Collapse of Economy Aided Most By Barney Frank In response to warnings about the growing riskiness, in housing markets, Franks said in 2003 (among other things)"Fannie Mae and Freddie Mac have played a very useful role in helping make housing more affordable."
Critics "exaggerate a threat of safety." and "conjure up the possibility of serious financial losses to the Treasury which I do not see."
Housing Meltdown Ruined Economy Must Not Be Swept Under the Liberal Rug
Housing Meltdown
Housing Meltdown November 15, 2009
Housing Meltdown
IT WAS GOVERNMENT THAT CAUSED THE ECONOMIC COLLAPSE
THE DEMOCRAT PARTY Forced Lenders To Lend Money To Millions Not Able To Maintain Payments and Not Responsible Enough To Do So
The Corrupt and Scandalous ACORN was at the center of this-Their Chief Adviser and Lawyer, Then, Was Barack Obama
Thomas Sowell's book THE HOUSING BOOM AND BUST breaks down this topic more accurately and completely than any I've seen.
Below are comments, phrases and quotes from that book.
Under Increased pressure from the Clinton Administration, Fannie Mae started lending money to low income people with standards much lower than had been previously acceptable.
Young people, for their own future should be aware of the many deceitful buzzwords, phrases and slogans of Democrats/liberals--for the sake of creating entire classes of victims and expanding the nanny-state and getting reelected.
In this case the "victim class" was created through the term "AFFORDABLE HOUSING"
Affordable Housing is determined more by the area where one lives, and the income, relating to the cost of the house, not by some government generalization, as was used by ACORN, Barack Obama, the Clinton Administration, the corrupt Reno Justice Department, Barney Frank, Chris Dodd and other bleeding heart, dishonest Democrats.
GOVERNMENT CANNOT MAKE HOUSING AFFORDABLE, IT CAN ONLY FORCE BAD DECISIONS AND WREAK HAVOC AS IT DID IN RUINING OUR ECONOMY.
30-36
WARNINGS
45
Warnings came from every important source as early as 2003. The British magazine The Economist warned for the second time, that "housing prices would fall 10% in America over the next 10 years.
You now know that instead of 10%, housing dropped precipitously and it took only till 2005 to start the landslide.
The Economist issued yet another warning, still nothing.
Also in 2003, then Secretary of the Treasury, John Snow, asked for legislation to avoid the coming catastrophe he warned about, especially pointing out the recklessness of Fannie Mae and Freddie Mac.
Robert Samuelson warned-again in 2003 highlighted the fact that "about 3000 banks held Fannie and Freddie "debt equal to all their capital."
Fortune Magazine, Peter Wallison, Alan Greenspan, Josh Bosner and scores of those we listen to regarding the economy issued warnings.
Barney Frank Rebuffs and Scorns The Experts in The House--Senator Chris Dodd Handles the Senate Cover-Up
In response to warnings about the growing riskiness, in housing markets, Franks said in 2003 (among other things)"Fannie Mae and Freddie Mac have played a very useful role in helping make housing more affordable." Critics "exaggerate a threat of safety." and "conjure up the possibility of serious financial losses to the Treasury which I do not see."
Franklin Raines and Maxine Waters Get In On The Fun
Waters 50, Joe Baca 51, Pelosi, Rangel 52, page 53, blistering report on FM by Office of FHEO p. 54 powerful lobbies of FM &FM.
p. 56 ends chapter From 48 to 56 is loaded
Ch 3
Samuelson ...Housing usually leads the economy into recession
57 Not from lax standards but as a result of government regulation and oversight.
58 housing began to fall in 2006
p. 63 top one fourth...60 days late... 65 sub-prime 1995 $65 billion, $332 billion by 2003 66 7% CRA lending by B of A constituted only 7% of its total lending but 29% of its losses---Oct. 8, quarterly report
Defaulting began making sense 66
67 Last paragraph refutes regulatory agencies' major role in collapse explains why sub-prime mortgages were almost the main culprit alone.
It was ultimately the skyrocketing rates of mortgage delinquencies and defaults that were like the heavy rain in the mountains that caused the flooding downstream. As Prof Stanley Liebowitz of U. of Texas put it:" From the current handwringing, you'd think the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job." Gov't was not passively inefficient. It was actively zealous in promoting risky mortgage lending practices.
Fannie Mae's culprit factor p. 68-79
REGULATORS
Widespread calls for more or better regulation do not come to grips with the fact that there is no such thing as generic "regulation" The reg of Fan and Fred by the Office of Federal Housing Enterprise Oversight (OFHEO) was radically different from the regulation of banks by various agencies that forced these banks into quota lending and lower loam approval standards.
TARP "Bailouts and Stimulus" starts on 79
Housing Meltdown
THE COMMUNITY REINVESTMENT ACT (CRA) OF 1977 SIGNED BY JIMMY CARTER WAS ACTUALLY THE FIRST GOVERNMENT STEP LEAD TO THIS COLOSSAL FAILURE
36p. 3 starting with "directed" 37 Pressures started building 39 "quotas"
By LARRY MARGASAK, Associated Press Writer Larry Margasak,
Associated Press Writer – 1 hr 7 mins ago
July 28, 2009
Excerpts
WASHINGTON – Despite their denials, influential Democratic Sens. Kent Conrad and Chris Dodd were told from the start they were getting VIP mortgage discounts from one of the nation's largest lenders, the official who handled their loans has told Congress in secret testimony.
Both senators have said that at the time the mortgages were being written they didn't know they were getting unique deals from Countrywide Financial Corp., the company that went on to lose billions of dollars on home loans to credit-strapped borrowers. Dodd still maintains he got no preferential treatment.
Dodd got two Countrywide mortgages in 2003, refinancing his home in Connecticut and another residence in Washington. Conrad's two Countrywide mortgages in 2004 were for a beach house in Delaware and an eight-unit apartment building in Bismarck in his home state of North Dakota.
Sen. Chris Dodd, working hard to remake himself as an outsider after a series of very insidery bad publicity — his presidential campaign depended heavily on finance industry contributions driven by his position on the banking committee — has been spent this year pressing populist legislation over the objections of the credit card and health care industries.
This, from his latest fundraising e-mail from campaign manager Jay Howser, is pretty ... broad, however:
Yes, Chris Dodd is fighting for the people of Connecticut every day. He's working hard to protect consumers and to make sure every American has affordable health care.
But what about the forgotten victims of Chris's efforts? What about the lobbyists?
The American people are pretty well convinced that the mortgage meltdown was the fault of greedy bankers, stupid borrowers, and the odd Friend of Angelo Mozilo like Sen. Christopher Dodd (D-CT). That's hardly surprising, since the mainstream media has shown a vivid lack of interest in getting to the bottom of it all.
That's why we have Thomas Sowell. His latest book, The Housing Boom and Bust, is a workmanlike analysis of the housing crisis. It's short enough, at about 50,000 words, for anyone to get through on a weekend.
Needless to say, Dr. Sowell does not find that the meltdown was all the fault of greedy bankers -- or even foolish borrowers. He puts most of the blame on politicians and activists that insisted that the US had an "affordable housing" crisis when it didn't. The government agencies that implemented the will of the political sector -- the Federal Reserve System, Fannie and Freddie, and the US Department of Housing and Urban Development -- they were the guilty suspects with actual fingerprints on the victim.
When analyzing a political scandal, our liberal friends usually like to expose the "myths" that the stupid American people were in thrall to. Dr. Sowell does not descend to such oversimplification, but we will.
Myth #1: The Housing Boom was Nationwide. No it wasn't. It was concentrated in just a a few places. News reports and scholarly research have found that even during the boom affordable housing "has been the norm across most of the country, but with glaring exceptions[.]" Writes Dr. Sowell:
Barney Frank: Let's spend TARP profits before taxpayers can get them
By: Byron York
Chief Political Correspondent
07/01/09 9:19 PM EDT
Excerpts:
When President Obama announced on June 9 that some financial institutions would be allowed to repay Troubled Asset Relief Program dollars, he said the massively expensive TARP bailout had made money for the federal government. "It is worth noting that in the first round of repayments from these [TARP recipients], the government has actually turned a profit," the president said. Indeed, TARP supporters have long held out the hope that the program might be profitable.
But now Rep. Barney Frank, the chairman of the House Financial Services Committee, has come up with a proposal to spend any TARP profits before they can be returned to the taxpayers. Last Friday, Frank introduced the "TARP for Main Street Act of 2009," a bill that would take profits from the program and immediately redirect them toward housing proposals favored by Frank and some fellow Democrats.
In exchange for receiving TARP money, financial institutions were required to hand over shares of preferred stock that paid a dividend for the government. In theory, if a financial institution paid the dividend faithfully, and then repaid the TARP money, then the government would turn a profit. Last month, the General Accountability Office (GAO) reported that, through June 12, 2009, the government had received $6.2 billion in dividend payments. The original TARP legislation required that money made from the program "shall be paid into the general fund of the Treasury for reduction of the public debt."
House GOP asks for hearings on "Friends of Angelo" VIP program
Submitted by Tom Readmond on Thu, 06/19/2008
Chris Dodd countrywide
Kent Conrad
mortgage
scandal
Promoted. -Patrick
Excerpts:
Twenty-eight members have signed onto a letter to Nancy Pelosi on members of Congress receiving preferential treatment in the "Friends of Angelo" program.
Thus, we demand that the House of Representatives undertake an investigation with open hearings to determine: (1) the validity of these charges, (2) whether the described practices were widespread, (3) the extent to which this scandal might have affected public policy, and (4) what steps might be necessary to assure the public that elected officials do not receive such preferential treatment in the future.
And later, they connect it to ordinary Americans:
At a time when millions of Americans are struggling to repay their mortgage debts while coping with $4/gallon gasoline and soaring foods prices, they will be outraged to learn that some Members of Congress may have personally profited from their official positions through secret sweetheart deals on their mortgages.
Senator Chris Dodd Democrat is one of the two major culprits leading to the housing meltdown. He kept the Senate from acting while Democrat Barney Frank kept the U.S. House from taking steps to deal with scandals leading to the collapse of CountryWide Mortgage and the scandals at Fannie Mae and Freddie Mac all led by Clinton Cronies and involving Rahm Emanuel.
Irish property prices have plummeted since 2002. But a "cottage" in County Galway owned by Connecticut Senator Chris Dodd has tripled in value during the same period, according to a financial disclosure form filed by the Senator this month.
There are two possible explanations for this remarkable turn of fortune. Maybe Mr. Dodd is luckier than a leprechaun. Or could it be that he paid well below the market price when he bought out a co-owner in 2002 and had undervalued the property accordingly? If it's the latter, then Mr. Dodd received a "gift," in IRS parlance, and should have declared it on his financial disclosure form that year. He did not. Oh, and by the way, the seller at that low, low price has been the business partner of a man for whom Mr. Dodd lobbied to receive a Presidential pardon.
It's also been nearly a year since a former loan officer at Countrywide Financial charged that the mortgage lender had classified Mr. Dodd as a "very important person" (a.k.a., a "friend of Angelo" Mozilo, Countrywide's then-CEO). As such, Robert Feinberg said, Mr. Dodd received -- and knew he'd received -- preferential rates and fees on two mortgages he and his wife refinanced in 2003. As a power on the Senate Banking Committee, he also knew this was a conflict of interest. This was the era when Countrywide originated and then sold to Fannie Mae high volumes of subprime loans.
The SEC charged Mr. Mozilo with fraud and insider trading earlier this month, and the Los Angeles Times reported in May that there is an FBI investigation which "includes a probe of [Countrywide's] role in an influence-peddling scandal involving" Mr. Dodd. The Senate Ethics Committee won't comment on its own investigation of almost a year.
On Thursday June 4th 2009, in a civil lawsuit filed by the U.S. Securities and Exchange Commission in Los Angeles federal court, regulators accused Mozilo of making more than $139 million in profits in 2006 and 2007 from exercising 5.1 million stock options and selling the underlying shares.
Countrywide CEO Angelo Mozilo is facing civil fraud charges
Excerpts:
On Thursday, securities regulators filed charges accusing the 70-year-old Mozilo of insider trading and securities fraud.
The man dubbed "Tangelo" by business media is the biggest name yet to be accused of wrongdoing by U.S. investigators probing the subprime mortgage crisis and housing market collapse.
Born in 1938 to Italian immigrants and raised in The Bronx borough of New York City, Mozilo evangelized home ownership for everyone.
Mozilo Was One of Many Clinton Cronies Causing the Housing Meltdown and Ruining A Strong Thriving Economy
SEC charging ex-Countrywide CEO Mozilo with fraud
Thu Jun 4, 2009
By Marcy Gordon And Greg Risling, The Associated Press
WASHINGTON - Federal regulators on Thursday charged Angelo Mozilo, the former chief executive of fallen mortgage lender Countrywide Financial Corp., with civil fraud and illegal insider trading in a prominent case arising from the financial meltdown.
The U.S. Securities and Exchange Commission also accused two other former executives of Countrywide of civil fraud, saying they and Mozilo "deliberately" misled investors about the risks the company assumed in its aggressive drive for a share of the booming mortgage market.
The SEC's civil lawsuit was filed in federal court in Los Angeles, naming Mozilo, Countrywide's former chief operating officer David Sambol, 49, and ex-chief financial officer Eric Sieracki, 52.
Hi, Senator Kent Conrad (D-ND). Enjoying your Countrywide mortgage?
You know, the one that’s just like the ones that your fellow Democrat Chris Dodd (D-CT) got?
Report Details Countrywide’s Efforts to Benefit VIPs
Excerpts:
WASHINGTON — - Executives at Countrywide Financial, one of the biggest names of the housing boom, routinely violated internal company policies to provide below-market rates on home loans to the politically connected and powerful, according to a congressional report to be released Thursday.
Recipients of special loans included senators and other officials, prominent businessmen, congressional aides, celebrities and journalists, including Sen. Kent Conrad, D-N.D., former U.N. ambassador Richard Holbrooke, former Department of Housing and Urban Development Secretary Alphonso Jackson, Jackson’s daughter and others.
Via Jeff Goldstein.
Not much to add at the moment - except that I felt that it was vitally important to remind you that nothing ever goes away on the Internet. Right now, Chris Dodd and his Magical Irish Cottage is sucking out a lot of oxygen in the room… but that won’t last forever, and once he’s gone we’ll be ready to address our concerns with everyone else from the Other America who seems determined to avail him or herself of the privileges denied to the members of mine.
On June 4, 2009, the U.S. Securities and Exchange Commission charged former CEO Angelo Mozilo with insider trading and securities fraud.
June 6, 2009
Excerpts:
Angelo R. Mozilo (born 1938 in New York City) was the chairman of the board and chief executive officer of Countrywide Financial until July 1, 2008[1]. CNBC named Mozilo as one of the "Worst American CEOs of All Time".[2]
He is the son of a Bronx butcher. He received a Bachelor of Science degree from Fordham University in 1960 and holds an honorary Doctor of Laws degree from Pepperdine University.[citation needed]
In 1978 he and his former mentor David S. Loeb, who had already started a mortgage lending company, founded Countrywide Credit Industries in New York. They later moved the headquarters to Calabasas, California in Los Angeles County. Mozilo and Loeb also cofounded IndyMac Bank, which was founded as Countrywide Mortgage Investment, before being spun off as an independent bank in 1997. IndyMac collapsed and was seized by federal regulators on July 11, 2008.[3]
US Housing Bubble Meltdown: "Is it too late to get out"?
Housing-Market / US Housing Apr 28, 2007 - 04:36 PM
By: Mike_Whitney
Excerpts:
Housing-Market Treasury Secretary Henry Paulson delivered an upbeat assessment of the slumping real estate market on Friday saying, "All the signs I look at" show "the housing market is at or near the bottom.”
Baloney.
Paulson added that the meltdown in subprime mortgages was not a “serious problem. I think it's going to be largely contained.”
Wrong again.
