Powerline links to a video that answers this question with admirable clarity. I’ll link to the video below [ UPDATE: the link has been updated]. First, here are a few data points from the video and other sources:
The Root Cause
* According to Senator Chris Dodd (D. CT) the “root cause” of the problem is “the housing foreclosure crisis.”
Not 100% accurate, perhaps–it’s really a credit crisis–but close enough for government work, especially from someone who has just happens to chair the Senate Banking Committee and who, completely coincidentally, has been such a conspicuous beneficiary of preferential mortgages and who, also coincidentally, leads the list of those who have received campaign contributions from Fannie Mae and Freddie Mac. (Guess who comes in 2nd and 3rd?)
* But what caused the housing crisis to which Senator Dodd alludes? The housing “bubble.”
* And what caused the housing bubble? “Sub-prime,” i.e., risky, mortgages; that is, mortgages made to people who, in the normal course of things would have to pay a premium in order to obtain a mortgage (if they could obtain one at all) because
a) they had bad or non-existent credit
b) their income was insufficient or
c) both.
Packaging the American Dream
A home of your own. It’s part of the American dream. Work hard, save up for a down payment, pay your bills on time and, presto, you, too, can buy a home.
For decades the government has done things to help Americans to realize the dream, e.g., graciously allowing citizens to keep some of their own money to help pay for the interest on a mortgage (the official term for this is a “tax deduction,” but I prefer my locution since it emphasizes the fact that it is YOUR MONEY we are talking about).
But what about people who do not work hard (if they work at all)? What about people who have not saved up for a down payment? What about people who do not pay their bills on time (if they pay them at all)? Why shouldn’t they get to live the American dream?
That was the question that led to
“The Community Reinvestment Act” (see here for more).
* The original Community Reinvestment Act was signed into law in 1977 by Jimmy Carter. Its purpose, in a nutshell, was to require banks to provide credit to “under-served populations,” i.e., those with poor credit.
The buzz word was “affordable mortgages,” e.g., mortgages with low teaser-rates, which required the borrower to put no money down, which required the borrower to pay only the interest for a set number of years, etc.
* In 1995, Bill Clinton’s administration made various changes to the CRA, increasing “access to mortgage credit for inner city and distressed rural communities,” i.e., it provided for the securitization, i.e. public underwriting, of what everyone now calls “sub-prime mortgages.”
Bottom line? It forced banks to issue $1 trillion in sub-prime mortgages.
$1 trillion, i.e., a thousand billion dollars in sub-prime,i.e., risky, mortgages, in order to push this latest example of social engineering.
But wait: how did it force banks to do this? Easy. Introduce a federal requirement that banks make the loans or face penalties. As Howard Husock, writing in City Journal way back in 2000 observed: “Bank examiners would use federal home-loan data, broken down by neighborhood, income group, and race, to rate banks on performance. There would be no more A’s for effort. Only results—specific loans, specific levels of service—would count.” Way back in 1994, for example, Barack Obama sued Citibank on behalf of a client who charged that the bank “systematically denied mortgages to African-American applicants and others from minority neighborhoods.”
* In 1997, Bear Stearns–O firm of blessed memory–was the first to get onto the sub-prime gravy train.
* Fannie Mae & Freddy Mac–were there near the beginning, too.
Anatomy of a bubble
Step 1. The intoxication: “My house is worth millions!” From 1995 – 2005, the number of sub-prime mortgages skyrocket. So did the house prices.
Step 2. The hangover: “Oh my God, my house isn’t selling. What went wrong?”
Why didn’t someone try to stop it?
Someone did: “The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago,” The New York Times, September 11, 2003.
But someone intervened to stymie the Bush administration. Who? The New York Times reports:
Supporters of the companies said efforts to regulate the lenders tightly under those agencies might diminish their ability to finance loans for lower-income families. . . . “These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Why didn’t someone else ring the alarm?
Someone else did. In 2005, John McCain co-sponsored the “Federal Housing Enterprise Regulatory Reform Act,” which among other things provided for more oversight of Freddie & Fannie. The bill didn’t pass. Guess who blocked it?
The bill was reintroduced in 2007. But again, no luck. Fannie Mae and Freddie Mac had friends in the Senate:
* Chris Dodd, a recipient of “sweetheart” loans from a Freddie and Fannie backed company.
* The junior senator from Illinois, i.e., Barack Obama, who turned to Jim Johnson, former head (1991-1998) of Fannie Mae, to help advise him on whom to pick for the vice-presidential slot on his ticket. From 1985 to 1990, incidentally, Johnson was managing director of Lehman Brothers. Remember them?
* You might also want to check out one of Barack Obama’s other advisors: Franklin Raines, former CEO of Freddie Mac: see here , for example, or here , or here.
Towards the end of the video, we read this salutary observation: “Everyone deserves a home, not a house of cards.”
Who gave us the house of cards? Watch the whole thing here (original link was here). And then pass it along to everyone you know.
** UPDATE ** At least two versions of the video have been removed from YouTube for alleged copyright infringement. As of this writing, this new link works;and so does this.
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204 Comments
1. Fausta:Excellent summary of how we got here. A must-read.
Sep 29, 2008 - 8:56 am 2. Quem é o culpado? | Dicta & Contradicta:[...] Como diria Thomas Pynchon, everything is connected. [...]
Sep 29, 2008 - 10:20 am 3. William Briggs:And so, the very people the government sought to help, through compassion and purity of heart, will be the same people who they hurt.
Yet again. The Law of Unintended Consequences strikes back, as it always does.
Sep 29, 2008 - 11:14 am 4. Tom U:And for people who ask why wasn’t Bush and McCain more forceful: What politician is going to put his career on the line to deny minorities housing opportunities?
I could only imagine the charges of racism. Would the American People appreciate what was avoided? Please!!!
Sep 29, 2008 - 12:09 pm 5. Victor T:To listen to Democrats say that Republican policies got us into this mess infuriates me deeply.
Sep 29, 2008 - 12:10 pm 6. Try Hang Gliding:I’m willing to believe all of that, but why are some banks going under but not all? Weren’t all banks required to meet the same obligations?
Sep 29, 2008 - 12:14 pm 7. frege:Excellent article and video.
Sep 29, 2008 - 12:16 pm 8. Harland:Excellent article Roger. It is amazing how the idiots who caused this mess get a pass by the media.
Sep 29, 2008 - 12:19 pm 9. POLYSEMY Online: The Daily Goose:[...] on how progressivism — i.e. the Left, Democrats — is at the root cause of our economic meltdown. addthis_url = ‘http%3A%2F%2Fpolysemy.org%2Fdailygoose%2F%3Fp%3D1562′; addthis_title = [...]
Sep 29, 2008 - 12:22 pm 10. David Thomson:The Democrats deserve most of the blame. At best, many of them had good intentions. They desired to help minorities with poor credit histories purchase their own homes. Indeed, the law of unintended consequences inevitably struck back. Greed, though, definitely had a role to play. A large number of Democratic Party politicians and their friends got a piece of the actions. Some of them even became downright wealthy.
Sep 29, 2008 - 12:22 pm 11. Kevin:Whoever put that video together must have put in one hell of a lot of work. Quite impressive.
Sep 29, 2008 - 12:25 pm 12. C Smith:Since you mention the Great Depression, I’ll say the ugly precedent it set is the root cause of the current fracas.
Sep 29, 2008 - 12:28 pm 13. Vero:When the underfunded pensions come ’round for their handout, and the entitlement programs go Tango Uniform, this all shall have seemed a minor bump in the road.
dump them all in the hungry aligator pit and get new some leaders that know what the hell they are doing.
all this has happened since Nov of 2006, anyone know what happened around that time-frame? oh yeah, the most ethical congress ever took over
asshats all
Sep 29, 2008 - 12:29 pm 14. Daniel:Actually, David, it strikes me that Democrats deserve all of the blame. Why John McCain isn’t flooding the media with ads pointing this out is beyond me. This “let’s be bipartisanship and get a deal done” plan isn’t helping him at all.
The Democrats don’t mind pointing fingers. What’s McCain’s problem?
Sep 29, 2008 - 12:29 pm 15. Sissy Willis:Sen. Tom Coburn (R-OK) gets it down to a single paragraph:
“As much as members of Congress want to find scapegoats, the root of this problem is political greed in Congress. Members of Congress from both parties wanted short-term political credit for promoting home ownership even though they were putting our entire economy at risk by encouraging people to buy homes they couldn’t afford. Then, instead of conducting thorough oversight and correcting obvious problems with unstable entities like Fannie Mae and Freddie Mac, members of Congress chose to ignore the problem and distract themselves with unprecedented amounts of pork-barrel spending.”
Sep 29, 2008 - 12:29 pm 16. Richard R:Are those regulations – forcing banks to make loans to non-credit-worthy people – still on the books? Have they been withdrawn, or are we just kind of ignoring them right now?
Sep 29, 2008 - 12:30 pm 17. GW Crawford:Video link down to Warner music claim
Perhaps the original poster will see this and drop the music and just run the video sans music
Please?
Sep 29, 2008 - 12:32 pm 18. frege:I just noticed that the ad has been taken down by Youtube for copyright violations. I am not a copyright lawyer, but don’t they have fair-use rights in something that is so clearly political ad not commercial speech?
Sep 29, 2008 - 12:33 pm 19. How we got here « Internet Scofflaw:[...] we got here Roger Kimball has a succinct account of the meltdown and its causes. (Via [...]
Sep 29, 2008 - 12:33 pm 20. frege:The soundtrack was awesome by the way.
Sep 29, 2008 - 12:34 pm 21. Letalis Maximus, Esq.:I’ve posted links to this everywhere I can think of. Normal people need to comment in favor of this article before the Obamabots move in and start their usual crap.
Sep 29, 2008 - 12:35 pm 22. Jay:Actually, Franklin Raines was the head of Fannie Mae, not Freddie Mac.
Sep 29, 2008 - 12:35 pm 23. Letalis Maximus, Esq.:Thanks, Sissy. Having followed his career since he was in the House, I had wondered what “Dr. Tom” had to say about all this.
Sep 29, 2008 - 12:39 pm 24. K T Cat:While I agree that Fannie and Freddie, pushed by the social engineers in the Democratic Party were a big part of this, that’s only part of the story. Some of the big investment firms got exemptions from the Republican congress and were allowed to overleverage themselves. Here’s an example:
2004: The SEC waived its leverage rules. Previously, broker/dealer net-capital rules limited firms to a maximum debt-to-net-capital ratio of 12 to 1. This 2004 exemption allowed them to exceed this leverage rule. Only five firms — Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns and Morgan Stanley — were granted this exemption; they promptly levered up 20, 30 and even 40 to 1.
More here.
Sep 29, 2008 - 12:42 pm 25. digitalintrigue:None other than the New York Times published a story way back in 1999 that anticipated a mortgage bailout.
http://www.youtube.com/watch?v=F60RIde2zpc
Sep 29, 2008 - 12:43 pm 26. Contrarian Guitarist:Great summary. Be screaming this from the mountain tops for ten years now.
Sep 29, 2008 - 12:48 pm 27. Eric:The real problem is that Obama supporters will ignore this as some trumped up conservative mumbo-jumbo. This might affect moderates if they care about what has happened to our economy. Good Luck.
Sep 29, 2008 - 12:49 pm 28. Taxi1:Asked above, “Why doesn’t McCain say something about this?” He is not the type to take credit or point blame personally. He tries to but can’t keep it up because he isn’t that kind of person. He really does side with the country first and doesn’t like to be part of the problem, but part of the solution.
So what percentage of the CRA-tagged loans are defaulting? Are they defaulting at a far greater rate? Everything I read says they’re not, that they default at a rate comparable to other loans, and that the majority of the subprime lending has been by institutions that do not fall under the CRA umbrella.
Somebody help me out here with the truth. Riverside, CA, Las Vegas, Boca Raton, etc…these are the places with the highest default rates, yet I doubt *extremely* that this is where the CRA is really working. What gives?
Sep 29, 2008 - 12:50 pm 29. SukieTawdry:I, for one, am up to here with well-intentioned Democrats and their unintended consequences. “Unintended” does not, should not and can not mean “unforeseen.” What in the hell did they all think would eventually happen when billions were lent to borrowers unable to maintain or repay those loans? When did they decide that the housing market was no longer cyclical and that home prices would continue rising indefinitely with no correction ever? And why is that the very people (low income and minority Americans) they “intend” to help are the ones who suffer the most when all those “unintended” consequences kick in (not that the rest of us get off lightly)? These people make me sick (and the Republicans only slightly less so). I don’t know about the rest of you, but this is certainly not the government I deserve.
Sep 29, 2008 - 12:54 pm 30. Hang Right Politics » REPUBLICANS STOOD TALL, Pelosi and Democrats stand small.:[...] Link to who caused this problem from Pajama’s Media [...]
Sep 29, 2008 - 12:57 pm 31. David Thomson:“Actually, David, it strikes me that Democrats deserve all of the blame”
I try to be very cautious with my rhetoric. Exaggeration should be avoided. If anything, it is usually better to understate. There are, alas, likely a small number of Republicans who also put their hand in the candy jar. Still, I think it fair to estimate that the Democrats are minimally responsible for 80% of the damage. And if the majority of American voters were aware of the actual situation—Democratic Party politicians would pay a severe price on Election Day.
Sep 29, 2008 - 12:57 pm 32. Lupo:K.T. Cat is correct; the changed leverage rules are what really got us here. The bond market was fairly reasonable about trading subprime bonds for almost a decade before that happened. That, and the fact that there is no liquidity in the MBS market. The total MBS market is about the same size as that for T-bills (aka, it’s as big as the national debt). Bond holders presently have to hold these securities to maturity, as the quoted market prices are insane. If you liquidate a losing position that was leveraged at 40:1, you lose more than everything. If you lost more than everything, you can’t move money around to your CDO or whatever, nor can you borrow more money to do what needs doing. If you bet at 12:1 leverage, you have a much better chance of surviving the exercise, no matter what your edge is.
One could also postulate that cheap money is a root cause of the problem. Much as I’d like to blame the Dumbocrats, there’s plenty of blame to go around.
Sep 29, 2008 - 1:02 pm 33. Texas Pete:As clear and succinct as the video is, I’m afraid that it is a bit too technical for the J-school infants of the media to comprehend. It will be much easier for them to take their direction from Pelosi, Frank, and Obambi. It’s time for the adults to step up and take over.
Sep 29, 2008 - 1:06 pm 34. Eric West:The consequences were probably foreseen. I don’t believe the Democrats are dummies. Perhaps not the full extent of the consequences. After all, it is a firm belief among many Democrats that wealth ought to be re-distributed. So they probably figured that those poor folks who wouldn’t succeed would be picked up by their bootstraps by those of us who could, IE: The bailout.
Sep 29, 2008 - 1:06 pm 35. jerry:Lupo:
Perhaps in magnitude but not the end result. You can’t systematicly force finacial institutions to loan money to people who cannot pay it back and expect to have no adverse impact on liquidity.
Sep 29, 2008 - 1:09 pm 36. solidstate:Commenter David Thomson is more charitable than I am. These “unintended consequences” were foreseeable by anyone with a junior-high knowledge of economics. Our legislators either (a) lack even that much knowledge, (b) care more about winning votes from their low-credit constituents than about bankrupting the country (i.e., those who actually pay their mortgage and taxes), (c) are handmaids to political correctness, or (d) all of the above. I’m going with (d).
As an econometrician friend says, you can’t legislate a decrease in poverty any more than you can legislate an increase in morality. (How’s that “War On Drugs” working out again?) What you _can_ do, though, is play Santa Claus for those citizens willing to engage in “predatory borrowing” until the bill comes due for the rest of us. And none of these legislators will pay a cent of it.
Carter, Clinton, Dodd, Obama, Frank, Waters, Meeks et al.: We will remember their names.
Sep 29, 2008 - 1:21 pm 37. nina:Where are the TV ads explaining all these facts to the public?
Sep 29, 2008 - 1:24 pm 38. dave:You’ll only confuse the People if you keep spewing facts. Try to remember that this is all because of ‘unpatriotic Republicans’. Barney didn’t do this! He loves poor people which now means all of us.
