The truth about the housing crisis...
Posted By: sm on 2008-10-23
In Reply to:
I will warn you this is long, but if your interested in the truth this is a good place to start.
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Would the Last Honest Reporter Please Turn On the Lights?
By Orson Scott Card
Editor's note: Orson Scott Card is a Democrat and a newspaper columnist,
and in this opinion piece he takes on both while lamenting the current
state of journalism.
An open letter to the local daily paper - almost every local daily paper
in America :
I remember reading All the President's Men and thinking: That's
journalism. You do what it takes to get the truth and you lay it before
the public, because the public has a right to know.
This housing crisis didn't come out of nowhere. It was not a vague
emanation of the evil Bush administration.
It was a direct result of the political decision, back in the late
1990s, to loosen the rules of lending so that home loans would be more
accessible to poor people. Fannie Mae and Freddie Mac were authorized
to approve risky loans.
What is a risky loan? It's a loan that the recipient is likely not to
be able to repay.
The goal of this rule change was to help the poor - which especially
would help members of minority groups. But how does it help these
people to give them a loan that they can't repay? They get into a
house, yes, but when they can't make the payments, they lose the house -
along with their credit rating.
They end up worse off than before.
This was completely foreseeable and in fact many people did foresee it.
One political party, in Congress and in the executive branch, tried
repeatedly to tighten up the rules. The other party blocked every such
attempt and tried to loosen them.
Furthermore, Freddie Mac and Fannie Mae were making political
contributions to the very members of Congress who were allowing them to
make irresponsible loans. (Though why quasi-federal agencies were
allowed to do so baffles me. It's as if the Pentagon were allowed to
contribute to the political campaigns of Congressmen who support
increasing their budget.)
Isn't there a story here? Doesn't journalism require that you who
produce our daily paper tell the truth about who brought us to a
position where the only way to keep confidence in our economy was a $700
billion bailout? Aren't you supposed to follow the money and see which
politicians were benefiting personally from the deregulation of mortgage
lending?
I have no doubt that if these facts had pointed to the Republican Party
or to John McCain as the guilty parties, you would be treating it as a
vast scandal. "Housing-gate," no doubt. Or "Fannie-gate."
Instead, it was Senator Christopher Dodd and Congressman Barney Frank,
both Democrats, who denied that there were any problems, who refused
Bush administration requests to set up a regulatory agency to watch over
Fannie Mae and Freddie Mac, and who were still pushing for these
agencies to go even further in promoting sub-prime mortgage loans almost
up to the minute they failed.
As Thomas Sowell points out in a TownHall.com essay entitled "Do Facts
Matter?" ( ]" target=_blank>http://snipurl.com/457townhall_com<http://snipurl.com/457to>]
): "Alan Greenspan warned them four years ago. So did the Chairman of
the Council of Economic Advisers to the President. So did Bush's
Secretary of the Treasury."
These are facts. This financial crisis was completely preventable. The
party that blocked any attempt to prevent it was ... the Democratic
Party. The party that tried to prevent it was ... the Republican Party.
Yet when Nancy Pelosi accused the Bush administration and Republican
deregulation of causing the crisis, you in the press did not hold her to
account for her lie. Instead, you criticized Republicans who took
offense at this lie and refused to vote for the bailout!
What? It's not the liar, but the victims of the lie who are to blame?
Now let's follow the money ... right to the presidential candidate who
is the number-two recipient of campaign contributions from Fannie Mae.
And after Freddie Raines, the CEO of Fannie Mae who made $90 million
while running it into the ground, was fired for his incompetence, one
presidential candidate's campaign actually consulted him for advice on
housing.
If that presidential candidate had been John McCain, you would have
called it a major scandal and we would be getting stories in your paper
every day about how incompetent and corrupt he was.
But instead, that candidate was Barack Obama, and so you have buried
this story, and when the McCain campaign dared to call Raines an
"adviser" to the Obama campaign - because that campaign had sought his
advice - you actually let Obama's people get away with accusing McCain
of lying, merely because Raines wasn't listed as an official adviser to
the Obama campaign.
You would never tolerate such weasely nit-picking from a Republican.
