The real criminals

Subject: From Investor's Business Daily -- The Real Culprits In This Meltdown

This is spot-on, except we need to add some major

responsibility for Alan Greenspan, Congress, and

the regulators...

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.

An "We were told this would happen" moment

the full story is here:
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=all

ahhh what fools we were!!

the bold is mine

Fannie Mae Eases Credit To Aid Mortgage Lending

By STEVEN A. HOLMES

Published: September 30, 1999

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

and

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

and

Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.

In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.

And we wonder why they are broke!!!

YouTube - Burning Down The House: What Caused Our Economic Crisis?

If you care to be informed before you vote on November 4, 2008, then it would behoove you to watch this video clip with verifiable links. The decision the American electorate makes on Election Day will be with us for at least four years. Inform yourself and vote wisely.

Click here: YouTube - Burning Down The House: What Caused Our Economic Crisis?

Part of the problem with the social handout issue -

Part of the problem with the social handout issue -

Who really needs a handout?

What kind of handout should it be?

Does the healthy, able bodied woman who has never worked a day in her life, has had kids outside of any moral or social commitment, need a handout?

And if she is second or third generation welfare, does she need a handout?

for how long?

She also sits at home all day, watches cable all day, and earns money under the table by watching children in her unlicensed daycare - now does she need a handout?

Does the person who was a middle class executive, but got terminated for theft, need a handout?

for how long?

Does the woman and 2 kids, who was told she'd get more money after she throws her husband out than if her husband stays in the same house need a bigger handout?

Does the guy standing on the center divider, with a "will work for food" need a handout?

What about if he leaves his beggar post, and climbs into a 2007 Honda?

(watched that today, by the way)

And when you find out he is housed at no charge to him by the VA, and gets 30K per year in disability pay - does he need a handout?

Does the section 8 housing subsidy apply to someone who is choosing to drive a 2008 Caddilac Escalade?

Does the person who files for SSI because they can't do the job thy used to need a handout?

What if they can do another job, but they just don't want to?

What about the person who spends the handout on drugs, instead of food and clothes for their kids? do they need a handout?

And what if they trade their and their children's food stamps and wick card for drugs - do they get a handout?

I support means testing,

I support drug testing,

I support limits on benefits, based on a lack of physical issues.

I support mandatory retraining

Otherwise - why should I keep busting my ass and paying taxes?

You may think my point is harsh, my view is harsh.

Then:

Tell me why I shouldn't I take my monies off shore,

Why I shouldn't use the tax code to shelter my income,

Why I shouldn't choose to make less income,

and

Why I shouldn't choose to limit my contribution so that I don't have to support someone who wants a free ride?

and before you reply, check out these two items - one from our founding fathers when they decided the king was giving them a raw deal, and one from Aesop, updated to today.

"To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it."
—Thomas Jefferson

and from a friend

The Ant and The Grasshopper, 2008 Edition

By Michelle Malkin

With what looks like imminent passage of the Mother of All Bailouts (following on the heels of a year's worth of government-funded rescues of private homeowners, lenders, insurers and automakers), Washington has turned Aesop's famous fable about prudence and hard work on its head. The time is ripe for a revised 2008 edition of "The Ant and the Grasshopper:"

In a meadow on a hot summer's day, a Grasshopper was chirping and carousing his time away. He watched scornfully as an Ant nearby struggled to store up large kernels of food and build a secure nest. The Ant pulled overtime shifts to pay off his loans and accumulate retirement funds for the future.

"Give it a rest," the Grasshopper said. "Why bother saving and slaving and toiling and moiling? Let's party!" The Ant demurred: "I am planning ahead for winter, and you should do the same." The Grasshopper blew off the Ant, squandered his supplies the rest of the season and abandoned his home while on vacation (paid for by tapping every last cent of his home equity gain) instead of holding down a job.

When winter came, the Grasshopper's pantry was empty, and his shelter ruined from neglect. The Ant, weary from planting, harvesting, and stocking up for months, was dining comfortably in his nest.

Cold, hungry, jobless, facing foreclosure and up to his two pairs of eyeballs in debt, the Grasshopper limped to the Association of Community Winged Insects for Rescue Now and demanded recourse. The office was swamped with thousands just like him. ACWIRN immediately put the Grasshopper to work registering dead ants as new voters.

Funded with tax dollars from the rest of the meadow's residents, ACWIRN organized mass protests at the Bank of Antamerica, ambushed its top officials at their private homes, harassed their children and demanded that the meadow's politicians halt all foreclosures ("We must keep Grasshoppers in their houses!") and outlaw discriminatory lending practices against starving, homeless Grasshoppers ("Well-stocked shelters are basic insect rights!")

The banking industry capitulated; the Orthoptera Lobby secured hundreds of millions of dollars in housing earmarks, grants and counseling subsidies to support the Grasshoppers with the shadiest credit and employment histories. Antie Mae, the meadow's government-backed home lending giant, fueled the push for increased insect homeownership in the name of biodiversity. Its executives cooked the books and headed for the hills. Katie Cricket and the Mainstream Meadow Media joined the grievance-for-profit circus, profiling Grasshopper sob stories and drumming up ratings as bewildered Ants wondered who was looking out for them.