Paulson knows full well that the housing market is headed for a crash and probably won't bounce back for the next 4 or 5 years. That's why Congress is slapping together a bailout package that will keep struggling homeowners out of foreclosure. If defaults keep skyrocketing at the present rate they are liable to bring the whole economy down in a heap.
Last week, the Senate convened the Joint Economic Committee, chaired by Senator Charles Schumer. The committee's job is to develop a strategy to keep delinquent subprime mortgage holders in their homes. It may look like the congress is looking out for the little guy, but that's not the case. As Schumer noted, “The subprime mortgage meltdown has economic consequences that will ripple through our communities unless we act.”
HOUSING MELTDOWN: Local foreclosures triple in '08
Excerpts:
Analyst says California housing recovery under way
In one of the more ominous signs of Las Vegas' crumbling housing market, foreclosures nearly tripled in 2008 from the previous year, Sacramento, Calif.-based Foreclosures.com reported Wednesday.
Lenders took back 31,416 homes in Clark County during the year, compared with 11,509 in 2007. Preforeclosure filings nearly doubled to 67,314 from 33,953 during the period. It's by far the highest numbers since Foreclosures.com began tracking the information.
Nationwide, foreclosures increased 63 percent for the year to about 1 million, plus 2 million filings that could lead to foreclosure, the online foreclosure investment firm reported.
Is the Housing Meltdown Ending (in South Lake Tahoe too)?Pending home sales jump 3.2% in March nationwide.
Pending home sales rose in March for the second consecutive month and are up year over year. So says an article at CNNMoney.com by Les Christie.
What’s interesting is that a consensus of real estate industry experts recently forecast that there would be no such increase at all.
The article very much proposes the question if the national housing downturn is ending. Lawrence Yun, chief economist of The National Association of REALTORS™ responds “it may still take a while before the market gains enough momentum to firmly state that the downturn has been reversed.”
After virtually every disaster created by Beltway politicians you can hear the sound of feet scurrying for cover, see fingers pointing in every direction away from Washington, and watch all sorts of scapegoats hauled up before congressional committees to be denounced on television for the disasters created by members of the committee who are lecturing them.
The word repeated endlessly in these political charades is "deregulation." The idea is that it was a lack of government supervision which allowed "greed" in the private sector to lead the nation into crises that only our Beltway saviors can solve.
What utter rubbish this all is can be found by checking the record of how government regulators were precisely the ones who imposed lower mortgage lending standards.
Who says Chris Dodd can’t win reelection? He’s just running in the wrong state.
First quarter fund raising reports are out, and so far this year the embattled Connecticut Senator has raised over $1 million for his 2010 campaign. Of that, just over $4,000 came from Connecticut residents — all five of them.
Dodd may want to move to Massachusetts where he’s raised $90,000 so far. He’s pretty popular in Texas too, raising $81,000 down there. Or do some kind of a weird Maryland/New York combo-meal thing as residents have combined in those two states to give him more than $100,000.
Housing Meltdown April 17, 2009
politicsandfinance.blogspot.com
Friday, March 20, 2009
Senator Chris Dodd: Can You Spell Mortgage Insurance?
Did I Say Mortgage Insurance? I Meant Mortgages and Insurance
The mortgage that I speak of is the apparent sweetheart deal he got from Countrywide on two mortgages that saved him about $75,000, and the insurance refers to the uproar over the bonuses paid AIG executives courtesy of a loophole left in the stimulus bill which prohibited "future" bonuses to firms receiving TARP money while retaining those that had already been contracted for. Dodd is the Chairman of the Senate Banking Committee.
Being A Politician Means You Can Say What You Want, Not Mean What You Say, Give A Convoluted Explanation and Face No Ramifications!
Not to be used as an indictment, but simply more negative P.R. for an incumbent running for re-election in 2010, "the watchdog group Center for Responsive Politics reported Dodd -- a senator since 1981 in a state heavily dependent on the insurance industry -- received more than $223,000 in campaign donations from AIG workers between 2003 and 2008." (CNBC)
This article from the insightful Investor's Business Daily gets to the heart of the Government legislation which made a huge contribution to the housing meltdown.
For example, it refers to the Community Reinvestment Act. Banks that lent less than the market average on properties in less affluent parts of the community were explicitly penalized. Government sanctions included, for example, denial of federal approval to open new branches...even if the branch was ready to do business. The regulators also imposed bans on merger activity, even when targets had been identified and wanted to be acquired.
While the legislation was well intended, and was aimed at eliminating the unfair practice of red-lining the legislation obviously had the risk that in the event of a significant real estate correction, loans to people in less affluent areas would quickly turn bad.
Rep. Barney Frank (D-Mass.) says that U.S. Supreme Court Justice Antonin Scalia is a "homophobe" who "makes it very clear that he's angry, frankly, about the existence of gay people." Frank points to Scalia's dissenting opinion in Lawrence vs.
Texas—a case that struck down a statute criminalizing homosexual sodomy—and accuses the justice of thinking that "it's a good idea for two consenting adults who happen to be gay to be locked up because he is so disapproving of gay people."
But Scalia has written no such thing. Either Frank is an incompetent reader or he is deliberately trying to mislead people into believing that justices vote for results in cases the way legislators vote a bill up or down.
Housing Meltdown
Now, it is true that Scalia wrote a cutting dissent in Lawrence.
Scalia didn't expand his opinion with a statement of sympathy for the gay men he would have let the state imprison. But his sharp words were not aimed at those men.
Scalia made a righteous show of his dedication to a method of constitutional interpretation, following the original meaning of the constitutional text.
In this analysis, any infusion of the judge's personal values is nothing but an illicit power grab.
Finally US authorities have gotten ‘tough' with the predator financial institutions. The world has been waiting for such decisive intervention since an unending series of Government bailouts of financial institutions began early in 2008 amounting to now trillions of taxpayer dollars.
Now, with the world's largest insurance giant, AIG, the White House Economic Council chairman, Larry Summers has expressed ‘outrage.' President Obama himself has entered the fray to promise ‘justice.'
US Senators have threatened a law to change the injustice. The only problem is they are all exercising ‘politics of deflection,' taking attention away from the real problem, the fraudulent bailout.
The issue is over AIG announcing it was obligated to pay its traders in its high-risk London unit a sales bonus totaling $165 million for the year.
Obama Treasury Secretary, Tim Geithner has announced a novel strategy for ‘justice.' AIG will ‘reimburse' the taxpayers up to $165 million for bonuses the company is giving employees. AIG will pay the Treasury an amount equal to the bonuses, and the Treasury will deduct that amount from the $30 billion in government (taxpayer) assistance that will soon go to the company.
Housing Meltdown
But he said that the Obama administration hasn't given up on efforts to recoup the money from the employees who got the bonuses. Good luck.
Larry Summers is the man directly responsible for the mess. As Clinton Treasury Secretary from 1999-January 2001 he shaped and pushed the financial deregulation that unleashed the present crisis.
He was Treasury Secretary after July 1999 when his boss, Robert Rubin left to become Vice Chairman of Citigroup, where Rubin went on to advance the colossal agenda of deregulated finance directly.
Housing Meltdown April 9, 2009
GUARDIAN.CO.UK
Congress grills Geithner and Bernanke over AIG bonus scandal
US treasury secretary says he was powerless to stop multi-million dollar bonus payouts by the struggling insurer
US treasury secretary Timothy Geithner talks to Federal Reserve chairman Ben Bernanke prior to their testimony before the House financial services committee.
Treasury secretary Timothy Geithner talks to Federal Reserve chairman Ben Bernanke before testifying about the AIG bonus scandal. Photograph: Matthew Cavanaugh/EPA
The US treasury secretary, Timothy Geithner, today called on Congress for sweeping new powers to seize control of non-bank financial institutions to avoid a repetition of the government's struggle to keep the stricken insurer AIG afloat.
Housing Meltdown
Under hostile questioning from lawmakers on Capitol Hill, Geithner and the Federal Reserve chairman, Ben Bernanke, attacked AIG's use of taxpayers' funds to pay $165m (£112m) in bonuses but insisted they had been blindsided and were powerless to prevent it.
"These were legal contracts and we're a nation of laws," said Geithner, who said he was briefed about the bonus payments only on 10 March. "We have to be very careful about the government intervening in these contracts."
WASHINGTON -- Timothy Geithner didn't pay Social Security and Medicare taxes for several years while he worked for the International Monetary Fund, and he employed an immigrant housekeeper who briefly lacked proper work papers.[President-elect Barack Obama's pick for Treasury secretary, Timothy Geithner, left, employed an immigrant housekeeper with expired work papers.] Getty Images
President-elect Barack Obama's pick for Treasury secretary, Timothy Geithner, left, employed an immigrant housekeeper with expired work papers.
Those issues, and a series of other tax matters, scuttled a tentatively scheduled confirmation hearing Tuesday for Mr. Geithner as Treasury secretary, Senate Finance Committee aides said. The tax matters were instead the subject of a closed-door meeting between the nominee, currently president of the Federal Reserve Bank of New York, and members of the Senate Finance panel, in whose hands his confirmation lies.
Treasury Secretary Tim Geithner wants a “vast expansion” of his power over the financial system. This is the same guy whose bungled $170 billion AIG bailout gave billions of dollars to wealthy AIG clients like Goldman Sachs, which admits it neither needed nor expected the money it got from taxpayers.
Back in the 1990’s, Geithner, working with the IMF, destroyed Indonesia’s economy, by prescribing disastrous economic policies. The result was massive increases in child malnutrition, riots, and mushrooming poverty, in a major country that once boasted annual economic growth rates of 7 percent. Australia’s long-time Prime Minister Paul Keating has chronicled Geithner’s central role in this disaster repeatedly, but to no avail (Keating was the leader of his country’s Labor Party, so he’s not exactly a doctrinaire conservative. And his rule was marked by economic growth.).
Now, Geithner wants more regulatory power in his own hands, even though unregulated financial institutions (like hedge funds) are doing better than regulated ones, so much so that unregulated financial institutions are being relied upon to bail out regulated financial institutions in Geithner’s toxic-asset buy-up program!
No one wants to pay higher taxes, but when the big banks are in trouble, who could be so heartless not to open their pocketbooks? That seems to be the consensus in the media in their discussion of the latest set of plans to bail out the Wall Street clowns who are losing hundreds of billions of dollars in the housing market meltdown.
Just to remind everyone, we are in the middle of a meltdown of an $8 trillion housing bubble. In the most recent data, house prices were declining at a 16 percent annual rate. This rate of price decline implies a loss of $3.2 trillion (more than $40,000 per homeowner) over the course of a year. This collapse is throwing the economy into a recession and leading millions of people to lose their homes.
As part of this story, most of the major banks have taken huge hits as a result of the fact that the financial wizards who guide them apparently didn’t know what they were doing. Most of these banks have seen their stock prices tumble by 50 percent, or more, as they have taken write-downs of bad debt that now exceed $100 billion. Citigroup, the gargantuan bank that has former Treasury Secretary Robert Rubin near the helm, currently tops the charts with more than $20 billion in write-downs. Everyone agrees that there is much more on the way.
Housing Meltdown April 5, 2009
Washington Times: AIG Political Support To Sen. Chris Dodd
By Christopher Keating
on March 30, 2009 2:09 PM
HartfordCourant.Com
The Hartford Courant's web site, www.courant.com, is reporting:
Former AIG Financial Products CEO Joseph Cassano urged company executives and spouses to donate to U.S. Sen. Christopher Dodd as he was in line to take over chairmanship of the critical Senate banking committee in November 2006, a report published today said.
According to the Washington Times, Cassano sent out an e-mail that said: "As he considers running for president in 2008, Senator Dodd has asked us for our support with his re-election campaign and we have offered to be supportive."
The executives were reportedly asked to write checks for $2,100 from themselves and their spouses, and to send them to Mr. Dodd's campaign. The Times said the executives were, in turn, supposed to pass the message down the line to senior members of their management teams.
Housing Meltdown April 4, 2009
BUILDER
To Come: A Fannie and Freddie Fist-Fight? A Melt-Down Smack-Down?
The appointment of Rahm Emanuel to be President-Elect Barack Obama's White House Chief of Staff was met with mixed reviews and speculation, based on the hard-charging Illinois Congressman's reputation for what some people have called "brutal effectiveness." Emanuel's policy feedback, they say, can be kind of confrontational — as in, he once made his point by mailing someone a two-foot-long dead fish.
An interesting question for builders, it seems, may be whether Emanuel will now become embroiled in a fist-fight (or fish-fight) over Fannie Mae and Freddie Mac and their role in the ongoing worldwide credit-market meltdown. This morning, the news is full of stories about the fact that Rahm, in between serving in Bill Clinton's White House and serving as a Congressman from Illinois, was on Fannie Mae's Board of Directors during a time when the mortgage-market financial giant apparently went down a path of some questionable financial reporting, and, according to critics, went out on an unwise limb backing shaky loans.
Personally, I have some doubts about whether blame for the current credit crisis, as some critics maintain, really belongs with Fannie Mae and can be laid at the door of the aggressive mortgage lending that Fannie helped to stimulate in lower-end markets. Fannie didn't get all that deep into sub-prime lending (that was mainly done by other private companies). And anyway, the worst of the bubble-blowing happened in markets Fannie wasn't directly part of — such as the odd "credit default swaps" that have far exceeded actual mortgage lending in volume (and in flakiness).
Housing Meltdown April 3, 2009
CHICAGO DAILY OBSERVER
Completing the Circuit: Rahm Emanuel on Freddie Mac Board
With the Fannie and Freddie in the news.It’s important to look at how the GSE’s lobbied Congress to build their dishonest balance sheets.NPR has a list of the politically connected that made it to the GSE boards.Before coming to Congress,Rahm Emanuel was a Freddie Mac board member.This means Rahm Emanuel has some explaining to do.The Chicago Sun-Times reported on Rahm Emanuel’s background :
Escapes controversy during impeachment. Leaves White House in 1998, never having to hire a lawyer. Clinton loyalist.
Chicago: Returns to Ravenswood, makes millions as an investment banker in a few deals; tapped by Clinton for a plum spot on Freddie Mac board; Daley appointee on CHA board. Wins House seat in 2002 with help of Daley Machine. Daley loyalist.
Housing Meltdown April 2, 2009
THE BUSINESS INSIDER
Rahm Emanuel Made $320,000 From Freddie Mac, But Didn't Do Squat
That Obama's chief of staff Rahm Emanuel made $320,000 during a brief stint at Freddie Mac is well known. Back in the halcyon days, before it blew up, that was the place where a lot of Clinton-folk went to get rich.
But what might (not) surprise is that Emanuel was basically just there to collect a paycheck. He didn't actually, you know, do anything. At least according to a Chicago Tribune report:
The board met no more than six times a year. Unlike most fellow directors, Emanuel was not assigned to any of the board's working committees, according to company proxy statements. Immediately upon joining the board, Emanuel and other new directors qualified for $380,000 in stock and options plus a $20,000 annual fee, records indicate.
Housing Meltdown April 1, 2009
UPDATING THE FACTS ON RAHM EMANUEL & THE DNC-OBAMA CRIME FAMILY
I realize that “crime” is a strong term to apply to the “family” of Democrats named herein, but, what else can be said of people such as these who manage, however gleefully and cunningly with smiles and booming voices, to wrangle trillions of dollars from other people based upon a declaration of alarming needs of their own determination after first creating the conditions that caused the needs themselves? Call it what it is: crime, by a family of individuals sharing a goal, participating in a variety of processes toward that goal, profiting in those processes and in and by that shared goal.
Of all sources to present the awful truth about one of those family members — Rahm Emanuel — THE CHICAGO TRIBUNE provides a series of articles with hardcore facts: what Emanuel manipulated and how and how these escapades by Emanuel set the loopey foundation for the housing and financial horrors that developed afterward.
Worse, that structural foundation is still loopey, the horrors are present and ongoing — “still in development” — and the Democrats (Emanuel, Obama and others among them) continue to do a garbage-dance-of-denial as to their involvement in these horrors.