If you who produce our local daily paper actually had any principles,
you would be pounding this story, because the prosperity of all
Americans was put at risk by the foolish, short-sighted, politically
selfish, and possibly corrupt actions of leading Democrats, including
Obama.
If you who produce our local daily paper had any personal honor, you
would find it unbearable to let the American people believe that somehow
Republicans were to blame for this crisis.
There are precedents. Even though President Bush and his administration
never said that Iraq sponsored or was linked to 9/11, you could not
stand the fact that Americans had that misapprehension - so you pounded
us with the fact that there was no such link. (Along the way, you
created the false impression that Bush had lied to them and said that
there was a connection.)
If you had any principles, then surely right now, when the American
people are set to blame President Bush and John McCain for a crisis they
tried to prevent, and are actually shifting to approve of Barack Obama
because of a crisis he helped cause, you would be laboring at least as
hard to correct that false impression.
Your job, as journalists, is to tell the truth. That's what you claim
you do, when you accept people's money to buy or subscribe to your
paper.
But right now, you are consenting to or actively promoting a big fat lie
- that the housing crisis should somehow be blamed on Bush, McCain, and
the Republicans. You have trained the American people to blame
everything bad - even bad weather - on Bush, and they are responding as
you have taught them to.
If you had any personal honor, each reporter and Editor would be
insisting on telling the truth - even if it hurts the election chances
of your favorite candidate.
Because that's what honorable people do. Honest people tell the truth
even when they don't like the probable consequences. That's what
honesty means . That's how trust is earned.
Barack Obama is just another politician, and not a very wise one. He
has revealed his ignorance and naivete time after time - and you have
swept it under the rug, treated it as nothing.
Meanwhile, you have participated in the borking of Sarah Palin,
reporting savage attacks on her for the pregnancy of her unmarried
daughter - while you ignored the story of John Edwards's own adultery
for many months.
So I ask you now: Do you have any standards at all? Do you even know
what honesty means?
Is getting people to vote for Barack Obama so important that you will
throw away everything that journalism is supposed to stand for?
You might want to remember the way the National Organization of Women
threw away their integrity by supporting Bill Clinton despite his
well-known pattern of sexual exploitation of powerless women. Who
listens to NOW anymore? We know they stand for nothing; they have no
principles.
That's where you are right now.
It's not too late. You know that if the situation were reversed, and
the truth would damage McCain and help Obama, you would be moving heaven
and earth to get the true story out there.
If you want to redeem your honor, you will swallow hard and make a list
of all the stories you would print if it were McCain who had been
getting money from Fannie Mae, McCain whose campaign had consulted with
its discredited former CEO, McCain who had voted against tightening its
lending practices.
Then you will print them, even though every one of those true stories
will point the finger of blame at the reckless Democratic Party, which
put our nation's prosperity at risk so they could feel good about
helping the poor, and lay a fair share of the blame at Obama's door.
You will also tell the truth about John McCain: that he tried, as a
Senator, to do what it took to prevent this crisis. You will tell the
truth about President Bush: that his administration tried more than once
to get Congress to regulate lending in a responsible way.
This was a Congress-caused crisis, beginning during the Clinton
administration, with Democrats leading the way into the crisis and
blocking every effort to get out of it in a timely fashion.
If you at our local daily newspaper continue to let Americans believe -
and vote as if - President Bush and the Republicans caused the crisis,
then you are joining in that lie.
If you do not tell the truth about the Democrats - including Barack
Obama - and do so with the same energy you would use if the miscreants
were Republicans - then you are not journalists by any standard.
You're just the public relations machine of the Democratic Party, and
it's time you were all fired and real journalists brought in, so that we
can actually have a news paper in our city.
This article first appeared in The Rhinoceros Times of Greensboro ,
North Carolina , and is used here by permission. |
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They did not cause the housing crisis. They did, however, fail acknowledge the problem
and they most certainly failed to tackle the problem in a timely and effective way.
One of the major factors in the housing crisis was the repeal of Glass-Steagall and the implementation of Graham-Bliley Act. The lack of oversight, the deregulation that allowed lenders to lend without being subject to oversight rules because the type of financial institution they were doomed us.
