I just rec'd this email from a good friend of mine. It does not surprise me that the media is not disclosing the truth about the financial crisis we are in. If you read this blog I don't mean any offense to you. However if Obama gets elected we are in a world of trouble. Please continue to read below (especially to the last paragraph):
Financial CrisisDate: Monday, October 6, 2008, 2:46 PM
I personally can't attest to all the facts in the attached. However, this was sent to me by the President of a bank. The comments about the Community Reinvestment Act [CRA] are accurate. According to him, the regulators only graded the banks upon how many census tracks they loaned money into, and, they never questioned the underwriting standards on those loans. If youdidn't meet their census track standard, you were graded down which resulted in negative consequences. Congress should be ashamed. The following is a condensation of a series from the Investor's Business Daily explaining 'What Caused the Loan Crisis':
1977: Pres. Jimmy Carter signs the Community Reinvestment Act into Law.
The law pressured financial institutions to extend home loans to those who would otherwise not qualify. The Premise: Home ownership would improve poor and crime-ridden communities and neighborhoods in terms of crime,investment, jobs, etc. Results: Statistics bear out that it did not help. How did the government get so deeply involved in the housing market?
Answer: Bill Clinton wanted it that way.
1992: Republican representative Jim Leach (IO) warned of the danger that Fannie and Freddie were changing from being agencies of the public at large to money machines for the principals and the stockholding few.
1993: Clinton extensively rewrote Fannie Mae and Freddie Mac's rules turning the quasi-private mortgage-funding firms into semi-nationalized monopoies dispensing cash and loans to large Democratic voting blocks and handing favors, jobs and contributions to political allies. This potent mix led inevitably to corruption and now the collapse of Freddie and Fannie.
1994: Despite warnings, Clinton unveiled his National Home-Ownership Strategy which broadened the CRA in ways congress never intended.
1995: Congress, about to change from a Democrat majority to Republican, Clinton orders Robert Rubin's Treasury Dept to rewrite the rules. Robert Rubin's Treasury reworked rules, forcing banks to satisfy quotas for sub-prime and minority loans to get a satisfactory CRA rating. The rating was key to expansion or mergers for banks. Loans began to be made on the basis of race and little else.
1997 - 1999: Clinton, bypassing Republicans, enlisted Andrew Cuomo, then Secretary of Housing and Urban Developement, allowing Freddie and Fannie to get into the sub-prime market in a BIG way. Led by Rep. Barney Frank and Sen. Chris Dodd, congress doubled down on the risk by easing capital limits and allowing them to hold just 2.5% of capital to back on their investments vs 10% for banks. Since they could borrow at lower rates than banks theirenterprises boomed.
With incentives in place, banks poured billions in loans into poor communities, often 'no doc', 'no income', requiring no money down and no verification of income. Worse still was the cronyism: Fannie and Freddie became home to out-of work-politicians, mostly Clinton Democrats. 384politicians got big campaign donations from Fannie and Freddie. Over $200 million had been spent on lobbying and political activities. During the 1990's Fannie and Freddie enjoyed a subsidy of as much as $182 Billion, most of it going to principals and shareholders, not poorborrowers as claimed. Did it work? Minorities made up 49% of the 12.5 million new homeowners but many of those loans have gone bad and the minority homeownership rates are shrinking fast.
1999: New Treasury Secretary, Lawrence Summers, became alarmed at Fannie and Freddie's excesses. Congress held hearings the ensuing year but nothing was done because Fannie and Freddie had donated millions to key congressmen and radical groups, ensuring no meaningful changes would take place. 'We manage our political risk with the same intensity that we manageour credit and interest rate risks,' Fannie CEO Franklin Raines, a former Clinton official and current Barack Obama advisor, bragged to investors in 1999.
2000: Secretary Summers sent Undersecretary Gary Gensler to Congress seeking an end to the 'special status'. Democrats raised a ruckus as did Fannie and Freddie, headed by politically connected CEO's who knew how to reward and punish. 'We think that the statements evidence a contempt for the nation's housing and mortgage markets' Freddie spokesperson Sharon McHale said. It was the last chance during the Clinton era for reform.
2001: Republicans try repeatedly to bring fiscal sanity to Fannie and Freddie but Democrats blocked any attempt at reform; especially Rep. Barney Frank and Sen.Chris Dodd who now run key banking committees and were huge beneficiaries of campaign contributions from the mortgage giants.
