blame Republicans for opposing.

The bigger problem for Obama and the Democrats is that the perceived failures of the stimulus package and Obamacare have undermined the case for big government as much as the perceived success of the Reagan economic policies strengthened the case for cutting it back. "Because I won" is a look back to the past, not a formula for the future.

FANNIE-MAE--THE DEMOCRATS' CRIMINAL ENTERPRISE / By Michelle Malkin

Fannie/Freddie are centerpieces of the criminal enterprise called the Democrat Party-—where Dem cronies and collaborators loot the organization, get cushy jobs, bonuses, and the like.

Fannie Mae’s political machine dispensed campaign contributions, gave jobs to friends and relatives of legislators, hired armies of lobbyists (even paying lobbyists not to lobby against it), paid academics who wrote papers validating the home ownership mania, and spread “charitable” contributions to housing advocates across the congressional map.

Fannie Mae serves as an industrial-sized patronage factory — sharing profits with political allies, spreading taxpayer funds to voting blocs——like ethnic groups-——and doling out jobsto left-wing academics, Washington has-beens and back-scratching buddies.

Obama insider Fannie Mae exec Jim Johnson got sweetheart loans from shady subprime Countrywide. Pols raked in six-figure salaries as F/F engaged in Enron-style accounting, plunged into debt and helped usher in the subprime housing meltdown through cockamamie lending practices.

Bill Clinton appointed Franklin Raines, Daley and Rahm Emanuel just as the quasi-governmental F/M engaged in rampant book-cooking so that F/M insider could help themselves to massive bonuses.

The Chi/Tribune exposed how political whore Rahm Emanuel’s “profitable stint” was low-show w/ no work involved. Emanuel was not even assigned to committees, according to company proxy statements. Immediately upon joining the board, Emanuel and other insiders qualified for $380,000 in stock and options plus a $20,000 annual fee, public records indicate. W/ Wall Street Rahm Emanuel at F/M, accounting tricks were used to mislead shareholders about outsize profits F/M reaped from risky investments.

The goal was to cook the books to keep fraudulent earnings on the books, to make Freddie Mac look profitable on paper-——AND to fraudulently obtain humongous annual bonuses for political insiders.

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GENESIS OF THE SUB-PRIME BILKING OF TAXPAYERS---
Fannie Mae CEO Franklin Raines' Letter to Shareholders--excerpted from 2003 Fannie Mae Annual Report

Excerpt ...Ten years ago the typical conforming mortgage required a down payment of 10-20%, and low-down payment mortgages were considered too risky. But then we helped to standardize the 3-5% down payment loan, brought it to global capital markets, and made it available to lenders and communities nationwide. Now low-down payment loans are commonplace. And we just adopted a new variance in our underwriting standards that will make the $500 down payment loan widely available as well...

In 1994, we pledged to provide $1 trillion in capital to ten million underserved families by the end of 2000. Thanks to our housing and industry partners, we met that goal early.

Then in 2000, we launched our American Dream Commitment, a pledge to provide $2 trillion in capital to 18 million underserved families by the year 2010, including $400 billion targeted specifically for minority families (later raised to $700 billion in response to President Bush’s Minority Homeownership Initiative). After four of the strongest years in housing and mortgage finance history, we’ve already surpassed the top-line goals of this commitment. But our work is far from complete.

So in January 2004, we announced our Expanded American Dream Commitment and pledged significant new resources to tackle America’s toughest housing challenges. Our new commitment has three main goals.

First, we will expand access to homeownership for six million first-time home buyers in the next ten years, including 1.8 million minority first-time home buyers.We also will help raise the national minority homeownership rate from 49 percent to 55 percent, with the ultimate goal of closing it entirely.

Second, we will help new and long-term homeowners stay in their homes through a series of initiatives, and commit $15 billion to preserve affordable rental housing and $1.5 billion to support the revitalization of public housing communities.

Third, we will increase the supply of affordable housing and support community development activities in at least 1,000 neighborhoods across the country through our American Communities Fund, and through targeted investments like Low-Income Housing Tax Credits that help finance affordable rental housing.

It is because of initiatives like our Trillion Dollar Commitment and our American Dream Commitment that we have exceeded our HUD affordable housing goals for ten consecutive years. (End Raines excerpt.) (NOTE Raines is a Clinton appointee)

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FRANKLIN RAINES----THE BIG F/M FISH THAT GOT AWAY WITH A BUNDLE

The Office of Federal Housing Enterprise Oversight’s report says that F/M CEO Franklin Raines---a Clinton appointee---and other Fannie Mae bigwigs, deliberately and intentionally manipulated financial reports to artificially hit earnings targets in order to trigger multi-million dollar bonuses for senior F/M executives.

Ex-Fannie CEO Franklin Raines should be behind bars for life. He is a crook of the first order. This thief Raines cooked the FM books precipitating losses of $9B (that we know of) for the single purpose of creating bonuses for himself and other F/M insiders. The SEC said Raines broke accounting rules by playing with risky derivatives.

RAINES COOKS THE F/M BOOKS---WALKS AWAY A MULTI-MILLIONAIRE After Raines was fired and exposed as a fraudster for cooking the govt books, Raines walked away w/ $90 million dollars, a $26 million parachute, PLUS..... Raines gets a MONTHLY pension of $116,300 for life. Raines had already collected $4.87 million in "special performance" shares. Raines owns options giving him $5.8 million in net profit after redemptions, plus another $8.7 million in deferred compensation for his six years at the F/M helm. There's more.