Sep 29, 2008 - 1:24 pm 39. Mark:“This video is no longer available due to a copyright claim by Warner Music Group ”
I’m not saying the music group is partisaned, but I’m willing to say the guy who indiscriminately slaps Youtube with copyright complaints is.
Sep 29, 2008 - 1:27 pm 40. Mimi:The video has been taken down due to copyright infringement. Is there music in it?
Sep 29, 2008 - 1:30 pm 41. Chuck Pelto:TO: Roger Kimball
RE: Bad Link?
Clicked the link and got this message…
“This video is no longer available due to a copyright claim by Warner Music Group”
Regards,
Chuck(le)
Sep 29, 2008 - 1:30 pm 42. kynna:Nina: I agree. Why are the Republicans not out there forcefully explaining why this is happening instead of letting the dems set their lies in stone? Foolish.
Sep 29, 2008 - 1:30 pm 43. Al Reasin:“A home of your own. It’s part of the American dream”. Well too many believed it was a right, not a dream, and that’s what got us where we are today. Ah, did anyone mention that it was a good way for ACORN to organize for loans and votes at the same time?
Sep 29, 2008 - 1:31 pm 44. Stones Cry Out - If they keep silent… » Republicans Wanted to Regulate Freddie & Fannie, Democrats Didn’t See a Problem:[...] Roger Kimball gives the roots of this crisis a closer look, with suitable linkage. Short and sweet, but [...]
Sep 29, 2008 - 1:31 pm 45. Ouch…. « A Defending Crusader…:[...] government’s $700 billion rescue plan for the financial sector Monday afternoon. Related: Who caused “the biggest financial crisis since the Great Depression?” H/T : Instapundit Possibly related posts: (automatically generated)No Titlenot the best way.Twitter [...]
Sep 29, 2008 - 1:35 pm 46. David Thomson:“Commenter David Thomson is more charitable than I am.”
Charity has little do with it. I am far more concerned with being charged with being a flagrant exaggerator. You are obviously not aware of my previous comments. I have repeatedly said, for instance, that Barack Obama is a poorly read and shallow individual who graduated from the vastly overrated academic institution known as Harvard university. Also, Roger L. Simon was once upset with my constant reference to white race guilt. He cooled his heels primarily because bloggers Shrinkwrapped and Phyllis Chessler essentially agree with me. Strangely enough, a number of people think I tend to get carried way. I disagree, but that’s life.
Sep 29, 2008 - 1:37 pm 47. Ben:Question:
I have been reading about this issue and trying to understand it. I understand how Fannie and Freddie caused much of the problem by buying subprime loans from lenders like Countrywide. But if all the “bad loans” were being bought, why did Countrywide, WAMU, et. al. get nuked? Were they selling some bad loans and keeping others? Were they securitizing some of the loans themselves?
Please explain, anyone who understands this. Thanks.
Sep 29, 2008 - 1:37 pm 48. pc:We get it. We understand how this came about.
Problem is that the average voter, who sees their bank closed or
changing hands, pays $3.75 for gasoline a couple of times a week,
and is looking at that monthly bank statement showing their investment
declined greatly, and their home mortage rate go up….is just mad.
Good old fashioned mad. At whoever is in charge: Bush.
At whatever got them here: Bush & Republicans.
The anti-amnesty hysteria that fueled so much hatred for Bush
w/i the GOP itself, helped create a perfect patch for the Democrats
to seize the day. They have. Not caring at all if they drag this
bill on for their own political gains, which they will achieve.
The more ‘we’ suffer, the angrier we get, the better it is for
the Obama-Biden ticket.
Cynical, but, true I fear.
As John McCain foolishly wastes time and money not seizing this
issue, laying hard core blame on the Democrats, the Democratic
Fannie/Freddie/home lender donations (Barack, Dodd, Franks, etc.),
and noting that even Bill Clinton said last week, hey, yeah,
the Democrats fought reform to prevent this mess. McCain is talking
about earmarks and firing Chris Cox and fats and Wall Street greed.
No, Senator, Congressional greed. Lots of it.
Palin, she’s in the bunker with Cheney. What a waste. He had momentum, he had a chance, he’s blowing it. I can’t blame it all
on the media and the economic news, and the Dems. John McCain is
helping himself lose right now, with a poor campaign, and hiding
Palin.
If she’s unable to do an interview, do a debate, stand up and defend
the policies of the party, she should never have been chosen. That’s
a bad thing for McCain to admit, if true. I think she can do the job.
Too bad ‘we’ can’t hear her talk on the radio.
Is today the day Barack Obama really won the election?
Sep 29, 2008 - 1:38 pm 49. Long Distance Observer:The worst day in the stock market in years, and the Democrats
look pretty happy for that scenario………why?
Pretty much everything Roger K. wrote is true, but the CRA is only a part of the problem. The excessive leveraging mentioned above is a huge factor, and the Bush Administration’s see-no-evil attitude to illegal immigration is another. They pushed mortgage lending to Hispanics, including illegal immigrants, very hard from 2002 to 2007, contributed significantly to the extreme bubble-and-burst in California, Arizona, and Nevada. In a nutshell, the bad mortgage paper got started due to Democratic social engineering and corruption, but it was turbocharged by some actions of the Bush Administration.
Sep 29, 2008 - 1:41 pm 50. Roger Kimball: Who caused “the biggest financial crisis since the Great Depression?” | The Sundries Shack:[...] than the backside-covering fiction the Democrats are telling them today. Roger Kimball is the is the latest to take a trip back in time in search of the real history of the subprime [...]
Sep 29, 2008 - 1:41 pm 51. Concerned One:The following might apply to the loans that were required to be made to those who couldn’t afford either the down payment for their houses, or the repayment of their mortgage debt.
“From each according to his ability
To each according to his needs.”
That seems to apply not only to the original lending practices, but also to the taxpayer subsidized “bailout.”
Karl Marx, the author of the quote, would be proud of the U S Congress (they pass the laws, not the Executive Branch) who, I believe quite unknowingly, brought his principles (somewhat modified) into the last decade of the 20th Century and the first decade of the 21st Century.
Perhaps the death of Capitalism, and the end of America as a great economic power, is close, and if so, all of us who have worked so hard to live the American dream will be much worse off. There are far more “needy,” and their ldealistic sympathisers who vote than the rest of us. There are far more vested interests who can give campaign contributions to influence the votes of Congress than the rest of us.
It is hard to be optimistic about the future under the circumstances. I hope we can muddle through.
Sep 29, 2008 - 1:42 pm 52. nick:LUC – yes
Dodd – yes
im against mccain but this article is good
Sep 29, 2008 - 1:42 pm 53. Rose:Wish I could watch the video but I guess Google higherups regard it is terrorist or something and have removed it.
Sep 29, 2008 - 1:43 pm 54. Fredösphere:It looks like the gods of the copybook headings have returned with a vengeance, right on schedule.
Sep 29, 2008 - 1:44 pm 55. Mark:http://www.youtube.com/watch?v=NU6fuFrdCJY here’s another version (I think) of the same video the guy put up.
Sep 29, 2008 - 1:56 pm 56. L.Jay:These facts should be presented STRONGLY by Sara Palin in the upcomming debate at the first opening regarding economic policy! She should publicly call for Dodd and Frank to step down (just as she did to the corrupt in Alaska) in a forum that can’t be ignored. Could the media then duck the facts? The video is compelling and could be ready to go in the post debate coverage. Big enough audience?
Sep 29, 2008 - 2:00 pm 57. Mike:Will this information ever get through the haze of misinformation the Democrats and their puppets in the media are spewing that falsely blames capitalism and Republicans?
Sep 29, 2008 - 2:07 pm 58. Stephen R:The video is back– “Version 2″ is here:
ttp://www.youtube.com/watch?v=NU6fuFrdCJY
Sep 29, 2008 - 2:11 pm 59. Stephen R:Doh! Try this:
http://www.youtube.com/watch?v=NU6fuFrdCJY
Sep 29, 2008 - 2:12 pm 60. Bob Thompson:I watched the vote today with all the lamentations from all directions about the pain to come.
I know we got here by over-indulgence and greed with a lack of personal responsibility and this behavior includes republicans and democrats, Wall Street and Main Street. I am watching right now the TV commentators suggesting that those voters who told their congressional representatives to vote ‘no’ don’t really understand the pain to come. Maybe so, maybe not.
What I do know is that we have a couple of generations that don’t really have a concept of self-reliance (except in good times). So maybe we will either have a plan that will help people (who really deserve some help) keep their homes (this does not include those who should never have had a mortgage in the first place) or we will have an economic depression that will teach a lesson to multiple generations of people who seem incapable of learning anything negative except through personal experience.
Sep 29, 2008 - 2:17 pm 61. The blame game: Who’s right? « WitSnapper | The Blog:[...] Simon at PajamasMedia provides a digest of “data points from the video and other [...]
Sep 29, 2008 - 2:23 pm 62. jerryofva:I have had a little more time to consider Lupo et al’s arguments about the relaxation of leverage requirements as the real cause, i.e., blame Bush. Nonsense. As Roger documents, this crisis is founded on the CRA, corrupt practices by the GSEs in complicity with the corrupt Democratic Party. Just look at the political contribution of some of the principal financial houses. Overwhelmingly to the Democratic Party. Remember, Obama is second large recipient of GSE money and he has only been in the Senate for four years.
Like all totalitarian political parties, the Democrats have evolved to be little more then a criminal conspiracy. The Congressional Democrats wanted to use the bill to channel money to ACORN which is just another criminal branch of the Democrtic Party. You think this is hyperbole? Just Google ACORN and vote fraud. You will find many references to not accusations but actual convictions.
Sep 29, 2008 - 2:25 pm 63. Chris Wren:This video is a bombshell. I have honestly never heard of the Community Reinvestment Act. I have to say though I still find it astonishing that a single piece of legislation could have such far reaching consequences, affecting banks and finance systems not just in America, but worldwide. But I guess that’s the way it is. We think we understand how interconnected the world has become, but to really be slapped in the face with it is another thing…
Sep 29, 2008 - 2:34 pm 64. John:I think an even more powerful video (and the one linked to on Powerline) is at
http://ca.youtube.com/watch?v=_MGT_cSi7Rs
Sep 29, 2008 - 2:43 pm 65. The Fop:Here we are during the height of an election campaign. We’re being faced with the biggest financial crisis since the Great Depression. The Democrats derserve the lion’s and tiger’s share of the blame for this crisis. And John McCain doesn’t want to point fingers??!!! This idiot deserves to lose to the most inexperienced candidate in the last 100 years.
Sep 29, 2008 - 2:44 pm 66. Ira:And just this weekend, NEWSDAY, the Long Island NY paper, ran an editorial telling us that there’s no reason to point fingers at anyone, there’s plenty of blame to go around – a sure sign that people are starting to realize the Democrats are responsible for a lot of this mess.
Sep 29, 2008 - 2:49 pm 67. Harry Eagar:Yeah, right. That explains why the most foreclosures are in Las Vegas, a rural town full of African-Americans.
The county I live in, which has the highest housing prices in the country, is now awash in foreclosures. I guarantee that mortgages made here on $3 million third vacation homes were not forced under the Community Reinvestment Act.
It was the people who thought that Glass-Steagall restrained the financial markets unduly who caused this: Phil Gramm, Paul Craig Roberts, folks like that going back to 1980. It took awhile, but it was inevitable: unrestrained financial markets cause panics.
Sep 29, 2008 - 2:52 pm 68. BMoon:Are we doomed to live fulfilling Santayana axioms?
Sep 29, 2008 - 2:55 pm 69. David Thomson:“In a nutshell, the bad mortgage paper got started due to Democratic social engineering and corruption, but it was turbocharged by some actions of the Bush Administration.”
The politically correct Bush administration has likely added significantly to the problem. This is why one should normally support only center-right politicians.
Sep 29, 2008 - 3:10 pm 70. Rose:For those of you who saw Version 1, has anything changed in Version 2?
Sep 29, 2008 - 3:18 pm 71. The Government We Deserve | Neptunus Lex:[...] I’m grimly relieved: It’s come to this, that any plan pushed so hard, so quickly, by so many people who were so self-evidently asleep at the switch for so many years was almost bound to have built in [...]
Sep 29, 2008 - 3:21 pm 72. Choey:The American dream used to be something you were expected to work for and earn. Owning a house was part of that dream. Now we have: “What about people who do not pay their bills on time (if they pay them at all)? Why shouldn’t they get to live the American dream?, and: “Everyone deserves a home, not a house of cards.” Pardon me but as a person who worked hard for many years to achieve that dream I seriously resent the liberal entitlement attitude. I also resent the ever repulsive Pelosi presiding over a process that now threatens to crash the stock market and my IRA. I do not understand how a Democrat can get elected to anything.
Sep 29, 2008 - 3:27 pm 73. David:This argument has been made before, and it’s been thoroughly attacked. For example, here, months before the current financial crisis:
http://www.prospect.org/cs/articles?article=did_liberals_cause_the_subprime_crisis
Do you have arguments against Gordon’s analysis and the myriad other responses to the “CRA did it” argument that have been made? Are you making new claims that these essays don’t address? If not, why are you simply repeating a charge that has been thoroughly criticized in economics journals, magazines, by the director of the San Francisco Fed, etc.?
And one that happens to be utterly implausible on its face. A multitrillion dollar capitalization problem is the result of home loans to people making $40,000 year in East St. Louis?! A law passed in 1977 and tinkered with in the 1990s is more significant for the 2008 financial meltdown than, say, SEC rule changes about leveraging in 2004?! Or the across-the-board decline in housing prices across the US?! Or the major changes in mortgage underwriting practices since the 1990s that had nothing to do with CRA?! I am not going to claim that the CRA is a beautiful piece of legislation, and OF COURSE encouraging banks to practice fair lending is a very very delicate business ripe for mistakes. But to blame the current financial meltdown on it is so far from reality that I don’t know where to begin.
Sep 29, 2008 - 3:29 pm 74. vader06:You might also want to check out one of Barack Obama’s other advisors: Franklin Raines, former CEO of Freddie Mac: see here , for example, or here , or here.
Franklin Raines was CEO of Fannie Mae (not Freddie Mac)
Sep 29, 2008 - 3:31 pm 75. Howard:One of a number of problems in laying the blame for the housing bubble on subprime lending is that you are then somewhat at a loss to explain other housing bubbles, such as in Britain, Japan or (to a lesser extent) Australia. Any asset can be bid up past the point of rationality with or without cheap credit.
Sep 29, 2008 - 3:47 pm 76. Geoff:The Community Reinvestment Act wasn’t passed to give mortgages to people who couldn’t pay them back. It was passed to give mortgages to people who were being denied mortgages because of their color (or the prevailing color of their neighborhoods). This was called redlining. Community development banks and credit unions specialize in giving loans to underserved communities, and they’re weathering the current crisis just fine.
Sep 29, 2008 - 4:02 pm 77. koblog:Rose,
I watched Version 1 about four times this weekend before it was taken down.
Version 2 is exactly the same.
The author could change out the copyrighted music with his kid playing the drums and it would still be true…and effective.
Sep 29, 2008 - 4:28 pm 78. J in TX:I want to know why Bush let this roll for so long – when did he give up the fight? Sometime around 2005, it seems – he just seemed to stop trying.
As for McCain – either someone else wrote his words in 2003 during the 109 bill – or he really DOES have some memory issues. I cannot imagine any other excuses.
Sep 29, 2008 - 4:32 pm 79. pragmatic:Can someone point to statistics linking GSE lending to any of the private-sector institutions that have been nuked recently?
This is a huge gap in the argument that the meltdown is somehow a Dem construction, as opposed to a more general failure of laissez-faire attitudes toward financial sector regulation, no?
Sep 29, 2008 - 4:32 pm 80. Sagar:Taxi1,
When Congress forces lenders to relax the qualifying standards so that the bank lends $200K to low-wage working class dude to buy a $200K home with no credit check or employment verification and 0 down, the same “diluted” standards would then apply to middle class Joe who would get a $400K loan to buy a $400K home (even though a few years ago, his income would qualify him for only $300K loan). So, the root of the problem (sub-prime loans to low-income people) spread to sub-prime loans to all way beyond their income levels would justify.