Housing Meltdown March 31, 2009
Done(Democrats Over Nominating Elitists.com)
Obama’s Dumb First Appointment: Freddie Mac Board Member, Rahm Emanuel
The first sign that President-elect Obama is not serious about fixing the housing crisis and restoring America’s economy: he has appointed a former board member of failed housing giant Freddie Mac — the housing giant whose actions have been cited by economists as the beginning of the country’s housing crisis – as his Chief of Staff:
President-elect Barack Obama’s newly appointed chief of staff, Rahm Emanuel, served on the board of directors of the federal mortgage firm Freddie Mac at a time when scandal was brewing at the troubled agency and the board failed to spot “red flags,” according to government reports reviewed by ABCNews.com. Rahm_Emanuel
According to a complaint later filed by the Securities and Exchange Commission, Freddie Mac, known formally as the Federal Home Loan Mortgage Corporation, misreported profits by billions of dollars in order to deceive investors between the years 2000 and 2002…
Housing Meltdown March 28, 2009
VOLOKH CONSPIRACY
[Jim Lindgren, July 14, 2008 at 2:28pm] Trackbacks
Jamie Gorelick's ties to Fannie Mae and What She's Doing Now
In reading this article about Crony Capitalism at Fannie Mae (tip to Instapundit), I noticed that Jamie Gorelick was one of the Fannie executives who benefited from inflated bonuses based of Enron-style accounting. She was Vice Chairman of Fannie Mae from 1997 to 2003 (Fannie’s fraudulent accounting scheme was made public in 2004).
This is the same Jamie Gorelick who was Deputy Attorney General in the mid 1990s and was reported to have been the author of the Clinton Administration’s WALL against sharing intelligence data between foreign and domestic agencies.
Democrat Scandals
Without the policies instituted by Gorelick still in place in 2001, officials might have learned more about the 9/11 attacks before the planes hit the buildings.
The Wall Street Journal quoted Attorney General Ashcroft on the possible influence of Gorelick's wall:
"In the days before September 11, the wall specifically impeded the investigation into Zacarias Moussaoui, Khalid al-Midhar and Nawaf al-Hazmi. After the FBI arrested Moussaoui, agents became suspicious of his interest in commercial aircraft and sought approval for a criminal warrant to search his computer. The warrant was rejected because FBI officials feared breaching the wall
Housing Meltdown March 27, 2009
ABC NEWS
Emanuel Was Director Of Freddie Mac During Scandal
New Obama Chief of Staff, Others on Board, Missed "Red Flags" of Alleged Fraud Scheme
President-elect Barack Obama's newly appointed chief of staff, Rahm Emanuel, served on the board of directors of the federal mortgage firm Freddie Mac at a time when scandal was brewing at the troubled agency and the board failed to spot "red flags," according to government reports reviewed by ABCNews.com.
According to a complaint later filed by the Securities and Exchange Commission, Freddie Mac, known formally as the Federal Home Loan Mortgage Corporation, misreported profits by billions of dollars in order to deceive investors between the years 2000 and 2002.
Emanuel was not named in the SEC complaint but the entire board was later accused by the Office of Federal Housing Enterprise Oversight (OFHEO) (click here to read) of having "failed in its duty to follow up on matters brought to its attention."
Housing Meltdown March 26, 2009
CHICAGOTRIBUNE.COM
Rahm Emanuel's profitable stint at mortgage giant
Short Freddie Mac stay made him at least $320,000
By Bob Secter and Andrew Zajac Tribune reporters
March 26, 2009
The White House Chief of Staff Rahm Emanuel listens as President Barack Obama delivers remarks to open the White House Forum on Health Reform in the East Room of the White House.
Before its portfolio of bad loans helped trigger the current housing crisis, mortgage giant Freddie Mac was the focus of a major accounting scandal that led to a management shake-up, huge fines and scalding condemnation of passive directors by a top federal regulator.
One of those allegedly asleep-at-the-switch board members was Chicago's Rahm Emanuel—now chief of staff to President Barack Obama—who made at least $320,000 for a 14-month stint at Freddie Mac that required little effort.
Housing Meltdown
As gatekeeper to Obama, Emanuel now plays a critical role in addressing the nation's mortgage woes and fulfilling the administration's pledge to impose responsibility on the financial world.
Emanuel's Freddie Mac involvement has been a prominent point on his political résumé, and his healthy payday from the firm has been no secret either. What is less known, however, is how little he apparently did for his money and how he benefited from the kind of cozy ties between Washington and Wall Street that have fueled the nation's current economic mess.
Ken Lay and Jack Abramoff must be green with envy over the all the mischief that has been accomplished by Jamie Gorelick, with scarcely any demonization in the press.
Imagine playing a central role in the biggest national defense disaster in 50 years. Imagine playing a central role in one of the biggest economic disasters in your country's history. Imagine doing both as an un-elected official.
Housing Meltdown
Imagine getting filthy rich in the process, and even being allowed to sit self-righteously on a commission appointed to get to the bottom of the first disaster, which of course did not get to the bottom of that disaster or anything else for that matter.
Imagine ending, ruining or at least causing signficant quality deterioration in the lives of millions of people, most of whom will never know your name. Imagine counting your millions of dollars while people who tried to stop you from causing all this mayhem were getting blamed for most of the ills you actually contributed to.
Well, as un-imagineable as this is, there is one American who doesn't have to imagine it. One Jamie Gorelick is this American. And without pretending that she caused the loss of countless thousands of lives and countless billions of dollars of wealth by herself, she certainly did push some of the early domino's in catastrophic chain events that are a major factors in life in America today
Housing Meltdown March 24, 2009
By INVESTOR'S BUSINESS DAILY
The Real Culprits In This Meltdown
Posted Monday, September 15, 2008
Big Government: Barack Obama and Democrats blame the historic financial turmoil on the market. But if it's dysfunctional, Democrats during the Clinton years are a prime reason for it.
Obama in a statement yesterday blamed the shocking new round of subprime-related bankruptcies on the free-market system, and specifically the "trickle-down" economics of the Bush administration, which he tried to gig opponent John McCain for wanting to extend.
Housing Meltdown
But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street's most revered institutions.
Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.
Housing Meltdown March 23, 2009
LiveLeak--From Washington Post
Internal Warnings Sounded on Loans At Fannie, Freddie
Internal Freddie Mac documents show that senior executives at the company were warned years ago that they were offering mortgages that could pose dangers to the firm, hurt borrowers and generate more risky loans throughout the industry.
At Fannie Mae, top executiv More..es were told it was necessary to develop "underground" efforts to buy subprime mortgages because of competitive pressures, although there were growing risks and borrowers often didn't understand the terms of the loans, documents show.
The House Committee on Oversight and Government Reform, which has the documents, is holding a hearing today to discuss Fannie and Freddie's downfall. The companies were seized by the government three months ago after nearly collapsing in the wake of billions of dollars of losses on mortgages.
'Wall Street, as we knew it, is dead. The system that allowed the U.S. economy to be a dynamic innovator has been fundamentally broken and the implications of these structural changes have yet to be fully felt."
It's now commonly accepted that the economic meltdown has forever changed the nature of the financial industry. But the words above weren't written in the past weeks. They were penned by financial analyst Richard Wayman in 2003, after investigations by then New York Attorney General Eliot Spitzer led to a structural shift in the relationship between research and investment banking following the stock-market collapse of 2001-02.[Washington Has Always Demonized Wall Street] Martin Kozlowski
Among the many remarkable aspects of our present crisis is the speed with which we have collectively forgotten past crises, even ones that happened recently. The current meltdown is substantial, dramatic, and systemically dangerous -- but it is hardly the first to merit that description. And each crisis, without fail, results in unequivocal pronouncements that such excesses will never again be allowed.
"It is an easy and vulgar thing to please the mob … but to improve them is a work fraught with difficulty, and teeming with danger." -- Charles Caleb Colton
"The mob is the mother of tyrants." -- Diogenes
Shamelessness is the order of the day. If I were an AIG executive entitled by law to a large "retention" bonus negotiated before the taxpayers had bailed out my company, I hope I would have the decency to refuse it. Reward for a job well done in the private sector is one thing. Suckling from the government sow is another. And it is particularly galling to reward mismanagement!
Housing Meltdown
Accepting all of the above as fact (and it is not entirely clear, as of this writing, whether the executives receiving bonuses are the same ones who got the company into trouble), it would be difficult for even the worst banking or insurance executive to outshine our elected officials when it comes to shamelessness. Our elected officials may have no idea how to extricate the economy from its economic decline, but they sure know how to stage a show trial.
It would be nice if just every once in a while, maybe just to keep us off-balance, the good members would make at least a pretense of caring about solving the nation's problems. There is surely enough blame to go around in this financial mess: bankers who made bad judgments about loans, Wall Street firms who negligently packaged securities of unknown worth, and individuals who made unwise investments based on the foolish assumption that real estate prices could only continue to rise.
Housing Meltdown
But certainly the malfeasance of politicians is near the top of any list. Politicians a) encouraged (to the point of bullying) Fannie Mae and Freddie Mac to make dubious loans; b) resisted regulation of those same GSEs; and c) have spent taxpayers' money wildly and irresponsibly, setting us up for even more frightening economic calamities down the road.
Housing Meltdown March 20, 2009
Open Secrets.Org
Update: Fannie Mae and Freddie Mac Invest in Lawmakers
Published by Lindsay Renick Mayer
September 11, 2008 11:26
When the federal government announced two months ago that it would prop up mortgage buyers Fannie Mae and Freddie Mac, CRP looked at how much money members of Congress had collected since 1989 from the companies.
On Sunday the government completely took over the two government-sponsored enterprises, and we've returned to our data to bring you the updates, this time providing a list of all 354 lawmakers who have gotten money from Fannie Mae and Freddie Mac (in July we posted the top 25).
Housing Meltdown
These totals are based on data released electronically from the FEC on Sept. 2 and include contributions to lawmakers' leadership PACs and candidate committees from the floundering companies' PACs and employees.
Current members of Congress have received a total of $4.8 million from Fannie Mae and Freddie Mac, with Democrats collecting 57 percent of that. This week we also wrote about how much money lawmakers had invested of their own money in the companies last year--a total of up to $1.7 million.
All Recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008
Name Office State Party Grand Total Total fromPACs Total fromIndividuals
Barney Frank is the face of our current credit crisis and resulting economic funk.
In 2004 Senator Frank claimed that there were no safety or soundness issues at the government-sponsored enterprises Freddie Mac and Fannie Mae. He stated his position in more than one forum, in more than one hearing--that is an undeniable truth. Something that he is so good at hiding from.
His opposition to the calls for oversight or "regulation" from the Bush White House or the Republican Congress were loud enough to send the sissy Republican members of the House banking and finance committee packing, literally.
It was their lack of character, their inability to stand up to the lunacy of the ridiculous idea that government should promote lending to those that cannot repay, and other similar liberal lite ideas, that cost them the leadership position.
Housing Meltdown
That is what got them ejected from the majority and rightfully so. They have been fired with cause. Until they come to see that they are the problem, until they come to see that the message is not the problem, there will be no Republican majority.
Today we are seeing the effect of this character of convenience. A government run amok! We spend trillions borrowing our way out of a credit crisis. Our budget deficit soars to a percentage of GDP that is unheard of and we hear talk of another stimulus package.
I say bullshit! Enough is enough. We propose the rewriting of mortgages, imagine, one day you have loaned someone $300,000, but the next day the government says it's worth only $200,000.
Housing Meltdown
Who in their right mind would want to make one more home loan? If you are at risk of having your money confiscated by the government when they decide to rewrite the agreement between the borrower and the lender, who is going to make such a loan? No person, no institution, in their right mind would make that loan.
Then we wonder why there is a crisis of confidence in the financial institutions?! There can be no financial industry if you take away the concept of a legal and binding contract.
Housing Meltdown
The financial institutions, AIG, Bank of America, Citibank, etc.. , the business, GM, Chrysler, that could not survive the storm should have been allowed to fail.
Regardless of the party in power, Republican or Democrat, regardless of the name of the president, Bush or Obama, the idea of taking money from the American taxpayer to take away the sting of these bad business decisions is unconstitutional, un-American, and just damn well wrong.
“Spendulus,” “Porkulus,” and “the Generational Theft Act of 2009” are all nicknames some have given to the “American Recovery and Reinvestment Act of 2009” signed into law by President Obama last month. In light of Obama’s most recent statements about the economy an even more accurate moniker might be “Scamulus” considering how obvious it now is that everything leading up to passage of the bill was a master con perpetrated on American taxpayers. The con is not over either. We have simply entered the next phase.
“Scamulus” had to be passed in a big hurry. The rush was such that not only did Democrats and Obama break their pledge to allow for a 48 hour review period prior to the vote, but not even 24 hours were provided to read the 1400-plus page bill. The urgency of the bill, according to President Obama, was because America was facing an "economic crisis as deep and as dire as the Great Depression” and we could not afford to wait even 48 hours because it might turn into a “crisis that at some point we may be unable to reverse.”
After the big rush through Congress the “emergency bill” sat for four days until President Obama signed it. If it were not obvious then that the big rush had been a con, additional evidence would continue to mount over the next few weeks. The strategy was calculated. It was deceitful. It was manipulative. It was opportunistic. It was un-presidential. And unless tax-paying American citizens speak up it will continue to be effective, with some tweaks.
Housing Meltdown March 16, 2009
Nosheepleshere.blogspot.com
Saturday, March 14, 2009
The OneUnited Bank Scandal, Barney Fwank, er, Frank and Mad Max(ine) Waters
Corruptocrat Mad Max (Maxine Waters) is at it again. Waters (D-CA) is the woman who tried to make a case that the Central Intelligence Agency deliberately helped smuggle drugs into the inner city of Los Angeles in order to poison its African-American populace and who interfered in a Drug Enforcement Agency investigation involving a Houston-based rap producer who just happened to be a childhood friend of Sidney Williams, Waters' husband.
Waters, as chair of the Housing subcommittee of the House Financial Services committee, has taken big banks to task for their failures to help homeowners affected by the current economic crisis.
Housing Meltdown
But for the small OneUnited bank, Waters personally intervened with the Treasury Department to obtain millions in bailout funds, according to the New York Times and others.
OneUnited, thought to be “in precarious financial shape,” had been criticized by regulators both for failing to lend enough to poor people, as well as for providing its CEO with a $6.4 million California “beachfront compound” and a Porsche SUV, according to the paper.
Housing Meltdown March 15, 2009
CITIZENWELLS
Obama, Barney Frank, Fannie Mae, Freddie Mac, Democrats cause of crisis, McCain warned, McCain reformer, Youtube video
“These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Barney Frank 2003 in response to Bush administration overhaul plan.
“I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.”
Housing Meltdown
John McCain
There is a new YouTube video out that reveals the truth about problems leading up to the bailout crisis and who caused them:
“Democrats in their own words Covering up the Fannie Mae, Freddie Mac Scam that caused our Economic Crisis.
At a 2004 hearing see Democrat after Democrat covering up and attacking the regulations to protect Fannie Mae and Freddie Mac (their Cash Cows) that are now destroying our economy because the Democrats let them cheat.”
Housing Meltdown March 15, 2009
WeThePeople.Org
Good ole' Barney Frank & Friends....
Below is an editorial that appeared in the New Hampshire Union Leader that talks about Barney Frank and Chuck Schumer and their roles in the failure of Fannie Mae and Freddie Mac.
One month from tomorrow, U.S. Rep. Barney Frank, D-Mass., will be the keynote speaker at the New Hampshire Democratic Party’s annual Jefferson-Jackson dinner. It is a coveted and high-profile role previously filled by such notables as Hillary Clinton and Al Gore. The Democrats’ choice of House Financial Services Committee Chairman Barney Frank is, therefore, very revealing.
The party announced Frank as the keynote speaker on Sept. 11 — three days after the U.S. government took control of Fannie Mae and Freddie Mac, costing taxpayers untold billions. That takeover probably could have been prevented had Frank not worked to thwart every attempt to limit the risks taken on by the two government-sponsored mortgage giants.