The banks drowned in toxic debt. More Grasshoppers fell behind on their mortgage payments. Bailout mania and panic gripped the meadow.

Our little Ant, minding his own business, heard a knock on his door one late winter night a year later. It was his old, sneering Grasshopper neighbor. With ACWIRN's presidential candidate, Barack Cicada, now in office, the Grasshopper had been hired by the meadow as a tax collector.

"I'm here to take your provisions," the Grasshopper cackled.

But it was the Ant who had the last laugh. "I've learned my lesson," he told his shiftless friend. "Why bother saving and slaving and toiling and moiling? I've spent all my savings. I'm walking away from my mortgage. Thrift is for suckers," the Ant said as he headed out the door, leaving the Grasshopper empty-handed.

Consumers - vote with your wallet

We all seem to forget that We, the People still control all of it with our purchasing power.

You don't like what's happening in Wall Street? - Don't give them your money - invest elsewhere, stick your money into local programs and local credit unions.

You don't like the Fannie and Freddy issue? - go to banks that are local, hold money locally, and lend conservatively.

You don't like fat cat CEO issues? - buy from the smaller guys, support your community.

Think the big box stores and large chains are bad for smaller local businesses? - Don't buy there, instead support your community.

Does that mean you're going to have to think a bit more? Yep - consider it exercise to stave off early Alzheimer's.

We, the People, can choose who we support, and where we spend our money.

Here is one company that seems to be doing it right.

I may or may not agree with the war, but I can choose to support the companies who support our people.

Check out what Sears is doing for the soldiers - then add them to the list of places to shop.

It is verified by Snopes.com

"Sears - Christmas shopping has already started

I know I needed this reminder since Sears isn't always my first choice. Amazing when you think of how long the war in Iraq has lasted and they haven't withdrawn from their commitment. Could we each buy at least one thing at Sears this year?

How does Sears treat its employees who are called up for military duty? By law, they are required to hold their jobs open and available, but nothing more. Usually, people take a big pay cut and lose benefits as a result of being called up.

Sears is voluntarily paying the difference in salaries and maintaining all benefits, including medical insurance and bonus programs, for all called up reservist employees for up to two years.

I submit that Sears is an exemplary corporate citizen and should be recognized for its contribution. I suggest we all shop at Sears, and be sure to find a manager to tell them why we are there so the company gets the positive reinforcement it well deserves.

Pass it on.

Someone decided to check this before they sent it forward. So they sent the following e-mail to the Sears Customer Service Department:

"I received this e-mail and I would like to know if it is true. If it is, the Internet may have just become one very good source of advertisement for your company. I know I would go out of my way to buy products from Sears instead of another store for a like item, even if it's cheaper at that store."

This is their answer to the e-mail:

"Dear Customer:

Thank you for contacting Sears.The information is factual. We appreciate your positive feedback.

Sears regards service to our country as one of greatest sacrifices our young men and women can make. We are happy to do our part to lessen the burden they bear at this time.

Bill Thorn
Sears Customer Care
webcenter@sears.com
1-800-349-4358"

Please pass this on to all your friends. Sears needs to be recognized for this outstanding contribution and we need to show them as Americans, we do appreciate what they are doing for our military!!!

In these times, let's support a company who does right by people

I copied this completely, but it makes sense to me

Sears - Christmas shopping has already started

I know I needed this reminder since Sears isn't always my first choice. Amazing when you think of how long the war in Iraq has lasted and they haven't withdrawn from their commitment. Could we each buy at least one thing at Sears this year?

How does Sears treat its employees who are called up for military duty? By law, they are required to hold their jobs open and available, but nothing more. Usually, people take a big pay cut and lose benefits as a result of being called up.

Sears is voluntarily paying the difference in salaries and maintaining all benefits, including medical insurance and bonus programs, for all called up reservist employees for up to two years.

I submit that Sears is an exemplary corporate citizen and should be recognized for its contribution. I suggest we all shop at Sears, and be sure to find a manager to tell them why we are there so the company gets the positive reinforcement it well deserves.

Pass it on.

Decided to check this before I sent it forward. So I sent the following e-mail to the Sears Customer Service Department:

I received this e-mail and I would like to know if it is true. If it is, the Internet may have just become one very good source of advertisement for your company. I know I would go out of my way to buy products from Sears instead of another store for a like item, even if it's cheaper at that store.

This is their answer to my e-mail:

Dear Customer:

Thank you for contacting Sears.The information is factual. We appreciate your positive feedback.

Sears regards service to our country as one of greatest sacrifices our young men and women can make. We are happy to do our part to lessen the burden they bear at this time.

Bill Thorn
Sears Customer Care
webcenter@sears.com
1-800-349-4358

Please pass this on to all your friends. Sears needs to be recognized for this outstanding contribution and we need to show them as Americans, we do appreciate what they are doing for our military!!!

It's Verified ! By Snopes.com

Our forefathers would shudder

Our forefathers would shudder at what we have done, and allowed to be done

"To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it." —Thomas Jefferson

Are we going in the right direction yet?

Democratic leadership and control of Congress

the last 2 years