LET'S BE HONEST, REAL HONEST-EVERYONE THINKS REPUBLICANS CAUSED THE MORTGAGE CRISIS…

Americans wondering who was responsible for the mortgage crisis should ask
themselves a question: is owning a home a privilege or a right?
Despite the meltdown in 2008, the seeds for the mortgage crisis were sown much
earlier by a Democrat Party long convinced homeownership was an entitlement.
As this chapter shows, once that basic premise became conventional wisdom, it
was all downhill from there.
If one listens to the mainstream media and many Democrats, the blame for
the mortgage crisis rests with the Republicans and the Bush administration.
They’ve convinced the public that Democrats had nothing whatsoever to do
with our current financial woes.
Precisely the opposite is true: Democrats created the lax mortgage policies
that precipitated the crisis while simultaneously stifling Republican efforts to
prevent it.
The history of the crisis started with the Community Reinvestment Act (CRA),
signed into law by Democrat President Jimmy Carter in 1977. The law was
designed to foster homeownership in low-income communities by pushing
banks to aggressively lend to low and moderate income people. At first, it was
easy to comply with the CRA. Banks merely had to demonstrate that they
did not discriminate in making loans in poor and black neighborhoods.
When Democrat Bill Clinton became President in 1992, he broadened the
Community Reinvestment Act in ways Congress had never intended. In
1995, rather than submit legislation that the Republican-led Congress was
certain to reject, Clinton bypassed Congress entirely, ordering the Treasury
Department to rewrite the CRA rules.
44 CLEARING UP THE PAST: ECONOMIC INSECURITY
As a result, banks were forced to fulfill loan “quotas” in low income
neighborhoods.
That wasn’t the only problem. CRA also allowed community activist groups
such as ACORN (Association of Community Organizations for Reform
Now), for whom Barack Obama once worked in Chicago, and NACA
(Neighborhood Assistance Corporation of America) to file complaints that
could affect a bank’s CRA rating. Failure to comply with CRA or a bad rating
meant a bank might not be allowed to expand lending, add new branches or
merge with other companies. Banks with poor CRA ratings were also hit
with stiff fines.
This rewrite of CRA gave activist groups like ACORN and NACA
unprecedented power. Protests often held in bank lobbies or in front
of the homes of bank officials, coupled with threats of litigation, allowed
these groups to extort huge sums of money from financial institutions. In
response, financial institutions began allocating more funds to low-income,
high risk borrowers.
Loans started being funded on the basis of race and often little else. CRA
became an excuse for lowering credit standards. Many Democrats have
claimed that banks subject to the CRA represented few of the mortgages
that led to our current problems. Not true. Nearly 4 in 10 subprime loans
made between 2004 and 2007 were funded by CRA-covered banks such
as Washington Mutual and Indy Mac. Many other subprime lenders not
covered by the Act were, in effect, beholden to CRA mandates because they
were owned by banks that were subject to it.
Since CRA only covered banks, the Clinton administration created a separate
department at Housing and Urban Development to police “fair lending”
policies at other institutions such as Countrywide and lending behemoths,
Fannie Mae and Freddie Mac.
The result? Countrywide made more loans to minorities than any other
lender, and not surprisingly, was one of the first lenders overwhelmed by loan
defaults. 10
As groups like ACORN ran their intimidation campaigns against local
banks, they eventually hit a roadblock. Banks told them they could afford to
Everyone Thinks Republicans Caused the Mortgage Crisis 45
reduce their credit standards by only a little – since Fannie Mae and Freddie
Mac refused to buy up these risky loans for resale on the secondary market.
ACORN realized that unless Fannie and Freddie were willing to relax their
credit standards as well, local banks wouldn’t make enough loans to individuals
with bad credit histories or with very little money for a down payment. 11
Democrats such as Barney Frank (D-MA), Ted Kennedy (D-MA) and
Maxine Waters (D-CA) allied with the Clinton administration to broaden
the acceptability of these risky mortgage loans. When the Republicans
attempted to restore fiscal sanity by paring back the CRA, they were stymied
by Democrats — and by ACORN. 12
In 1995, an unrestrained Clinton administration announced a comprehensive
strategy to push homeownership in America to new heights – regardless of the
compromise in credit standards that this would require. Fannie and Freddie
were given massive subprime lending quotas, which would increase to about
half of their total business by the end of the decade. 13
Then came the single most catastrophic decision leading to the housing
crisis: Clinton legalized the securitization of these mortgages, which allowed
Fannie and Freddie to finance everything by buying loans from banks, then
repackaging and securitizing them for resale on the open market. 14
Thus began the meltdown. In 1997, Bear Stearns handled the first
securitization of CRA loans — $385 million worth — all guaranteed by
Freddie Mac. 15 Subsequently, a subprime market that had been a relatively
modest part of the mortgage business with $35 billion in loans in 1994 soared
to $1 trillion by 2008. 16
Regrettably, this massive bundling of subprime mortgages wound up
poisoning the entire mortgage industry.
Fannie and Freddie used their “affordable housing mission” to avoid
restrictions on their accumulation of mortgage portfolios. They argued
that if they were constrained, they wouldn’t be able to adequately subsidize
affordable housing. As a result, by 1997, Fannie was offering mortgages with
a down payment of only 3 percent. By 2001, it was purchasing mortgages
with “no down payment at all.” 17
46 CLEARING UP THE PAST: ECONOMIC INSECURITY
By 2007, Fannie and Freddie were required by Housing and Urban
Development to show that 55 percent of their mortgage purchases were to
low and moderate income borrowers, and, within that goal, 38 percent of
all purchases were to come from underserved areas (usually inner cities). 18
Meeting these goals almost certainly required them to purchase loans with