Hope that explains the situation.
Ben,
Banks such as WaMu and Wachovia also had these securities in their portfolios – Fannie and Freddie didn’t buy all of the “Alt-A” mortgage based securities, but when they started buying them without hesitation everyone started getting in on the “good stuff”. When it hit the fan, the weaker players were the first to fall. We will see who will be left standing. Certainly the local regional banks who did their business the old fashined way will not have much problem in the short run (other than the liquidity crisis impacts everyone in general).
Sep 29, 2008 - 5:15 pm 81. help mccain:I just emailed McCain urging him to attack Obama on this issue. I simply cannot comprehend why he would allow one of the largest PR spins in recent memory rob him of the election.
Sep 29, 2008 - 5:30 pm 82. Greg:What happened to the legislation proposed in September 2003? The linked NYT article states that the proposed new oversight agency was “endorsed in large part” by Fannie and Freddie and that Rep Oxley and Sen Shelby would draft the legislation.
Does anybody know whether the legislation was introduced? Did it pass? Etc
Sep 29, 2008 - 5:36 pm 83. Mom:This may be a dumb question. But aren’t some (a lot) of these subprime mortgages actually second home fixer-uppers, short-term houses to flip, and/or rentals, all purchased by people who were “investing” in the poor neighborhoods and thus able to get the affirmative action, no-or-low-down payment mortgages. When the home values started to fall, they simply walked away (who needs a credit rating?), leaving the bank holding the bag and a poor tenant to evict. Do we want to bail out these, in many cases “middle-class,” investors?
Sep 29, 2008 - 7:55 pm 84. Math Challenged:–A multitrillion dollar capitalization problem is the result of home loans to people making $40,000 year in East St. Louis?!
+++++++++++++++++++++++++++++++++++++++
Five thousand $100,000 mortgages in East St. Louis = One half Billion Dollars.
Ten thousand $100,000 mortgages in St. Louis = 1 Billion dollars
How many cities the size of E St Louis? Five hundred? Equals approx 250 billion Now lets throw in New York, Philadelphia, Miami, Los Angeles and all the other top 50 cities. Hmm, hundreds of billions again.
Oh and while thinking about it, my governor set up a program to make sure illegal aliens got mortgages. Yes, no problem there. We start enforcing immigration law and the no-down-payment, no document, no proven income mortgage holder take a trip leaving a house behind.
As for leverage being the culprit. If the underlying asset had value the leveraging wouldn’t be the problem would it.
The way I see it the banks were forced at Government regulator point to make bad loans. Securitizing gave them a chance to make them a hot potato and pass them onto another institution to hold.
Sep 29, 2008 - 8:12 pm 85. Math Challenged:—-It was passed to give mortgages to people who were being denied mortgages because of their color (or the prevailing color of their neighborhoods).
Here we have a liberal mind set, unable to see the unintended consequences of a perhaps well intentioned act. But are we sure that the intentions were noble? or was a side benefit of helping (–again the liberal focus on race-race-race) our disadvantaged citizens planting a time bomb in our economic system for those moles in our government of a hard core socialist bent?
—Community development banks and credit unions specialize in giving loans to underserved communities, and they’re weathering the current crisis just fine.
Were they forced to give to non-credit worthy recipients? Credit unions are not subject to the same federal laws were they – so they are able to apply more commonsensical standards?
Sep 29, 2008 - 8:18 pm 86. Housing Crisis: how we got here « Smart and silly:[...] http://pajamasmedia.com/rogerkimball/2008/09/29/who-caused-the-biggest-financial-crisis-since-the-gr... ”The Community Reinvestment Act” (see here for more). [...]
Sep 29, 2008 - 9:25 pm 87. Pajamas Media » Who Really Triggered This Financial Crisis?:[...] Read the entire story here. [...]
Sep 29, 2008 - 11:39 pm 88. BuckeyeBlog » Blog Archive » Values:[...] Roger Kimball reminds us how the Democrats use everything as social engineering, including housing. Then they blame the free [...]
Sep 30, 2008 - 4:32 am 89. Sissy Willis:Math Challenged: You may be onto something. As I blogged yesterday:
Was this year’s sub-prime mortgage meltdown ACORN’s insidious project all along? And what about what Victor Davis Hanson describes as Obama’s “Strategy of Preemption,” including threats “to go to the courts after the NRA ads, to swarm Milt Rosenberg’s radio station in Chicago to badger guest Stanley Kurtz, or to unleash Missouri law-enforcement on McCain’s campaign ads?” Are these efforts the fruits of Obama’s schooling in the intimidation tactics of community organization? So much disinformation, so little time. It’s downright Gramscian.
Sep 30, 2008 - 4:59 am 90. David Thomson:“I just emailed McCain urging him to attack Obama on this issue. I simply cannot comprehend why he would allow one of the largest PR spins in recent memory rob him of the election.”
That is because John McCain is politically correct and afraid of being called a racist. It really is that simple.
Sep 30, 2008 - 5:01 am 91. M. Stephen Lamb:The “both parties are guilty” defense ought to be enough to soothe voter concerns about who is to blame for this disaster. I see no reason to think the Democrats won’t control all four branches (including the press) of power in Washington come January.
America is about to give the New Left a blank check. It’ll be interesting to watch what they do with it.
Sep 30, 2008 - 5:07 am 92. jeff:let him be called a racist. he is not getting the black vote anyway.
Sep 30, 2008 - 5:28 am 93. Believer:I cheered yesterday when I heard the Republicans had voted down the bailout.
And then watched my stock portfolio drop precipitously in value.
I only regret I have but one to give for my country.
Sep 30, 2008 - 6:18 am 94. Freddie Funky:Hurray the first bailout is dead. Before this Hyrda grows another head, can’t we get McCain ( or any legislator really) to propose a simple remedy instead. How about more FDIC insurace coverage, a return to a 20% downpayment ( or equity) before a loan can be sold on the secondary market. Tightening the debt-to-net-capital ratio would cap off the legislation. Ta Da. Does this have to be any more complicated than this? With the public ready to throw all the political bums out, a simple plan that can be explained to the voting populace is going to be needed to get passed.
Sep 30, 2008 - 6:29 am 95. Who caused “the biggest financial crisis since the Great Depression?” « Sidemeat:[...] Who caused “the biggest financial crisis since the Great Depression?” Jump to Comments Roger Kimball lays it out for you here. [...]
Sep 30, 2008 - 6:45 am 96. Lynn:I think it was all a giant pyramid scheme.
Sep 30, 2008 - 7:14 am 97. jbb:The Republicans should be attacking the Democrats on this with full force. The problem is where do they go? Fox News? Some blogs? This will not be looked into by the MSM until after the elections. Don’t believe me? Just watch. I just finished paying our land taxes and a month’s mortgage payment, I’m 3 months ahead, plus I’m saving money and give to charities. I’ve worked hard, to damn hard, to be ahead of the game and this bailout crap just pisses me off. Maybe we need to do it, I don’t know, I think there is a better way but how can we have an honest debate about it. I don’t think it’s possible, not with these bums in office.
Sep 30, 2008 - 7:18 am 98. YG:They tried to ban original video. Here is a new updated version.
Sep 30, 2008 - 7:28 am 99. It's The Economy, Nubtard! - Page 11 - StrafeRight Forums:http://www.youtube.com/watch?v=nRmB93McZeI&feature=related
[...] Bottom line? It forced banks to issue $1 trillion in sub-prime mortgages. A nice summary here. __________________ Admin – sR Source [...]
Sep 30, 2008 - 7:43 am 100. Common Sense Junction » Blog Archive » Bailout Or Burning Down The House?:[...] post is a twofer… You can read: Who caused “the biggest financial crisis since the Great Depression?” and then see the video that Obama, YouTube, the DNC and Warner Brothers are fighting desperately to [...]
Sep 30, 2008 - 8:34 am 101. cfbleachers:I don’t know who should or should not be called a racist. Whenever race is discussed, it quickly devolves into a festival of name calling and race baiting.
There is an issue that has caused me some pause, in the failed bailout of subprime loans, and it indeed has an issue of race in its underpinnings.
The Community Reinvestment Act was a Carter legislation designed to assist minorities (primarily blacks and Hispanics at the time as written, now African American communities and Latino communities). As far as I’m concerned, this is a wonderful idea. Great. No redlining in real estate, no de facto redlining in real estate lending. I’m behind it.
In 1995, President Clinton wanted to put some “muscle” behind the CRA, and he “perked it up a bit”…the Sword of Damocles over the banks was….if you don’t have “X” amount of loans in your portfolio in minority neighborhoods of CRA designation, you will be sued for ECOA (equal credit opportunity act) violations.
Fine. A legislation to enhance opportunities for folks is ok by me and a legislation without enforcement is a nullity. NO problem.
Fannie Mae and Freddie Mac were run as quasi-governmental programs. That is, they were not owned or run by the government, but they were filled with cronyism…essentially political patronage hacks were put in charge and left to do the bidding of the folks who wished to push through subprime and “alternative” funding for real estate…including Dodd and Barney Frank. Frank’s significant other was placed in a position of supreme importance…as was a dear friend of Obama…one he chose to help find a VP candidate at first.
Fannie and Freddie took on more and more high risk loans to CRA designated borrowers…and Barney Frank announced that there was absolutely, positively nothing wrong or dangerous in doing so. His signnificant other apparently told him so. No ADDITIONAL OVERSIGHT was needed…or wanted, especially if it came by way of the Republican administration. “Don’t look here!” Barney cried.
Of course, Sen. McCain was trying to legislate some attention into this looming problem, …but nobody wants to talk about that now. Most of all, the Democrats.
So, the problem explodes as Fannie and Freddie need to be bailed out, but that is not enough.
The loans, which were COMMANDED to be given by the Democrats…for certain “communities” designated by the CRA…must be themselves “bailed out” because the banks have to carry them on the books as a loss. In essence, the banks were forced to lose money…in order to loan money to CRA designated neighborhoods.
700 billion dollars worth of taxpayer risk was asked of the people who carry the tax burden in this country. The overwhelming bulk of that burden, is NOT coming from the CRA designated neighborhoods, that is simply a mathematical fact. The whole idea of the CRA was to try to give the CRA neighborhoods a chance at becoming more intricately woven into the economic fabric of the country.
Therefore, the CRA designated areas were getting loans that led to the crisis, were not really being relied upon to help “bailout” the country out of the crisis…all they were being asked to do…was vote for the program in which they and their risky loans would be placed on the shoulders of the folks who carry the burden for paying taxes in this country.
So what did the African American and Hispanic caucuses do under the sterling leadership of Nancy Pelosi? They voted to not pass the legislation. The legislation didn’t pass…and 95 Democrats failed to support it. Many of them, portions of the black and Hispanic voting blocs. Apparently, there wasn’t enough in it for them to do so.
Sep 30, 2008 - 8:36 am 102. Ben:“Harry Eagar” and other lefties are making non-sensical arguments. No one is claiming that the only “bad” mortgages are ones to people with bad credit. Yes, this crisis is affecting wealthy neighborhoods, too. The point is that by underwriting bad lending practices, the government caused these practices to become commonplace, even with higher-income people. Furthermore, the Dems moved Fannie and Freddie far afield from their original purpose by pushing them to buy larger and larger mortgages. Why on earth were Fannie and Freddie buying million-dollar mortgages? So yes, the root of this problem starts with the CRA.
Sep 30, 2008 - 8:46 am 103. Markus:“cfbleachers” — Barney Frank wasn’t chair until 2007, and Democratic House members including him had no power to block Fannie Mae reform legislation before then. The fact that you blame him, rather than the Republican Chairman of the Committee, and the House Republican Leadership makes no sense, especially since unlike Frank they had the power to do something about it.
Sep 30, 2008 - 8:49 am 104. Ben:David,
O.K., I read that Prospect piece, and it repeats the standard lefty argument which conveniently leaves out the key role played by Freddie and Fannie. Yes, mortgage lenders like Countrywide are not covered by CRA and they were some of the worst culprits of subprime lending. But since Fannie and Freddie were willing to buy the crappy loans these mortgage companies were making, there was no incentive for them to stop and every incentive to continue. Fannie and Freddie were buying these loans both to create shareholder profit AND to meet the same “affordable housing” goals that were behind CRA. Republicans tried time and time again to rein in the GSEs, but Dems blocked them at every turn. Thus, here we are.
If you’re going to argue differently, show some guts and honesty and don’t leave out inconvenient facts.
Sep 30, 2008 - 8:56 am 105. Ben:Markus,
Dems in the Senate had veto power and the ability to throw up other procedural roadblocks. Plus it is well known that numerous Republicans were also beholden to Fannie and Freddie’s money — not many, but enough to give the Dems the edge they needed to defeat any reform proposals.
Sep 30, 2008 - 8:58 am 106. Ben:Duh — I meant “fillibuster power,” not “veto power.” Need. More. Coffee.
Sep 30, 2008 - 8:59 am 107. cfbleachers:Markus, Barney Frank and Chris Dodd..as well as the rest of the Democratic party have been refusing to budge on oversight on this issue. For them to place the blame at the feet of the Republicans is sophistry. See this article below and tell me which part of it is not accurate or incorrect in its assessment.
The GBigs Angle
Thursday, September 25, 2008
Economic Crisis of 2008
How did we get here? The economic crisis of 2008 is rooted in history from post World War II thru today. The crisis is connected to the founding, function, and fate of the US Government Sponsored Enterprises (GSE) – Fannie Mae and Freddie Mac.
Founding Fathers
As part of the massive social programs of the Franklin Roosevelt New Deal in 1938, congress created Fannie Mae to restore the mortgage credit markets destroyed during the Great Depression.
Later, during the Viet Nam war era in 1970, during the Lyndon Johnson Great Society legislation, Freddie Mac was created to compete with Fannie Mae as both were pushed off federal books and into the public sector.
How Fannie and Freddie Work
The function and mandate for both GSEs is to maintain a market for mortgages – buying loans from banks (IndyMac) and mortgage companies (Countrywide Financial), repackaging them as Mortgage-Backed Securities (bonds), and selling those securities to investors (Lehman Bros, and AIG).
Both GSEs are given special treatment and are able to borrow money directly from the Federal Reserve as AAA rated creditors. The mortgages they hold on their books alone total about $2.4 trillion, as of 2008. This amounts to 20% of the US national debt before 2008.
The types of loans the GSEs would underwrite became more risky during the Carter Administration when the Community Reinvestment Act (CRA) of 1977 was written and enacted. The CRA required banks and thrifts to end a practice known as “redlining.” Redlining is the practice of targeting loans to higher income neighborhoods. The purpose of the CRA is to provide credit, including home ownership opportunities to undeserving populations and commercial loans to small businesses in the inner-cities and poor rural areas.
The GSEs became the center of the “Low Income-Inner City” mortgage industry during the Clinton administration. The CRA was modified in 1997 to relax regulation for inner-city loans. The Clinton HUD department forced the GSEs to lower lending standards and created quotas for making loans to low-income clients. Finally, the GSEs were forced to commit a minimum of 10% of their portfolios to “Alt-A” or Subprime loans. These loans were known as NINJA loans – No Income, No Job, and No Ability to pay.
The result of the GSEs loan guarantees, and loan purchasing in the high risk Subprime market created a false sense of security among private lenders. Private lenders could more easily find and write NINJA loans, and increase their brokerage fee revenues. Likewise, the GSEs bought thousands of such loans and packaged them for sale in the securities markets. Buyers of these securities also felt a false sense of security because the seller was Fannie Mae and Freddie Mac, two companies they viewed as being the same as the US Government.
The GSEs currently carry about $830 billion or about 15 percent of their total portfolio in Subprime mortgages.
Corruption At The Helm
Specifically, three Democrats with close ties to Barack Obama served as Fannie Mae executives: Franklin Raines, former Clinton administration budget director; James Johnson, former aide to Democratic Vice President Walter Mondale; and Jamie Gorelick, former Clinton administration deputy attorney general. They are stark examples of Democrats using the GSEs to further their personal ambitions.
Fannie Mae overstated its earnings by $10.6 billion from 1998 through 2004, and its chief executive, Franklin Raines was fired by Congress. Freddie Mac understated its profit by nearly $5 billion from 2000 through 2002. The incentive to do this was to garner larger performance bonuses.
