The Madness of Crowds

"Many people, especially liberal politicians, have blamed the disaster on the deregulation of the last 30 years. But they do so in order to avoid the blame’s falling where it should—squarely on their own shoulders. For the same politicians now loudly proclaiming that deregulation caused the problem are the ones who fought tooth and nail to prevent increased regulation of Fannie and Freddie—the source of so much political money, their mother’s milk.

"To be sure, there is more than enough blame to go around. Forgetting the lessons of the past, Wall Street acted as though the only direction that markets and prices could move was up. Credit agencies like Moody’s, Standard & Poor’s, and Fitch gave high ratings to securities that, in retrospect, they clearly did not understand. The news media did not even try to investigate the often complex economics behind the housing market.

"But remaining at the heart of the financial beast now abroad in the world are Fannie Mae and Freddie Mac and the mortgages they bought and turned into securities. Protected by their political patrons, they were allowed to pile up colossal debt on an inadequate capital base and to escape much of the regulatory oversight and rules to which other financial institutions are subject. Had they been treated as the potential risks to financial stability they were from the beginning, the housing bubble could not have grown so large and the pain that is now accompanying its end would not have hurt so much.

"Herbert Hoover famously remarked that 'the trouble with capitalism is capitalists. They’re too greedy.' That is true. But another and equal trouble with capitalism is politicians. Like the rest of us, they are made of all-too-human clay and can be easily blinded to reality by naked self-interest, at a cost we are only now beginning to fathom."

Dems ignored those Bush and McCain Warnings On Fannie Mae and Freddie Mac

"How soon we tend to forget (and the Democrats chose to ignore) that the financial crisis could largely have been prevented, were it not for the destructive impact of Fannie Mae and Freddie Mac - whose policies resulted in 25 million junk mortgages: Timeline shows Bush, McCain warning of financial crisis:

"The Bush Administration and Senator McCain warned repeatedly about Fannie Mae and Freddy Mac and what thus became the 2008 financial crisis -- starting in 2002. Democrats not only resisted all reform efforts, but Barney Frank continued to declare them 'financially sound' despite clear signs of meltdown."

The case against Barack Obama, Part 2

"Brokaw, moderating a debate, asked Obama when American combat forces should be used to quell humanitarian crises that pose no threat to U.S. security. Obama – specifically mentioning Darfur and Rwanda – said, 'When genocide is happening, when ethnic cleansing is happening somewhere around the world and we stand idly by, that diminishes us.' But after a 2007 interview with Obama, the Associated Press wrote, 'Democratic presidential hopeful Barack Obama said Thursday the United States cannot use its military to solve humanitarian problems and that preventing a potential genocide in Iraq isn't a good enough reason to keep U.S. forces there.' So Obama wants to use our military to stop genocide in Darfur – a tragedy that we did not start. But he wants our military to withdraw in Iraq, possibly resulting in a genocide of our own making. Got that?"

It would be wonderful to see the Bush bashers advocate for Obama's wars (hypocrites).

Would the Last Honest Reporter Please Turn On the Lights?

"The goal of this rule change was to help the poor — which especially would help members of minority groups. But how does it help these people to give them a loan that they can't repay? They get into a house, yes, but when they can't make the payments, they lose the house — along with their credit rating.

"They end up worse off than before."

and

"These are facts. This financial crisis was completely preventable. The party that blocked any attempt to prevent it was ... the Democratic Party. The party that tried to prevent it was ... the Republican Party.

"Yet when Nancy Pelosi accused the Bush administration and Republican deregulation of causing the crisis, you in the press did not hold her to account for her lie. Instead, you criticized Republicans who took offense at this lie and refused to vote for the bailout!

"What? It's not the liar, but the victims of the lie who are to blame?"

and

"If you who produce our local daily paper actually had any principles, you would be pounding this story, because the prosperity of all Americans was put at risk by the foolish, short-sighted, politically selfish, and possibly corrupt actions of leading Democrats, including Obama.

"If you who produce our local daily paper had any personal honor, you would find it unbearable to let the American people believe that somehow Republicans were to blame for this crisis."

Exploding The Myths of “Predatory Lending”

How can I be greedy if I loan to people who I know may not be able to pay back the loan?

If I were greedy I would look for people I could soak with lots of money.

The Democrats 'had' to know that the subprime regulations would bring down the American economy

"There's simply no other way to explain what the Democrats did in forcing banks, with the help of "Barack Obama-trained" ACORN and their affiliates, to loan money to homebuyers who had no chance in hell of ever paying the mortgages back: Either their real goal was the destruction of the American economy or the 'socialist' Democrats (might I say "Marxist?) are far too stupid to be legislators. So, which one is it?"

and

"They, the Dems, actually defended what was going on. These people are either very very stupid, very very crooked, or, more likely, both. These are the kind of disgusting idiots that Obama surrounds himself with."