For 16 years reformers in Congress have tried to improve oversight of Fannie Mae and Freddie Mac and prevent the government-chartered companies from putting the housing market and the whole economy at risk. All that time, Frank was involved in efforts to block those attempts, and in the last eight years he was a leader of those efforts.
Housing Meltdown March 14, 2009
Business & Media Institute
Media Mum on Barney Frank's Fannie Mae Love Connection
Democratic House Financial Services Committee Chair promoted GSEs while former 'spouse' was Fannie Mae executive.
By Jeff Poor
9/24/2008 4:00:57 PM
Are journalists playing favorites with some of the key political figures involved with regulatory oversight of U.S. financial markets?
MSNBC’s Chris Matthews launched several vitriolic attacks on the Republican Party on his Sept. 17, 2008, show, suggesting blame for Wall Street problems should be focused in a partisan way. However, he and other media have failed to thoroughly examine the Democratic side of the blame game.
Housing Meltdown
Prominent Democrats ran Fannie Mae, the same government-sponsored enterprise (GSE) that donated campaign cash to top Democrats. And one of Fannie Mae’s main defenders in the House – Rep. Barney Frank, D-Mass., a recipient of more than $40,000 in campaign donations from Fannie since 1989 – was once romantically involved with a Fannie Mae executive.
The media coverage of Frank’s coziness with Fannie Mae and his pro-Fannie Mae stances has been lacking. Of the eight appearances Frank made on the three broadcasts networks between Jan. 1, 2008, and Sept. 21, 2008, none of his comments dealt with the potential conflicts of interest. Only six of the appearances dealt with the economy in general and two of those appearances, including an April 6, 2008 appearance on CBS’s “60 Minutes” were about his opposition to a manned mission to Mars.
Housing Meltdown March 12, 2009
BOSTONGLOBE.COM
Frank's fingerprints are all over the financial fiasco
Because while the mortgage crisis convulsing Wall Street has its share of private-sector culprits -- many of whom have been learning lately just how pitiless the private sector’s discipline can be -- they weren't the ones who "got us into this mess."
Barney Frank's talking points notwithstanding, mortgage lenders didn't wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers.
It would be closer to the truth to say they woke up to find the government twisting their arms and demanding that they do so - or else.
Housing Meltdown
The roots of this crisis go back to the Carter administration. That was when government officials, egged on by left-wing activists, began accusing mortgage lenders of racism and "redlining" because urban blacks were being denied mortgages at a higher rate than suburban whites.
The pressure to make more loans to minorities (read: to borrowers with weak credit histories) became relentless.
Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to "meet the credit needs" of "low-income, minority, and distressed neighborhoods."
Lenders responded by loosening their underwriting standards and making increasingly shoddy loans.
The two government-chartered mortgage finance firms, Fannie Mae and Freddie Mac, encouraged this "subprime" lending by authorizing ever more "flexible" criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued.
Housing Meltdown March 11, 2009
U.S.News & World Report
CAPITAL COMMERCE
The 10 Dopiest Business and Economy Leaders of 2008
4) Angelo Mozilo. The nattily dressed former CEO of Countrywide Financial has become the tanned face of the subprime mortgage meltdown. Mozilo built Countrywide into the nation's largest mortgage lenderand enriched himself to the tune of more than $400 million in the process. But as it turns out, lots of those borrowers should have stayed renters. Not that it mattered to Countrywide, since it could sell those soon-to-be-toxic mortgagesto Wall Street and beyond.
5) Robert Rubin. It has been a bad run for the heroes of the 1990s boom. Now it's Rubin's turn for criticism, thanks to the unfolding financial disaster that is Citigroup. It looks as if all the company got from Rubin for some $115 million was a strategy for taking on heaps more risk in the collapsing debt markets. The former treasury secretary probably doesn't have to worry about deciding whether to give up his fat private-sector compensation package if eventually nominated by Barack Obama to be the next Fed chair. Doesn't look as if that call will be coming...
Housing Meltdown
...7) Barney Frank. This is a quote, from 2003, that the Massachusetts Democrat would like to have back: "These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.'' Turns out that the two government-sponsored entities were walking farther and farther out onto thin financial ice. And as late as last year, Frank wanted Fannie and Freddie to take on even more subprime risk. Washington and Wall Street have to share the blame for the financial crisis...
Housing Meltdown March 10, 2009
Congress Lies Low To Avoid Bailout Blame
By TERRY JONES
INVESTOR'S BUSINESS DAILY
Posted Thursday, September 18, 2008 4:30 PM PT
Congress says it likely will adjourn this month having done nothing on the most important issue in America right now: the financial meltdown from the subprime lending crisis.
"Can Congress just walk away from a problem it helped create? Maybe, maybe not.
...But the fact is, President Bush in 2003 tried desperately to stop Fannie Mae and Freddie Mac from metastasizing into the problem they have since become.
Here's the lead of a New York Times story on Sept. 11, 2003: "The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago."
Housing Meltdown
Bush tried to act. Who stopped him? Congress, especially Democrats with their deep financial and patronage ties to the two government-sponsored enterprises, Fannie and Freddie.
"These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis," said Rep. Barney Frank, then 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."
It's pretty clear who was on the right side of that debate.
Housing Meltdown March 9, 2009
Business & Media Institute
Media Mum on Barney Frank's Fannie Mae Love Connection
Democratic House Financial Services Committee Chair promoted GSEs while former 'spouse' was Fannie Mae executive.
"... Prominent Democrats ran Fannie Mae, the same government-sponsored enterprise (GSE) that donated campaign cash to top Democrats. And one of Fannie Mae’s main defenders in the House – Rep.
Barney Frank, D-Mass., a recipient of more than $40,000 in campaign donations from Fannie since 1989 – was once romantically involved with a Fannie Mae executive.
The media coverage of Frank’s coziness with Fannie Mae and his pro-Fannie Mae stances has been lacking.
Of the eight appearances Frank made on the three broadcasts networks between Jan. 1, 2008, and Sept. 21, 2008, none of his comments dealt with the potential conflicts of interest.
Housing Meltdown
Only six of the appearances dealt with the economy in general and two of those appearances, including an April 6, 2008 appearance on CBS’s “60 Minutes” were about his opposition to a manned mission to Mars.
The news media have covered the relationship in the past, but there have been no mentions since 2005, according to Nexis and despite the collapse of Fannie Mae.
The July 3, 1998, Reliable Source column in The Washington Post reported Frank, who is openly gay, had a relationship with Herb Moses, an executive for the now-government controlled Fannie Mae.
Housing Meltdown
The column revealed the two had split up at the time but also said Frank was referring to Moses as his “spouse.” Another Washington Post report said Frank called Moses his “lover” and that the two were “still friends” after the breakup. [emphasis mine]
Frank was and remains a stalwart defender of Fannie Mae, which is now under FBI investigation along with its sister organization Freddie Mac, American International Group Inc. (NYSE:AIG) and Lehman Brothers (NYSE:LEH) – all recently participants in government bailouts.
But Frank has derailed efforts to regulate the institution, as well as denying it posed any financial risk. Frank’s office has been unresponsive to efforts by the Business & Media Institute to comment on these potential conflicts of interest...
Housing Meltdown March 9, 2009
Hot Air
Ed Morrissey
A great example of how we got to the credit-market meltdown
posted at 5:00 pm on September 25, 2008 by Ed Morrissey
Sometimes the greatest blame comes from great praise when viewed in hindsight. The Los Angeles Times proves that with an article from 1999 heaping praise on the very people most responsible for the credit-market meltdown.
Ronald Brownstein lauded the Clinton administration for boosting minority ownership by forcing lenders to offer better terms to marginally-qualified borrowers — and noted the financial creativity from Fannie Mae and Freddie Mac as a crucial component of Bill Clinton’s efforts.
It also demonstrates why Congress mandated the failure of the lending system, and why it has to act to fix it (via Hot Air reader abinitoadinfinitum):
It’s one of the hidden success stories of the Clinton era. In the great housing boom of the 1990s, black and Latino homeownership has surged to the highest level ever recorded.
The number of African Americans owning their own home is now increasing nearly three times as fast as the number of whites; the number of Latino homeowners is growing nearly five times as fast as that of whites.
Housing Meltdown
These numbers are dramatic enough to deserve more detail. When President Clinton took office in 1993, 42% of African Americans and 39% of Latinos owned their own home. By this spring, those figures had jumped to 46.9% of blacks and 46.2% of Latinos.
Most people would agree that higher home-ownership rates are a positive sign in any community. They indicate investment in a community and commitment as well. Property owners have more of a stake in their cities and towns, and also typically support property rights in general.
But how was this accomplished? Here’s where that praise turns to condemnation (emphases mine):
Housing Meltdown March 8, 2009
INVESTOR'S BUSINESS DAILY
Let The Inquisition Start With Frank
INVESTOR'S BUSINESS DAILY
Posted Friday, March 06, 2009 4:20 PM PT
Oversight: Congressman Barney Frank says he wants some of those responsible for our current financial meltdown to be prosecuted. And we couldn't agree more. First up in the court dock: Rep. Barney Frank, D-Mass.
Even by the extraordinarily loose standards of Congress, it takes some chutzpah for someone such as Frank to suggest that he'll seek prosecutions for those behind the housing and financial crunch and for what he called "a strongly empowered systemic risk regulator."Frank: Fannie Mae and Freddie Mac's point man in Washington.
Frank: Fannie Mae and Freddie Mac's point man in Washington.
For Frank, perhaps more than any single individual in private or public life, is responsible for both the housing market mess and subsequent bank disaster. And no, this isn't partisan hyperbole or historical exaggeration.
"...As the world’s financial structures buckle and sway, seemingly on the verge of collapse, Barney Frank lumbers into a threadbare AM-radio station in the old mill town of Brockton, Massachusetts.
He is, as usual, a bit exasperated—and he seems close to sartorial entropy, his shirt half tucked, cuffs unfastened, and tie skewed at an unlikely angle...
Housing Meltdown
...The measures are unpopular even among many of Frank’s fellow congressional Democrats. But they are unfathomable in Brockton, a working-class burg where boxer Rocky Marciano remains a hometown hero 50 years after his last bout.
Frank settles into a chair in the station’s studio. Adam Bond, a talk show host in a baseball cap, is finishing up with another guest, the ruddy-faced owner of a nearby dog track...
...“Is your position that in this fiasco you are without fault?” Bond asks. “Or that you’re no more at fault than anybody else?”
Housing Meltdown
The congressman, his lips pursed and gray hair mussed, lurches forward in his seat. Bond is treading on his already frayed nerves.
Much to Frank’s dismay, this is a question he is hearing everywhere. No Democrat in America is more closely associated with the bailout plan.
For the 68-year-old Frank, the economic collapse offers a chance to build his legacy as a great lawmaker, remaking the nation’s financial system by enacting changes comparable, in Frank’s typically immodest estimation, to the greatest reforms of the New Deal..."
In theory, I have no problem with limiting the executive pay and bonuses of corporations that take billions in taxpayer-funded bailout money. As Nicole Gelinas put it: “It is untenable for taxpayers directly to support lavish pay for executives at government-guaranteed corporations. When the taxpayer is bearing all risk — as the taxpayer is now in much of the financial industry — the government should set limits.”
But the first question is: Where are the limits on Fannie and Freddie corruptocrats’ executive pay? Have those been passed yet? Are they equal to the limits on private executives’ pay?
And the second question is: Where will it stop? Barney Frank has no intention of restraining his grubby government paws. Via Financial Week
Housing Meltdown March 5, 2009
U.S. News & World Report
Sam Dealey
Barney Frank's Fannie and Freddie Racism Regarding the Financial Crisis
October 08, 2008 06:13 PM ET Sam Dealey
Rep. Barney Frank, chairman of the House Financial Services Committee, is doing his best to outshine Joe Biden in the silly comments department. As the Associated Press reports:
Frank said Monday that Republican criticism of Democrats over the nation's housing crisis is a veiled attacked on the poor that's racially motivated....
"They get to take things out on poor people," Frank said to a mortgage foreclosure symposium in Boston. "Let's be honest: The fact that some of the poor people are black doesn't hurt them either, from their standpoint. This is an effort, I believe, to appeal to a kind of anger in people."
Frank's comments are in response to widespread criticism of Fannie Mae and Freddie Mac, the two government-backed mortgage-bundling giants that played fast and loose with both risk and their bookkeeping.
Until this last month, Fannie Mae and Freddie Mac may have been pictured by most Americans as two individuals which, in some ubiquitous way, were connected to the mortgage market.
Now, we all find ourselves struggling to learn the complexities of GSEs, asking exactly who was really calling for more regulation, who was calling for less, and would have regulation averted the catastrophic meltdown that we just experienced.
Whose responsibility was it to foresee any potential problems in the banking industry? Upon whose deskbarney frank does the $700 billion bucks stop?
Housing Meltdown
Although it is certainly much more popular to point fingers at the CEOs of these GSE who were pocketing on the upwards of $200 million in compensation , one must remember, those individuals were doing exactly as they were commissioned by Congress to do…provide as many risky, sub-prime loans as they possibly could. And they were doing it too well.
The architect of the meltdown is Massachusetts own Barney Frank, ultra liberal democrat who set the stage for the meltdown, and as the Chairman of the House Financial Services Committee, even had the smarts to see the ship wreck he was creating, and publically discount the possibility that the unthinkable would happen. In his speech before Congress on the proposed regulation of Fannie Mae that would limit any type of financial crisis, Barney Frank said in 2003:
Housing Meltdown March 4, 2009
DIGG Reader Asks:
WHY ISN'T BARNEY FRANK IN JAIL?
The Link doesn't take you to the readers comment.
I've experienced the same problem with Answers at Yahoo.
Could it be, they are both protecting Barney Frank?
Chairman Barney Frank blames the Republicans and the lack of regulation for the financial meltdown. He refuses to accept any culpability for the current crisis, and keeps making excuses for his role.
He loudly denies any involvement in the mess, and even says that he tried to reform Fannie Mae and Freddie Mac.
Congressman Frank blocked many efforts over the years to reform these two Government Sponsored Enterprises.
Indeed, he enabled them as one would enable an alcoholic, he protected them so he could protect affordable housing, and he thwarted every effort to reform them since warnings began in 1991.
He was one of many apologists and cheerleaders, but he was the key architect of this financial 9/11.
Ironically, he now wants to take credit for coming to the rescue to clean up a problem that he is responsible for creating in the first place.
Housing Meltdown
This is what happens when emotion, hysteria, government meddling, and social engineering replace facts, evidence, and prudent decisions.
Also, the first maxim of law is that it should do no harm. The whole country was injured, never mind the poor souls, who were forced into mortgages that they could never repay.
Now Bailout Barney wants to help the fat cats on Wall Street. Why does he favor a bailout?
Perhaps it is because he gets 70% of his contributions from the same industries he should be regulating as chairman of the House Finance Services Committee.
Housing Meltdown
He gets most of his money from Insurance Companies, Investment Banks, Securities Firms, and Lawyers. He was also in the top 5 in the Congress of donations from Fannie Mae. Barney Frank is not your Father's Democrat.
"I believe in less government, fewer taxes, term limits, and public service, not personal enrichment. I will only serve two terms. We have many serious problems that must be solved quickly such as high energy prices, illegal immigration, loss of jobs, the banking crisis, inflation, judicial activism, and protecting our citizens from those who would do us harm. Congress is not doing the Peoples' will. This is not a time for humor, smart quips, or petty partisan politics. I believe in getting the job done. We need common sense and deliberate action. Where there is a will, there is a way. I want to get America moving again."
Earl Henry Sholley
Housing Meltdown March 1, 2009
WALL STREET JOURNAL
Dodd and Countrywide
The Senator should take the witness stand.
October 10, 2009
Former Lehman Brothers CEO Dick Fuld was under oath Monday when he was grilled on Capitol Hill about his role in the current financial meltdown. But if Members really want to understand the credit mania, they should also call Chris Dodd.