James Johnson earned $21 million in just his last year serving as Fannie Mae CEO from 1991 to 1998; Franklin Raines earned $90 million in his five years as Fannie Mae CEO, from 1999 to 2004; and Jamie Gorelick earned an estimated $26 million serving as vice chair of Fannie Mae from 1998 to 2003.
Who Wants To Regulate?
“For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac – known as government-sponsored entities or GSEs – and the sheer magnitude of these companies and the role they play in the housing market,” John McCain said on the floor of the Senate in 2005, speaking as a co-sponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005.
The bill to tighten the Fannie Mae and Freddie Mac regulatory structure passed the House but was never brought up for a vote in the Senate, largely because of Democratic opposition (led by Chris Dodd and Barney Frank).
Chris Dodd is the Chairman of the Senate Banking Committee and has received money from Fannie Mae and favorable treatment in personal loans from Countrywide Financial. Dodd received $165,400 in Fannie Mae and Freddie Mac campaign contributions, including contributions from PACs and individuals. Additionally Barack Obama has received $126,349 in such contributions since being elected to the Senate in 2004.
Chris Dodd, in his role as chairman of the Senate Banking Committee, proposed a housing bailout to the Senate floor in June 2008 that would assist troubled subprime mortgage lenders such as Countrywide Bank. In 2003, Dodd refinanced the mortgages on his homes in Washington D.C. and Connecticut through Countrywide Financial and received favorable terms due to being placed in a “Friends of Angelo” program.
As Chairman of the House Financial Services Committee, Barney Frank “sits at the center of power in the mortgage industry”. In 2003, Frank opposed the Bush administration and Congressional Republican efforts in the most significant regulatory overhaul of the housing finance industry since the Carter Era.
Democrats in Congress have sought to preserve the quasi-governmental status of the mortgage giants, viewing Fannie Mae and Freddie Mac as places to locate former top Democratic Party operatives and to further their agenda to use the government to provide low-income money to their constituents.
President George Bush has persistently asked the Democratically controlled congress SEVENTEEN times for more regulation of Fannie Mae in 2007, and 2008 to no avail.
Meltdown In 2008
“What’s important are facts – and the facts are that Fannie and Freddie are in sound situation,” note Chris Dodd. “They have more than adequate capital. They’re in good shape.” July, 2008.
“These two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis,” Chairman Frank said. He added, “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” July, 2008
On Sept 7, 2008 Congress declared both Fannie Mae and Freddie Mac bankrupt. The government injected taxpayer dollars into the GSEs — up to $100 billion total for each company.
Seven Hundred Billion Dollars
In order to avoid total economic collapse in the credit markets due to the influence and activities of the GSEs, the government is now mulling the passage of a $700,000,000,000 bailout that involves buying Mortgage-Backed Securities generated over the past ten years
Sep 30, 2008 - 9:11 am 108. David W. Lincoln:There is something I need to get off my chest.
The version of man’s inhumanity to man attributable to the pirates on Wall Street, andtheir confreres on Capital Hill in Washington,via their conjuring of giving mortgages to those who do not qualify under the old rules – their version isn’t all that different than the version attributable to those who have copious amounts of blood on their hands and who follow in the footsteps of what stormed out of the Arabian Peninsula 14 centuries ago.
Sep 30, 2008 - 9:12 am 109. Clyde:We will see history repeat itself when Social Security fails. Soon the money will start to run out. After several attempts by Bush and the Republicans to get bipartisan action on a solution (remember those State of the Union addresses), all we heard was partisan democrats slam every idea. The day will soon come when the account is flat broke. Can you imagine the price tag for this one! And can you imagine how the democrats will spin it, blaming conservatives for failed policies!
Sep 30, 2008 - 9:15 am 110. Henry:The situation is far more complicated than both sides tends to admit. Yes, Freddie and Fannie bought mortgages from firms like Countrywide. The did this so they could repackage those mortgages as mortgage-backed securities and sell them to financial institutions. This made money for Freddie/Fannie.
How were financial institutions able to buy trillions of dollars worth of mortgage-backed securities? In 2004, the SEC gave a leverage-limit exemption to 5 large banks: Goldman, Merrill, Lehman, Bear Stearns, and Morgan Stanley.
So while Ben is right in that Fannie/Freddie played a key role, it’s also true that the 2004 SEC rule change played a key role, and that companies like Countrywide played a key role.
Does this even begin to address the issue the bailout is meant to fix? No. The issue is the failing credit market, in which banks don’t want to lend to each other. One small reason the banks are afraid is because they don’t have an understanding of their counterparties’ exposure to the mortgage problem. A much bigger reason again goes back to leverage: banks have purchased too many credit default swaps, so if a single company goes bankrupt, banks holding those swaps will owe money to other parties. The banks are so highly leveraged that if that happens, they will need to raise large amounts of money to stay solvent. In the current market, that is impossible (see Lehman Bros). That bank will then go bankrupt, triggering another round of defaults, causing more banks to need more money to stay within federal leverage ratios, and so on. It’s a domino effect.
So can you really blame the CRA? The CRA was passed in the 70s, made more aggressive in the 90s. But this is years before excessive leveraging was applied, and years before mortgage backed securities were broadly traded.
Sep 30, 2008 - 9:46 am 111. Henry:http://www.newsweek.com/id/161218
CAMPAIGN 2008
A Freddie Mac Money Trail Catches Up With McCain
Few advisers in John McCain’s inner circle inspire more loyalty from him than campaign manager Rick Davis. McCain and his wife, Cindy, credit the shrewd, and sometimes volatile, Republican insider with rescuing the campaign last year when it was out of money and on the verge of collapse. As a result, McCain has always defended him—even when faced with tough questions about the foreign lobbying clients of Davis’s high-powered consulting firm. “Rick is a friend, and I trust him,” McCain told NEWSWEEK last year.
Last week, though, McCain’s trust in Davis was tested again amid disclosures that Freddie Mac, the troubled mortgage giant that was recently placed under federal conservatorship, paid his campaign manager’s firm $15,000 a month between 2006 and August 2008. As the mortgage crisis has escalated, almost any association with Freddie Mac or Fannie Mae has become politically toxic. But the payments to Davis’s firm, Davis Manafort, are especially problematic because he requested the consulting retainer in 2006—and then did barely any work for the fees, according to two sources familiar with the arrangement who asked not to be identified discussing Freddie Mac business. Aside from attending a few breakfasts and a political-action-committee meeting with Democratic strategist Paul Begala (another Freddie consultant), Davis did “zero” for the housing firm, one of the sources said. Freddie Mac also had no dealings with the lobbying firm beyond paying monthly invoices—but it agreed to the arrangement because of Davis’s close relationship with McCain, the source said, which led top executives to conclude “you couldn’t say no.”
The McCain campaign told reporters the fees were irrelevant because Davis “separated from his consulting firm … in 2006,” according to the campaign’s Web site, and he stopped drawing a salary from it. In fact, however, when Davis joined the campaign in January 2007, he asked that his $20,000-a-month salary be paid directly to Davis Manafort, two sources who asked not to be identified discussing internal campaign business told NEWSWEEK. Federal campaign records show the McCain campaign paid Davis Manafort $90,000 through July 2007, when a cash crunch prompted Davis and other top campaign officials to forgo their salaries and work as volunteers. Separately, another entity created and partly owned by Davis—an Internet firm called 3eDC, whose address was the same office building as Davis Manafort’s—received payments from the McCain campaign for Web services, collecting $971,860 through March 2008.
In an e-mail to NEWSWEEK, a senior McCain official said that when the campaign began last year, it signed a contract with Davis Manafort “in which we purchased all of [Davis's] time, and he agreed not to work for any other clients.” The official also said that though Davis was an “investor” in 3eDC, Davis has received no salary from it. As to why Davis permitted the Freddie Mac payments to continue, the official referred NEWSWEEK to Davis Manafort, which did not respond to repeated phone calls. One senior McCain adviser said the entire flap could have been avoided if the campaign had resisted attacking Barack Obama for his ties to two former Fannie Mae executives, which prompted the media to take a second look at Davis. “It was stupid,” the adviser said. “A serious miscalculation and an amateurish move.” Still, this adviser said, McCain’s faith in his campaign manager remains unswerving.
Sep 30, 2008 - 9:52 am 112. Nicholas Fitzgerald » Stepping Up:[...] more on the bail out read these: Gunservatively, Hot Air, IMAO, The Mudville Gazette, PajamasMedia, Patterico’s Pontifications, Right Voices, Wizbang and Right Wing [...]
Sep 30, 2008 - 9:59 am 113. Rose:This link:
Sep 30, 2008 - 10:03 am 114. Jeff:http://www.youtube.com/watch?v=nRmB93McZeI&feature=related
has been removed too – anyone have another link to the video?
What most people have not notice or fail to notice is that “Change” is coming in this election. But the “Change” is not only being promoted by Obama’s campaign since the beginning, the “Change” is now also in McCain himself, who has seemed to have made a 180 degrees turn in his own transformation. Here are the “Changes” of McCain —
1) McCain was previously against oil drilling in ANWR, Alaska; off the coast of Florida; off the coast of the Gulf of Mexico; and off the coast of California. Now he is for “drill baby drill”.
2) McCain was against Federal regulations of America’s largest financial institutions like Fannie Mae, Freddie Mac, and AIG. On May 6, 1999, he voted for the Gramm-Leach-Bliley Act which led to the banking deregulation that allowed the mortgage industry to adopt predatory loan practices that offered mortgages to those with a poor or thin credit history who had unreliable or low incomes and could not pay it back later on. Take a look at the compelling details below —
http://thetruthorsomethinglikeit.blogspot.com/2008/09/mccain-voted-for-mortgage-crisis.html
http://www.govtrack.us/congress/vote.xpd?vote=s1999-105
3) Now, after these financial institutions are collapsing, he is promoting Federal regulations to control them so that this crisis will not happen again. He now wants more Federal regulations of Wall Street altogether. Wouldn’t this be considered as socialism that most conservatives do not want? Also, please do not forget McCain’s past involvement in the Keating Five as an example that his future plans for Federal regulations of financial institutions will not work —
http://en.wikipedia.org/wiki/Keating_Five
4) McCain has said over and over that, “the fundamentals of our economy are strong” in reference to our economy. Now, he states that he was referring to the American workers as being the backbone of our economy? This reference is only made after Obama has contested his refusal to accept that our country is in a financial crisis. Maybe this is McCain’s way of defusing his stance of denial.
5) McCain has stated since the beginning of the Republican campaign that he will fight a good and honest campaign without resorting to dirty politics of using smear tactics. Now, most of the McCain’s campaign ads against Obama are smear campaigns that even The New York Times, The Washington Post, The LA Times, Newsweek, and various other major news agencies have declared as false information using very dirty politics. Most of the Obama’s campaign ads have been on the defense to all of these false accusations by the McCain’s campaign ads.
6) For more changes of McCain, please look at the link below —
http://www.thecarpetbaggerreport.com/flipflops
In this election, there are in fact two forms of changes. One form of “Change” is being promoted by a candidate who wants to transform this country for the better, while the other form of “Change” is being promoted by another candidate of his own transformation to capture the hearts of the American public. Which form of “Change” do we want as a country?
Sep 30, 2008 - 10:08 am 115. Paul:Links no longer work. Music companies have forced YouTube to remove the videos because they had a music soundtrack. I hope the original director/producer can correct and reload the video. I’ve seen it and it is great.
Sep 30, 2008 - 10:11 am 116. tanstaafl:Do you link
This Video ?
Well worth watching !
Sep 30, 2008 - 10:13 am 117. Willaim:Our political process has become so polarized that I doubt we will ever get beyond this. Reading the quotes on this board saddens me to no end. There is plenty of blame to go around. Yes, Democrats pushing for more home ownership is certainly cause for blame. But the Republicans has plenty of blame as well. Allowing the investment banks exemptions to the leverage requirements is a big cause for the actual meltdown we are having now. The Commodity Futures Modernization Act basically bared the SEC or the Commodity Futures Trading Commission from regulating the swaps market……which grew to $62 trillion..nearly 4 times the size of the US stock market. Nobody could check to see if banks had the money to cover these obligations. These are the reasons for the current meltdown…..not minority home ownership….which is laughable.
Sep 30, 2008 - 10:19 am 118. Markus:cfbleachers — “See this article below and tell me which part of it is not accurate or incorrect in its assessment.”
Well two mistakes are blatantly obvious.
“These two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis,” Chairman Frank said. He added, “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” July, 2008″
Frank said this in 2003, not 2008. In 2003, he was not Chairman, and Democrats were in the majority in both chambers. Dodd was not Chairman of Banking Committee in the Senate, and had no power to stop a reform bill from being voted on at least at the Committee level. Senate Republicans made no effort to pass reform bill in the Committee, and force a cloture vote on the Senate floor.
“The bill to tighten the Fannie Mae and Freddie Mac regulatory structure passed the House but was never brought up for a vote in the Senate, largely because of Democratic opposition (led by Chris Dodd and Barney Frank).”
Barney Frank is not a Senator, was not the Chairman at the time, and had no power to keep bills from being brought up in the Senate.
Sep 30, 2008 - 10:22 am 119. Ex-fetus:“I’m willing to believe all of that, but why are some banks going under but not all? Weren’t all banks required to meet the same obligations?”
No. IIRC, it was part of the FDIC program. A bank that doesn’t want FDIC insurance just has to comply with State laws, as long as they do business within the State. I think there is an SC ruling on that, but it’s not my area and I’m not sure.
Sep 30, 2008 - 10:27 am 120. Dave:One of the local banks is like that. It was started early in the 19th century to give the Cotton merchants a place to keep their loot. The last dealing they had with the Federal Government was in 1863 when a Yankee Cavalry unit thought they would get ahold of that cotton money. Ending up using cannon to reduce the walls. The employees died to a man. Local legend has it the dying words of the head teller were “To ‘ell wid you, we hid the money.” Needless to say, they are NOT FDIC insured and don’t need to be. Real Bankers won’t be bothered by any of this. You can tell the real bankers by them having survived the ‘29 crash. The fly by night point shaving hustlers will get well and truely screwed.
They got it coming. Pity about the poor suckers, but that is life. Everyone will come out of this wiser and stronger, even the ones that go to jail.
A real banker is a treasury and deserves the small percentage he earns. The fly-by nighters are a menace to society and deserve whatever bad they draw to them selves.
Another link to the Video. Up as of 1:30 PM this afternoon.
http://www.youtube.com/watch?v=fiXwZI_YqHY
For those searching the web for it, it’s called “Burning down the house: What cause our economic crisis”.
Sep 30, 2008 - 10:28 am 121. Markus:Woops, important typo in prior post:
Sep 30, 2008 - 10:29 am 122. xj:“Frank said this in 2003, not 2008. In 2003, he was not Chairman, and Democrats were NOT in the majority in both chambers.” [And had no power to block Republican bills.]
The argument that the financial crisis is in any way related to the repeal of Glass-Steagall is profoundly ignorant.
Glass-Steagall separated commercial banking (deposit-taking and loans) from investment banking (the issue of tradable securities.) The repeal of Glass-Steagall allowed these two banking functions to be combined in the same entity (as had always been the case in Britain, Germany, France, Japan and the whole rest of the world.)
Some banks, such as J.P. Morgan, took advantage of this repeal and became European-style “universal banks,” combining investment and commercial activities. Other banks remained purely investment banks (like Bear Sterns and Lehman Brother) or commercial banks (like Countrywide and WaMu.)
If the repeal of Glass-Steagall was such a terrible idea, we should expect the universal banks to fail and the commercial and investment banks to remain in business. In fact, the opposite has been the case.
The repeal of Glass-Steagall increased the robustness of the American financial system and brought U.S. banking practices into line with the rest of the world. Anyone who blames this repeal for the financial crisis is too ignorant to have a credible opinion on the subject.
Sep 30, 2008 - 10:46 am 123. YG:Rose, I was going to link another version of “Burning Down the House: What Caused the Financial Crisis” (the version without John McCain at the end). However, I’ve just discovered that this version has also been removed.
Really scary!