THERE IS PROFIT IN CONFUSION

"The first thing we heard earlier this year was that thousands of homes had gone into foreclosure due to the subprime loans affecting the liquidity of financial institutions. The Community Reinvestment Act required banks to make loans in all areas of their communities, even the lowest income ones. This egalitarian Act turned banks into charitable institutions or arms of the welfare state. Banking lobbyists did nothing to stop it because they feared being labeled 'racist' by the 'civil rights’ groups.[1] I wrote back in February 2007 that America was insolvent."

CNN's Lou Dobbs blames financial crisis on The Democrats and ACORN

"Dobbs failed to share the blame with Obama, the Democrats' community organizer in chief, who says pushing mortgages on folks who couldn't afford the loans was a 'good idea.'"

More shame on the Democrats and their community organizers

"Watch as Andrew Cuomo, Clinton's Secretary of Housing and Urban Development, admits the Clinton administration forced banks to make bad loans families would not have qualified for without the wrongheaded loan 'affirmative action.' Continue to watch and see how ACORN "community organizers" and the Democrats' community organizer in chief, Barack Obama helped bring us this financial crisis...."

McCain Letter Demanded 2006 Action on Fannie and Freddie

"Sen. John McCain's 2006 demand for regulatory action on Fannie Mae and Freddie Mac could have prevented current financial crisis, as HUMAN EVENTS learned from the letter shown in full text below.

"McCain's letter -- signed by nineteen other senators -- said that it was '...vitally important that Congress take the necessary steps to ensure that [Fannie Mae and Freddie Mac]...operate in a safe and sound manner.[and]..More importantly, Congress must ensure that the American taxpayer is protected in the event that either...should fail.'

"Sen. Obama did not sign the letter, nor did any other Democrat." WHY NOT?

A Savage prediction for McCain

"Sen. McCain, despite his self-admitted lack of knowledge of economic issues, should be taking a crash course by reading 'An Idiots Guide to Economics.' He and Palin should be hammering Obama and the Democrats every day regarding the bailout of the Wall Street crooks and incompetent mortgage executives at Fannie Mae, Freddie Mac, AIG, Bear Stearns, Lehman Brothers and others. These corporate criminals have been protected for years by the Democrat majority in Congress, even as Republicans repeatedly sought for tighter regulations of Wall Street and the home mortgage industry."

NOT PRIME TIME

It seems that part of the community organizing for which Senator Obama has been lauded actually was 'organizing his career' as researcher Andrew Gilbert put it. The Solon from Illinois helped Acorn organize to pressure banks and lending firms to dish out shaky mortgages or get branded 'racist' a charge against which there is virtually no defense. Senator Obama also is the second highest recipient (after Connecticut Democrat Chris Dodd) of 'contributions' from FMAE while receiving vaster sums from the other major banks and investment firms in the nation. What a remarkable convergence of interests: Acorn, Fannie and Freddie, Morgan Stanley, Citigroup, Lehman Brothers, Google, Inc, Goldman Sachs, JP Morgan-Chase, the House Finance Committee: a remarkable assemblage of populists for the man now described openly as a 'change agent.' It’s as if the Senator was the missing link between Bill O’Reilly and David Bowie: 'the horror!'”

The Financial Mess: How We Got Here

"'How can you vote Republican when they so messed up the economy?' a liberal friend screams at me with such vehemence that I had to put the phone a full arms length from my ear. Of course, my friend never heard of the Community Reinvestment Act. He is one of those mindless liberals who thinks that George Bush and the Republicans are responsible for everything from Global Warming to Hurricane Katrina to the attempted genocide of the entire black population of New Orleans.

"He claims to be informed but he doesn't remember those dire warnings going back nine years ago that the Community Reinvestment Act would eventually cause a major financial and banking crisis in this country."

The manufactured crisis

"The reason lenders stopped requiring down payments in the last part of the 20th century was a series of Democrat-supported enactments, including the Community Reinvestment Act (under Carter), which was strengthened under Clinton and Bush, whose HUDs required Fanny Mae to drop or weaken all the safeguards enumerated above (down payment requirements, documentation of employment, etc). To pass this dangerous legislation, the Democrats claimed that minorities were being denied mortgages on the basis of race, when in fact, the minority communities statistically simply did not have enough people with good credit, good jobs and jobs to justify as many mortgages as the Democrats called for. It was — and is — politically incorrect to mention these inconvenient truths. People who now demand fairness in lending are called racists. Community organizers like ACORN, a group that worked hand-in-hand with Barack Obama, used strong-arm tactics to shake down banks and force them to give mortgages to people who could not afford them and then when the loans were, inevitably, foreclosed, the same people who caused the crisis blamed the banks. That way, they could blame the free market and make gullible people believe that America needs socialism, when in fact what we desperately need is less socialism."