low down payments and other deficiencies that would characterize them as
subprime or Alt-A. 19
The decline in lending standards was also facilitated by competition. Fannie
and Freddie were now competing with private-label mortgage lenders
such as investment and commercial banks to fulfill the affordable housing
requirements imposed by Congress.
The inevitable result? Everyone was scraping the bottom of the mortgage
barrel in search of new borrowers.
Once the looser lending standards were offered to low and middle income
buyers, it was naïve to believe that they wouldn’t lead to more relaxed standards
for higher-income and prime borrowers as well. This spreading of looser
standards to the prime market greatly increased the availability of credit for
mortgages, and ultimately led to the bubble in housing prices. 20
Unsurprisingly, Fannie Mae and Freddie Mac were huge campaign
contributors to Congress, spending millions to ensure no reform would be
implemented to restrict them. In all, 354 members of Congress received
funds. The bulk of the money went to Democrats. 21 Between 1989 and 2008,
the leading recipient of Fannie/Freddie campaign money was Connecticut
Democrat Chris Dodd, the Senate Banking Committee Chairman, who
collected more than $165,000. Dodd opposed restrictions on Fannie and
Freddie and pushed hard for the continuance of subprime loans. In second
place was then-Senator Barack Obama, who, in just three years in the U.S.
Senate, took in $126,000. Third, was Massachusetts Democrat John Kerry,
who received $110,000. 22
Since the 1990s, Fannie Mae and Freddie Mac have been run by Democrats.
From 1991 to 1998, Fannie Mae was led by James Johnson, a long-time aide to
former Democrat Vice President Walter Mondale. Johnson made headlines in
2008 when Barack Obama picked him to chair his vice presidential selection
committee. He had to resign in disgrace when it was revealed he had taken
Everyone Thinks Republicans Caused the Mortgage Crisis 47
out at least five below-market real estate loans totaling more than $7 million
from Countrywide Financial Corporation. 23
Johnson’s successor as head of Fannie Mae, Franklin Raines, had previously
served as a budget director to President Bill Clinton. From 1995 to 2005,
Raines pocketed nearly $100 million in compensation before leaving because
of a scandal involving profit and loss reports manipulated to increase his
annual bonuses. 24
Another well-known Democrat, Jamie Gorelick, served as vice chair of Fannie
from 1998 to 2003. Prior to that, she was Janet Reno’s Deputy Attorney
General during the Clinton years, when the Clinton Justice Department
was aggressively compelling banks to make subprime loans to unworthy
borrowers. 25 And Rahm Emanuel, current White House Chief of Staff, also
served as a director at Freddie Mac. 26
Most Americans are not aware that Fannie and Freddie, while lining the
pockets of politicians, also funnels hundreds of millions of dollars to a host
of leftist groups and causes promoting the Democrat agenda. 27 The grantmaking
arms of Fannie and Freddie – specifically the Fannie Mae Foundation
and the Freddie Mac Foundation – gives tens of millions of dollars each year
to predominantly left-wing organizations such as the American Civil Liberties
Union; the NAACP and National Urban League; the left-wing financier the
Tides Foundation; pro-illegal immigration groups like the Mexican American
Legal Defense and Education Fund, and the National Council of La Raza;
pro-Democrat community activist groups like ACORN; and former president
Jimmy Carter’s Carter Center. 28
The Republicans were not oblivious to Fannie and Freddie’s problems.
Bush’s 2001 budget called runaway subprime lending a “potential problem”
and warned of “strong repercussions in financial markets.” 29 In July 2003,
Senators Chuck Hagel (R-NE), Elizabeth Dole (R-NC) and John Sununu
(R-NH) introduced legislation to address regulation of them. The bill was
blocked by the Democrats. 30 In September 2003 Bush’s Treasury Secretary,
John Snow, proposed what The New York Times called “the most significant
regulatory overhaul (of Fannie and Freddie) in the housing finance industry
since the savings and loan crisis a decade ago.” 31
Did the Democrats in Congress welcome reform? Here’s how Barney Frank
48 CLEARING UP THE PAST: ECONOMIC INSECURITY
(D-MA), the ranking Democrat on the Financial Services Committee,
responded:
“I do not think we are facing any kind of a crisis. That is, in my view, the
two government sponsored entities we are talking about here, Fannie Mae
and Freddie Mac, are not in crisis…. I do not think at this point there is a
problem with a threat to the Treasury…. 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.” 32
In 2005, Republican Senators Hagel, Sununu, Dole, and later John McCain
reintroduced legislation to once again address regulation of Fannie and
Freddie. In essence, the bill would have required Fannie and Freddie to
eliminate their investments in risky subprime loans.33 According to Kevin
Hassett, writing in Bloomberg.com, “if that bill had become law, then the
world today would be different.” 34
But the legislation didn’t become law for a single reason: Democrats opposed
it on a party-line vote in the Senate Banking Committee, signaling that this
would be a partisan issue. Republicans, tied in knots by the tight Democrat
opposition, couldn’t even get the Senate to vote on the bill. 35
Had the bill passed in 2005, the mortgage meltdown would have been far less
intense. In 2005, 2006 and 2007, approximately $1 trillion of these terrible
mortgage loans were funded by Fannie and Freddie at a time when housing
prices were at their highest. When housing prices fell dramatically, losses
from those mortgages turned out to be tremendous.
Bottom line: if Fannie Mae and Freddie Mac weren’t buying these subprime
loans, the market for them would likely not have existed.
Rep. Artur Davis (D-AL) now admits Democrats were in error:
“Like a lot of my Democratic colleagues, I was too slow to appreciate the
recklessness of Fannie and Freddie. I defended their efforts to encourage
affordable home ownership when in retrospect I should have heeded the
concerns raised by the regulator in 2004. Frankly, I wish my Democratic
colleagues would admit when it comes to Fannie and Freddie, we were
wrong.” 36