Sep 30, 2008 - 10:55 am 124. Ben:Again, Markus, some GOP members have also been beholden to Fannie and Freddie, as their donations from these GSEs clearly show. The point is that the only reforms proposed and pushed came from the GOP. Opposition to these reforms came primarily from Dems, who accused the reformers of cloaked racism and antipathy toward the working class.
Sep 30, 2008 - 11:04 am 125. Whitehall:Pragmatic:
A specific answer to your question is that AIG held $600 million of FM stock. When those GSEs went belly-up, that stock was worthless so they had to take a $600 million write down of capital. Whether that was the only cause of the AIG purchase I can’t say but it certainly didn’t help. The AIG action did occur after the FM action.
Allowing greater leverage as part of banking deregulation was non-conservative but that was not for banks under regulation by the Fed. The question of why there has been a global inflation in housing might be traced to similar increases in allowed leverage in other countries too. I understand that banks in Belgium and Germany are close to failure too and have leverage ratios of 50:1, far exceeding what US banks are allowed. Note that investment banks in the US are allowed greater leverage but they have less effect on creating money supply – I think – and can claim less support from the government like Fed lending window and FDIC – so far.
Ex-Fetus is correct – there are REAL bankers and then there are hustlers. The latter assume greater risk and sometimes earn greater return.
Still, Congress changed the rules of the game. Don’t blame people too much for trying to make money within the rules, even flippers. However, we do need rewards (or at least no punishment) for those who exhibit conservative habits.
Sep 30, 2008 - 11:26 am 126. kabud:Enemies of America killed the VIDEO
http://www.youtube.com/watch?v=NU6fuFrdCJY
This video is no longer available due to a copyright claim by Universal Music Publishing
Sep 30, 2008 - 11:35 am 127. YG:Rose, try this link for the video:
Sep 30, 2008 - 11:39 am 128. Eric S:http://www.liveleak.com/view?i=658_1222431921
Markus, how about elaborating how many votes it requires to pass a bill in the Congress and the Senate. Then if you wouldn’t mind elaborating how many Dems/Repubs were in each house. I’m quite confidant that this majority you speak of is smaller than enough. Please do elaborate.
Sep 30, 2008 - 11:55 am 129. wumhenry:They spiked that one, too!
Sep 30, 2008 - 11:59 am 130. theotherLynn:“This video is no longer available due to a copyright claim by Universal Music Publishing.”
I am looking forward to the time when banks will conduct themselves as they used to in better times. As Bob Hope said:
“A bank is a place that will lend you money if you can prove that you don’t need it.”
Sep 30, 2008 - 12:09 pm 131. Unequalizer:I know demographic shifts are normal over time.
But I saw my neighborhood RAPIDLY shift majority-white to majority-minority and from a 5% disadvantaged child ratio to a 25% ratio in about 8 years.
It all seemed to start in the mid 90’s.
Fannie and Freddie seemed to be the Clinton/Carter solution to busting up the middle class majority white neighborhoods.
Seemed to work where I am at.
Sep 30, 2008 - 12:24 pm 132. Andrew Hamilton:Roger,
Many, many thanks for putting some flesh on the argument. The NYT coverage of the Bush-Snow initiative in September 2003 is especially damning. They would have taken away Congressionally determined reserve requirements for the federal enterprises and substituted a regulator’s judgment, and depoliticized F&F by removing the president’s power to appoint board members. And see what Barney Frank said in response, and compare that to what he says today. There are lies, damned lies, and Barney Frank. With Pelosi smirking in the background. Nightmare scenario.
Andrew Hamilton
Sep 30, 2008 - 12:25 pm 133. Clyde:Wow – I see the Obama “truth squads” must be in full torpedo mode. All the videos keep getting pulled. And I see some comments here that are trying to refocus the issue away from the true intent of the CRA. So let me ask this; The mortgagaes that were swaped and traded…If they would have been actually valuable (i.e. – being repaid with interest), would these failures have occured?
Sep 30, 2008 - 12:26 pm 134. kabud:file is available here
http://www.liveleak.com/view?i=658_1222431921
you can download video with this firefox addon
https://addons.mozilla.org/en-US/firefox/addon/3006
and share it on youtube or any other hosting yourself
in fact you should!
Sep 30, 2008 - 12:44 pm 135. Believer:“mishu” on another thread, “Challenging the Young Vote” posted a link.
It’s a video that hasn’t been taken down — they think it’s great! — go watch, and, if you’re a normal American, get creeped out.
Sep 30, 2008 - 12:52 pm 136. Nightly Ramble:More Bailout;Acorn Vote fraud, more | BitsBlog:[...] Kimball has a great peice on all this, you should [...]
Sep 30, 2008 - 1:03 pm 137. david roberts:Isn’t Time that if people who do not run the ship properly and are not held accountable why do they deserve golden parachutes and great seperation bonuses when the congress will not even extend unemployment benefits to the working poor of who’s job’s have been sent overseas by greedy companies looking for cheaper labor I refuse to buy anything made in Pakistan or even Vietnam or countries who still owe America money Why don’t we collect our overdue payments due our country from others Thank-You That is all I have to say So let us work together as Democrats Nancy Pelosi and Barney Frank work with the people who had guts like Tim Walz and Michelle Bachmann let the two party’s come together for the good of all Thank-You David
Sep 30, 2008 - 1:11 pm 138. Lupo:“You can’t systematicly force finacial institutions to loan money to people who cannot pay it back and expect to have no adverse impact on liquidity.”
I agree that these programs were profoundly unwise, but the fact remains: they’re not responsible for the present liquidity hole. They may eventually exacerbate it, but they’re not the root problem. The present problem was caused by leverage and speculative bets on the fella in the string vest. If you must blame Democrats for it, you can blame them for allowing the bulge bracket IB’s who caused the mess to go public in the 1990s. That, leverage and mark to market accounting made all the money go away. When IB’s were privately held, they didn’t have to tell anyone what kind of trash was on the books, let alone tell them the insane things that the MBS market was saying (aka, when there are no buyers, MtM accounting more or less means your bond is worth 0, when in fact, they are demonstrably worth something if you can sit on them for 20 years).
Anyone who thinks 40:1 leverage is anything resembling insane on even something as vanilla as T-bill punts is smoking something. That was a huge mistake. 12:1 leverage is given to banks because they’re supposed to not make risky bets. 40:1 on big risk is bonkers. This has nothing to do with partisan politics; all political parties, even our favorites, make terrible mistakes. I rather think 40:1 leverage was not a basic platform of the Republican party or Bush administration, so you can rest easy on that.
Sep 30, 2008 - 1:20 pm 139. Lupo:(erm I meant “anything resembling sane” thank you drive through)
Sep 30, 2008 - 1:21 pm 140. David:Math Challenged:
This is exactly the problem I’m raising — these arguments are made with no attention to available facts and evidence. Your numbers are completely disconnected from reality even as back-of-the-envelope calculations. There are 5,000 owner-occupied houses in the ENTIRE CITY of East St. Louis, and new loans are undoubtedly a fraction of that total number. The MEDIAN home price was around $40,000 in 2000, and if CRA had any impact at all it was by opening banks up to lending well below the median. Finally, do you really mean to imply that the current value of your $100,000 loans is actually ZERO? (The capitalization gap ultimately rests on the difference between the original loan amount and the current value of the loan to the mortgage institution. As long as the property is worth anything at all net foreclosure costs, the original loan amount isn’t the right measure.)
Ben -
What evidence do you have that CRA fundamentally changed mortgage underwriting practices throughout the industry, including institutions that aren’t regulated by CRA at all? And in other countries going through the same crisis? (My mortgage was bought by a Dutch company; did they buy it because of CRA?) Is this claim anything other than speculation?
Fannie and Freddie is a whole separate discussion. The idea that we can seamlessly lump it together in the same category of CRA is another example of the broad-brush, fact-free kind of argument I’m complaining about. What I’m talking about is the original claim that CRA was the root of the problem. So far I haven’t seen any support whatsoever for the claim that it did. People pushing that view are doing so without even showing awareness of, much less trying to rebut, the many, many discussions of this issue. And as far as I can tell the claims are made in a complete and total factual vacuum. And with no attention to the obvious alternative explanations for the financial meltdown. For example, the proximate cause of the current crisis is apparently the decline in home values. (See, for example, the second chart here http://delong.typepad.com/sdj/2008/09/today-in-financ.html.) Is the CRA the cause of that?
Sep 30, 2008 - 1:24 pm 141. kabud:we need to
expedite the Foreclosure auctions
clean up things like naked short sales and clearing houses deficits,- could be much worth then subprime component of the crisis
Sep 30, 2008 - 1:33 pm 142. kabud:Jeffrey A. Miron is senior lecturer in economics at Harvard University.
A Libertarian, he was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan.
http://edition.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview
Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.
Further, the current credit freeze is likely due to Wall Street’s hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents.
The costs of the bailout, moreover, are almost certainly being understated. The administration’s claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion.
If these assets are worth something, however, private parties should want to buy them, and they would do so if the owners would accept fair market value. Far more likely is that current owners have brushed under the rug how little their assets are worth.
The bailout has more problems. The final legislation will probably include numerous side conditions and special dealings that reward Washington lobbyists and their clients.
Anticipation of the bailout will engender strategic behavior by Wall Street institutions as they shuffle their assets and position their balance sheets to maximize their take. The bailout will open the door to further federal meddling in financial markets.
So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.
The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer.
Sep 30, 2008 - 1:44 pm 143. Ben:David,
Do your homework. The expansion of Fannie and Freddie into buying subprime loans is DIRECTLY related to the expansion of the CRA to force banks to make such loans. Congress used Freddie and Fannie to facilitate the CRA mandates — banks could make these risky loans knowing they could turn around and sell most of them to “the government.”
As for the fall in housing prices, no, CRA did not cause that. But the subprime lending boom DID cause much of the dramatic run-up in housing prices since the mid-90s (the housing bubble), and it was inevitable that this bubble would eventually pop. As far back as 1998, libertarian economists were warning of just such a scenario.
Wish all you want, but you can’t wish away facts.
Sep 30, 2008 - 2:50 pm 144. kabud:several thousand people protested in the Wall Street, NY
AGAINST BAILOUT
http://www.liveleak.com/view?i=096_1222744802
Sep 30, 2008 - 2:54 pm 145. Clowns, Schmucks, and Glorious Dictatorships | ninme:[...] Hmm. Meanwhile, here’s a good breakdown of the whole thing: Who caused “the biggest financial crisis since the Great Depression?” [...]
Sep 30, 2008 - 3:32 pm 146. cfbleachers:http://online.wsj.com/public/article/SB121677050160675397.html
“Fan and Fred also couldn’t prosper for as long as they have without the support of the political left, both in Congress and the intellectual class. This includes Mr. Frank and Sen. Chuck Schumer (D., N.Y.) on Capitol Hill, as well as Mr. Krugman and the Washington Post’s Steven Pearlstein in the press. Their claim is that the companies are essential for homeownership.
Yet as studies have shown, about half of the implicit taxpayer subsidy for Fan and Fred is pocketed by shareholders and management. According to the Federal Reserve, the half that goes to homeowners adds up to a mere seven basis points on mortgages. In return for this, Fannie was able to pay no fewer than 21 of its executives more than $1 million in 2002, and in 2003 Mr. Raines pocketed more than $20 million. Fannie’s left-wing defenders are underwriters of crony capitalism, not affordable housing”
Sep 30, 2008 - 3:42 pm 147. George Alper:You are a fucking moron! What started this was Ronald Reagan’s incessant march toward deregulating the federal government out of existence- a mantra taken up by Bush 1, then Clinton, and finished off by that chimpanzee son of a Bush. To blame the resultant damage caused by the staggering greed of those on Wall Street who created bets on bets that the home loans would or wouldn’t fail is a fatally flawed argument. Don’t forget that 96 % of all loans are performing, and 76 % of all sub-prime loans are performing.
Sep 30, 2008 - 5:30 pm 148. kabud:>Don’t forget that 96 % of all loans are performing, and 76 % of all sub-prime loans are performing.
exactly , lets let the loser go out of business
enough is enough
Sep 30, 2008 - 5:40 pm 149. Two--Four:[...] been linked all over the place, but I just want to make sure that everybody reads Howard Husock’s superb article in [...]
Sep 30, 2008 - 6:02 pm 150. Ex-fetus:“The argument that the financial crisis is in any way related to the repeal of Glass-Steagall is profoundly ignorant.”
No, that isn’t correct. It was a major contributing factor, but not the principal cause. If Glass-Steagall hadn’t been passed, the sub-prime crisis would not have spread as far and as fast.
Glass-Steagall had the same effect on this crisis as the dike failing had on New Orleans.
“The repeal of Glass-Steagall increased the robustness of the American financial system and brought U.S. banking practices into line with the rest of the world.”
Yes, which isn’t a good thing if you are an American. If you are a Socialist One-Worlder, then it was a great idea.
“Anyone who blames this repeal for the financial crisis is too ignorant to have a credible opinion on the subject.”
Anyone who fails to understand the effect this repeal had on this financial crisis is too ignorant to have a credible opinion on the subject.
First, for your edification, there are two parts to this “crisis”. First is the squeeze on liquidity caused by the sun-prime thingie. That in turn was created by Congress trying to tinker with the ONLY 2 laws of Economics.
Second is the Wall and Broad Amusement Park, with it’s thrill a minute ride.
The 2 problem are related, sorta. The first is systematic, and a classic example of what happens when you game a system as complex as the US Financial system.
The Stock Market rollar coaster is the result of the market being manipulated. The SEC started their investigation on the 19th, so within a decade or so, we will know who did it.
Remember those two laws? They are “supply and demand” and “Buy low, sell high”. Socialist economies ALWAYS fail because they ignore or refuse to accept those laws. The regulations passed by Congress were an attempt to circumvent the laws of Supply and demand.
They didn’t work. ALL the fancy instruments (AKA junk bonds) created over the last few years are a violation of the “buy low, sell high” law because they add cost to the price of money without adding value.
You appear to like the European economy, or at least think enough of it to want the US economy to be more like Europes.
Well when the stock market gets down to about 8000 and unemployment up to 10% with interest rates into the double digitsa and productivity sinking, then you will get your wish.
I think it would be much simpler for you to move to Europe. Turn in your Social Security number on the way out and we will find some European that wants to live in America. A straight swap only, no draft picks.
“An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.”
Sep 30, 2008 - 6:17 pm 151. Bill Bradley:Laurence J. Peter
US educator & writer (1919 – 1988)
Well, somebody has to make the case that the crisis was really caused by liberals.
Judging by the bow tie, I suppose that would be you.
Sep 30, 2008 - 8:49 pm 152. Bill Bradley:Hmm.
I am not seeing the link to my web site, New West Notes.
Yet another upgrade here, I suppose.
Sep 30, 2008 - 8:50 pm 153. Ex-fetus:Here is the street legal video. It should stay up for a while;
http://www.youtube.com/watch?v=1RZVw3no2A4&feature=iv&annotation_id=event_597487
Bill, it was.
Sep 30, 2008 - 11:31 pm 154. TechBustSurvivor:There was this thingie in ‘29 called the Great Depression.
It was caused by the Stock market crashing. The stock market crashed because of bad paper ( aka junk bonds).
After that crash, Congress wrote several laws that would prevent it happening again.
Everything was fine, with the market going thru it’s normal cycles until Carter ( a Socialist/Communist) got rid of the regulations. I’m not sure if that he created ’stagflation’ by that or if he was trying to cure ’stagflation’ by deregulating the secutities market.Neither was he, I think. Anyway, Clinton (a Liberal/Socialist) added a bunch of really screwball ideas to the mix. Now we are where we are.
Try and deny that the stock market is bleeding like a stuck pig. Try to deny that major players in the financial markets are dying like flies. Both of these things are happening for a reason. Somebody screwed up big time. Once the problem is fixed we will fix the blame.
Meanwhile, there was a problem, it was fixed. Regulations were written to prevent that problem from happening again. Those regulations were discarded and/or ‘adjusted’. It happened again.
How difficult is that to understand?
The video states that banks were REQUIRED to lend sub-prime otherwise face penalty. This contradicts with the next statement in the video that states that after the interest rates raised, banks stopped lending. So, it means either the banks were okay with the penalty or there was no penalty.