The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents. "Expect fallout, expect foreclosures, expect horror stories," California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job.
I am not a fan of Frank, Dodd, or Pelosi. I am not a fan of TARP, especially because there was/is no built-in oversight or accountability. Shoot, the some of the same predatory lenders that were put out of business by their own practices are up and running again, passing out toxic loans to desperate people, because they managed to get their hands on bailout money.
Hurricane housing, a way to help!
Just got this email from my brother:
We are forwarding this information about hurricanehousing.org - it was assembled by the progessive people of moveon.org and has been publicized by local mainstream media. While we are unspeakably upset by the lack of timely federal emergency aid, we are gratified by grassroots caring and hope that this disaster will serve as a moral reawakening beyond its terrible pain and loss. Please consider the following....
We're sure you've seen the horrifying images on TV of destruction left by Hurricane Katrina, and the many, many people left with nowhere to go.
You can help. MoveOn.org just launched a website, www.hurricanehousing.org, to connect your empty beds with hurricane victims who desperately need a place to wait out the storm.
You can post your offer of housing (a spare room, extra bed, even a decent couch) on http://www.hurricanehousing.org or search there for housing if you need it.
MoveOn will pass requests from hurricane victims or relief agencies on to volunteer hosts, who can decide whether or not to respond to a particular request. The host remains anonymous until they reply to someone looking for housing.
The ______(this was my brother's name) just posted an offer. We hope you will too, or pass this on to people you know in the Southeast:
http://www.hurricanehousing.org
Housing is most urgently needed within reasonable driving distance (about 300 miles) of the affected areas, especially New Orleans.
Thanks!
Housing people
People all over this nation are opening up their hearts and homes to try to help these people.
I wonder how many people could be housed in a certain ranch in Crawford.
But what has that to do with affordable housing?
/
Hey there! I like it, but what about clothing, housing, medicines......sm
baby products (I nursed all three completely so THAT was cheap, but not an option for everyone), I don't think the MREs were meant to nourish little children, so I would worry about that. You still need utilities of some kind, because we all can't go out and cut down trees, so there is a lot to think about. I think if they INVESTED in hiring more social workers who were monitored to really do their jobs and fish out all the bogus welfare claims, get those people jobs or job training and paying back into the system, that would be wiser, because let's face it, there are some families that spend their welfare money on wasteful or indulgent stuff, but with this economic depression the Welfare is going to go more and more to unemployed families who were "let go," and I do worry about the nutrition and health of the little ones.
And did you know there are waiting lists for subsidized housing? Why do you think there are....sm
so many newly-poor families on the streets? Getting on the rolls these days, cutting through the red tape, can be a daunting and long task, but what about the families in the meantime? The shelters are overflowing. In my state, the food banks actually have to close now from time to time because times are hard, less people are able to donate, more people need the help, and there is just not enough to go around.
I just want DESERVING FOLK to get their needs met while they get back on their feet, and the kids do not have to live a nightmare. Yes, I, too, have seen some welfare folk buying inappropriate things, but perhaps if we had a voucher system that monitored purchases, if they only got reimbursed on the back end after submitting their receipts to make sure they were buying needed, healthy, appropriate goods....I don't have the answer, or I would be applying at the White House, but we need social safety nets so badly right now.
Obama Administration Launches Housing Plan
Hope this helps those of you that need help.
http://online.wsj.com/article/SB123617623602129441.html
Housing market on upswing - good news!
Part of an interesting article on housing market upswing - inflation slowing down. Good news if it stays the course!
www.truthout.org/031709C
Tuesday 17 March 2009
by: Lucia Mutikani | Visit article original @ Reuters
US housing starts rose sharply in February, providing some good news for the struggling housing industry. (Photo: AP)
Washington - New U.S. housing starts and permits unexpectedly rebounded in February, according to data on Tuesday that provided a rare dose of good news for the recession-hit economy and fractured housing market.
The Commerce Department said housing starts jumped 22.2 percent to a seasonally adjusted annual rate of 583,000 units from 477,000 units in January. That was the biggest percentage rise since January 1990 and also marked the first increase since last April.
