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"Saving Our Economy"

Discussion in 'U.S. Politics' started by Little-Acorn, Feb 20, 2009.

  1. Little-Acorn

    Little-Acorn Well-Known Member

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    I wrote this last November, a week after the election, after seeing the videos on Youtube. The history it describes, is just as true now as it was then, and just as true as when it happened over the span of the last 30 years or so.

    Once we get through the obligatory "Fox News always lies" hysteria from the usual suspects, these events of the past are very much worth discussing.

    ----------------------------------------

    Have you seen the Special Report composed by Fox News, on the financial crisis? It's a hour-long show, and been broadcast several times. Someone has put it on YouTube, in six segments. Fox calls it "Saving Our Economy". Go to YouTube and do a search on that title, and you should get all six segments. They vary from 5 to 10 minutes each, about 45 minutes running time total (no commercials).

    It's a GREAT explanation of how the crisis started, who did what, what the results were, etc. A real must-see.

    Here's a summary:

    -----------------------------------------

    Sept. 23, 2008: Treasury Secretary Henry Paulson: "The events leading us here began many years ago, starting with bad lending practices by banks and financial institutions, and by borrowers taking up mortgages they couldn't afford."

    -----------------------------------------

    The Federal National Mortgage Association (FNMA, or "Fannie Mae") was created in 1938 during the Great Depression. to create a market for mortgages where they could be bought and sold.

    In 1968, Lyndon Johnson and a Democratic Congress spun off Fannie Mae so that it would not show up in the Federal budget. But the Federal govt was always there, ready to bail out Fannie Mae if problems happened. This enables Fannie Mae to offer lower rates for the mortgages it bought, since it was not taking the risks that other banks and institutions had to. In 1970, the Federal Home Loan Mortgage Corporation ("Freddie Mac") was formed, to create competition for Fannie Mae, since ordinary banks could NOT compete with the government-backed rates they offered.

    The Community Reinvestment Act (CRA) was passed by a Democrat Congress and signed by Jimmy Carter in 1977. It made sure banks were lending to people of all colors and income levels. But things quickly began going off the rails, as activist groups found a new weapon in the law: The could start suing lenders for discrimination if they didn't lend to enough minority families, regardless of the families' ability to pay the loans back as promised. Banks began making riskier and riskier loans for fear of having to fight expensive lawsuits.

    Community groups began bullying the banks, especially one called the Association of Community Organizers for Reform Now ("ACORN"). It hired several specialized lawyers, including a young man named Barack Obama, to teach its employees how to go to the homes of bank CEOs and senior officers, harassing and publicly embarrassing them while remaining within the limits of local law to avoid prosecution. At one point, ACORN brought a lawsuit against a thrift merger in Illinois, insisting that the lending institutions had not made as many loans to minorities as ACORN thought they should. The bank replied that such loans would be financially irresponsible, and would put ALL the bank's customers at unacceptable risk. ACORN prevailed in court, and banks began making more and more risky loans to home buyers who could have never qualified for those loans under ordinary circumstances.

    In late 2000, in the last days of the Clinton administration, the government ordered Fannie and Freddie to increase the numbers of these risky ("sub-prime") mortgages they were buying from banks and lending institutions across the country. They did, lowering their rates and buying more and more, until fully half their portfolios consisted of these risky sub-prime mortgages, combined and packaged in various ways.

    The Bush administration raised red flags starting in April 2001. Their 2002 Budget Request declared that the size of mortgage giants Freddie Mac and Fannie Mae is "a potential problem" because financial trouble in either one of them "could cause strong repercussions in financial markets".

    In 2003, the White House warning about Fannie and Freddie, was upgraded to a "Systemic Risk that could spread beyond just the housing sector".

    As Fannie and Freddie continued to lower their rates and buy mortgages, lenders made more and more mortgages to buyers with questionable ability to pay, safe in the knowledge that they could immediately turn around and sell the mortgages to the government-sponsored Fannie and Freddie, thus avoiding any consequences if the loans were later defaulted. They were happy to make more and more such mortgages, collecting fees for each and selling the mortgages to F&F.
     
  2. Little-Acorn

    Little-Acorn Well-Known Member

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    ("Saving our Economy" continued)

    Countrywide Financial chairman Angelo Mazzillo literally started screaming at Wall Street Journal editor Paul Gigot, when Gigot asked him about the wisdom of making so many loans to buyers unlikely to pay them back. Mazzillo insisted loudly that Gigot had no idea what he was talking about, did not understand the first thing about mortgage lending, etc., etc. He failed, however, to answer any of Gigot's questions in even the simplest terms or explain why they were "wrong".