The Connecticut Senator has been out front denouncing the "companies that form the foundation of our financial markets," for "their insatiable appetite for risk."
He has also decried "reckless, careless and sometimes unscrupulous actors in the mortgage lending industry" and he has proclaimed that "American taxpayers deserve to know how we arrived at this moment." To that end, we propose he take the stand -- under oath.
Former Countrywide Financial loan officer Robert Feinberg says Mr. Dodd knowingly saved thousands of dollars on his refinancing of two properties in 2003 as part of a special program the California mortgage company had for the influential.
Housing Meltdown
He also says he has internal company documents that prove Mr. Dodd knew he was getting preferential treatment as a friend of Angelo Mozilo, Countrywide's then-CEO.
That a "Friends of Angelo" program existed is not in dispute. It was crucial to the boom that Countrywide enjoyed before its fortunes turned.
While most of the company was aggressively lending to risky borrowers and off-loading those mortgages in bulk to Fannie Mae and Freddie Mac, Mr. Feinberg's department was charged with making sure those who could influence Fannie and Freddie's appetite for risk were sufficiently buttered up. As a Banking Committee bigshot, Mr. Dodd was perfectly placed to be buttered.
Ireland does not easily give up its secrets. That may have been one attraction it held for Sen. Christopher Dodd in 1994 when he became an owner of a refuge on nearly 10 acres on the Irish west coast.
The murky tale includes a felonious inside trader, a Kansas City businessman, a presidential pardon and what appears to be a financial bonanza to Dodd during the Irish property boom.
The saga of Dodd's lucrative Irish odyssey reveals that his two 2003 sweetheart loans from subprime mortgage titan Countrywide Financial were not the first time he enjoyed a financial advantage from a wealthy benefactor.
The trail begins at one of New York's most desirable addresses.
Housing Meltdown
In 1993, Dodd's close friend, New York bon vivant Edward R. Downe Jr., got a heaping helping of justice when his insider trader scheme caused him to plead guilty to violating tax and securities laws.
Downe, who lived at exclusive 25 Sutton Place on the Upper East Side with his then wife, heiress Charlotte Ford, was nabbed setting up foreign accounts to make illegal insider stock trades for himself and some socialite friends.
Dodd attended Downe's sentencing, where the schemer received three years' probation and 3,000 hours of community service. Downe agreed a year later to pay $11 million to the SEC.
February 24, 2009
Bloomberg.Com
Bob Rubin Wants Your Kids to Pay for Banking Mess:
Jan. 30 (Bloomberg) -- Here we go again. As proposals for a bad bank that would buy lousy assets from U.S. banks gather speed, an old stumbling block is re-emerging -- how to price the holdings the government would buy.
This is rekindling the debate over mark-to-market accounting and its role in the financial crisis, as banks try to find something to blame other than their own ineptitude while shifting losses onto taxpayers’ backs.
The talk about accounting also obscures a bigger issue: Who should shoulder losses from the housing and credit bubbles, us or our kids?
Using market prices makes it more likely that we, and the banks, will have to face immediate pain. Ignoring market prices means we pass the tab to future generations.
Housing Meltdown February 23, 2009
READER COMMENTS FOR GOPUSA
Let's Blame Barney Frank, Chris Dodd & Bill Clinton
Now I know how Elvis Presley felt when he shot his television! Watching Barney Frank (D-MA) and Chris Dodd (D-CT) pontificate about how they are going to save the country in its time of financial crisis made me nauseous.
How is it that these two charlatans can feign concern when they are among the principles responsible for getting the taxpayers into this mess?
By now even the most intellectually stunted among us understands that the first casualty of politics is honesty.
No matter how superficial or how serious the matter, inside the beltway spin doctors take the facts, carve out anything that points to their client's guilt or responsibility in any given matter and then figure out how to package it so they can level a charge of irresponsibility and ineptness at their opponents or opposing colleagues.
Housing Meltdown
Kool-Aid drinking political sycophants glom on to these talking points and suddenly the innocent are the guilty and the inept and responsible are pointing fingers of blame.
..."This is true but, if I am to believe other articles I have read, lenders were coerced into urging loans on people who could not repay them.
I am referring, of course, to reports that the Clinton administration, through Attorney General Janet Reno, threatened to investigate borrowers who did not loan money on real estate in poor neighborhoods.
If the First National Bank of Podunk couldn't show that it had "enough" mortgages to minorities on their books, the Justice Department would investigate First National of Podunk on charges of "red-lining" (roughly equivalent to profiling) and worse, racism"...
And who were the main forces behind this? None other than Senator Dodd and Representative Frank. Instead of negotiating a bail-out, they should be concerned with posting bail.
Housing Meltdown February 22, 2009
Los Angeles Times--Blog
Report Says Dodd Has Received Millions From Pacs and other employees
..."In an investigative story by Matthew Kaufman and Jesse A. Hamilton, the newspaper reveals that although Dodd was a presidential also-ran in terms of votes, in terms of cash money he ranks among the top five receivers of donations from the nation's now-troubled financial sector.
"During the past 20 years," the Courant reports, "PACs and employees of finance-related firms have contributed more than $13 million to Dodd's election efforts, including nearly $6 million in the past two years."
That's $250,000 per month from people who expect legislative protection. That kinda money oughta cover the electric bills, anyway..."
Housing Meltdown February 21, 2009
Economic Meltdown Fueled By Barney Frank/Christopher Dodd
By TVC Executive Director Andrea Lafferty
January 29, 2009 – As our nation faces a serious economic crisis in 2009, Americans need to understand the origins of this crisis.
The subprime mortgage crisis fueled instability in other sectors of the economy and has led a crisis in the banking industry, housing industry, auto industry – and is resulting in the layoffs of millions of Americans. A subprime mortgage is one granted to individuals with a bad credit history or no credit history. They were given no-money-down, low interest, or interest-only loans.
Democrats effectively blamed President Bush for the economic crisis and this propelled Obama into office as President of the United States for the next four years.
Housing Meltdown
Is President Bush to blame? No. It was Democrat leadership going back to the Carter Administration that created this economic disaster.
The fact is that the roots of this economic crisis go back to the Clinton and Carter Administrations , the radical group ACORN, and Rep. Barney Frank (D-MA) and Senator Christopher Dodd (D-CT).
Here are the facts:
* Under President Jimmy Carter, the Community Reinvestment Act (CRA) was passed. It required federal financial institutions to encourage banks to give home loans to persons with little credit and low income. Economist Russell Roberts said that the CRA played a major role in creating the sub-prime mortgage crisis in the U.S.
February 20, 2009
RAHM'S 'RENT' IS JUST THE TIP OF ETHICS ICEBERG
By DICK MORRIS & EILEEN MCGANN
Emanuel: "Oversaw" Freddie Mac's antics, then got donation from Freddie's PAC.
NEWS broke last week that Rahm Emanuel, now White House chief of staff, lived rent- free for years in the home of Rep. Rosa De Lauro (D-Conn.) - and failed to disclose the gift, as congressional ethics rules mandate. But this is only the tip of Emanuel's previously undislosed ethics problems.
One issue is the work Emanuel tossed the way of De Lauro's husband. But the bigger one goes back to Emanuel's days on the board of now-bankrupt mortgage giant Freddie Mac.
Emanuel is a multimillionaire, but lived for the last five years for free in the tony Capitol Hill townhouse owned by De Lauro and her husband, Democratic pollster Stan Greenberg.
Housing Meltdown February 19, 2009
Here is a piece about Franklin Raines, an Obama financial adviser.
Franklin Raines was the CEO of the Federal National Mortgage Association (Fannie Mae) from 1999-2004;
Mr. Raines was deeply involved in the very root of the meltdown which led to the collapse of the entire economy, at the same time, drastically shortening a very solid expansion that was riding along nicely before this meltdown took the whole nation unnecessarilly down.
Some believe Mr. Raines is the individual most responsible for the subprime mortgage crisis.
It was after all, Mr. Raines’ on his watch that Fannie Mae went bankrupt.
He was accused of manipulating earnings statements so he could be paid bonuses to which he was not entitled, bonuses he did receive in excess of $90, 000,000. He was known to be giving advice to Mr. Obama, during the latter's campaign.
Despite his ties to Freddie Mac and Fannie Mae, Obama has been exploiting the current financial crisis by spinning it into evidence that we must abandon economic freedom in favor of socialism.
Yet coercive intrusion by government moonbats had a large hand in creating the crisis. From Investor's Business Daily:
[I]t was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street's most revered institutions.
Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.
[…] Clinton-era corruption, combined with unprecedented catering to affordable-housing lobbyists, resulted in today's nationalization of both Fannie and Freddie, a move that is expected to cost taxpayers tens of billions of dollars.
Housing Meltdown
And the worst is far from over. By the time it is, we'll all be paying for Clinton's social experiment, one that Obama hopes to trump with a whole new round of meddling in the housing and jobs markets. In fact, the social experiment Obama has planned could dwarf both the Great Society and New Deal in size and scope.
Clinton crony Franklin Delano Raines looted the quasi-governmental Fannie Mae for almost $100 million in compensation in just a few years before he had to abandon his CEO post under an ethical cloud.
Since then he has moved on to other nefarious activities, serving as a "high level economic advisor and donation 'bundler' to the Obama Campaign."
Jim Johnson, who also stuffed his pockets with $millions as Fannie Mae CEO, served on Obama's VP search committee. Obama chucked him under the bus when his involvement in the questionable loans scandal at Countrywide Financial became public.
Fannie Mae and Freddie Mac have been big believers in greasing the wheels in Washington, as an alternative to restricting themselves to sound business practices. Despite being a junior Senator of little apparent consequence, Obama managed to soak up more of their money than any other Senator after Chris Dodd.
Housing Meltdown February 15, 2009
Barney Frank More Than Any Other American Caused The Collapse of the Economy--SEE VIDEO JUST BELOW
Sequence of Events-Leading To Collapse of the Economy Starts Toward Bottom of the Page
Congressman Barney Frank says it is nonsense, but he's taking heat from critics who say he fueled the credit-market crisis by brushing off concerns about government-backed mortgage lending.
But can Frank's denial stand up to the Spin-o-Meter?
There's a reason voters in the Fourth District have been returning Frank to Congress for nearly 20 years.
He's a smart, hard-working congressman who's been a longtime advocate for affordable housing.
But when he claims to share no blame for the ditch those government-subsidized lenders have driven us into, is that the truth, or just self-serving political spin?
COMMEN SENSE
Housing Collapse
Posted by Mike80
Thursday, January 22, 2009 12:00:00 AM
Barney Frank, Chris Dodd, and the Housing Meltdown
When assigning blame to the current meltdown affecting the financial industry there is plenty to go around. We often hear it was the Bush administration’s fault because he was president at the time and the Buck must stop with him.
However, the real truth has been hidden by the mainstream media. I believe, as often the case, the main perpetrator is Big Government.
It is a turgid and ineffectual federal bureaucracy at the root of this problem. The main function of government is to protect equal rights, not provide equal belongings. This leads to a Socialist society and as history has shown doomed to fail.
Thomas Jefferson once remarked that “democracy will cease to exist when you take away from those who are willing to work and give to those who would not.” It can be easily seen that 200 years ago our founders new the dangers of big government and yet we are at place now where we are begging for more.
Housing Meltdown
Housing Meltdown
One attribute that can be said about government is they always leave us with plenty of clues to follow. In 1977, under President Jimmy Carter, the Community Reinvestment Act was born and later became the CRA under Clinton.
As with most social programs it was good in theory but lacked practical applications. Clinton used this program to compel banks and make them loan money to high risk low-income individuals usually in minority neighborhoods.
If banks did not comply they would be threatened with fines, loss of business, and ostracism.
Housing Meltdown
Enter the central players. The Government Sponsored Enterprises known as Fannie Mae and Freddie Mac were created in 1938(Fannie) as part of Roosevelt's New Deal to provide federal money for housing, and 1970(Freddie) during Lyndon Johnson's Great Society.
In 1968, Fannie was privatized and removed from the federal budget. This was when it became a GSE with private profits, exemption from state and federal income taxes & oversight, and the implied backing of the Federal Government. Freddie was created as competition for Fannie. They currently control about 90% of the secondary mortgage market.
Housing Meltdown February 12, 2009
WALL STREET JOURNAL
President Bush Tried to Rein In Fan and Fred
Democrats and the media have the housing story wrong.
Mythmaking is in full swing as the Bush administration prepares to leave town. Among the more prominent is the assertion that the housing meltdown resulted from unbridled capitalism under a president opposed to all regulation.[Commentary] AP
Like most myths, this is entertaining but fictional. In reality, Fannie Mae and Freddie Mac were among the principal culprits of the housing crisis, and Mr. Bush wanted to rein them in before things got out of hand.
Rather than a failure of capitalism, the housing meltdown shows what's likely to happen when government grants special privileges to favored private entities that facilitate bad actors and lousy practices
Housing Meltdown: February 9, 2009
WALL STREET JOURNAL
FEBRUARY 9, 2009, 9:33 A.M. ET
How Government Created the Financial Crisis
Research shows the failure to rescue Lehman did not trigger the fall panic.
Many are calling for a 9/11-type commission to investigate the financial crisis. Any such investigation should not rule out government itself as a major culprit. My research shows that government actions and interventions -- not any inherent failure or instability of the private economy -- caused, prolonged and dramatically worsened the crisis.
Housing Meltdown
The classic explanation of financial crises is that they are caused by excesses -- frequently monetary excesses -- which lead to a boom and an inevitable bust.
This crisis was no different: A housing boom followed by a bust led to defaults, the implosion of mortgages and mortgage-related securities at financial institutions, and resulting financial turmoil.
Monetary excesses were the main cause of the boom. The Fed held its target interest rate, especially in 2003-2005, well below known monetary guidelines that say what good policy should be based on historical experience.
Keeping interest rates on the track that worked well in the past two decades, rather than keeping rates so low, would have prevented the boom and the bust.
Researchers at the Organization for Economic Cooperation and Development have provided corroborating evidence from other countries: The greater the degree of monetary excess in a country, the larger was the housing boom.
Housing Meltdown February 8, 2009
FOXNEWS.COM HOME > OPINION
Housing Meltdown: Barney Frank, Bill Clinton, Franklin Raines, New York Times, Covering Up Role of Democrats in Housing Meltdown
The mortgage crisis has produced a massive case of political amnesia. That happens when one is trying to redirect blame for something that could cost up to $700 billion.
Some who now claim that the mortgage crisis is the result of too little regulation saw things more clearly when so much wasn’t at stake.
The New York Times editorialized on Saturday that “This crisis is the result of a willful and systematic failure by the government to regulate and monitor the activities of bankers, lenders, hedge funds, insurers and other market players.”
If you believe the Times or the Obama campaign, everything but government regulation is to blame for the crisis.
Yet, it is not just economists who were predicting these problems. For example, a September 30, 1999, article in the New York Times predicted exactly what has happened:
Housing Meltdown February 3, 2009
WALL STREET JOURNAL
Dodd's Peek-A-Boo Disclosure
The Senator's modified, limited mortgage hangout.
Housing Meltdown
Connecticut Senator Chris Dodd has finally, sort of, kind of, ended 193 days of stonewalling about his sweetheart loans from former Countrywide CEO Angelo Mozilo.
At least he did if you were a fast reader and were one of the few reporters he invited to his Hartford office yesterday to review -- but not copy or take -- more than 100 pages of documents related to his 2003 mortgage financings through Countrywide's "Friends of Angelo" program.[Review & Outlook] AP
These are the files that Mr. Dodd pledged to make public after the news broke last summer that the Chairman of the Senate Banking Committee had received preferential treatment from Countrywide.
At first, Mr. Dodd denied everything. Later, he conceded that he'd been given special treatment but thought it was "more of a courtesy."
Housing Meltdown
Heck, we'd all love the kind of courtesy that would have saved Mr. Dodd $75,000 over the life of the two loans he refinanced to the tune of $800,000, according to an analysis by Portfolio magazine. The savings came from rock-bottom interest rates and a free "float-down" -- the right to borrow at a lower rate if interest rates fall before you've closed on the loan.