Look banks have been in the loan business for the last 300 years, and they know about income-to-debt ratio. They are partly to blame. The politicians were wrong in going along with the bubble. Many folks could not afford the high price homes, but no one gave a damn.
The banks though, drank their own kool-aid, and stashed their money back into mortgage backed securities.
Now, the home-owners made a mistake chasing after homes (mass hysteria as intended by the Greenspan) and they have to pay or foreclose. Whereas the banks want the tax payers (i.e. homeowners) to foot the bill of the bad loans (in addition to the high home prices). Double whammy.
I remember Greenspan saying in 2003/2004 that we should come up with 40-year home loans (to keep the party going), since this is the only way to make the consumer spend, the only way to get us out of the tech bubble was to make a housing bubble. The only way out of the housing bubble is inflation and commodities bubble.
Oct 1, 2008 - 12:25 am 155. TheOtherLynn:The new age speculators moved into real estate and left carnage behind in their feeding frenzy. They moved into oil until the percentage of people s’s income going toward fuel became dangerously unsustainable. They tried to move into commodities until rumors of rioting woke the governments up. So in a way your right it is poor people’s fault. Now they have no place to go. We spent the last number of years living it up in Las Vegas now it’s time to go home. Oh, and they lie when they say that what happens in Vegas stays in Vegas. Read this: http://www.spiegel.de/international/world/0,1518,559550,00.html
Oct 1, 2008 - 5:11 am 156. Ex-fetus:Adding the above to the mix, I think we were hit with the perfect storm and I think the real test will be how we handle the clean-up.
TBS, I think you misunderstood;
“The video states that banks were REQUIRED to lend sub-prime otherwise face penalty. This contradicts with the next statement in the video that states that after the interest rates raised, banks stopped lending.”
The Banks stopped lending to EVERYONE, not just the deadbeats. The penalties they faced were from law suits.
Oct 1, 2008 - 6:37 am 157. obhaven:If you deny EVERYONRE a loan, because there is no money to lend, then you cannot be sued for discrimination.
If you Cant Make it, I suppose You CAN FAKE IT! Needing a loan? NEW CAR?? Credit Guidelines TOO DAMN TOUGH? You Are Not Alone! Let us help! Click here for more info www FAKEPAYCHECKSTUBS com Proven Effective for ANYONE Needing Credit,Car or Home refinancing!
Oct 1, 2008 - 7:51 am 158. rel:The law doesn’t state to give people loans that they couldn’t afford and if you look around foreclosures are happening all over the place not just in section 8 low income areas.
Face it the banks found a new vehicle to take these mortgages and package them to make billions so more and more lenders started finding any way to hand out loans to increase their investment assets. The greed for these loans is what prompted lenders to hand out bad loans.
Either they knew that they would sell the loan and make their money so it didn’t matter if the loan was a poison pill or the loans were handed out by shady lenders so far down the ladder that the bigger lenders had no idea what they had.
Oct 1, 2008 - 10:46 am 159. kabud:rel:
>foreclosures are happening all over the place :
not exactly
for example Bergen County(New Jersey, closest to NYC) capital Hackensack, 43 thousand population,
blacks and hispanics 50% population
there only 4 forclosures
in Bergen County 64 all together
Oct 1, 2008 - 11:02 am 160. Ex-fetus:“rel:
The law doesn’t state to give people loans that they couldn’t afford and if you look around foreclosures are happening all over the place not just in section 8 low income areas.”
Actually it does, you just don’t understand it.
Oct 1, 2008 - 6:06 pm 161. kabud:Know what an income to debt ratio is? Know how to calculate debt?
I thought so.
Meanwhile, I’m waiting to see if the Senate caves. I suspect they will, or at least the ones that aren’t standing for election. Diane Feinstien, an ultra-liberal Senator from Far left California, said that she got about 92,000 messages from her constituents and 75,000 were against the bail-out. It is higher in the red states. My Senator isn’t up for re-election, but I sent him an E-mail with a quote from him when he was running for election in ‘06 about smaller government and how he thought it was important. I pointed out that while my memory isn’t so good, my computer NEVER forgets and all I have to do is put it on my schedule for 2012 and I’ll be reminded.
It is possible to remind all those voters who Senators aren’t standing for re-election how they voted on this bail out (which will fail) when there re-election comes up.
obamidiots and other corrupted scum in us senate voted to give our defense budget to wall street((((
dont you people vote for this senators – they will bury this country
it is a very bad day in the American history
my condolences
Oct 1, 2008 - 6:41 pm 162. qrstuv:“The law doesn’t state to give people loans
that they couldn’t afford”
Yet Barack Obama could force a bank to give such a loan, by suing the bank.
See http://www.suntimes.com/news/politics/obama/700499,CST-NWS-Obama-law17.article
Oct 1, 2008 - 7:04 pm 163. Shocked!:“I sincerely believe the banking institutions having the issuing power of money, are more dangerous to liberty than standing armies.”
-Thomas Jefferson
“Who controls money controls the world.”
-Henry Kissenger
Council on Foreign relations
“Capital must protect itself in every way…Debts must be collected and loans and mortgages foreclosed as soon as possible. When through a process of law the common people have lost their homes, they will be more tractable and more easily Governed by the strong arm of the law applied by the central power leading financiers. People without homes will not quarrel with their leaders. This is well known among our principle men now engaged in forming an imperialism of capitalism to govern the world. By dividing the people we can get them to expand their energies in fighting over questions of no importance to us except as teachers of the common herd.”
Oct 1, 2008 - 7:19 pm 164. Believer:-JP Morgan
Readers should go to “americanthinker.com” for Simpson’s article:
“Barack Obama and the Strategy of Manufactured Crisis”
Don’t cast your vote until you’ve read it.
Oct 1, 2008 - 8:43 pm 165. Marjo:This mess should get McCain elected for sure.
Oct 1, 2008 - 8:45 pm 166. The Rosett Report » Bragging Up the Bailout:[...] as Chris Dodd, Barack Obama & cohorts, check out this post from one of my Pajamas colleagues, Roger Kimball – and if you haven’t already seen the video linked at the end, it provides some [...]
Oct 2, 2008 - 1:09 am 167. Cybercorrespondent:A Look Into Barack Obama’s Past
Since the pro-Obama advocacy organization such as the New York Times did so much to dig up dirt on Sarah Palin, it is only fair to shed some light on their candidate, Senator Barack Obama.
Barack Obama joined Trinity United Church of Christ more than 20 years ago and considered the church pastor, Rev. Jeremiah Wright as his mentor. Rev. Wright married Obama and his wife Michelle, baptized their two daughters and is credited by Obama for the title of his book, “The Audacity of Hope.” In his sermons, Rev. Wright repeated denunciations of the U.S and blurted out statements like “The government gives them the drugs, builds bigger prisons, passes a three-strike law and then wants us to sing “God Bless America.” No, no, no, God damn America, that’s in the Bible for killing innocent people,” he said in a 2003 sermon. “God damn America for treating our citizens as less than human. God damn America for as long as she acts like she is God and she is supreme.”
Looking at Obama’s ties to Rev. Wright, and his connections to a terrorist bomber, William Ayers, both men who would like nothing more than to destroy this country causes many people to second guess Obama’s intentions for change. If you have not heard about William Ayers, you can read about him in the U.S. News, Michael Barone’s column-Obama Needs to Explain His Ties to William Ayers. “In my U.S. News column, I make a brief reference to the unrepentant Weather Underground terrorist bomber William Ayers and his connections to Barack Obama. They were closer than Obama implied when George Stephanopoulos asked him about Ayers in the April 16 debate—the last debate Obama allowed during the primary season. To get an idea of how close they were, check out Tom Maguire’s Just One Minute blog and Steve Diamond’s Global Labor and Politics. The Obama-Ayers relationship is also mentioned in David Freddoso’s The Case Against Barack Obama: The Unlikely Rise and Unexamined Agenda of the Media’s Favorite Candidate.”
Lets examine Obama’s connection with an accused political fixer Antoin “Tony” Rezko. The following is on explanation by Brian Ross and Rhonda Schwartz from ABC News. “In sharp contrast to his tough talk about ethics reform in government, Sen. Barack Obama, D-Ill., approached a well-known Illinois political fixer under active federal investigation, Antoin “Tony” Rezko, for “advice” as he sought to find a way to buy a house shortly after being elected to the United States Senate. Rezko had been widely reported to be under investigation by the U.S. attorney and the FBI at the time Obama contacted him and has since been indicted on corruption charges by a federal grand jury in a case that prosecutors say involves bribes, kickbacks and “efforts to illegally obtain millions of dollars.”
Because Barack Obama was a dependable ally of subsidized developers in the Legislature, his friend and fund-raiser Rezko depended on him to get things done such as cosponsoring a bill in 2001 allowing developers to pocket half of the proceeds from selling state tax credits to others. Obama admitted that his decision to involve Rezko was “a bone-headed mistake.” What he failed to mention is that he has a closet full of bone-headed mistakes such as Peter Wallsten pointed out in the Los Angeles Times on
January 24, 2008.
“Barack Obama angered fellow Democrats in the Illinois Senate when he voted to strip millions of dollars from a child welfare office on Chicago’s West Side. But Obama had a ready explanation: He goofed.
“I was not aware that I had voted no,” he said that day in June 2002, asking that the record be changed to reflect that he “intended to vote yes.”
That was not the only misfire for the former civil rights attorney first elected to the state Senate in 1996. During his eight years in state office, Obama cast more than 4,000 votes. Of those, according to transcripts of the proceedings in Springfield, he hit the wrong button at least six times.”
Now comes the big question, what exactly does a community organizer do?
One thing Barack Obama did as a community organizer was pressure banks to make bad loans. In Barack Obama’s youthful community organizing days he joined a group called ACORN. Using the Community Reinvestment Act which was designed to encourage banks to make loans to high-risk borrowers, ACORN started abusing the law by forcing banks to make hundreds of millions of dollars in ’subprime’ loans to minorities with bad or no credit. Using charges of racism and threats to use CRA to block business expansions have enabled ACORN to extract hundreds of millions of dollars in loans and contributions from America’s financial institutions.
Other things that ACORN did as community organizers were agitate for higher minimum wages, attempt to thwart school reform, try to unionize welfare recipients who are obliged to work in exchange for benefits and organize voter registration drives. In 2006 for example, their voter registration drive in Washington produced 1,800 new voters of which 1,794 names submitted were fake. The secretary of state called it the “worst case of election fraud in our state’s history.”
If you like to know more, watch these two videos.
http://www.youtube.com/watch?v=nRmB93McZeI
http://www.youtube.com/watch?v=_MGT_cSi7Rs
Cybercorrespondent
Oct 2, 2008 - 5:57 am 168. Colonel:cybercorrespondent@gmail.com
http://cybercorrespondent.blogspot.com
Obama’s Not Exactlys:
1.) Selma March Got Me Born – NOT EXACTLY, your parents felt safe enough to have you in 1961 – Selma had no effect on your birth, as Selma was in 1965. (Google ‘Obama Selma ‘ for his full March 4, 2007 speech and articles about its various untruths.)
2.) Father Was A Goat Herder – NOT EXACTLY, he was a privileged, well educated youth, who went on to work with the Kenyan Government.
3.) Father Was A Proud Freedom Fighter – NOT EXACTLY, he was part of one of the most corrupt and violent governments Kenya has ever had.
4.) My Family Has Strong Ties To African Freedom – NOT EXACTLY, your cousin Raila Odinga has created mass violence in attempting to overturn a legitimate election in 2007, in Kenya . It is the first widespread violence in decades. The current government is pro-American but Odinga wants to overthrow it and establi sh Muslim Sharia law. Your half-brother, Abongo Oba ma, is Odinga’s follower. You interrupted your New Hampshire campaigning to speak to Odinga on the phone. Check out the following link for verification of that….and for more.
Obama’s cousin Odinga in Kenya ran for president and tried to get Sharia muslim law in place there. When Odinga lost the elections, his followers have burned Christians’ homes and then burned men, women and children alive in a Christian church where they took shelter.. Obama SUPPORTED his cousin before the election process here started. Google Obama and Odinga and see what you get. No one wants to know the truth.
5.) My Grandmother Has Always Been A Christian – NOT EXACTLY, she does her daily Salat prayers at 5am according to her own interviews. Not to mention, Christianity wouldn’t allow her to have been one of 14 wives to 1 man.
6.) My Name is African Swahili – NOT EXACTLY, your name is Arabic and ‘Baraka’ (from which Barack came) means ‘blessed’ in that language. Hussein is also Arabic and so is Obama.
Barack Hussein Obama is not half black. If elected, he would be the first Arab-American President, not the first black President. Barack Hussein Obama is 50% Caucasian from his mother’s side and 43.75% Arabic and 6.25% African Negro from his father’s side. While Barack Hussein Obama’s father was from Kenya , his father’s family was mainly Arabs… Barack Hussein Obama’s father was only 12.5% African Negro and 87.5% Arab (his father’s birth cert ificate even states he’s Arab, not African Negro). From….and for more….go to…..
http://www.arcadeathome.com/newsboy.phtml?Barack_Hussein_Obama_-_Arab-American,_
7.) I Never Practiced Islam – NOT EXACTLY, you practiced it daily at school, where you were registered as a Muslim and kept that faith for 31 years, until your wife made you change, so you could run for office.
4-3-08 Article ‘Obama was ‘quite religious in islam” http://www.wnd.com/index.php?fa=PAGE.view&pageId=60559
8.) My School In Indonesia Was Christian – NOT EXACTLY, you were registered as Muslim there and got in trouble in Koranic Studies for making faces (check your own book).
February 28, 2008. Kristoff from the New York Times : Mr. Obama recalled the opening lines of the Arabic call to prayer, reciting them with a first-rate accent. In a remark that seemed delightfully uncalculated (it’ll give Alabama voters heart attacks), Mr. Obama described the call to prayer as ‘one of the prettiest sounds on Earth at sunset.’ This is just one example of ‘Obama’s narrative is being altered, enhanced and manipulated to whitewash t roubling facts.’
9.) I Was Fluent In Indonesian – NOT EXACTLY, not one teacher says you could speak the language.
10.) Because I Lived In Indonesia , I Have More Foreign Experience – NOT EXACTLY, you were there from the ages of 6 to 10, and couldn’t even speak the language. What did you learn except how to study the Koran and watch cartoons.
11.) I Am Stronger On Foreign Affairs – NOT EXACTLY, except for Africa (surprise) and the Middle East (bigger surprise), you have never been anywhere else on the planet and thus have NO experience with our closest allies.
12.) I Blame My Early Drug Use On Ethnic Confusion – NOT EXACTLY, you were quite content in high school to be Barry Obama, no mention of Kenya and no mention of struggle to identify – your classmates said you were just fine
13.)An Ebony Article Moved Me To Run For Office – NOT EXACTLY, Ebony has yet to find the article you mention in your book. It doesn’t, and never did, exist.
14.) A Life Magazine Article Changed My Outlook On Life – NOT EXACTLY, Life has yet to find the article you mention in your book. It doesn’t, and never did, exist.
15.) I Won’t Run On A National Ticket In ‘08 – NOT EXACTLY, here you are, despite saying, live on TV, that you would not have enough experience by then, and you are all about having experience first.
16.) Voting ‘Present’ is Common In Illinois Senate – NOT EXACTLY, they are common for YOU, but not many others have 130 NO VOTES.
17.) Oops, I Misvoted – NOT EXACTLY, only when caught by church groups and Democrats, did you beg to change your misvote.
18.) I Was A Professor Of Law – NOT EXACTLY, you were a senior lecturer ON LEAVE.
19.) I Was A Constitutional Lawyer – NOT EXACTLY, you were a senior lecturer ON LEAVE.
20.) Without Me, There Would Be No Ethics Bill – NOT EXACTLY, you didn’t write it, introduce it, change it or create it.
21.) The Ethics Bill Was Hard To Pass – NOT EXACTLY, it took just 14 days from start to finish.
22.) I Wrote A Tough Nuclear Bill – NOT EXACTLY, your bill was rejected by your own party for its pandering and lack of all regulation – mainly because of your Nuclear donor, Exelon, from which David Axelrod came.