Democrats destroy economy--blame Republicans

"But, until then, let's take another realistic look at why we are in the current financial mess. Beginning with the Democrats and President Clinton's push to force banks and mortgage companies to lend to low-income home buyers — coupled with the Democrats running Fannie Mae and Freddie Mac — the process that has placed us in the position of heading toward the current financial debacle was put into place. Then, with Clinton's signing of the American Home Ownership and Economic Opportunity Act of 2000, the dye was cast. Institutions that did not want to lend monies to those who could not afford to buy homes were advised that they would be investigated by the government. Thus, the ARM (adjustable rate mortgage) came into being in full force. Huge balloon payments were the norm for the ARM and when they came due — equally huge foreclosure numbers for those who couldn't pay them were the result.

"As foreclosures increased, a domino effect began that took down mortgage companies and publicly exposed the corruptions inherent within the Democrats' personal slush funds — Fannie Mae and Freddie Mac. Then, the commercial banks — the ones who had initially been forced to carry the bad-paper mortgages "or else" began to fail. After that, other banks and lending institutions started to experience problems and then — as the world's banks are now connected — European and Asian financial institutions have begun to crash. What was put in place by US Democrats as at its best 'good intentions' for poor folk and at its worst another way to scam the system has now caused world-wide panic in financial institutions. Note: Elected Congressional Republicans — including Sen. John McCain — have tried for years to pass legislation that would provide oversight on both Fannie and Freddie. Democrats blocked each and every attempt."

Frank's fingerprints are all over the financial fiasco

"All this was justified as a means of increasing homeownership among minorities and the poor. Affirmative-action policies trumped sound business practices. A manual issued by the Federal Reserve Bank of Boston advised mortgage lenders to disregard financial common sense. 'Lack of credit history should not be seen as a negative factor,' the Fed's guidelines instructed. Lenders were directed to accept welfare payments and unemployment benefits as 'valid income sources' to qualify for a mortgage. Failure to comply could mean a lawsuit."

and

"But his fingerprints are all over this fiasco. Time and time again, Frank insisted that Fannie Mae and Freddie Mac were in good shape. Five years ago, for example, when the Bush administration proposed much tighter regulation of the two companies, Frank was adamant that 'these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis.' When the White House warned of 'systemic risk for our financial system' unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing."

Thumbs Up -- At Least He Is Willing To Admit It

“Like a lot of my Democratic colleagues, I was too slow to appreciate the recklessness of Fannie Mae and Freddie Mac. I defended their efforts to encourage affordable homeownership, when in retrospect I should have heeded the concerns raised by their regulator in 2004. Frankly, I wish my Democratic colleagues would admit that when it comes to Fannie and Freddie, we were wrong. By the way, I wish my Republican colleagues would admit that they missed the early warning signs that Wall Street deregulation was overheating the securities market and promoting dangerously lax lending practices. When it comes to the debacle in our capital markets, there is much blame to go around for both sides."

The Dems did it!

"The structure of disaster was almost complete. The Clinton administration directed federal agencies to expand credit, particularly home loans, to low-income buyers. ACORN and other community organizations were empowered to promote loans and encourage banks to make them, and Fannie and Freddie were instructed to buy the loans. The Federal Reserve joined the parade by reducing interest rates to help facilitate these loans.

"No wonder the housing market exploded."

and

"As early as 2004, the Bush administration tried to increase regulation of Fannie and Freddie, but ran into stiff opposition from Democrats, especially from Barney Frank, who was afraid that lending activities would be sacrificed in the name of market risk. Now, Frank is blaming the Republicans for failing to enact reforms that he and his party blocked."

Your scorecard for understanding mortgage scandal Find out who's who in the 'Rogues Gallery' of economic crisis

"As Congress works on a $700 billion bailout plan for the U.S. financial system, the FBI has extended fraud investigations to 26 companies involved in mortgage lending. Authorities are attempting to determine whether any of the firms have participated in accounting fraud, insider trading or inflating values of mortgage-related assets. The FBI has not disclosed a list of companies under investigation, but the following are just a few firms in distress and executives under scrutiny."

Pressured to Take More Risk, Fannie Hit a Tipping Point

"So Mr. Mudd made a fateful choice. Disregarding warnings from his managers that lenders were making too many loans that would never be repaid, he steered Fannie into more treacherous corners of the mortgage market, according to executives.

"For a time, that decision proved profitable. In the end, it nearly destroyed the company and threatened to drag down the housing market and the economy."

and

"Between 2005 and 2008, Fannie purchased or guaranteed at least $270 billion in loans to risky borrowers — more than three times as much as in all its earlier years combined, according to company filings and industry data.

“'We didn’t really know what we were buying,' said Marc Gott, a former director in Fannie’s loan servicing department. 'This system was designed for plain vanilla loans, and we were trying to push chocolate sundaes through the gears.'”