In September 2003, Frank, then the ranking Democrat on the Republican-led Financial Services Committee, opposed a Bush administration proposal for transferring oversight of Fannie Mae and Freddie Mac from Congress and the Department of Housing and Urban Development to a new agency that would be created within the Treasury Department.
The proposal reflected the administration's belief that Congress "neither has the tools, nor the stature" for adequate oversight. Frank stated, "These two entities...are not facing any kind of financial crisis.... The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."[40]
Conservative groups have criticized Frank for campaign contributions from Fannie Mae and Freddie Mac ($42,350 between 1989 and 2008).
Housing Meltdown
They further claim the donations influenced his support of their lending programs, and they have partially blamed Frank for not playing a stronger role in reforming Fannie Mae and Freddie Mac in the years leading up to the Economic crisis of 2008.[41][42] In addition, Frank's former partner, Herb Moses, was an executive at Fannie from 1991 to 1998, where Moses helped develop many of Fannie’s affordable housing and home improvement lending programs.
In 1991, Frank pushed for reduced restrictions on two- and three-family home mortgages.[43] Frank and Moses' relationship ended around the same time Moses left the company; Frank's support of Fannie and Freddie predated and continued past that relationship.[44]
Housing Meltdown
Frank has responded that he "opposed right-wing efforts to put Fannie Mae and Freddie Mac out of business, while simultaneously supporting strong regulation" and "voted against the [2005 reform] bill in protest of those restrictions, while making it clear that I was for the reforms it otherwise contained."[45]
Lawrence B. Lindsey, former chief economic adviser to then-President Bush, states that Frank "is the only politician I know who has argued that we needed tighter rules that intentionally produce fewer homeowners and more renters."[46]
Bill Clinton, Franklin Raines, Barney Frank, Chris Dodd Gave Us Today’s Meltdown
About 15 years ago, typical Mainstream Media spin and Democrat Party-Class Warfare/Victimology,-joined forces as always, to create a new and false victim class- minorities being denied mortgages. It was alleged, that minorities were being denied mortgages because they were minorities.
If not an outright lie, weak, incomplete, data was used to build a case.
However to those who covered this in the Washington Post, among others, one sided data had replaced balanced reporting, many years before and had become the means to bigger and better redistribution goodies, to be received by the latest group of victims.
The practice of not lending in some neighborhoods was demonized as “redlining” and the fact that minority applicants were approved for mortgages only 72 percent of the time, while whites were approved 89 percent, was called “overwhelming” evidence of discrimination, in the words of the Washington Post.
Did that publication bother to ask if the percentages of income and ability to repay the borrowed money was inconsistent with the first set of facts?
Media Punditry, The Washington Post, The New York Times, etc. all demanded that evil lenders stop mistreating these individuals.
Why should these lenders have reasonable means in place, to recover the money they lent out? This was and is the mentality of nanny-state elitists.
Democrats, however, with their never-ending demagoguery, led the way, screaming "REDLINING!"
Next, in 1994, the Clinton administration, made revisions to the Community Reinvestment Act, legislated under Jimmy Carter.
This forced banks to go into low-income neighborhoods, where the banks were forced to accept applicants who previously would not have been accepted and so the era of sub-prime loans was underway.
The penalties were rather severe under the Community Reinvestment Act, so risky loans were forced on the lenders
Housing Meltdown
The result: typical bureaucratic recklessness, creating a surge in irresponsible mortgage lending, giving us today’s meltdown.
Bill Clinton and Franklin Raines Create Phase 1 of the Meltdown
Fannie and Freddie started buying up hundreds of billions of dollars in substandard loans, many with no down payment, insufficient income and no proof of creditworthiness.
Dangerous Government Incompetence Leaps In Once Again>/b>
With all the old rules of responsibility, out the window, Fannie and Freddie binged, eventually controlling 90% of the secondary market mortgages.
The full portfolio of Fannie and Freddie topped $5.4 trillion-half of all U.S. mortgage lending.
While many of those responsible, looked the other way, Freddie and Fannie, borrowed $1.5 trillion from U.S. capital markets and the suggestion of a government guarantee.
Meantime ACORN, a radical housing rights group then, which more recently could easily be described as a group whose main function is to find fraudulent voters, lobbied big time for such loans. ACORN was then represented by a lawyer in Chicago-one Barack Obama.
Housing Meltdown
Using extraordinary leverage, they eventually controlled 90% of the secondary market mortgages. Their total portfolio of loans topped $5.4 trillion — half of all U.S. mortgage lending. They borrowed $1.5 trillion from U.S. capital markets with — wink, wink — an "implicit" government guarantee of the debts.
Fannie and Freddie knew that demagoguery would widen their voter base of victims, by giving billions to questionable recipients. They were rewarded by investment bankers in the form of piles of cash to the Democrat Party.
it instead led to a reckless surge in mortgage lending that has pushed our financial system to the brink of chaos.Subprime's Mentors
Fannie and Freddie, the main vehicle for Clinton's multicultural housing policy, drove the explosion of the subprime housing market by buying up literally hundreds of billions of dollars in substandard loans — funding loans that ordinarily wouldn't have been made based on such time-honored notions as putting money down, having sufficient income, and maintaining a payment record indicating creditworthiness.
Housing Meltdown
With all the old rules out the window, Fannie and Freddie gobbled up the market. Using extraordinary leverage, they eventually controlled 90% of the secondary market mortgages.
Their total portfolio of loans topped $5.4 trillion — half of all U.S. mortgage lending.
Housing Meltdown
They borrowed $1.5 trillion from U.S. capital markets with — wink, wink — an "implicit" government guarantee of the debts.
This created the problem we are having today.
So now as a result of subprime mortgages,
The revisions also allowed for the first time the securitization of CRA-regulated loans containing subprime mortgages.
The changes came as radical "housing rights" groups led by ACORN lobbied for such loans. ACORN at the time was represented by a young public-interest lawyer in Chicago by the name of Barack Obama.
HUD, in turn, pressured Fannie Mae and Freddie Mac to purchase more subprime mortgages, and Fannie and Freddie, in turn, donated to the campaigns of leading Democrats like Barney Frank and Pelosi who throttled investigations into fraud at the agencies.
Housing Meltdown
Soon, investment banks such as Bear Stearns were aggressively hawking the securities as "guaranteed." Wall Street's pitch was that MBSs were as safe as Treasuries, but with a higher yield.
But they weren't safe. Everyone in the subprime business — from brokers to lenders to banks to investment houses — absolved themselves of responsibility for ensuring the high-risk loans were good.
The mortgage lenders didn't care, because they were going to sell the loans to other banks. The banks didn't care, because they were going to repackage the loans as MBSs.
The investors and traders didn't care, because the MBSs were backed by Fannie and Freddie and their implicit government guarantees.
In other words, nobody up and down the line — from the branch office on main street to the high-rise on Wall Street — analyzed the risk of such ill-advised loans. But why should they?
Everybody was just doing what the regulators in Washington wanted them to do.
Housing Meltdown
So everybody won until everybody lost, including the minorities the government originally mandated the banks to serve.The original culprits in all this were the social engineers who compelled banks to make the bad loans. The private sector has no business conducting social experiments on behalf of government.
Its business is making profit. Period. So it did what it naturally does and turned the subprime social mandate into a lucrative industry.
Of course, it was a Ponzi scheme, because they weren't allowed to play by their rules. The government changed the rules for risk.
Housing Meltdown
In order to put low-income minorities into home loans, they were ordered to suspend lending standards that had served the banking industry well for centuries. No one wants to talk about it, so they just scapegoat Wall Street. Even John McCain has joined the Democrat chorus on this.
The FBI is now investigating 24 large mortgage lenders for alleged abuses. But who will investigate the pols and the lobbyists and the community agitators who made the bad decisions that ultimately forced businesses to make their bad decisions?
In 1998, Bill Clinton’s former director of OMB, who had little background for that former position was named to head Fannie Mae, where he was equally unqualified.
In 1977 President Jimmy Carter signed the Community Redevelopment Reinvestment Act into law. Ultimately the work of ACORN, Barack Obama, Bill Clinton, Janet Reno and others listed below, undertook their Marxist redistribution plan.
Reinvestment Act * Origin of the Current "Crisis"
MYSALINE.COM
Posted by Brad Moore on February 16, 2009 at 12:25pm
In 1995 the Clinton administration strengthened the regulations of the Community Redevelopment Act. The CRA enabled consumers to secure mortgages with “no verification of income or assets; little consideration of the applicant’s ability to make payments; [and] no down payment.”
As the mortgage industry grew, Fannie Mae and Freddie Mac (government-sponsored entities, or GSEs) became a kind of “jobs program for out-of-work Democrats”.
Clinton administration friends and staffers managed the GSEs including Franklin Raines (now advisor to President Obama), Jim Johnson, Jamie Gorelick (outspoken member of the "Bi-Partisan 9/11 Commission")and Rahm Emmanual (now Chief of Staff for President Obama). This small group of executives paid themselves nearly $200 million in only six years’ time.
...Franklin Raines, CEO of the Federal National Mortgage Association (Fannie Mae) from 1999-2004, is the individual most responsible for the subprime mortgage crisis. It was on Mr. Raines' watch that Fannie Mae went bankrupt.
He was accused of manipulating earnings statements so he could be paid bonuses to which he was not entitled.In July, Mr. Raines was interviewed by Anita Huslin, a business reporter for the Washington Post.
Housing Meltdown
"In the four years since he stepped down as Fannie Mae's chief executive under the shadow of a $6.3 billion accounting scandal, Franklin D. Raines has been quietly constructing a new life for himself," Ms. Huslin's story began.
"He has shaved eight points off his golf handicap, taken a corner office in Steve Case's D.C. conglomeration of finance, entertainment and health care companies and, more recently, taken calls from Barack Obama's presidential campaign seeking his advice on mortgage and housing matters."...
DEMOCRAT SCANDALS March 28, 2009
WASHINGTON TIMES
Jamie Gorelick's wall
Originally published 09:47 p.m., April 15, 2004, updated 12:00 a.m., April 16, 2004
The disclosure that Jamie Gorelick, a member of the September 11 commission, was personally responsible for instituting a key obstacle to cooperation between law enforcement and intelligence operations before the terrorist attacks raises disturbing questions about the integrity of the commission itself.
Ms. Gorelick should not be cross-examining witnesses; instead, she should be required to testify about her own behavior under oath.
Specifically, commission members need to ask her about a 1995 directive she wrote that made it more difficult for the FBI to locate two of the September 11 hijackers who had already entered the country by the summer of 2001.
WIKIPEDIA
The Housing Crisis
Excerpts:
...The immediate cause or trigger of the crisis was the bursting of the United States housing bubble which peaked in approximately 2005–2006.[2][3] High default rates on "subprime" and adjustable rate mortgages (ARM), began to increase quickly thereafter. An increase in loan incentives such as easy initial terms and a long-term trend of rising housing prices had encouraged borrowers to assume difficult mortgages in the belief they would be able to quickly refinance at more favorable terms. However, once interest rates began to rise and housing prices started to drop moderately in 2006–2007 in many parts of the U.S., refinancing became more difficult. Defaults and foreclosure activity increased dramatically as easy initial terms expired, home prices failed to go up as anticipated, and ARM interest rates reset higher. Foreclosures accelerated in the United States in late 2006 and triggered a global financial crisis through 2007 and 2008.
In the years leading up to the crisis, high consumption and low savings rates in the U.S. contributed to significant amounts of foreign money flowing into the U.S. from fast-growing economies in Asia and oil-producing countries. This inflow of funds combined with low U.S. interest rates from 2002-2004 resulted in easy credit conditions, which fueled both housing and credit bubbles. Loans of various types (e.g., mortgage, credit card, and auto) were easy to obtain and consumers assumed an unprecedented debt load.[4] As part of the housing and credit booms, the amount of financial agreements called mortgage-backed securities (MBS), which derive their value from mortgage payments and housing prices, greatly increased. Such financial innovation enabled institutions and investors around the world to invest in the U.S. housing market. As housing prices declined, major global financial institutions that had borrowed and invested heavily in subprime MBS reported significant losses. Defaults and losses on other loan types also increased significantly as the crisis expanded from the housing market to other parts of the economy. Total losses are estimated in the trillions of U.S. dollars globally.[5]
While the housing and credit bubbles built, a series of factors caused the financial system to become increasingly fragile. Policymakers did not recognize the increasingly important role played by financial institutions such as investment banks and hedge funds, also known as the shadow banking system. Some experts believe these institutions had become as important as commercial (depository) banks in providing credit to the U.S. economy, but they were not subject to the same regulations.[6] These institutions as well as certain regulated banks had also assumed significant debt burdens while providing the loans described above and did not have a financial cushion sufficient to absorb large loan defaults or MBS losses.[7] These losses impacted the ability of financial institutions to lend, slowing economic activity. Concerns regarding the stability of key financial institutions drove central banks to take action to provide funds to encourage lending and to restore faith in the commercial paper markets, which are integral to funding business operations. Governments also bailed out key financial institutions, assuming significant additional financial commitments...
...Subprime loans, along with their much higher default risks, were placed into different risk classes, or tranches, each of which came with its own repayment schedule. Upper tranches were able to receive 'AAA' ratings - even if they contained subprime loans - because these tranches were promised the first dollars that came into the security. Lower tranches carried higher coupon rates to compensate for the increased default risk. All the way at the bottom, the "equity" tranche was a highly speculative investment, as it could have its cash flows essentially wiped out if the default rate on the entire ABS crept above a low level - in the range of 5 to 7%. (To learn more, read Behind The Scenes Of Your Mortgage.)
All of a sudden, even the subprime mortgage lenders had an avenue to sell their risky debt, which in turn enabled them to market this debt even more aggressively. Wall Street was there to pick up their subprime loans, package them up with other loans (some quality, some not), and sell them off to investors. In addition, nearly 80% of these bundled securities magically became investment grade ('A' rated or higher), thanks to the rating agencies, which earned lucrative fees for their work in rating the ABSs. (For more insight, see What does investment grade mean?)
As a result of this activity, it became very profitable to originate mortgages - even risky ones. It wasn't long before even basic requirements like proof of income and a down payment were being overlooked by mortgage lenders; 125% loan-to-value mortgages were being underwritten and given to prospective homeowners. The logic being that with real estate prices rising so fast (median home prices were rising as much as 14% annually by 2005), a 125% LTV mortgage would be above water in less than two years...
Housing Meltdown
Housing Meltdown
Community Reinvestment Act
Background & Purpose
* The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound banking operations. It was enacted by the Congress in 1977 (12 U.S.C. 2901) and is implemented by Regulations 12 CFR parts 25, 228, 345, and 563e. (See Regulation).
* The CRA requires that each insured depository institution's record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution's application for deposit facilities, including mergers and acquisitions. (See CRA Ratings) CRA examinations (see Exam Schedules) are conducted by the federal agencies that are responsible for supervising depository institutions: the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS).
* Additional information in the form of Interagency Questions and Answers, Interagency Interpretive Letters, CRA data reporting is available.
###
12 USC CHAPTER 30 - COMMUNITY REINVESTMENT TITLE 12 - BANKS AND BANKING CHAPTER 30 - COMMUNITY REINVESTMENT
Sec. 2901. Congressional findings and statement of purpose. 2902. Definitions. 2903. Financial institutions; evaluation. (a) In general. (b) Majority-owned institutions. 2904. Report to Congress. 2905. Regulations. 2906. Written evaluations. (a) Required. (b) Public section of report. (c) Confidential section of report. (d) Institutions with interstate branches. (e) Definitions. 2907. Operation of branch facilities by minorities and women. (a) In general. (b) Definitions.
CHAPTER REFERRED TO IN OTHER SECTIONS This chapter is referred to in sections 1430, 1835a, 3103, 4565 of this title.