You know Walter I remember when all this went down. When the republicans wanted to keep loans the way they were and the dems screamed racism. It was awful to watch and the republicans finally caved.

I also have fond memories of those videos you posted and TGIX went ballistic that was classic.

Pissedoffvulcan wrote:

I also have fond memories of those videos you posted and TGIX went ballistic that was classic.

You know, IF I can remember where exactly I found that vid, I would love to show it to Charles, errr Bad Chaz over on FaceBook (since he doesn't appear to be coming back. What is it with Libs? Don't we play nice enough? He can't say he is too busy with work wince he DOES constantly post all things anti-Republican on FaceBook through that HufingtonPost site. Like she was worth a darn when she was IN the California legislature. She couldn't win the governorship against Arnold and since nobody ever took her politically serious since (or before) she get's her own site to bash!

Ooops.

Walterth3rd wrote:

Pissedoffvulcan wrote:

I also have fond memories of those videos you posted and TGIX went ballistic that was classic.

You know, IF I can remember where exactly I found that vid, I would love to show it to Charles, errr Bad Chaz over on FaceBook (since he doesn't appear to be coming back. What is it with Libs? Don't we play nice enough? He can't say he is too busy with work wince he DOES constantly post all things anti-Republican on FaceBook through that HufingtonPost site. Like she was worth a darn when she was IN the California legislature. She couldn't win the governorship against Arnold and since nobody ever took her politically serious since (or before) she get's her own site to bash!

Ooops.

Your wish is my command.

Thanks

Walterth3rd wrote:

Thanks

No problem Walter let us know how it turns out.

Today, he wrote, 'John Madden should bow Bush in the chest for what he did to our Country!!!' which was THE perfect opening, so I wrote, 'He'll have to go after THESE people FIRST----> https://www.youtube.com/watch?v=_MGT_cSi7Rs&feature=player_embedded

'Fix' THEM, THEN go after who REALLY was/is DESTROYING OUR COUNTRY!'

