The Real Culprits In This Meltdown, no McCain aides listed...

Reply Wed 17 Sep, 2008 02:46 pm
The Real Culprits In This Meltdown

By INVESTOR'S BUSINESS DAILY | Posted Monday, September 15, 2008 4:20 PM PT

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.

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.

The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but "predatory."

Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street. But the seed was planted in the '90s by Clinton and his social engineers. They were the political catalyst behind this slow-motion financial train wreck.

And it was the Clinton administration that mismanaged the quasi-governmental agencies that over the decades have come to manage the real estate market in America.

As soon as Clinton crony Franklin Delano Raines took the helm in 1999 at Fannie Mae, for example, he used it as his personal piggy bank, looting it for a total of almost $100 million in compensation by the time he left in early 2005 under an ethical cloud.

Other Clinton cronies, including Janet Reno aide Jamie Gorelick, padded their pockets to the tune of another $75 million.

Raines was accused of overstating earnings and shifting losses so he and other senior executives could earn big bonuses.

In the end, Fannie had to pay a record $400 million civil fine for SEC and other violations, while also agreeing as part of a settlement to make changes in its accounting procedures and ways of managing risk.

But it was too little, too late. Raines had reportedly steered Fannie Mae business to subprime giant Countrywide Financial, which was saved from bankruptcy by Bank of America.

At the same time, the Clinton administration was pushing Fannie and her brother Freddie Mac to buy more mortgages from low-income households.

The 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.

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.

There's a political root cause to this mess that we ignore at our peril. If we blame the wrong culprits, we'll learn the wrong lessons. And taxpayers will be on the hook for even larger bailouts down the road.

But the government-can-do-no-wrong crowd just doesn't get it. They won't acknowledge the law of unintended consequences from well-meaning, if misguided, acts.

Obama and Democrats on the Hill think even more regulation and more interference in the market will solve the problem their policies helped cause. For now, unarmed by the historic record, conventional wisdom is buying into their blame-business-first rhetoric and bigger-government solutions.

While government arguably has a role in helping low-income folks buy a home, Clinton went overboard by strong-arming lenders with tougher and tougher regulations, which only led to lenders taking on hundreds of billions in subprime bilge.

Market failure? Hardly. Once again, this crisis has government's fingerprints all over it.

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Type: Discussion • Score: 14 • Views: 8,360 • Replies: 139

ebrown p
Reply Wed 17 Sep, 2008 02:51 pm
Oh, Of Course! It's Clinton's fault.

((you guys have got to come up with some new material))
0 Replies
cicerone imposter
Reply Wed 17 Sep, 2008 02:52 pm
McG, You people want it both ways; during Bush's watch, you all bragged that during Bush's tenure, more Americans bought homes as never before because the economy was so good. Now, you want to blame Clinton for the current subprime mess. You guys are beyond the laughter curve.

FYI, you probably don't know it, but McCain even mentioned the Mae and Mac problems before it really became a problem just a few years ago. Bush ignored it.

You now want to blame Clinton. He's been gone for eight years.
0 Replies
Reply Wed 17 Sep, 2008 02:53 pm
wtf? How the hell did they manage to write that piece with out putting the name Phil Gramm in there? He was instrumental to the effort to remove regulations in the 1990's.


cicerone imposter
Reply Wed 17 Sep, 2008 02:55 pm
They've been blaming Clinton for every problem this administration has had; it's no wonder they never admit wrong-doing and incompetence!
0 Replies
Reply Wed 17 Sep, 2008 03:07 pm
You are all missing the funny part

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.

Retrovirus?!!? You know he picked that word because it was big and scary sounding.
cicerone imposter
Reply Wed 17 Sep, 2008 03:18 pm
From Wiki:

Subprime mortgages

Like other subprime loans, subprime mortgages are defined by the financial and credit profile of the consumers to which they are marketed. According to the U.S. Department of Treasury guidelines issued in 2001, "Subprime borrowers typically have weakened credit histories that include payment delinquencies, and possibly more severe problems such as charge-offs, judgments, and bankruptcies. They may also display reduced repayment capacity as measured by credit scores, debt-to-income ratios, or other criteria that may encompass borrowers with incomplete credit histories."