12 USC Sec. 2901 TITLE 12 - BANKS AND BANKING CHAPTER 30 - COMMUNITY REINVESTMENT
Sec. 2901. Congressional findings and statement of purpose
(a) The Congress finds that - (1) regulated financial institutions are required by law to demonstrate that their deposit facilities serve the convenience and needs of the communities in which they are chartered to do business; (2) the convenience and needs of communities include the need for credit services as well as deposit services; and (3) regulated financial institutions have continuing and affirmative obligation to help meet the credit needs of the local communities in which they are chartered. (b) It is the purpose of this chapter to require each appropriate Federal financial supervisory agency to use its authority when examining financial institutions, to encourage such institutions to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions.
(Pub. L. 95-128, title VIII, Sec. 802, Oct. 12, 1977, 91 Stat. 1147.)
SHORT TITLE Section 801 of title VIII of Pub. L. 95-128 provided that: ''This title (enacting this chapter) may be cited as the 'Community Reinvestment Act of 1977'.''
REPORT ON COMMUNITY DEVELOPMENT LENDING Pub. L. 102-550, title IX, Sec. 910, Oct. 28, 1992, 106 Stat. 3874, provided that: ''(a) In General. - Not later than 12 months after the date of enactment of this section (Oct. 28, 1992), the Board of Governors of the Federal Reserve System, in consultation with the Comptroller of the Currency, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, shall submit a report to the Congress comparing residential, small business, and commercial lending by insured depository institutions in low-income, minority, and distressed neighborhoods to such lending in other neighborhoods. ''(b) Contents of Report. - The report required by subsection (a) shall - ''(1) compare the risks and returns of lending in low-income, minority, and distressed neighborhoods with the risks and returns of lending in other neighborhoods; ''(2) analyze the reasons for any differences in risk and return between low-income, minority, and distressed neighborhoods and other neighborhoods; and ''(3) if the risks of lending in low-income, minority, and distressed neighborhoods exceed the risks of lending in other neighborhoods, recommend ways of mitigating those risks.''
12 USC Sec. 2902 TITLE 12 - BANKS AND BANKING CHAPTER 30 - COMMUNITY REINVESTMENT
Sec. 2902. Definitions
For the purposes of this chapter - (1) the term ''appropriate Federal financial supervisory agency'' means - (A) the Comptroller of the Currency with respect to national banks; (B) the Board of Governors of the Federal Reserve System with respect to State chartered banks which are members of the Federal Reserve System and bank holding companies; (C) the Federal Deposit Insurance Corporation with respect to State chartered banks and savings banks which are not members of the Federal Reserve System and the deposits of which are insured by the Corporation; and (2) (FOOTNOTE 1) section 1818 of this title, by the Director of the Office of Thrift Supervision, in the case of a savings association (the deposits of which are insured by the Federal Deposit Insurance Corporation) and a savings and loan holding company; (FOOTNOTE 1) So in original. Text reading ''(2) section 1818 of this title, by the Director'' probably should read ''(D) the Director''. (2) the term ''regulated financial institution'' means an insured depository institution (as defined in section 1813 of this title); and (3) the term ''application for a deposit facility'' means an application to the appropriate Federal financial supervisory agency otherwise required under Federal law or regulations thereunder for - (A) a charter for a national bank or Federal savings and loan association; (B) deposit insurance in connection with a newly chartered State bank, savings bank, savings and loan association or similar institution; (C) the establishment of a domestic branch or other facility with the ability to accept deposits of a regulated financial institution; (D) the relocation of the home office or a branch office of a regulated financial institution; (E) the merger or consolidation with, or the acquisition of the assets, or the assumption of the liabilities of a regulated financial institution requiring approval under section 1828(c) of this title or under regulations issued under the authority of title IV (FOOTNOTE 2) of the National Housing Act (12 U.S.C. 1724 et seq.); or (FOOTNOTE 2) See References in Text note below. (F) the acquisition of shares in, or the assets of, a regulated financial institution requiring approval under section 1842 of this title or section 408(e) (FOOTNOTE 2) of the National Housing Act (12 U.S.C. 1730a(e)). (4) A financial institution whose business predominately consists of serving the needs of military personnel who are not located within a defined geographic area may define its ''entire community'' to include its entire deposit customer base without regard to geographic proximity.
(Pub. L. 95-128, title VIII, Sec. 803, Oct. 12, 1977, 91 Stat. 1147; Pub. L. 95-630, title XV, Sec. 1502, Nov. 10, 1978, 92 Stat. 3713; Pub. L. 101-73, title VII, Sec. 744(q), title XII, Sec. 1212(a), Aug. 9, 1989, 103 Stat. 440, 526.)
REFERENCES IN TEXT The National Housing Act, referred to in par. (3)(E), (F), is act June 27, 1934, ch. 847, 48 Stat. 1246, as amended. Title IV of the National Housing Act which was classified generally to subchapter IV (Sec. 1724 et seq.) of chapter 13 of this title, was repealed by Pub. L. 101-73, title IV, Sec. 407, Aug. 9, 1989, 103 Stat. 363. Section 408 of the National Housing Act, which was classified to section 1730a of this title, was also repealed by section 407 of Pub. L. 101-73. For complete classification of this Act to the Code, see section 1701 of this title and Tables.
AMENDMENTS 1989 - Par. (1)(D). Pub. L. 101-73, Sec. 744(q), directed the general amendment of par. (1)(D) but then set out ''(2)'' followed by the text of the new provisions. Prior to amendment, par. (1)(D) read as follows: ''the Federal Home Loan Bank Board with respect to institutions the deposits of which are insured by the Federal Savings and Loan Insurance Corporation and to savings and loan holding companies;''. Par. (2). Pub. L. 101-73, Sec. 1212(a), substituted ''insured depository institution (as defined in section 1813 of this title)'' for ''insured bank as defined in section 1813 of this title or an insured institution as defined in section 401 of the National Housing Act''. 1978 - Par. (4). Pub. L. 95-630 added par. (4).
EFFECTIVE DATE OF 1978 AMENDMENT Amendment by Pub. L. 95-630 effective Nov. 10, 1978, see section 1505 of Pub. L. 95-630, set out as a note under section 27 of this title.
SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 3103 of this title.
12 USC Sec. 2903 TITLE 12 - BANKS AND BANKING CHAPTER 30 - COMMUNITY REINVESTMENT
Sec. 2903. Financial institutions; evaluation
(a) In general In connection with its examination of a financial institution, the appropriate Federal financial supervisory agency shall - (1) assess the institution's record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of such institution; and (2) take such record into account in its evaluation of an application for a deposit facility by such institution. (b) Majority-owned institutions In assessing and taking into account, under subsection (a) of this section, the record of a nonminority-owned and nonwomen-owned financial institution, the appropriate Federal financial supervisory agency may consider as a factor capital investment, loan participation, and other ventures undertaken by the institution in cooperation with minority- and women-owned financial institutions and low-income credit unions provided that these activities help meet the credit needs of local communities in which such institutions and credit unions are chartered.
(Pub. L. 95-128, title VIII, Sec. 804, Oct. 12, 1977, 91 Stat. 1148; Pub. L. 102-550, title IX, Sec. 909(1), Oct. 28, 1992, 106 Stat. 3874.)
AMENDMENTS 1992 - Pub. L. 102-550 designated existing provisions as subsec. (a), inserted heading, and added subsec. (b).
SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 1831u, 1842, 2906 of this title.
12 USC Sec. 2904 TITLE 12 - BANKS AND BANKING CHAPTER 30 - COMMUNITY REINVESTMENT
Sec. 2904. Report to Congress
Each appropriate Federal financial supervisory agency shall include in its annual report to the Congress a section outlining the actions it has taken to carry out its responsibilities under this chapter.
(Pub. L. 95-128, title VIII, Sec. 805, Oct. 12, 1977, 91 Stat. 1148.)
12 USC Sec. 2905 TITLE 12 - BANKS AND BANKING CHAPTER 30 - COMMUNITY REINVESTMENT
Sec. 2905. Regulations
Regulations to carry out the purposes of this chapter shall be published by each appropriate Federal financial supervisory agency, and shall take effect no later than 390 days after October 12, 1977.
(Pub. L. 95-128, title VIII, Sec. 806, Oct. 12, 1977, 91 Stat. 1148.)
12 USC Sec. 2906 TITLE 12 - BANKS AND BANKING CHAPTER 30 - COMMUNITY REINVESTMENT
Sec. 2906. Written evaluations
(a) Required (1) In general Upon the conclusion of each examination of an insured depository institution under section 2903 of this title, the appropriate Federal financial supervisory agency shall prepare a written evaluation of the institution's record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods. (2) Public and confidential sections Each written evaluation required under paragraph (1) shall have a public section and a confidential section. (b) Public section of report (1) Findings and conclusions (A) Contents of written evaluation The public section of the written evaluation shall - (i) state the appropriate Federal financial supervisory agency's conclusions for each assessment factor identified in the regulations prescribed by the Federal financial supervisory agencies to implement this chapter; (ii) discuss the facts and data supporting such conclusions; and (iii) contain the institution's rating and a statement describing the basis for the rating. (B) Metropolitan area distinctions The information required by clauses (i) and (ii) of subparagraph (A) shall be presented separately for each metropolitan area in which a regulated depository institution maintains one or more domestic branch offices. (2) Assigned rating The institution's rating referred to in paragraph (1)(C) (FOOTNOTE 1) shall be 1 of the following: (FOOTNOTE 1) So in original. Probably should be paragraph ''(1)(A)(iii)''. (A) ''Outstanding record of meeting community credit needs''. (B) ''Satisfactory record of meeting community credit needs''. (C) ''Needs to improve record of meeting community credit needs''. (D) ''Substantial noncompliance in meeting community credit needs''. Such ratings shall be disclosed to the public on and after July 1, 1990. (c) Confidential section of report (1) Privacy of named individuals The confidential section of the written evaluation shall contain all references that identify any customer of the institution, any employee or officer of the institution, or any person or organization that has provided information in confidence to a Federal or State financial supervisory agency. (2) Topics not suitable for disclosure The confidential section shall also contain any statements obtained or made by the appropriate Federal financial supervisory agency in the course of an examination which, in the judgment of the agency, are too sensitive or speculative in nature to disclose to the institution or the public. (3) Disclosure to depository institution The confidential section may be disclosed, in whole or part, to the institution, if the appropriate Federal financial supervisory agency determines that such disclosure will promote the objectives of this chapter. However, disclosure under this paragraph shall not identify a person or organization that has provided information in confidence to a Federal or State financial supervisory agency. (d) Institutions with interstate branches (1) State-by-State evaluation In the case of a regulated financial institution that maintains domestic branches in 2 or more States, the appropriate Federal financial supervisory agency shall prepare - (A) a written evaluation of the entire institution's record of performance under this chapter, as required by subsections (a), (b), and (c) of this section; and (B) for each State in which the institution maintains 1 or more domestic branches, a separate written evaluation of the institution's record of performance within such State under this chapter, as required by subsections (a), (b), and (c) of this section. (2) Multistate metropolitan areas In the case of a regulated financial institution that maintains domestic branches in 2 or more States within a multistate metropolitan area, the appropriate Federal financial supervisory agency shall prepare a separate written evaluation of the institution's record of performance within such metropolitan area under this chapter, as required by subsections (a), (b), and (c) of this section. If the agency prepares a written evaluation pursuant to this paragraph, the scope of the written evaluation required under paragraph (1)(B) shall be adjusted accordingly. (3) Content of State level evaluation A written evaluation prepared pursuant to paragraph (1)(B) shall - (A) present the information required by subparagraphs (A) and (B) of subsection (b)(1) of this section separately for each metropolitan area in which the institution maintains 1 or more domestic branch offices and separately for the remainder of the nonmetropolitan area of the State if the institution maintains 1 or more domestic branch offices in such nonmetropolitan area; and (B) describe how the Federal financial supervisory agency has performed the examination of the institution, including a list of the individual branches examined. (e) Definitions For purposes of this section the following definitions shall apply: (1) Domestic branch The term ''domestic branch'' means any branch office or other facility of a regulated financial institution that accepts deposits, located in any State. (2) Metropolitan area The term ''metropolitan area'' means any primary metropolitan statistical area, metropolitan statistical area, or consolidated metropolitan statistical area, as defined by the Director of the Office of Management and Budget, with a population of 250,000 or more, and any other area designated as such by the appropriate Federal financial supervisory agency. (3) State The term ''State'' has the same meaning as in section 1813 of this title.
(Pub. L. 95-128, title VIII, Sec. 807, as added Pub. L. 101-73, title XII, Sec. 1212(b), Aug. 9, 1989, 103 Stat. 527; amended Pub. L. 102-242, title II, Sec. 222, Dec. 19, 1991, 105 Stat. 2306; Pub. L. 103-328, title I, Sec. 110, Sept. 29, 1994, 108 Stat. 2364.)
REFERENCES IN TEXT This chapter, referred to in subsecs. (b)(1)(A)(i), (c)(3), and (d)(1), (2), was in the original ''this Act'' and was translated as reading ''this title'', meaning title VIII of Pub. L. 95-128, known as the Community Reinvestment Act of 1977, to reflect the probable intent of Congress.
AMENDMENTS 1994 - Subsec. (b)(1). Pub. L. 103-328, Sec. 110(b), redesignated existing provisions as subpar. (A) and former subpars. (A) to (C) as cls. (i) to (iii), respectively, of subpar. (A), inserted subpar. (A) heading, and added subpar. (B). Subsecs. (d), (e). Pub. L. 103-328, Sec. 110(a), added subsecs. (d) and (e). 1991 - Subsec. (a)(1). Pub. L. 102-242, Sec. 222(b)(1), substituted ''financial supervisory'' for ''depository institutions regulatory''. Subsec. (b)(1)(A). Pub. L. 102-242, Sec. 222(b)(2), substituted ''financial supervisory'' for ''depository institutions regulatory'' in two places. Subsec. (b)(1)(B). Pub. L. 102-242, Sec. 222(a), inserted ''and data'' after ''facts''. Subsec. (c). Pub. L. 102-242, Sec. 222(b)(3), substituted ''financial supervisory'' for ''depository institutions regulatory'' wherever appearing.
12 USC Sec. 2907 TITLE 12 - BANKS AND BANKING CHAPTER 30 - COMMUNITY REINVESTMENT
Housing Meltdown
Sec. 2907. Operation of branch facilities by minorities and women
(a) In general In the case of any depository institution which donates, sells on favorable terms (as determined by the appropriate Federal financial supervisory agency), or makes available on a rent-free basis any branch of such institution which is located in any predominantly minority neighborhood to any minority depository institution or women's depository institution, the amount of the contribution or the amount of the loss incurred in connection with such activity may be a factor in determining whether the depository institution is meeting the credit needs of the institution's community for purposes of this chapter. (b) Definitions For purposes of this section - (1) Minority depository institution The term ''minority institution'' (FOOTNOTE 1) means a depository institution (as defined in section 1813(c) of this title) - (FOOTNOTE 1) So in original. Probably should be ''minority depository institution''. (A) more than 50 percent of the ownership or control of which is held by 1 or more minority individuals; and (B) more than 50 percent of the net profit or loss of which accrues to 1 or more minority individuals. (2) Women's depository institution The term ''women's depository institution'' means a depository institution (as defined in section 1813(c) of this title) - (A) more than 50 percent of the ownership or control of which is held by 1 or more women; (B) more than 50 percent of the net profit or loss of which accrues to 1 or more women; and (C) a significant percentage of senior management positions of which are held by women. (3) Minority The term ''minority'' has the meaning given to such term by section 1204(c)(3) of the Financial Institutions Reform, Recovery and Enforcement Act of 1989.
(Pub. L. 95-128, title VIII, Sec. 808, as added Pub. L. 102-233, title IV, Sec. 402(b), Dec. 12, 1991, 105 Stat. 1775; amended Pub. L. 102-550, title IX, Sec. 909(2), Oct. 28, 1992, 106 Stat. 3874.)