Not REALLY expecting an answer, but he might surprise me.

Update, even though he tried to come back, MORE people pretty much shot his opinion down quickly and succinctly. I just LOVE it when the RIGHT is, well RIGHT!

Here's the ongoing discussion:

Quote :

Charles Jackson
Nobody's above the D-Town Stomp!! Even Obama. But, and it's a mighty big BUTT, that war criminal has been let so far off the hook, he's just glad they're blaming everything on the Black guy!!! His first big move that upset everyone was w...hen he put both wars & the FEMA's disaster budget on the federal budget and ended all the "supplemental budgets." That instantly ballooned the federal budget since the Republicans were doing so much "off the books." Don't give him any credit for anything he has done well, but surely don't pile on things that were not his fault!!See More
2 hours ago · LikeUnlike
#
Walter Hawthorne
Which things DID President Obama do well? Other than apologize to EVERYONE about things this country did in the past, other than IGNORING the damage done in America Samoa by a Tsunami, other than ignore the BIG oil spill along the Canadian ...border that POISONED the RIVER along there, even though THAT company was WARNED their pipes were corroding, but since THEY didn't give any DONATIONS to HIS party, were just ignored, along with the PEOPLE LIVING THERE. Or were you speaking of how he increased the attacks in Afghanistan and fired MORE Predator drones AFTER he was GIVEN the Nobel PEACE Prize?

Which things DID he do well? Aside from being THE best friend of the AUTO UNIONS of course.See More
2 hours ago · LikeUnlike
#
KaTina Smith Walker Lol. You are crazy!
2 hours ago · LikeUnlike
#
Keenan Gardner
The only follow up remark that I will make is that for intelligent Americans it has become quite annoying listening to Democrats complain about what conditions they inherited. There were numerous issues left unresolved in the transition of ...Bush to Obama. That has been the case from the beginning of our countries history. However, if all this administration was tasked with doing was fixing those problems left before them and couldn't then possibly continuing to point the finger would be somewhat justifiable. But this administration hasn't done much about the hole that was left, and in the mean time managed to dig an even bigger hole right next to it. Which means the next president, no matter which party he comes from, has TWO holes to fill. So at the end of the day how have we improved the state of our union under these circumstances? And it is very insulting for ANYONE to claim otherwise until some real work has been put in addressing ALL of our countries issues.See More
2 hours ago · UnlikeLike · 1 personLoading...
#
KaTina Smith Walker Wow! I'm staying out of this discussion! Lol
2 hours ago · LikeUnlike
#
Charles Jackson
‎@ Keenan & Walter - As an intelligent American that studied Public Policy at the Graduate level from 2005-2008 & received a Masters Degree in Political Science (Shameless Plug for UT Arlington), I wasn't just referring to the last Republic...an Administration. I was talking about the last 5. (Nixon, Ford, Reagan, Bush I, & "W"). Prior to President Obama, there had only been 2 Democratic Presidents in the previous 40 years.

This current incarnation of the Republican party are great at shifting blame. They were in charge of both houses of Congress from 1994-2006-- all 3 branches from 2000-2006. From their Contract on America to W's "Mission Accomplished" fiasco. The Iraq War, that "W" lied & tortured our way in to, was costing more than $12 billion a month at its peak for more than 5 yrs.

Massive deregulation & unfunded mandates like the repeal of Glass-Steagall & No Child Left Behind helped fuel our freefall. The creation of TARP (Troubled Assets Relief Program) in a 3-pg Bill by Hank Paulson that had a "Get out of jail Provision" in it was another Republican machination that had them backpeddling & talking about "everyone's to blame" & "Let's not play the blame game now cause there'll be plenty of time to investigate all wrongdoing later." Now everybody has Am-dam-nesia.

Your annoyance at being reminded how just 3 years ago the Republican Party destabilized the Global Economy by launching two Wars, Medicare Part D, & two massive Bush tax cuts ('01, '03), all on America's Credit Card without paying for any of them doesn't bother me in the least bit. What annoys me Keenan & Walter is that you expected President Obama to fix in 3 years what it took Bush 8 years to break. Along with other Republican presidents!!

It was Nixon that took us off the Gold Standard in '72, it was Reagan & his Supply-side, Trickle Down Economics (Reaganomics) that paved the way for the Savings & Loan Scandal & Stock Market crash in the 80's. Bush 41 took us to the Gulf War & raised taxes!! "W" just squandered a multi-billion dollar surplus, broke 100's of laws by re-defining them by the use of a seldomly used tactic called "signing statements" to change the interpretation of laws. The Republicans sandbagged over 40% of Obama's Presidential appointments, negotiated 161 Republican policies into the Stimulus to make it worse than unanimously voted against it. They tried the same thing with Healthcare Reform, but failed.