Subprime mortgage loans are riskier loans in that they are made to borrowers unable to qualify under traditional, more stringent criteria due to a limited or blemished credit history. Subprime borrowers are generally defined as individuals with limited income or having FICO credit scores below 620 on a scale that ranges from 300 to 850.[5] Subprime mortgage loans have a much higher rate of default than prime mortgage loans and are priced based on the risk assumed by the lender.

Although most home loans do not fall into this category, subprime mortgages proliferated in the early part of the 21st Century. About 21 percent of all mort­gage originations from 2004 through 2006 were subprime, up from 9 percent from 1996 through 2004, says John Lonski, chief economist for Moody's In­vestors Service. Subprime mortgages totaled $600 billion in 2006, accounting for about one-fifth of the U.S. home loan market[1].

As with other types of mortgage, various special loan features are available with subprime mortgages, including:

* interest-only payments, which allow borrowers to pay only interest for a period of time (typically 5"10 years);
* "pay option" loans, usually with adjustable rates, for which borrowers choose their monthly payment (full payment, interest only, or a minimum payment which may be lower than the payment required to reduce the balance of the loan);
* and so-called "hybrid" mortgages with initial fixed rates that sooner or later convert to adjustable rates.

This last class of mortgages has grown particularly popular among subprime lenders since the 1990s. Common subprime hybrids include the "2-28 loan", which offers a low initial interest rate that stays fixed for two years after which the loan resets to a higher adjustable rate for the remaining life of the loan, in this case 28 years. The new interest rate is typically set at some margin over an index, for example, 5% over a 12-month LIBOR. Variations on the "2-28" include the "3-27" and the "5-25"
Reply Wed 17 Sep, 2008 03:31 pm
@cicerone imposter,
But they got more good houses built and poor ones improved and those gains are still here. A house is worthless unless you sell it and go live in a tent in the woods.

And further to that the US laxity in regard to credit ratings was bundled up and sold on to investors in other countries who then shared the hit.

Which makes the US a sub-primer.
Reply Wed 17 Sep, 2008 04:35 pm
In what some political observers are calling his most ironic speech of the 2008 campaign, GOP presidential nominee John McCain today lashed out at Washington, the Republican Party and a group of insiders he called "old white men with white hair."
"It's time to take our country back," Sen. McCain told his audience in Dayton, Ohio. "It's time to send a message to those in power - those Republicans in Washington, those old white men with their combed-over white hair."
Sen. McCain went on to attack the power elite on Wall Street, calling them "wealthy plutocrats with private jets and too many houses to keep track of."
"The time has come to say enough is enough to those rich old white men," he said. "And the same goes to their zombie-like trophy wives who plaster their makeup on like trollops."
Responding to the nation's economic turmoil, Sen. McCain said that as President he would create millions of jobs "by putting Americans to work making negative ads."
"We no longer lead the world in manufacturing cars, steel, or computers," Sen. McCain said. "But our negative ad industry is second to none."
In other economic news, President Bush announced another massive bailout today, saying that he had completed a deal for China to buy the United States in its entirety.

"This was a difficult deal to pull off," Mr. Bush acknowledged. "The hard part was identifying the parts of the U.S. that China didn't already own."

Reply Wed 17 Sep, 2008 04:44 pm
Am I the only one who hears the subtext of "it's the fault of minorities who took these loans. And guess who else is Black?"
0 Replies
Reply Wed 17 Sep, 2008 04:49 pm
Vewwie funny Rama.

Reply Wed 17 Sep, 2008 05:05 pm
I was thinking in the pub that it was a bit like the build up to 1789. If there is "meltdown" (no electricity, supermarkets blowin' in the wind) then just like the enraged victims then knew all the names so we do now.

No wonder they are trying to keep things on an even keel.
0 Replies
Reply Wed 17 Sep, 2008 05:07 pm
spendius wrote :

And further to that the US laxity in regard to credit ratings was bundled up and sold on to investors in other countries who then shared the hit.

methinks there is an "s" missing in the last word ! <GRIN>
0 Replies
Reply Wed 17 Sep, 2008 05:47 pm
Complimentary "Subterranean Homesick Blues" Ringtone

Johnnys in the basement
Mixing up the medicine
Im on the pavement
Thinking about the government
The man in the trench coat
Badge out, laid off
Says hes got a bad cough
Wants to get it paid off
Look out kid
Its somethin you did
God knows when
But youre doin it again
You better duck down the alley way
Lookin for a new friend
The man in the coon-skin cap
In the big pen
Wants eleven dollar bills
You only got ten