Raines keeps $5 million of paid-up life insurance. He and his spouse get free medical and dental benefits for life, worth over $1 million. NOTE: Raines earned $20 million in salary, bonuses and stock awards (that we know of) in one year.

To keep Raines happy within philanthropic circles, Fannie Mae will match Raines' charitable contributions by $10,000 a year.

After he was fired, Raines told the F/M board that he's entitled to get paychecks until June 22 giving him another $600,000, which triggers a $2,000 monthly raise in his pension.

SUB-PRIME MORTGAGE SCAMS--MASSIVE MORTGAGE FRAUD ON CAPITOL HILL:

The Congressional Hispanic Institute, Inc, is an entity organized by then-Cong Joe Baca (D-Cali) in his capacity as then-head of the Congressional Hispanic Caucus.

Then-Cong Baca created "HOGAR" (Spanish for home) in 2003 to work with the mortgage industry, F/M, lenders, banks and latino community groups to increase mortgage lending to what savvy observers consider to be unqualified Latinos.

"HOGAR" colluded w/ then-Cong Baca in what was to become a massive bilking of taxpayers. Then-Cong Baca calculatedly hyped the fact that the national Latino homeownership rate was 47%, compared with 68% for the overall population.

HOGAR was coached to call the figure "alarming," and to say "a concerted effort was required to ensure that by the end of the decade Latinos will share equally in the American Dream of home ownership."

HOGAR and Cong Baca conned the public, failing to note that most of the "dreamers" were illegals, citizens of Third World countries who had violated US borders.

Predictably, HOGAR colluded w/ co-conspirators which included:

(a) shaky mortgage companies that ran into big trouble;

(b) Fannie Mae and Freddie Mac, both now under federal control after billions in taxpayer bailouts;

(d) Washington Mutual Inc., taken over by the US government and sold to J.P. Morgan Chase & Co.; and,

(e) New Century Financial Corp. and Ameriquest Mortgage Corp, both now defunct, killed by defaulted subprime Latino mortgages.

HOGAR's ties to the subprime mortgage industry were substantial. Bribery and self-dealing were rampant:

<><> Companies that donated $150,000 to Cong Baca got the right to have their own research fellow who would conduct fraudulent studies, which were cunningly used by industry lobbyists to pump lending.

<><> Bribery and extortion in the form of $100,000 annual donations to Cong Baca, for which HOGAR provided phony news releases from Cong Baca's Hispanic Caucus promoting a lender's commercial products to the Latino market,

<><> The most shocking example of bribery well-substantitated by Hogar's literature..... HOGAR announced it worked with Freddie Mac on a self-serving two-year examination of Latino homeownership in 63 congressional districts.

The "study" found Hispanic ownership on the rise thanks to "new flexible mortgage loan products" that the industry was adopting at the urging of Cong Baca's collusive coterie.

<><> HOGAR conned lenders into even more lenient down-payment and underwriting standards.

<><> As the subprime debacle unfolded, HOGAR declined repeated requests for comment despite the economic havoc their activities precipitated.

The mortgage schemes demonstrated the criminal activities of border violators with multiple identities---perhaps violent, terrorist-connected foreigners---colluding and conspiring to defraud private companies and public entities. And mortgage racketeering enterprises which employed sub rosa finance and business practices to carry out deceptions and frauds.

The alleged ring of swindlers---a Congresman, individuals with multiple identities, banks, insurance companies, mortgage brokers--might be charged with cheating the US govt, taxpayers and bank share holders out of hundreds of millions of dollars via an elaborate web of mortgage and bank frauds.

The mortgage Dreamers used multiple phony identities, fraudulent Social Security numbers, purchased from identity forgers in order to obtain govt-subsidized benefits.

L/E will find that individuals with multiple identities obtained fraudulent mortgages then flipped the houses at ever-higher prices to family member who then absconded to foreign countries, sticking banks (and taxpayers) with hundreds of millions in fraudulent mortgages.

BACKGROUND A Wall Street Journal investigative report related that, according to the Federal Financial Institutions Examination Council examination of the borrowing spree, uncovered financial schemes by low-income housing groups, Hispanic lawmakers, a congressional Hispanic housing initiative, mortgage lenders and brokers, all colluding in fraduent schemes to increase homeownership among Latinos with forged documents which enabled massive fraud.

This was not simply the mortgage market at work. It was fueled by avarice, greed, and Congressional enabling fraudulent practices. In 2005 alone, mortgages to Hispanics jumped by 29%; Latinos with multiple fraudulent identities in low-paying jobs obtained subprime mortgages for prime properties---soaring to 169%.

(Research provided by Wall Street Journal. Some material excerpted from the NY Times).

No discussion of the 2000s housing crash would be complete without adding George W. Bush's part in it. And, his policies played a large part in it.

Remember, that GWB comes from a long line of Wall Street Bankers and it was them he served.

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 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.

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:

Financial Education—educates immigrants on the benefits and importance of holding accounts, the credit process, and mainstream banking.
Bank Products and Services Working Group—encourages banks and thrifts to develop financial service products with remittance features as a strategy to reach the unbanked immigrant community.
Mortgage Products—created the New Alliance Model Loan Product for potential homeowners who pay taxes using an ITIN.
Social Projects—provides scholarship funds for immigrant students and fosters economic support for Plazas Comunitarias, a program that will give Mexican citizens an opportunity to finish their high school education.

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]

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