Housing Meltdown
REFERENCES IN TEXT Section 1204(c)(3) of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, referred to in subsec. (b)(3), is section 1204(c)(3) of Pub. L. 101-73, which is set out as a note under section 1811 of this title.
AMENDMENTS 1992 - Subsec. (a). Pub. L. 102-550 substituted ''may be a factor in determining whether the depository institution is'' for ''shall be treated as''.
COMMUNITY REINVESTMENT - 12 USC Chapter 30
12 USC CHAPTER 30 - COMMUNITY REINVESTMENT TITLE 12 - BANKS AND BANKING CHAPTER 30 - COMMUNITY REINVESTMENT
Sec. 2901. Congressional findings and statement of purpose. 2902. Definitions. 2903. Financial institutions; evaluation. (a) In general. (b) Majority-owned institutions. 2904. Report to Congress. 2905. Regulations. 2906. Written evaluations. (a) Required. (b) Public section of report. (c) Confidential section of report. (d) Institutions with interstate branches. (e) Definitions. 2907. Operation of branch facilities by minorities and women. (a) In general. (b) Definitions.
Housing Meltdown
CHAPTER REFERRED TO IN OTHER SECTIONS This chapter is referred to in sections 1430, 1835a, 3103, 4565 of this title.
12 USC Sec. 2901 TITLE 12 - BANKS AND BANKING CHAPTER 30 - COMMUNITY REINVESTMENT
Sec. 2901. Congressional findings and statement of purpose
(a) The Congress finds that - (1) regulated financial institutions are required by law to demonstrate that their deposit facilities serve the convenience and needs of the communities in which they are chartered to do business; (2) the convenience and needs of communities include the need for credit services as well as deposit services; and (3) regulated financial institutions have continuing and affirmative obligation to help meet the credit needs of the local communities in which they are chartered. (b) It is the purpose of this chapter to require each appropriate Federal financial supervisory agency to use its authority when examining financial institutions, to encourage such institutions to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions.
Housing Meltdown
(Pub. L. 95-128, title VIII, Sec. 802, Oct. 12, 1977, 91 Stat. 1147.)
SHORT TITLE Section 801 of title VIII of Pub. L. 95-128 provided that: ''This title (enacting this chapter) may be cited as the 'Community Reinvestment Act of 1977'.''
REPORT ON COMMUNITY DEVELOPMENT LENDING Pub. L. 102-550, title IX, Sec. 910, Oct. 28, 1992, 106 Stat. 3874, provided that: ''(a) In General. - Not later than 12 months after the date of enactment of this section (Oct. 28, 1992), the Board of Governors of the Federal Reserve System, in consultation with the Comptroller of the Currency, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, shall submit a report to the Congress comparing residential, small business, and commercial lending by insured depository institutions in low-income, minority, and distressed neighborhoods to such lending in other neighborhoods. ''(b) Contents of Report. - The report required by subsection (a) shall - ''(1) compare the risks and returns of lending in low-income, minority, and distressed neighborhoods with the risks and returns of lending in other neighborhoods; ''(2) analyze the reasons for any differences in risk and return between low-income, minority, and distressed neighborhoods and other neighborhoods; and ''(3) if the risks of lending in low-income, minority, and distressed neighborhoods exceed the risks of lending in other neighborhoods, recommend ways of mitigating those risks.''
12 USC Sec. 2902 TITLE 12 - BANKS AND BANKING CHAPTER 30 - COMMUNITY REINVESTMENT
Sec. 2902. Definitions
Housing Meltdown
For the purposes of this chapter - (1) the term ''appropriate Federal financial supervisory agency'' means - (A) the Comptroller of the Currency with respect to national banks; (B) the Board of Governors of the Federal Reserve System with respect to State chartered banks which are members of the Federal Reserve System and bank holding companies; (C) the Federal Deposit Insurance Corporation with respect to State chartered banks and savings banks which are not members of the Federal Reserve System and the deposits of which are insured by the Corporation; and (2) (FOOTNOTE 1) section 1818 of this title, by the Director of the Office of Thrift Supervision, in the case of a savings association (the deposits of which are insured by the Federal Deposit Insurance Corporation) and a savings and loan holding company; (FOOTNOTE 1) So in original. Text reading ''(2) section 1818 of this title, by the Director'' probably should read ''(D) the Director''. (2) the term ''regulated financial institution'' means an insured depository institution (as defined in section 1813 of this title); and (3) the term ''application for a deposit facility'' means an application to the appropriate Federal financial supervisory agency otherwise required under Federal law or regulations thereunder for - (A) a charter for a national bank or Federal savings and loan association; (B) deposit insurance in connection with a newly chartered State bank, savings bank, savings and loan association or similar institution; (C) the establishment of a domestic branch or other facility with the ability to accept deposits of a regulated financial institution; (D) the relocation of the home office or a branch office of a regulated financial institution; (E) the merger or consolidation with, or the acquisition of the assets, or the assumption of the liabilities of a regulated financial institution requiring approval under section 1828(c) of this title or under regulations issued under the authority of title IV (FOOTNOTE 2) of the National Housing Act (12 U.S.C. 1724 et seq.); or (FOOTNOTE 2)
Housing Meltdown
See References in Text note below. (F) the acquisition of shares in, or the assets of, a regulated financial institution requiring approval under section 1842 of this title or section 408(e) (FOOTNOTE 2) of the National Housing Act (12 U.S.C. 1730a(e)). (4) A financial institution whose business predominately consists of serving the needs of military personnel who are not located within a defined geographic area may define its ''entire community'' to include its entire deposit customer base without regard to geographic proximity.
(Pub. L. 95-128, title VIII, Sec. 803, Oct. 12, 1977, 91 Stat. 1147; Pub. L. 95-630, title XV, Sec. 1502, Nov. 10, 1978, 92 Stat. 3713; Pub. L. 101-73, title VII, Sec. 744(q), title XII, Sec. 1212(a), Aug. 9, 1989, 103 Stat. 440, 526.)
REFERENCES IN TEXT The National Housing Act, referred to in par. (3)(E), (F), is act June 27, 1934, ch. 847, 48 Stat. 1246, as amended. Title IV of the National Housing Act which was classified generally to subchapter IV (Sec. 1724 et seq.) of chapter 13 of this title, was repealed by Pub. L. 101-73, title IV, Sec. 407, Aug. 9, 1989, 103 Stat. 363. Section 408 of the National Housing Act, which was classified to section 1730a of this title, was also repealed by section 407 of Pub. L. 101-73. For complete classification of this Act to the Code, see section 1701 of this title and Tables.
Housing Meltdown
AMENDMENTS 1989 - Par. (1)(D). Pub. L. 101-73, Sec. 744(q), directed the general amendment of par. (1)(D) but then set out ''(2)'' followed by the text of the new provisions. Prior to amendment, par. (1)(D) read as follows: ''the Federal Home Loan Bank Board with respect to institutions the deposits of which are insured by the Federal Savings and Loan Insurance Corporation and to savings and loan holding companies;''. Par. (2). Pub. L. 101-73, Sec. 1212(a), substituted ''insured depository institution (as defined in section 1813 of this title)'' for ''insured bank as defined in section 1813 of this title or an insured institution as defined in section 401 of the National Housing Act''. 1978 - Par. (4). Pub. L. 95-630 added par. (4).
EFFECTIVE DATE OF 1978 AMENDMENT Amendment by Pub. L. 95-630 effective Nov. 10, 1978, see section 1505 of Pub. L. 95-630, set out as a note under section 27 of this title.
SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 3103 of this title.
BANKING
12 USC Sec. 2903 TITLE 12 - BANKS AND BANKING CHAPTER 30 - COMMUNITY REINVESTMENT
From Dr. Thomas Sowell's 2009 Book THE HOUSING BOOM AND BUST
One of America's greatest authors gives a great account of the events and decisions leading up to the collapse of the housing market and indeed the U.S. economy, including the scheming and politicking, especially of major players, House Finacial Services Committee Chairman Barney Frank and Senate Committee Chairman Chris Dodd who has since announced he will not seek reelection. Dodd was getting clobbered in the polls due to scandals and his major involvement in the housing scandal.
As for govt pressures on Fannie Mae and Freddie Mac to loosen their mortgage lending standards, he said:
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"I believe that we, as the Federal Government, have probably done too little rather than too much to push them to meet the goals of affordable housing and to set reasonable goals,"
He said "He said, "I would like to get Fannie and Freddie more deeply into helping low-income housing and possibly moving into something taht is more explicitly a subsidy." He added: "I want t roll the dice a little bit more in this situation towards subsidized housing."
Congressman Frank dismissed fears expressed by those who saw an implicit commitment by the federal govt to bail out Fannie and Freddie that could lead these giants to engage in more risky financial operations, because they felt they were backed up by the government, and this could lead investors to go along with accepting their risky securities, based on the same implicit reliance on the federal treasury. "But there is no guarantee,k there is no implicit guarantee, there is no wing-and-nod guarantee."
Such statements were not just some popping off by an isolated politician. Barnery Frank was in 2003 the ranking member of the House Committee on Financial Services and would later become chairman of that powerful commttee in 2006. He was a very influential force in the housing market.
expressed a fear that criticisms of lower lending standards could create pressures to tighten those standards, because "the more pressure there is there, then the less I think we see in affordable housing."Critics "exaggerate a threat of safety and "conjure up the possibility of serious financial losses to the Treasury, [which I do not see."]
As for government pressures on Fannie Mae and Freddie Mac to loosen their mortgage lending standards, he said: I believe we as the Federal Government have probably done
Dodd was Frank's equivalent in the Senate as the ranking Democrat on the Senate Banking Committee.
Dodd was as adamant as Frank that everything was rosy with Fannie and Freddie, as well as with sub-prime loans, and all the "poor" people it was helping. Dodd's insistence that everything was rosy, well into the year 2008, long after the housing collapse had begun and the whole country new about it.
In 2004, when warnings about Fannie and Freddie were being sounded everywhere, Dodd, like Franks, referred to these two agencies
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"one of the great success stories of all time" and told us we should be cautious in putting restrictions on them, because Dodd feared we might be "doing great damage to what has been one of the great engines of economic success in the last 30 or 40 years."
After accounting errors totalling $11 billion were discovered in the bookds of Fannie and Freddie, Prez Bush in 2007 said that these govt sponsotred enterprises should complete a "robust reform package" before being allowed to expand their mortgage portfolios. Senator Dodd daid that President Bush should "Immdiately reconsider his ill-advised" position. as late as July 2008, after the housing market had collapsed, Senator Dodd continued to defend Fannie Mae and Freddie as being " on a sound footing". Later events did not deal kindly with this assertion, as both these hybrid enterprises were bailed out to prevent their collapse and were taken over by the federal government.
Over the years, both houses of Congress had many defenders of Fannie and Freddie as promoters of the oolitical crusade for "affordable housing." through lower mortgage lending standards.
Maxine Waters said in 2003, "We do not have a crisis at Freddie and particular at Fannie, under the outstanding leadership of Mr. Franklin Raines." (This was the same Franklin Raines whol would later resign after the accountying scandals at Fannie came to light.) Maxine Waters added that any regulatory reforms "must be done in a manner so as not to impede their affordable housing mission, a mission that has seen innovation flourish from desktop underwriting to 100% loans."
It was precisely these "desktop loans" based on unsubstantiated income claims by applicants--"liar loans" critics called them--and loans with no down payment at all("100%")loans that many saw as especially dangerous.
Democrat Congressman John Baca likewise made "affordable housing" his over-riding concern. "According to Fannie's own research" he said, with each rise of q quarter of a percent in the interest rate "sine 78,166 Hispanic and 107,158 African American families become unable to afford to purchase a home". Moreover "a long protracted debate on regulation" could cause "instability of the markets." In other words just talking about the risks and the need for regulation could reduce the over-riding goal of more home ownership through "affordable housing." Such statements are reminiscent of Admiral Farragut's famous battle cry, "Damn the torpedoes, full speed ahead!" In this case, however, the financial markets got torpedoed and the whole economy sank.
In June 2004, in response to President Bush's expressed concerns about the riskiness of Fannie Mae and Freddie, seventy-six Dems in the House sent him a letter defending these govt-sponsored enterprises, and again making the case that "an exclusive focus on safety and soundness is likely to come, in practice, at the expense of affordable housing." these 76 House members included such prominent individuals as Nancy Pelosi, Barney Frank, Maxine Waters and Charles Rangel.
Non only members of Congress, but others with a vested interest in lower mortgage lending standards, staunchly defended those standards in general and Fan and Fred in particular, during the housing boom that bukilding homes have a vested interest in govt policies and programs that cause more homes to be built.
REGULATORS
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...............These latter regulators micro-managed mortgage standards, while the former simply held Fan and Fred to the existing accounting rules, which they were violating. More importaqnt, those regulators who pushed for lower mortage approval standards were doing what politicians wanted done, while OHFEO, by holding Fannie and Fred to the accounting rules, was limiting the scope of these hybrid enterprises' operations, bringing down ofn OFHEO the wrath of Senator Kit Mond and Congressman Barney Frank, among others.
As we have already seen, government regulation and intervention have been at the heart of the conditions that set the stage for the current housing market disaster. That does not mean that all regulation must be futile or counterproductive. What it does mean is that the specifics of any proposed regulation are crucial. Among these specifics must be answers to such questions as: Regulate with what powers? With what insulation from political interference? With what accountability for what results? Such specifics would tell us much more than political rhetoric about a need for more generic "regulation."
there is already overlapping regulation of banks and other lending institutions by various federal agencies with varying jurisdictions and agendas, and a substantial portion of the lending institutions are regulated by state agencies. Morever, mortgages as they pass from banks to Wall Street firms that bundle them into stocks and bonds pass from the jurisdiction of bank regulators into the jurisdiction of the Securities and Exchange Commission. Any hope of consistent coordination among all these overlapping regulatory organizations seems almost Utopian.
Those who speak of regulation in the abstract not only overlook how radically different one kind of regulation can be from aniother, they seldom bother to consider how many individual regulators there are to oversee how many varied lenders with ever growing kinds of complex and exotic lending arrangements."At the peak of California's housing boon," according to one study, "no more than 30 state examiners watched over nearly 5000 cnsumer finance companies," with the net result that mortgage companies could expect an examination from state regulators about once every 4 years. That is longer than it took the housing market to go from boom to bust. Moreover, many of these regulators "felt pressure from local politicians to keep mortgage credit flowing freely to their constituents."
A question can also be raised as to whether members of the general public who enter the housing market are better off being toled to rely on the govt's protecting their interests--which if done thoroughly might require regulators as mumerous as the hordes of Genghis Khan, each with a degree in accounting and some with degrees in lwas and economics as well--or to be told frankly that they had
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...better watch their back themselves. In other words is the illusion of government protection better than caveat emptor? It all depends on the specifics, not on the generalities of political rhetoric.
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ECONOMICS AND POLITICAL ADJUSTMENTS
THE MARKET'S ADJUSTMENT TO the bursting of the housing bubble took place quickly and in predictable ways. In Cal, for example, the mixtures of homes purchased shifted toward what were, for Cal, less exxpensive homes. Homes costing less than half a million dollars were just 43% of all homes sold there the following year. In short, people were learning to stay within what their incomes could afford.
Although the median down payment during the housing boon was a record low 12 % of the sales price in Cal in 2006, after the riskiness of low down pmts. became painfully clear to both borrowers and lenders in the wake of the housing bust, the median down pmt rose to the traditional 20 percent level in 2008. The proportion of Cal home buyers who made no down pmt at all drepped from 18% in 2007 to 3% in 2008, the lowest proportion in years.
the proportion of interest-only arm's in the state also fell, from 16% of all morgages in 2007 to 2% in08. Even first time home buyers, who had financed 24% of their housing purchses with interest only, arm's at the height of the housing boon in 2005, financed only 2 percent of their home purchases that way in 2008. The ;d-fashioned fixed rate, 30 year mortgage made a dreamatic comebck, rising from just 55% of all mortgages in the state in 2005 to more than 90 percent of all Cal mortgates in 2008.