    In Fall 2003, the Bush Admin was pushing Congress hard to create a new Federal agency to regulate and supervise Fannie and Freddie, both Government Sponsored Entities, or GSEs.

    At a Congressional hearing on Sept 10, 2003, John Snow, Secretary of the Treasury stated: "We need a strong, world-class regulatory agency to oversee the prudential operations of the GSE's, and the safety and soundness of their financial activities."

    At that same hearing, ranking member of the House Financial Services Committee Barney Frank (D-MA) defended his practices with regard to Fannie Mae and Freddie Mac: "Fannie Mae and Freddie Mac, are not in a crisis."

    Frank said the Fed Govt should be encouraging F&F to do more to get low-income families into homes:
    "The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up a possibility of serious financial losses to the treasury - which I do not see, I think we see entities which are fundamentally sound financially and can withstand some of the disaster scenarios - the more pressure there is there, then the less I think we see in terms of 'affordable housing' ".

    The top executives at F&F began cooking their books, exaggerating their sales in their quarterly reports, so that the company officials could claim they had met their companies' sales targets, and thus collect huge salary bonuses. They were finally caught in 2004. Several of them stepped down, but none was every punished, or even charged. One of them, Franklin Raines, CEO of Fannie Mae, later gave financial and housing advice to the campaign of Presidential contender Barack Obama.

    At a House Financial Services Committee Hearing on Feb. 17, 2005, Alan Greenspan warned against one of the fundamental ideas of modern liberalism, the idea of putting all our eggs in one basket by concentrating financial activity into just a few big agencies in central government: "... Enabling these institutions to increase in size - and they will once the crisis in their judgment passes - we are placing the total financial system of the future at a substantial risk."
    He later added at another hearing on on April 6, 2005: "If we fail to strengthen GSE regulation, we increase the possibility of insolvency and crisis."

    Senator Charles Schumer (D-NY) ignored any possibility the F&F might be in trouble at that hearing, and simply pointed to the advantages some people had gotten from the government's activities: "I think Fannie and Freddie ... are an intrinsic part of making America the best-housed people in the world... if you look over the last 20 or whatever years, they have done a very, very good job."
    Schumer also complained, "Things are good in the housing market. Why are people entertaining radical change?"

    On April 7, 2005, Treasury Secretary John Snow warned again: "These large portfolios, unchecked in their growth over the last decade or so, pose a real problem." The Senate Banking Committee adopted strong regulation that would have prevented Fannie and Freddie from acquiring these bad mortgages. All of the Republicans on the committee voted for it, and all the Democrats voted against it, and it passed out of the committee on a straight party-line vote. But Democrats then filibustered the bill on the Senate floor, preventing it from being brought to a vote.

    Freddie Mac and Fannie Mae was active in making campaign contributions to politicians, from money that ostensibly was for low-income mortgages. The top two recipients were:

    Christopher Dodd (D-CT): $165,000
    Barack Obama (D-IL): $126,000

    The highest-receiving Republican was Bob Bennett (R-UT), who got $108,000. Further down the list was John McCain (R-AZ), who accepted $25,000.

    On May 25, 2006 in the Senate, John McCain (R-AZ) sounded more warnings over the huge size and lack of discipline in the government companies, and sponsored a bill to regulate the companies more firmly: "For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac... and the sheer magnitude of these companies and the role they play in the housing market... the GSEs need to be reformed without delay." McCain's bill was voted out of committee on a straight party-line vote: All Republicans voted for it, and all Democrats voted against. Democrats then announced they would filibuster the bill in the Senate, as they had the previous year's regulatory legislation. Republicans knew they did not have enough votes to achieve the 60% needed, and so never brought the bill to the Senate floor.

    By the beginning of 2008, Fannie Mae and Freddie Mac had bought up over $4 trillion in mortgages, roughly one-quarter of which was risky sub-prime mortgage paper. With interest rates rising, these rickety homeowners started defaulting on their loans. Only about 2% of them defaulted by January 2008, but the effect was disastrous. Banks began to get leery of lending money to each other, knowing that their fellow banks held substantial assets that might default and become worthless, thus making the banks unable to pay back their loans to each other.

    Banks and lending institutions began collapsing or seeking emergency help: Countrywide Financial, Lehman Brothers, insurer AIG, Bear Stearns, IndyMac bank, etc. buckled to their knees as paralysis spread. The huge numbers of risky subprime mortgages, had become like a "poison pill" that choked the institutions that had swallowed them. The Fed finally took over Freddie Mac and Fannie Mae, but the damage had long been done.