"That is an encouraging sign for the U.S. economy. It is good signal of what is to come. With the rally in equities we hopefully have seen a bottom for the economy here," said Matt Esteve, foreign exchange trader at Tempus Consulting in Washington.
U.S. stocks have been on the rise over the last several days and the major indexes opened flat on Tuesday. U.S. government bond prices trimmed gains after the data and the U.S. dollar fell against the euro as risk aversion eased.
Hate to dampen the spirits but housing upswings
always take place in the beginning of spring. They usually don't do house construction in the winter unless it's a year round warm climate. You have to look at charts and/or info for housing starts in those states to see if it's true or just wishful thinking...and as you said, they will still sit empty.
The truth sounds rude when put bluntly but still is the truth. nm
!!!! hahaha
There IS no constitutional crisis.
Recession teetering on the brink of depression. WAKE UP, will ya?
Maybe it isn't a crisis, just extortion and
I bet it won't be long before some of the anti-union people (poster below) will be begging for union representation. Since Reagan kept his promise to break the unions it's been a downhill course and I imagine we've just about reached the bottom of the hill.
Actually, you are wrong about his role in this crisis....
concerning Fannie and freddie, he tried to get legislation passed to deal directly with them...and the Democrats blocked it. Fact is, John McCain was on the RIGHT side of this issue, and perhaps if the Democrats had listened to him in 2005 we would not be facing this crisis today. In the interest of full disclosure and truth, this is what he said regarding that legislation:
Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.
The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.
The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.
For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac–known as Government-sponsored entities or GSEs–and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.
I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
I urge my colleagues to support swift action on this GSE reform legislation.
He saw it coming, tried to tell the Dems, and they blocked it. Chris Dodd, head of banking and finance comittee, Democrat, largest recipient of donations from them. Guess who was #2?
crisis manufactured by Bush
they knew about this for weeks -- trying to railroad dems before election.
Like I said before, try focusing on a REAL crisis.
x
Financial crisis meeting;
November 14, 2008
World leaders dine in style as they discuss financial crisis
(CNN) – The global economy may be undergoing a significant downturn, but the White House's dinner budget still appears flush with cash.
After all, world leaders who are in town to discuss the economic crisis are set to dine in style Friday night while sipping wine listed at nearly $500 a bottle.
According to the White House, tonight's dinner to kick off the G-20 summit includes such dishes as "Fruitwood-smoked Quail," "Thyme-roasted Rack of Lamb," and "Tomato, Fennel and Eggplant Fondue Chanterelle Jus."
To wash it all down, world leaders will be served Shafer Cabernet “Hillside Select” 2003, a wine that sells at $499 on Wine.com.
The exceedingly pricey wine may seem a bit peculiar given leaders are in Washington to discuss a possible world financial meltdown, but Sally McDonough, a spokeswoman for Laura Bush, said it "was the most appropriate wine that we had in the White House wine cellar for such a gathering.
McDonough also said the White House purchased the wine at a "significantly lower price" than what it is listed at.
"Of course the White House gets its wine at wholesale prices," she said. "Given the intimate size of the group, it was an appropriate time for The White House to use this stock."
The leaders of the U.K., France, Russia, China, India, Brazil, Saudi Arabia, South Africa, Turkey and 11 developing economies have all come to Washington at the behest of President Bush in an effort to express confidence in the fundamental underpinnings of the world's economy.
– CNN's Becky Brittain contributed to this report
My solution to carmaker crisis
SUGGESTED SOLUTION TO CARMAKER'S CRISIS, AS WELL AS SOME ENVIRONMENTAL ISSUES
Maybe I've gone off the deep end - but I'm so sick of hearing about the big 3 bailout requests I've come up with a serious suggestion to help them.
I think its environmentally, morally, and financially irresponsible for the government to give tax breaks to those who buy NEW cars (much less bail out the manufacturers). The majority can't afford them anyway (or can't guarantee they'll have a job to make payments on them tomorrow), and we already have enough cars! Backyards and junk yards are full of cars because we can't get parts for them! How many economy cars that were good on gas are sitting in junkyards - because we don't have the parts to keep 'em on the road?