23.) I Have Released My State Records – NOT EXACTLY, as of March, 2008, state bills you sponsored or voted for have yet to be released, exposing all the special interests pork hidden within.
24.) I Took On The Asbestos Altgeld Gardens Mess – NOT EXACTLY, you were part of a large group of people who remedied Altgeld Gardens . You failed to mention anyone else but yourself, in your books.
25.) My Economics Bill Will Help America – NOT EXACTLY, your 111 economic policies were just combined into a proposal which lost 99-0, and even YOU voted against your own bill.
26.) I Have Been A Bold Leader In Illinois – NOT EXACTLY, even your own supporters claim to have not seen BOLD action on your part.
27.) I Passed 26 Of My Own Bills In One Year – NOT EXACTLY, they were not YOUR bills, but rather handed to you, after their creation by a fellow Senator, to assist you in a future bid for higher office.
28.) No One on my campaign contacted Canada about NAFTA – NOT EXACTLY, the Canadian Government issued the names and a memo of the conversation your campaign had with them.
29.) I Am Tough On Terrorism – NOT EXACTLY, you missed the Iran Resolution vote on terrorism and your good friend Ali Abunimah supports the destruction off Israel .
30.) I Want All Votes To Count – NOT EXACTLY, you said let the delegates decide.
31.) I Want Americans To Decide – NOT EXACTLY, you prefer caucuses that limit the vote, confuse the voters, force a public vote, and only operate during small windows of time.
32.) I passed 900 Bills in the State
Oct 2, 2008 - 6:47 am 169. Marc Malone:There were a couple questions asked here that I’d like to try to answer, since no one else has.
Why did some banks do okay and others fail?
Two reasons. Some insisted on responsible lending and didn’t get sucked into the get rich quick mentality. Deregulation was the other reason. Allowing them to get into insurance and other financial things allowed them to diversify.
Still not seeing how the bad mortgages caused this financial crisis?
Government interference. 1977 CRA encouraged bad loans. 1995 FHA lending guidelines thrown out. CRA reinforced with threats of legal action. Post-Enron accounting changes, aka Mark-to-Market.
Mark-to-market: Let’s say you own mortgage securities. There’s no real concrete value on them, as they’re all mixed up with others. You sell one at X price. It’s more than your previous valuation, because housing prices have gone up. Ergo, with mark-to-market, all your other mortgage securities get valued at that price, and so it continues.
Problem is, if the market falls fast, your securities get marked down the same way… all at once. Bust cycle also accentuated. Ugly.
While things were up, you were able to leverage all those new higher valuations to get more money and repeat the cycle. The boom cycle is accentuated.
In 2004, SEC regs are lifted for those very investment houses that later went bust. It allowed them to overleverage.
Housing market hits inevitable bust. Mark-to-market devalues all those securities. Now all holders of mortgage securities are drastically overleveraged/undercapitalized. They can’t get more money.
They have to rely on cash on hand. Start checking the sofa for lost change. Nobody wants their mortgage securities assets, except maybe at fire-sale prices. Lehman sold theirs for 22 cents on the dollar. Not enough to cover their exposure. Bye-bye Lehman Bros.
Now the domino effect takes place. Lehman issued paper is no-good. Wonderful. All these mortgage securities have been chopped up and resold 5 or 6 times. It’ll take time to know who holds what, and what their value will be.
Enter the stupid bailout. Until it’s passed or rejected, no one wants to liquify by selling their bad paper at fire-sale prices, when they might get lots more from the government. So, everybody’s hoarding cash. Government pumps another $152B into the banking system, to no effect, because of the hoarding.
Paulson’s licking his chops at playing super-hedge-fund-wheeler-dealer. A banker’s wet dream: $700B to play with! He’ll beg for it, if he has to. Oh, wait, he did!
Government meddling the whole way. Do you really think the market could have messes it up this badly without government meddling? Simplest solution? Can the whole bailout idea. The markets will liquefy assets. Peolpe will stop hoarding. Markets will recover worth. End of problem.
Oct 2, 2008 - 3:12 pm 170. Harry Spider:You’re wrong. Nothing in CRA required interest only loans, or ARM’s.
According to the linked article below, claims about CRA being the root of all this, are false.
Hey all you Democrat-blamers: tell me what is incorrect about this:
http://www.truthout.org/100208D?print
Excerpt:
Myth 1: “The CRA was a liberal boondoggle designed to con banks into funding housing for undeserving, unqualified minorities.”
False. The Community Reinvestment Act of 1977 was the result of decades of disinvestment in poor and working-class neighborhoods. It was designed to put an end to “redlining”-a widespread practice in which banks refused to write mortgages for houses in certain neighborhoods, no matter who was applying or how creditworthy they were…
The CRA didn’t force lenders to make riskier loans than they would have otherwise. It simply required that they take each applicant on his or her own merits, and give people in poorer neighborhoods the same fair chance at a mortgage that everybody else in town was getting…
Myth 9: “it must be Bill Clinton’s fault, right? In 1995, Clinton changed the Community Reinvestment Act to allow the securitization of CRA and subprime mortgages. That’s what started all this.”
False: Talking point regurgitation at its worst. The 1995 revisions to the CRA only changed the way in which a bank’s CRA compliance is evaluated. They made no mention of mortgage securitization at all. Under the 1995 rules, banks are rewarded only for making mortgages in their communities, not for re-selling mortgages as securities…
Lastly: any discussion about this crisis which fails to include the disasterous contributions of Phil Gramm’s bills from circa 2000 is incomplete and as such, necessarily biased. Warren Buffet called Gramm’s creation of shadowy investment vehicles “Financial weapons of mass destruction.” So I guess Warren is a liberal who knows nothing about the free market, right all you Einsteins?
Oct 3, 2008 - 4:03 pm 171. Jeff:What people don’t understand is why some of us are so against the current Republican ticket, but we have an obligation to fight against history of ever being repeated again. Many of us out here are not fighting for the Democratic campaign but are fighting against an ideology.
1) An ideology that completely mirrors the ideology of this past 8 years.
2) An ideology that recognizes the few while completely disregarding the masses.
3) An ideology that believes in taking military action against Iraq, an incident that is completely unrelated to 9/11, without solidifying our claims beforehand. In the present, we have found no evidence of weapons of mass destructions or a tie to Osama Bin Laden. The devastation of this war has cost us over 4,000 of our brave troops and counting, over 1/2 trillion dollars of taxpayer’s money and counting, and over 1 million Iraqi lives unrelated to the terrorists or insurgency.
Cost of the Iraq War — http://www.nationalpriorities.org/costofwar_home
4) An ideology that still believes that the Iraq War is the right war on terrorism when the Afghanistan War should had been the right war on terrorism, where Osama Bin Laden actually was until he slipped into the mountains and into Pakistan’s territory now. The Iraq War also diverted our attention away from the Afghanistan War. We now have extended our resources in two separate places and have heightened our risk to our troops, our expenses, and creating another dilemma that will take quite some time to finalize. The Iraq War will not go away overnight and it is now our obligation to see it all the way through for God knows how many more years. This has also been the most unpopular war in the eyes of the world’s communities.
5) An ideology that believes that we are at our safest state since 9/11, when a recent terrorist plot was still trying to enter Great Britain’s airports with liquid explosives heading directly to us, but thankfully the plot was foiled. While in Afghanistan, the terrorists are regrouping and strengthening and we have recently suffered another high casualty to our troops yet again within this past month. We currently have the least amount of alliances in the world’s communities due to this unpopular Iraq War. True national securities are the ties that bind us to our world’s communities and the ties that bind them to us.
6) An ideology that vetted one of the most inexperience VP ticket in history, from foreign policies to national defense. If God forbids that anything happens to this President if elected and is stricken with illness, this VP will be running the country. For a more compelling look at Sarah Palin’s VP readiness, please look at these links below —
http://www.youtube.com/watch?v=loUHRv3ipLE
http://www.salon.com/opinion/walsh/election_2008/2008/09/30/palin_gaffes/
7) An ideology that believes in “the fundamentals of our economy are strong” while we are facing the highest mortgage foreclosure crisis, high unemployment rate, and the largest collapse of our financial infrastructures since The Great Depression of 1929.
This is an ideology that many of us in America are against. Whether this ideology is in the Republican or Democratic ticket is not the main issue but the fact is that America does not want to fall into another 4 more years of devastation. We cannot afford this anymore.
Oct 3, 2008 - 4:18 pm 172. dean:If I had money I would make a million copies of the video “no money” found on youtube.com/themouthpeace and pass them out in the swing states. Anybody out there know anybody that can do this?
Oct 4, 2008 - 7:54 am 173. Race based social engineering is what’s causing this financial crisis | BlogWonks Free WordPress Blog Hosting:[...] Kimball also has an excellent post regarding how The Community Reinvestment Act led to the subprime meltdown. It’s well worth reading as [...]
Oct 6, 2008 - 8:59 am 174. Australia The Financial Crisis, Round 2. - antimisandry.com:[...] incredibly poor Obama
Oct 7, 2008 - 2:59 am 175. Alphecca » Democrat Lies:[...] Roger Kimball at Pajamas Media. [...]
Oct 7, 2008 - 5:46 am 176. It’s The End of the World As We Know It … And I Feel Fine | Fishing The Abyss:[...] policy) all-the-while turning a blind eye to regulating risky loans and Freddy & Fanny (to line their own pockets); 3) The lenders who created all sorts of creative ways to make ninja loans and other subprime [...]
Oct 7, 2008 - 2:32 pm 177. CRN.Info and Analysis » Blog Archive » It’s The End of the World As We Know It … And I Feel Fine:[...] policy) all-the-while turning a blind eye to regulating risky loans and Freddy & Fanny (to line their own pockets); 3) The lenders who created all sorts of creative ways to make ninja loans and other subprime [...]
Oct 7, 2008 - 3:33 pm 178. Detailed Balance » Blog Archive » Contradictions:[...] conservative critique is outlined in fair detail by Roger Kimball at Pajamas Media. It’s a vaguely interesting story, although I suspect the truth is somewhat more [...]
Oct 7, 2008 - 10:04 pm 179. DT:It’s amazing that people on this board want to believe that some legislation from 1977 is the sole and root cause of a crisis some 30 years later. The financial system is way too complex to be damaged by one piece of legislation. What actually happened was that several factors came together and caused this: There was the lowering of federal interest rates (in the name of saving the ailing economy) which made lending easier, predatory lending practices done with fancy loans (a charming example of how hard work doesn’t always pay off), deregulation of banks leading to overleveraging, people of all income strata wanting to live above their means, the mark-to-market rule which devalued bank’s assets, realtors artificially inflated housing values, lack of government intervention (both Obama and McCain claim to have warned against the dangers of the mortgage situation, yet nothing happened), Bush’s lackadaisical approach to leadership(the guy has the foresight of a mole).
Let me repeat that there is no single cause of this. It is not a house of cards that came tumbling down but a domino effect in which all the players took each other down. This article is nothing more than political rhetoric and a shoddy attempt to slander groups of people (democrats, the underpriveledged). Opinions here even state that “good intentions don’t matter.” If that is the Republican mantra, then this country has a lot more then the mortgage crisis to worry about.
Oct 8, 2008 - 8:10 am 180. MLL:Why McCain doesn’t bring up this information in the debates when Obama is trashing him and the Bush administration for all the financial woes is totally bewildering to me. I hope the good Senator takes the gloves off for the next and final debate on this and many other issues.
Oct 8, 2008 - 12:36 pm 181. bhattathiri:YOUR WEBSITE IS BEAUTIFUL, EXCELLENT AND INFORMATIVE.
Why Americam management failed and resulted into great economic recession.?
The modern (Western) management concepts of vision, leadership, motivation, excellence in work, achieving goals, giving work meaning, decision making and planning, are all well discussed and implemented but failed miserably.
The greed is a more fundamental and better explanation than the principles of economics and the impact of government policy on economic decisions. Misses the point that most people and businesses are motivated to improve their condition and that this force is always at work. Why did greed suddenly cause this meltdown? What allowed it to get out of control. There is one major difference. While Western management thought too often deals with problems at material, external and peripheral levels, the Bhagavad-Gita tackles the issues from the grass roots level of human thinking. Once the basic thinking of man is improved, it will automatically enhance the quality of his actions and their results. If businessmen wanted to rape and pillage, I mean maximize profit, you wouldn’t have to force them to loan money. Their profit motive gives them an incentive to “serve” the community. If certain communities aren’t being served that signals the presence of other forces dissuading businessmen from selling their product or service. Implicit in this argument is the belief that customers have a right to demand the services and goods provided by businesses. Of course, this idea underlies arguments for universal health care and whatever other service or good deemed to be too valuable to trust to the market.
The management philosophy emanating from the West is based on the lure of materialism and on a perennial thirst for profit, irrespective of the quality of the means adopted to achieve that goal. This phenomenon has its source in the abundant wealth of the West and so ‘management by materialism’ has caught the fancy of all the countries the world over, India being no exception to this trend. My country, India, has been in the forefront in importing these ideas mainly because of its centuries old indoctrination by colonial rulers, which has inculcated in us a feeling that anything Western is good and anything Indian, is inferior. Gita does not prohibit seeking money, power, comforts, health. It advocates active pursuit of one’s goals without getting attached to the process and the results.
The result is that, while huge funds have been invested in building temples of modem management education, no perceptible changes are visible in the improvement of the general quality of life – although the standards of living of a few has gone up. The same old struggles in almost all sectors of the economy, criminalization of institutions, social violence, exploitation and other vices are seen deep in the body politic.
The source of the problem
The reasons for this sorry state of affairs are not far to seek. The Western idea of management centers on making the worker (and the manager) more efficient and more productive. Companies offer workers more to work more, produce more, sell more and to stick to the organization without looking for alternatives. The sole aim of extracting better and more work from the worker is to improve the bottom-line of the enterprise. The worker has become a hirable commodity, which can be used, replaced and discarded at will.
Thus, workers have been reduced to the state of a mercantile product. In such a state, it should come as no surprise to us that workers start using strikes ( gheraos) sit-ins, (dharnas) go-slows, work-to-rule etc. to get maximum benefit for themselves from the organizations. Society-at-large is damaged. Thus we reach a situation in which management and workers become separate and contradictory entities with conflicting interests. There is no common goal or understanding. This, predictably, leads to suspicion, friction, disillusion and mistrust, with managers and workers at cross purposes. The absence of human values and erosion of human touch in the organizational structure has resulted in a crisis of confidence.
Western management philosophy may have created prosperity – for some people some of the time at least – but it has failed in the aim of ensuring betterment of individual life and social welfare. It has remained by and large a soulless edifice and an oasis of plenty for a few in the midst of poor quality of life for many.
Hence, there is an urgent need to re-examine prevailing management disciplines – their objectives, scope and content. Management should be redefined to underline the development of the worker as a person, as a human being, and not as a mere wage-earner. With this changed perspective, management can become an instrument in the process of social, and indeed national, development.
Now let us re-examine some of the modern management concepts in the light of the Bhagavad-Gita which is a primer of management-by-values.
Mulavana Bhattathiri
Oct 9, 2008 - 7:05 am 182. Cybercorrespondent:Thursday morning I turned on the news and heard that ACORN is under investigation for voter fraud in a number of states. Since I learned not to trust what the media tells us, I decided to have a look what the bloggers had to say. On a sight called A Look Into Barack Obama’s Past – Obamamania – Zimbio website I found the following comment that made me think.
A concerned citizen
Oct-6-08 7:48pm [Edit]
Those two videos paint a very clear picture. As the terrorists have promised, they will destroy this country from with in. …..
http://www.youtube.com/watch?v=puN9X1mVgRA ……..
http://www.youtube.com/watch?v=vjvBEKrGkDI …….
Back to my point. By allowing the voter fraud to go on, makes this great country look like a third world dictatorship. We are supposed to send an example to the rest of the world how honest elections are held and not allow the media to distort the facts. Please people, wake up and tell the media no more. Boycott all the products advertised on publications like the Newsweek, Time magazine and other propaganda machines like the New York Times. Also do the same with CNN and other communist propaganda news sources. Even the Fox News network is starting to sway the viewer decision. After Thursday’s presidential debate, watching Chris Wallace interview a communist from Saint Louis made me sick. Even bad journalists should realize that when you ask a communist or a skin head to give you their views, you can pretty much expect what they are going to say.