    Congress appropriated nearly $1 trillion in emergency funds to loan to, or otherwise prop up, failing financial institutions. But none of the original legislation that had spurred decades of risky lending, has been repealed in all the "bailout" frenzy, and there are no bills pending to do so.
     
  3. foggedinn

    foggedinn New Member

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    Still clueless.

    Blame the democrats for everything. What a wonderful eight years of republican leadership just ended.
     
  4. Depeche Toad

    Depeche Toad New Member

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    Everytime Barack Obama opens his trap, he crashes a market.
     
  5. Andy

    Andy Well-Known Member

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    See, this is the problem right here. This is all documented, and is concrete evidence. Yet Mr. Hack Job here thinks it's just political partisanship. Why? Because normally when the left comes up with stuff, it really is just political partisanship.

    So can you actually contest any of the claims? Refute any of the evidence? Make any case at all? Of course not. Liberals never can.

    Liberals hate facts. They always have, and always will. They prove your solutions are failures. Your ideas are crap. Your beliefs are wrong. And your theories are bunk.

    And what is your response? Lame posts like the above.
     
  6. Andy

    Andy Well-Known Member

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    Not even when he does that.

    Just winning the election sent the market crashing.

    Then when he was inaugurated, the market went for a dive.

    Now after the Overspend-Obama stimulus passed, the market hit a 12 year low.

    Like a walking disaster zone or something.
     
  7. Mr. Shaman

    Mr. Shaman New Member

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    Yeah.....Lil' Dumbya & Uncle DICK only did it, once.

    :rolleyes:
     
  8. Mr. Shaman

    Mr. Shaman New Member

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    .....AND, your icons are gettin' BUSTED, Skippy!!!!

    LOL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    :p

    These'd be those folks who're paying "more than their fair-share"....right, Skippy?

    :rolleyes:
     
  9. Depeche Toad

    Depeche Toad New Member

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    Well, a Swiss court nixed that.

    Viva sovereignty.
     
  10. BigRob

    BigRob Well-Known Member

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    You know, if you are a believer in international law (which the President seems to be), the United State can still take jurisdiction in this case, regardless of the idea of Swiss sovereignty. While it would be hard to prove anything without UBS help, loads of pressure could be applied to the Swiss to get their compliance.

    The question in this regard really is, how far is the Obama Administration really willing to take it legally and politically. I would guess they stop short of doing this, but legally (in terms of international law) they could.
     
  11. Mr. Shaman

    Mr. Shaman New Member

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    Everything's TEMPORARY!!!!!

    :p

    CHANGE is comin'!!!!!!!!!!!!!

    :D

     
  12. Little-Acorn

    Little-Acorn Well-Known Member

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    Actually he doesn't. It's just that he knows the facts presented are true, and he can't refute them, as you pointed out. But rather than have the integrity to ackowledge what's true, he chooses to tell fibs like "you always blame the Dems for everything", and hope people believe him rather than finding out the truth for themselves.

    Back to the subject:
    The present financial crisis has its roots in the mortgage meltdown... and that has its roots in liberal policies. The main one was buying votes by giving mortgages to lots of people who couldn't afford them (by making F&F buy the risky mortgages and absolve lenders of the risk)... and threatening banks with rafts of lawsuits if they didn't meet the racial quotas the liberals wanted.

    Then when housing prices started to come down and unemployment rose a few tenths of a point, some of the ones who couldn't afford the mortgages, got foreclosed on, and it was found that the homes were now worth less than the loan amounts, so the lenders now had problems. It snowballed, banks became leery of lending to one another, and here we are.

    Repyublicans tried to stop it, but Dems outvoted them when Repubs were in the minority and filibustered them when Rebubs were in (slight) majorities, and all the while the Dems kept insisting everything was fine. So with no remedial action taken, the situation got worse and worse.

    Now leftist fanatics, caught with ther hand clearly in the cookie jar, would rather accuse the Republicans of "partisanship" than acknowledge who actually pushed the bad policies and who resisted them. One result of their desperate diversion, is that still no remedial action is taken - just handing money to the same people who caused the problem in the first place. Money that must, inevitably, run out.
     
  13. Little-Acorn

    Little-Acorn Well-Known Member

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    Those questions remain unanswered.
     
  14. Little-Acorn

    Little-Acorn Well-Known Member

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    I wrote that summary of the "Saving Our Economy" program in October 2008.

    Anybody know if any legislation to repeal the CRA or other such triggers to the meltdown, has been passed since then?
     
  15. pocketfullofshells

    pocketfullofshells Well-Known Member

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    land of 10,000 lakes and 2 senators again
    stock market today
    12,300
    it was at 8,200 the day he took office

    Job losses
    [​IMG]
     
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