Why can't we get parts? The greedy corporate suits in Detroit figured if we couldn't get them, we'd be forced to buy new cars whether we wanted to or not! So they won't make them. I guess their plan didn't work, because when we bought new cars, we bought them from someone else.
I believe replacement parts manufacturing can be profitable - as the few little companies that make replacement parts for classic cars can prove. It might not restore the bonus of every deprived CEO in Detroit, but it could save quite a few line jobs. There is no longer a big market for new cars - but there's a constantly growing market for replacement parts. Its better than continuing the denial that Detroit has been in for the last decade - clinging stubbornly to the myth that we LIKE what they make, that we WANT it, and that we can AFFORD it, and that every one of us pines away for shiny new giant gas-guzzler in our driveway. We like what they USED to make, the muscle cars, the economy cars, the cars that were our sentimental favorites back in the day, when cars didn't cost the price of a house, and lasted longer than the 5 year warranty! They still have the blueprints to make the parts for those models, as well as parts for later-model cars past their warranty. That's what we want, what we can afford - and the sheer volume of parts purchased would make them a profit as well as helping the little guy with bad credit survive. Not everyone can get a loan for a new car - or even a used one - but those that can't could probably come up with the price of a needed part
I propose we reduce the production of new cars drastically. Instead we revamp a large number of our factories to manufacture parts for the cars that already exist (if we really MUST bail out the big 3, let's insist they put the money toward this). Alternatively, we insist that for every new car they manufacture - they must manufacture a certain number of essential repair parts for their discontinued models (which, according to recent news - will be most of them). This creates jobs, renews the jobs at some of the small non-union subcontracting plants that had to close when told to stop making the parts, or at least saves the jobs of UAW workers who were making unwanted new cars. Let them close their dealerships - but keep the dealer repair shops open. We then give tax credits for anybody who takes classes on repair - this creates jobs, as more people would rather fix it versus junk it (and can certainly afford the part easier than a whole new car). We give tax credits to anyone who gets a non-running vehicle operational again, we give tax credits for anyone who opens a repair/refurbishment shop, we give tax credits to junk yards that reduce their scrap heaps. Much better than a tax credit encouraging people to take on even more debt for a new car!
If some of elderly vehicles are unsafe by today's standards, we could manufacture parts that make them safer and update them, depending on the needs of each model. Surely the powers that be could run a scan for every VIN and get the statistics for how many models of each are currently still on the road (just like they do when there's a safety recall), and decide from there on whatever issues need addressed.
We should also consider legislation that insurance companies stop totalling vehicles without proof that their repair will be more expensive than a new car. "What a car is worth" needs to be restructured - what is the environmental/financial impact of junking it worth - the cost of a new one? If an old paid-off car ran perfectly fine before the wreck - should it be totalled because the damages came to a couple bucks more than the Blue Book value? I really don't think so! In this economy, having a paid-off vehicle with the option of keeping minimal insurance on it is nearly priceless!
We found out during the last couple years that we really can't afford a brand new McMansion, and we don't actually need one either, and we're much better off with less house than our budget can stretch to cover. Many of us know the same thing about the brand new car, but we don't have a choice because we can't fix the old one, and can't trust that the used one we buy will have parts available for it when it breaks down. That needs to change. We need more cost-effective options and we WANT the choice of fixing what we already paid for, instead of being forced to buy ever-more expensive brand new ones again and again and stuffing the landfills indefinitely!
My solution also applies to large appliances. Our landfills are full of them! The manufacturers of refrigerators, washers/dryers, riding lawnmowers, etc. should be required to produce a set number of repair parts for their older models - instead of making commercials about a lady throwing her old one off a cliff simply because she's tired of it!
Do we really want to be a nation of salesmen and consumers? I think we'd have more pride, strength and better ability to make it through these hard times if we replaced our salesmen with repairmen, blind consuming with sensible choices, and learn to one-up the Joneses with how much we saved from the landfill instead of how much we spent. Let's stop planned obsolescence and let the companies that refuse to give up the practice go belly up! They deserve it - they are trashing the environment as well as ripping off their customers - deliberately manufacturing products to break down in a couple years is just morally wrong. Lets make if fashionable to preserve and restore instead of consume and discard! I hope I'm not the only one that's tired of this - so is anybody with me on this? If you're in favor spread the idea! Discuss this with everybody!