2003: Bush proposes what the NY Times called 'the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago'. Even after discovering a scheme by Fannie and Freddie to overstate earnings by $10.6 billion to boost their bonuses, the Democrats killed reform.
2005: Then Fed chairman Alan Greenspan warns Congress: 'We are placing the total financial system at substantial risk'. Sen. McCain, with two others, sponsored a Fannie/Freddie reform bill and said, 'If congress does not act, American taxpayers will continue to be exposed to theenormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financialsystem and the economy as a whole'. Sen. Harry Reid accused the GOP ;of trying to 'cripple the ability of Fannie and Freddie to carry out their mission of expanding homeownership' The bill went nowhere.
2007: By now Fannie and Freddie own or guarantee over HALF of the $12 trillion US mortgage market. The mortgage giants, whose executive suites were top-heavy with former Democratic officials, had been working with Wall St. to repackage the bad loans and sell them to investors. As the housing market fell in '07, subprime mortgage portfolios suffered major losses. Thecrisis was on, though it was 15 years in the making.
2008: McCain has repeatedly called for reforming the behemoths, Bush urged reform 17 times. Still the media have repeated Democrats' talking points about this being a 'Republican' disaster. A few Republicans are complicit but Fannie and Freddie were created by Democrats, regulatedby Democrats, largely run by Democrats and protected by Democrats. That's why taxpayersare now being asked for $700 billion!! If you doubt any of this, just click the links below and listen to your lawmakers own words. They are condeming! http://www.youtube.com/watch?v=68D9XrqyrWo&feature=relatedhttp://www.youtube.com/watch?v=68D9XrqyrWo&feature=related# http://www.youtube.com/watch?v=pIgqfM5C8lYhttp://www.youtube.com/watch?v=pIgqfM5C8lY# http://www.youtube.com/watch?v=H9juJr8CSY4&feature=relatedhttp://www.youtube.com/watch?v=H9juJr8CSY4&feature=related#
Postscript: ACORN is one of the principle beneficiaries of Fannie/ Freddie's slush funds. They are currently under indictment or investigation in many states. Barack Obama served as their legal counsel, defending their activities for several years. Please share this with everyone you know. Send it. Print it. Talk about it. America needs to know!!!
Monday, October 13, 2008
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3 comments:
Those of us who have received mortgages with the participation of Fannie or Freddie (and there are MILLIONS of us) resent what you say. Without those two institutions, many of us would not be owning our homes. And, we are voters!
It was not Fannie or Freddie’s fault that the value of homes have collapsed since the bubble. That was the fault of overbuilding, and the bubble itself was largely caused by speculation. And Fannie and Freddie had nothing to do with credit default swaps, auction rate securities (which chopped down the value of several money market funds), the high rate of leverage of banks (sometimes 33-to-1), bank and investment bank assets held in “off balance sheet” companies, Etc. Who caused all that? The SEC’s “voluntary” regulation program, the Fed’s inability to discover 33-to-1 leverage, the administration’s lack of interest in regulating derivatives.
So you say that Fannie and Freddie were supporters of Democrats? Well, the American Bankers Association gave 59% of the 24.24 million it contributed over the period 1990-early 2008 to Republicans, according to OpenSecrets.com.
Someday, the Republicans will want to win votes in the African-American community and among other minority groups. Well, this is not the way to do that. You are inferring that the ability to pay back loans among minority groups is lower than the population as a whole. Hard workers resent this!
Moreover, by far most of the sub-prime loans were made and owned by commercial mortgage companies and commercial banks. Fannie and Freddie owned some, not because they wanted to help out minorities, but because they (like Wachovia, Washington Mutual, Etc) thought that sub-prime investments would be profitable investments. This was a business motive, a capitalist motive if you will, not caused by a desire to help the poor. In fact, there is no way of knowing whether sub-prime mortgage paper is composed mainly of minority mortgages, or loans on second homes, or real estate speculation.
No, it was the Republicans who caused the financial crisis.
You are free to believe what you want to believe. Facts are facts and you are in denial. I work in the mortgage industry. People were buying homes that could not afford them in the first place. Originally lenders were not wanting to be part of this. But because of the Clinton administration this was all put into place. So NO it was not the republicans. We are now seeing the after affects of what Clinton did when he was in office. So naturally everyone is assuming that it had to do with the Bush administration.
If you do not like what is said on my blog, don't read it. It's as simple as that. I am stating my opinion and my opinion only. Last I checked that was one of the freedoms that hasn't been done with already.
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