Regardless of what side you come down on, President Obama is doing what he campaigned he would do & that 53% of voting Americans hired him to do. Funny all you so-called intelligent Americans were nowhere to be found when Bush was gutting the U.S. Treasury. Where were the so-called "Values voters, fiscal conservatives, or Tea Party" idiots? I'll tell you, sitting on your collective asses blaming other people!! The floor is yours.See More
about an hour ago · LikeUnlike
#
Walter Hawthorne
Sure, I mostly agree with most of what you wrote here, Charles. I also would like to point out that you, and others of your ilk, also lay a massive portion of the BLAME for America's housing demise when, as has been said time and time again..., that it was the REPUBLICANS that were AGAINST IT. Oh sure, the Iraqi war (part II) should never have been undertaken (but the eventual pull out was NOT Obama's doing, it was already a part of the 'treaty' when Bush was still in office, but who's taking the 'blame' now?).
Oh yes, and the 'permission' to go to and keep FUNDING that war WAS supported by enough DEMOCRATS (Mrs. Clinton included, not Mr. Obama of course, but others) otherwise we never would have stayed as long as we did.
No, this is a prime example of how BOTH sides are EQUALLY culpable at where we are, I just wanted to be clear that BOTH sides were getting the proper 'credit', the proper 'BLAME' for where we are. I don't expect Mr. President Obama to fix it all, but I'll be DA_MED to sit here and just let some people just flap away as though their side was the ONLY right side. Their hasn't BEEN a right side since, well, since Eisenhower! Maybe not even then! At least THAT Republican seemed to sincerely WANT true equality between the races of this country.
But again, it is what it is, isn't it?

'ANY OTHER PARTY '12!See More
2 minutes ago · Like

His last comment -

Quote :

Touche'. Point well taken. Now, with the Financial Industry crunch, TARP, Housing collapse, the stock market crash to 6,000 points, the H1N1 Pandemic, Pirates, Gas @ $4, the Auto manufacturing Companies failing, & every other "Known Unkno...wn," all Economists agreed that the 1st Stimulus was necessary. A Keynesian approach was the only way to stave off the next Great Depression.

To stop the banks from falling like dominoes, the Gov't became the spender of last resort. It worked. The things that President Obama chose to spend money on were Saving the Auto Industries (2 of the 3 took Money, Ford took the Gov't Guarantee to help them restructure).

The speed with which the crises were occurring were fast & furious, but all were more transparent than previous administrations. The only backroom deal that was cut & not discussed was the deal that the administration cut with Big Pharma which guaranteed lower prescription drug prices by more than $10 billion over 10 yrs.

That deal made us all feel taken advantaged of. Going into it, all I wanted them to agree on was that Congress would take the same Healthcare plans that they expected average Americans to take. Obama cut a deal and the details of that deal have never come to light.

All in all, I'm satisfied that he is trying to fix a lot of wrongs. Whether they are popular or not. Credit Card Reform, Healthcare Reform, Student Loan Reform, Lilly Ledbetter Fair Pay Act, Children's Healthcare Insurance Program, closing offshore tax havens, reforming the tax code, etc.

As a Middle Class citizen of these United States, my vote was & is exactly what this man is doing. He's done more in two years than your boy did in his 8 yrs. The Obama Administration has created more jobs in 2010 than Bush did in his entire 8 yrs.!!!

I've worked in Education Administration, at a County Hospital, & with two Texas State Representatives. So I'm well versed in the local impact & ramifications of these Public Policy proscriptions. It may be different in Cali, where both you fellas are, but down here, in the Dallas/Fort Worth metroplex, I've worked thru the ill effects of poor public policy for the last 12 years.

In the last 5 years, Dallas ISD absorbed a bankrupt Wilmer Hutchins School District, we inherited Katrina & Rita refugees, & the NCTCOG (North Central Texas Council of Governments) estimates another 5 million people will flow into the region over the next 5 yrs.

I'm in the process of creating a Black Chamber of Commerce and have worked nonstop on helping turn my high school around the past 3 yrs. I'm on the front lines and have been working to change policies that adversely affect OUR people. I challenge you to do the same. I'll close with a quote:

"How terrible is wisdom, when it brings no profit to the wise." ~ from Sophocles' "Oedipus The King"

Walter I might have to sign up for facebook.

I keep telling you!