And your solution to the economic crisis is???? (nm)
x
Not the same at all! The man inherited a national crisis,,,,,,sm
the likes of which have not been seen since the Great Depression, he had no hand at all in creating it. But he was brave enough and altruistic enough to come forward and TRY to bring changes that WOULD HELP OUR COUNTRY IN THE LONG RUN. Do you like instant Cup-A-Soup and coffee, because you and so many others are putting the RIDICULOUS load on Obama's shoulders to INSTANTLY come up with the perfect answer to all the crises (and yes, this is a multi-dimentional problem, no quick fix here), make everyone happy, snap his fingers, and poof the big bad depression that has been brewing for a LONG TIME since the Bush administration, and I say that because under President Clinton we had record surpluses in our nation, and by the by, you think W. was well-polished, well-experienced to head this country just cuz Daddy did? Come off it, he hired most of Daddy's friend and cabinet, he took his cues, but the poor guy could not even speak well, even with his Yale education. This man has been in office 4 months versus the past 8 years, a bit of inequity here?
Liberal truth vs. Conservative truth.
x
Financial crisis a democratic scandal....sm
http://www.floppingaces.net/2008/09/16/financial-crisis-a-democrat-scandal/
Read all the comments underneath this, if you have time.
No need to wonder...current mortgage bank crisis...
brought to you courtesy of greedy democrats on Congress and greedy Democrats at the top of Fannie Mae. The handwriting is on the wall. This one's on you. McCain saw it coming in 2005 and the dems shut him down. Well, we are reaping what they sowed. To quote Toby Keith...how do you like them now?
How The Democrats Created The Financial Crisis....sm
How the Democrats Created the Financial Crisis: Kevin Hassett
Commentary by Kevin Hassett
Sept. 22 (Bloomberg) -- The financial crisis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story.
Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.
But really, it isn't. Enough cards on this table have been turned over that the story is now clear. The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.
Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street's efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.
In the times that Fannie and Freddie couldn't make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.
The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.
Turning Point
Take away Fannie and Freddie, or regulate them more wisely, and it's hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.
It is easy to identify the historical turning point that marked the beginning of the end.
Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission's chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie's position on the relevant accounting issue was not even ``on the page'' of allowable interpretations.
Then legislative momentum emerged for an attempt to create a ``world-class regulator'' that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.
Greenspan's Warning
The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn't be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''
What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.
Different World
If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.
But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.
That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: ``It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''
Mounds of Materials
Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.
But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.
Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.
Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.
There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.
Oh, and there is one little footnote to the story that's worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess.
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_hassett&sid=aSKSoiNbnQY0
McCain suspending campaign due to crisis
...sm
John McCain is looking like a leader today. I wonder if Obama will follow his lead.....
McCain suspending campaign due to crisis
Email|Link|Comments (0) Posted by Foon Rhee, deputy national political Editor September 24, 2008 03:07 PM
Saying that the Wall Street bailout plan is in jeopardy and the US economy at stake, John McCain said today that he is suspending his presidential campaign on Thursday and called for postponing the first presidential debate on Friday night.
"It has become clear that no consensus has developed to support the Administration’s proposal," he said in New York. "I do not believe that the plan on the table will pass as it currently stands, and we are running out of time.
"Tomorrow morning, I will suspend my campaign and return to Washington after speaking at the Clinton Global Initiative. I have spoken to Senator Obama and informed him of my decision and have asked him to join me.
"I am calling on the President to convene a meeting with the leadership from both houses of Congress, including Senator Obama and myself. It is time for both parties to come together to solve this problem."
Obama spokesman Bill Burton just issued a statement: "At 8:30 this morning, Senator Obama called Senator McCain to ask him if he would join in issuing a joint statement outlining their shared principles and conditions for the Treasury proposal and urging Congress and the White House to act in a bipartisan manner to pass such a proposal. At 2:30 this afternoon, Senator McCain returned Senator Obama’s call and agreed to join him in issuing such a statement. The two campaigns are currently working together on the details."