Maggie comes fleet foot
Face full of black soot
Talkin that the heat put
Plants in the bed but
The phones tapped anyway
Maggie says that many say
They must bust in early may
Orders from the d. a.
Look out kid
Dont matter what you did
Walk on your tip toes
Dont try no doz
Better stay away from those
That carry around a fire hose
Keep a clean nose
Watch the plain clothes
You dont need a weather man
To know which way the wind blows

Get sick, get well
Hang around a ink well
Ring bell, hard to tell
If anything is goin to sell
Try hard, get barred
Get back, write braille
Get jailed, jump bail
Join the army, if you fail
Look out kid
Youre gonna get hit
But losers, cheaters
Six-time users
Hang around the theaters
Girl by the whirlpool
Lookin for a new fool
Dont follow leaders
Watch the parkin meters

Ah get born, keep warm
Short pants, romance, learn to dance
Get dressed, get blessed
Try to be a success
Please her, please him, buy gifts
Dont steal, dont lift
Twenty years of schoolin
And they put you on the day shift
Look out kid
They keep it all hid
Better jump down a manhole
Light yourself a candle
Dont wear sandals
Try to avoid the scandals
Dont wanna be a bum
You better chew gum
The pump dont work
cause the vandals took the handles.

And that's got cobwebs on it. But what a killer ending eh?
0 Replies
Reply Thu 18 Sep, 2008 06:07 am
Democratic Congress May Adjourn, Leave Crisis to Fed, Treasury

By Kristin Jensen
More Photos/Details

Sept. 18 (Bloomberg) -- The Democratic-controlled Congress, acknowledging that it isn't equipped to lead the way to a solution for the financial crisis and can't agree on a path to follow, is likely to just get out of the way.

Lawmakers say they are unlikely to take action before, or to delay, their planned adjournments -- Sept. 26 for the House of Representatives, a week later for the Senate. While they haven't ruled out returning after the Nov. 4 elections, they would rather wait until next year unless Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke, who are leading efforts to contain the crisis, call for help.

One reason, Senate Majority Leader Harry Reid said yesterday, is that ``no one knows what to do'' at the moment.

This is the type of leadership that got the taxpayers in this situation in the first place. Yet, most of these scumbags will be re-elected by the same partisan morons who elected them in the first place.

0 Replies
Reply Thu 18 Sep, 2008 06:24 am
There are connections the democrats including Obama but to deny any connections to McCain/Palin is being dishonest.

They’ve stacked their payrolls with top Washington power brokers of all political stripes, including Republican John McCain’s presidential campaign manager, Rick Davis; Democrat Barack Obama’s original vice presidential vetter, Jim Johnson; and scores of others now working for the two rivals for the White House.


John McCain's campaign manager, Rick Davis, also has ties to Fannie Mae, though less directly.

Davis, was president of the Homeownership Alliance, a Fannie Mae and Freddie Mac-led advocacy group which has tried to fend off regulation sought by large private banks and mortgage lenders.

The front story of the Homeownership Alliance is that it sought to make home ownership affordable to the broadest possible range of people and feared that that this mission would be compromised if Congress stepped in with too many rules.

The back story, according to critics, is that Fannie Mae and Freddie Mac feared that Congressional meddling would lower their healthy profits.

0 Replies
Reply Thu 18 Sep, 2008 07:05 am
FANNIE CEO calls demokkkrats FANNIE's "family":

0 Replies
Reply Thu 18 Sep, 2008 02:12 pm
clinton? again, you blame clinton???

your boys have had eight years to "fix clinton's mistakes".

the best used by date on blaming clinton for everything expired a shite long time ago.

you guys need to grow up and take responsibility for your failures.
cicerone imposter
Reply Thu 18 Sep, 2008 02:35 pm
You ain't gonna see it during our lifetime. Of all the Bush screw-ups, he's never once admitted to being wrong. Illegal wiretaps, torture, habeas corpus, Katrina, Iraq, Geneva Convention, US Constitution, etc, etc, etc, ....

0 Replies
Reply Thu 18 Sep, 2008 04:17 pm
What a bunch of whiny **** you guys are.

None of you can refute the truth in the article, it's sad to watch you guys try to muster up the vile that you are.

Can just one of refute the facts posted in the OP?

I'll not hold my breath.

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