Oct 9, 2008 - 9:33 am 183. Roger’s Rules » America without apology:I certainly had enough of all of the $%#@Comunism.org
Cybercorrespondent
[...] the frightening economic implosion we see around us. While there is plenty of blame to pass around, the primary, if inadvertent, architects of the current economic mess are the Democrats. Bill Clinton memorably reminded us that [...]
Oct 9, 2008 - 10:54 am 184. DemocratNoMore:Let us also not forget Clinton had a hand in this too. “Demo”crats. They sure “demoed” our american dreams!!! Socialistic government where everyone is poor.
Oct 9, 2008 - 8:36 pm 185. Dale:History clearly shows and even President Clinton admits that Democrats caused the current worldwide financial meltdown. Ignoring the lessons of loose credit from the 1929 great depression, the Democrats began to build for the next great depression as early as 1930’s. No matter how compassionate the motive by the Democratic Party has been since 1929, it has been the result of their systematic disregard for good credit standards that has led to our current financial crisis.
Why has it taken almost 80 years for the perfect storm of events to trigger another great depression? Because, between the following Democrat led governments, we have had conservative Republicans that slowed the process along with two notable Democrats: “the buck stops here” Truman and “ask not what your country can do for you; ask what you can do for your country” Kennedy. Now look at the history of how we got here.
1) Democrat President Roosevelt’s New Deal took America off the Gold Standard.
By 1935 the Nation had achieved some measure of recovery, but businessmen and bankers were turning more and more against Roosevelt’s New Deal program. They feared his experiments, were dangerous because he had taken the Nation off the gold standard and allowed deficits in the budget. Fannie and Freddie have their origins form the New Deal.
2) Democrat President Johnson’s Great Society reforms greatly expanded government.
Johnson Administration went beyond the New Deal social reforms first established by President Roosevelt. Two chief goals of the Great Society social reforms include the elimination of poverty and racial injustice. Many new and substantive programs that addressed education, medical care, urban problems, and transportation were started in this period which grew government faster than good regulations could be written.
3) Democrat President Carter’s Community Reinvestment Act (CRA) resulted in bad loans.
The most resent seeds of today’s financial meltdown lie in the Community Reinvestment Act passed in 1977. CRA was passed to encourage banks to make loans to high-risk borrowers. The purpose of CRA was to allow more people to experience the American dream of home ownership. This law was used by organizations like ACORN (Association of Community Organizations for Reform) to force the banking industry to make poor quality loans. Intimidation tactics, public charges of racism and threats to use CRA to block business expansion have been used by ACORN to extract hundreds of millions of dollars in loans from America’s financial institutions.
4) Democrat President Clinton’s amended the CRA to allowed banks to participate in Wall Street.
President Clinton knows now that he caved-in, under political pressure, when in 1995 he signed the bill into law that allowed public underwriting on Wall Street of the sub-prime mortgages. He has also stated to ABC’s Chris Cuomo that Democrats for years have been “resisting any efforts by Republicans in the Congress to put more controls on Fannie and Freddie”\1. Chris Cuomo’s response was that it seemed a little surprising for him to hear the Democrats like Nancy Pelosi saying, “This came out of nowhere, this is all about the Republicans”.
\1 In 2005, the Senate Banking Committee, then chaired by Republican Richard Shelby, tried to rein in the two organizations by passing some strong new regulations. All the Republicans voted for it. All the Democrats, including the current chairman, Senator Chris Dodd, voted against it, and that was after Fed Chairman Alan Greenspan had issued a stark warning to senators that Fannie and Freddie were playing with fire. Greenspan said without stronger regulations, “We increase the possibility of insolvency and crisis”. Which turned out to be exactly right, but because Democrats blocked it, those new regulations never got consideration by the full Senate and died. So that’s how we got into this mess, and how we missed a chance to avoid it. Getting out of it now, of course, will be a lot more difficult. Reported by: Noel Sheppard, September 25, 2008.
Democrat Presidential Candidate Obama tells voters that Republican deregulation caused the current meltdown. Senator Obama knows better. He has worked very close to ACORN with full knowledge of their intimidation tactics which have forced the investment banking industry led by Fannie and Freddie to make the poor loans. Who really knows? Some CEO’s may have also been corrupt or they may just have been intimidated into doing the wrong things. The FBI will eventually sort it out.
While Senator Obama’s motive may have been a compassion for the less affluent, the results of his actions, those of his ACORN friends and those of his Democratic Party in congress, now threatens to place 85% or more people into poverty.
The Democrats led the way and the Republicans did not do enough to stop the crisis from happening. As Americans, from Main Street to Wall Street, from small business to large business, from less affluent to the excessively wealthy, all voters must leave politics at the door when they vote on November 4th.
Oct 12, 2008 - 8:24 pm 186. RobertofSC:Come on you really think any of them are not on this love boat. Very few. Bush relative ,Mc Cain hooked into the Keating 5, of the savings and loan fiasco. Checkout NNDB.com (notable names database) and see all the webs of deceit and profit. There is the individual text pages and a graphical “Mapper”. My personal map are here: http://mapper.nndb.com/authors/587/000000587/
Also my quote for all:
Oct 13, 2008 - 8:50 am 187. timioso:Freedom
Knowing you and your neighbors
Eat until the next harvest
Drink until the next rainfall
Enabling humanity to build safe communities
Look at how these free things are are under attack even before now.
Surprisingly, no mention of the two big deregulation acts authored by Republican and McCain pal Phil Gramm, which gave us the Enron rise and collapse and led to a lot of this. I weep for all the financial fatcats who wanted to do the right thing but were powerless against the poor and their army of lobbyists.
Oct 15, 2008 - 2:37 pm 188. SludgeMonkey:Read Atlas Shrugged. You will figure out what you are in the midst of.
Oct 15, 2008 - 5:51 pm 189. Ryan Dover:Well written and informative blog, but it leaves out some key information and fails to ask how could the Democrats could block legislation regarding Fannie Mae and Freddie Mac when the GOP controlled the House from 1994 until 2006 and where in control of the Senate, House, and Presidency from 2002 through 2006.
The commons sense answer is: they couldn’t.
The changes made to the CRA and signed into law by President Clinton in 1999 were done so under the Republican sponsored Gramm-Leach-Bliley Act. The Federal Housing Enterprise Regulatory Reform Act introduced by Sen. Chuck Hagel (R – Neb) and co-sponsored by Senator McCain to provide greater oversight for Fannie Mae and Freddie Mac was never introduced to the Senate floor in a 55 to 45 Republican controlled Senate.
If Hagel, McCain, and the GOP recognized the problems, why didn’t they introduce legislation for debate or vote. Even if they were afraid of a filibuster, the GOP could have proposed similar legislation in the House where they set the legislative agenda (because of time limits there is not chance for filibustering in the House of Representatives).
Moreover, Fannie Mae and Freddie Mac have been overseen by the Department of Housing and Urban Development Department (HUD) since 1992. The Administrator of HUD is appointed by the President (subject to confirmation by the Senate). So where was the oversight from Bush-appointed HUD Administer between 2000 and 2008?
The GOP had the authority, power, and time to enact changes and address problems with Fannie, Freddie, the CRA, and the sub-prime mortgage market in general. The Federal Housing Enterprise Regulatory Reform Act in 2005, and McCain’s letter in 2006, are proof of the GOP’s awareness of the problems.
The GOP was the party in power as this crisis become more and more apparent but they failed to act. And now the Republicans are trying to cover their tracks by blaming the Democrats. Unreal. This is just another example of the GOP and conservative right refusing to take responsibility for their actions (or inactions in this case) and failed policies of the past 8+ years.
Oct 16, 2008 - 1:44 pm 190. Dan:How did this economic crisis occur? Who is responsible for the mortgage meltdown? Before you vote find out the facts (all documented and sourced):
http://www.youtube.com/watch?v=TxgSubmiGt8
Actually, it was a Democrat, Roosevelt, that started Fannie Mae. Later a Democrat, LBJ, started Freddie Mac & privatized both (less regulation). Then Clinton promoted legislation, The Fair Housing Act, that forced banks to lend to minorities whether or not they had down payments or decent credit. Democrats have received major contributions from Fannie Mae & Freddie Mac. Fannie Mae’s former CEO, Raines, received $90 million dollars in three years of bonuses for forcing banks to give credit to non-credit worthy customers. Raines became one of Obama’s campaign advisers. Democrats Barnie Frank & Chris Dodd chair committees that have oversight and they disregarded McCain’s call for tighter regulation two years ago. All three have had major contributions from Fannie Mae & Freddie Mac, Obama having the second largest. Who is responsible for the mortgage meltdown? You decide.
Oct 20, 2008 - 8:02 pm 191. Dusty:There is just as much greed on the left as there is on the right. I think good points were raised here, but everyone deserves blame. Commentors have said that pointing fingers is not going to help, but that is all that this article has done. You have to be delusional to think that one political party or group of persons are singlehandedly responsible for this.
I need not remind anyone how much we have spent on this war.
I need not remind anyone that “fiscally responsible” politicians voted and passed the bailout.
I need not remind anyone how much we rely on foreign oil, and how our greed is blocking attempts to advance towards alternative resources.
I need not remind anyone that we outsource everything.
But here I am, reminding people…
We all hear, say and do what we want. Plain and simple.
So, are the Democrats to blame for all the world’s trouble and for socializing this country?
Doubtful, it just makes the Right feel better. But it does not solve any problems.
Do i have some solutions? Sure. But I am not Politician.
*Give up Israel. We need to stop investing interest over ancient religious prophecy.
*Give up the Middle East. They have a majority of the world’s oil. Our presence simply indicates occupation and expansion of an empire. It needs to end.
*Stop building the Great Wall between Mexico and bordering states. Tax dollars can be used elsewhere.
*Legalize Marijuana. Grow it, cultivate it, tax it. WE KNOW ITS SAFER THAN ALCOHOL, and smoking cigarettes. We have the demand, and the resources to employ more people here at home.
*Free Economy. I think the Republicans have hit this on the head. Less Regulation the better.
*National Healthcare. Eliminate ALL social programs to reinvest in the health and productivity of all american citizens regardless of your contribution to society. People DESERVE to be healthy.
*We need to re-examine States’ Rights and limit the Federal Government from invervening on social issues, i.e gay Marriage, Abortion, etc. The Federal Govt. is a secular entity that has no place dictating moral, or religious values.
*last, but not least, remove our troops from every corner of the globe and focus only on homeland defense. Also, we need to destroy the Patriot Act which is slowly replacing our freedom with some sense of security. Our Forefathers would be turning over in their graves if they knew what WE have done to Civil Liberties.
This is off the top of my head. Sorry if I offended anyone. I am a mixture between Libertarian and Green Party.
Note: We also need to remember that as a Democratic country we need to ensure that 3rd Parties have the resources and know how, and priveledge to debate.
Republicans and Democrats are NOT bringing new ideas to the table.
Your hatred for each other is so transparent, and its preventing progress…and hurting our Country.
Oct 22, 2008 - 12:59 pm 192. Did I do that? « Conservingtruth:[...] Before exclaiming, “I know what caused it, it was deregulation and greed” please read this. Anyway, to recap what [...]
Oct 22, 2008 - 5:29 pm 193. Un. Be. Lievable. « Living IRL:[...] it will be a stay-at-home crisis. Maybe the Democrat-controlled-filibuster-proof Congress will “fix” our financial crisis all better for all time. I better start learning how to milk [...]
Oct 22, 2008 - 7:06 pm 194. Cybercorrespondent:Financial Crises and the Way to Recovery
The term “shocking” can’t even come close to describe the severity of the financial crises that we are faced with. According to Barack Obama, the only way we can get out of this mess is for this country to adapt socialistic values and enforce socialism by gaining control of all three branches of government. I’m sure that the mountain of money his campaign has collected from domestic and foreign donors, names the Obama campaign won’t disclose, will be used for that purpose. As soon as total control is gained, organizations like ACORN will have a green light to further abuse the law to suppress free speech, control the outcomes of elections and brain wash children in schools to believe that socialism is the answer to all of our problems. With total control of the government, and help from people like Bill Ayers, Rev. Wright and Antoin Rezko, who will probably be pardoned, achieving the ultimate goal, “a life of sexual confusion and moral collapse” will become a strong possibility.
The proof that socialism, or spreading the wealth around does not work can be seen by examining ACORN and its accomplishments by manipulating bancs to make loans to minorities with bad credit. By using charges of racism and threats to use CRA to block business expansions, ACORN and Obama already contributed to the crises we are in today and finding new ways to distribute the wealth will only make the situation much worse. His idea to put a three-month moratorium on foreclosures will further weaken the already fragile banking industry and only benefit delinquent homeowners by allowing them to live rent-free.
In order for our economy to start prospering again, we first need to elect an honest leader who is determined to stamp out the corruption in government and to stop the leftist movement from destroying the middle class. The hard working people can no longer be expected to keep giving until they themselves have nothing left to give.
Cybercorrespondent
Oct 24, 2008 - 7:13 am 195. Andre' Jones:http://cybercorrespondent.blogspot.com
The only high point to the Bush administration was the housing bubble, unfortunatly, it was based on debt and coruption. George Bush gleemed at the fact that the average person could “own a home” and share the american dream. What we now know is that process of lending was based on fake money, fuzzy math. This is a run away train that nobody dared to stop, resulting our current crash. It is time to pick up the pieces. While we blame both parties for this crisis, it is clear that hard working americans are sick of wallstreet, Enron style corporations, the financial industry, and the far right economic policies.
Oct 31, 2008 - 7:00 am 196. seko:Politics aside- American needs only the truth- un-abridged, unadultered-
Let the rest of the world watch this video
Buzz it up
http://buzz.yahoo.com/article/1:32c609e497ff10c8fd2691b61bbae8dc:60c103662d1c2895e47dbd1b31d187f9?usc=1
Oct 31, 2008 - 10:45 am 197. Roger’s Rules » Thoughts on the instinct of self-preservation or, Why I still, even now, believe John McCain will be moving to 1600 Pennsylvania Avenue on January 20:[...] understand that. Even so, the current financial meltdown (and whose fault was that, Barney Frank?), like the prospect of hanging in a fortnight, has done wonders to concentrate the mind. The [...]
Nov 3, 2008 - 7:35 am 198. JP:Yet 20 years of Republican presidents couldnt do shit to change anything for the better?
Dec 23, 2008 - 6:03 pm 199. Road Sassy » Blog Archive » The Nigger Rich Administration:[...] win best stop short of lecturing Wall Street on ethics. A man whose cabinet consists of every scalawag and dirty snake that has crawled out from under their post-Bush rocks (and your bus), is hardly a [...]
Feb 4, 2009 - 2:28 pm 200. Porkulus bill reverses welfare reform and nationalizes health care « Wintery Knight Blog:[...] Too bad the Democrats aren’t owning the Clinton’s Community Reinvestment Act, which caused a lot of this mess in the first [...]
Feb 15, 2009 - 3:19 pm 201. Democrats caused the recession and Republicans tried to stop it « Wintery Knight Blog:[...] 2:
Feb 22, 2009 - 3:24 pm 202. Fred:The CRA does not and never did require banks to provide loans to people with poor credit. In fact, it’s premised on the opposite idea that banks should not discriminate against people who are creditworthy, based on the neighborhood in which they live. It’s a law that says banks have a duty to serve all communities equitably – within the bounds of safe and sound banking principles. READ THE STATUTE.
Apr 20, 2009 - 4:49 pm 203. Paul Cumming:Damn, I’ve never read such nonsense. The Democrats caused the GFC? The Egyptian river runs deep…
Cheers
Elroy
Jul 7, 2009 - 2:34 am 204. cluelessinky:Voters are stupid. There is nothing new being revealed here. Voters will go to the politician who makes the biggest promises regardless of the costs to the productive class. Reading Atlas Shrugged should be mandated but with the state of today’s government schools just reading is a challenge.
I no longer fear for my country, for my country no longer exists. I weep for my children and grandchildren.
Jul 19, 2009 - 6:56 am