"We must meet as Americans, not as Democrats or Republicans, and we must meet until this crisis is resolved. I am directing my campaign to work with the Obama campaign and the commission on presidential debates to delay Friday night’s debate until we have taken action to address this crisis."
http://www.boston.com/news/politics/politicalintelligence/2008/09/mccain_suspendi.html
McCains Top 10 economic crisis strategies.
10. Blissful ignorance. "The economy is not my strong suit."
9. Ridicule. In an interview with the Washington Post on 07/9/2008, McCain advisor and national campaign general co-chair Senator Phil Gramm was defining McCain's plans to reform the U.S. economy. Gramm explained the nation was not in a recession, stating, "You've heard of mental depression; this is a mental recession," and "We have sort of become a nation of whiners, you just hear this constant whining, complaining about a loss of competitiveness, America in decline." This would be the same Phil Gramm of the Gramm-Leach-Bliley Act which allowed commercial and investment banks to consolidate. The legislation allowed Swiss Bank UBS to purchase several American institutions. Gramm later became a lobbyist for UBS, collecting over 750,000 USD in fees. UBS alone issues over 18 Billion USD in subprime mortgages.
8. Denial. Black Monday, 09/15/2008. John McCain: "The fundamentals of our economy are still sound." A worldwide stock market crash occurred as Lehman Brothers filed Chapter 11 bankruptcy and major investment bank Merrill Lynch was sold to Bank of America. Dow Jones Industrial Average lost more than 500 points, which is the biggest point drop (up to that point) since September 2001. FTSE 100 dropped 212 points, and it was the biggest one-day percentage drop since January 21, 2008. Hong Kong, Japan and Korea stock market suspended that day due to public holiday, and they fell over 5% on the following day. Two weeks later, we had a blacker Monday (09/29/2008) with a 777.68 point drop on the Dow Jones Industrial Average.
7. Political grandstanding. Announcement of suspending his campaign to return to DC to "lead" Congress during economic bail-out negotiations. This effort led to a defeat of the measure when the votes were cast. Tried unsuccessfully to use the bailout as an excuse to postpone the presidential debate.
6. Flip-Flop. Claims to support regulation. Record says otherwise.
5. Incoherence. Threatens to fire the chairman of the SEC if he were in office, even though the president does not have the authority to do so.
4. Theft of intellectual property. Claiming previously existing mortgage buy-out proposal as his own.
3. Avoid / change the subject. Greg Strimple, a McCain top advisor: If we keep talking about the economy, we will lose."
2. Engage the politics of division, hate, fear mongering and cultural warfare with high-gear Obama smear campaign: Ayers, ACORN, Farrakhan, Rev Jeremiah Wright, Barack Hussein Obama, etc.
1. McCain’s send message to voters is to stop whining about the economy and start focusing on attacking Obama.
Obama's economic crisis strategy...
Vote for the bailout....and nothing else. Zip, zilch, nada. Oh, except echo Harry Reid, and I quote: "Nobody knows what to do about this." Well, no **** Sherlock. And STILL doesn't know. Not a clue. All he can say is middle class tax cuts and watch the thrills run up peoples' legs. Would be funny if it weren't so.....
Perhaps you could enlighten us on the economic crisis suffered by
There is nothing in your chart or context that convincingly explains away the $559 billion dollar surplus Clinton left behind when his term came to an end.
Having said that, most Americans will agree that, when compared to the past 8 years, the middle class enjoyed a prosperous decade in the 90s. I was able to pay off my condo, so it has been foreclosure-proof under W.
Reasons there would be a constitutional crisis according to one expert...
The Consequences of “Forgetting”
There are factual economic, social, Constitutional, military and financial consequences of forgetting what damage an ineligible POTUS will do to our Country and the Constitution. These consequences are so serious that our government will not exist if we forget the rule of law, and what our Constitution demands. These are succinctly addressed in an article by Edwin J. Viera, Jr. entitled “Obama must step up or stand down now”.
Of the nine (9) reasons why Obama should step down if he has not proven his eligibility, the two that most notably concern me are:
No laws of Congress are valid
“Congress can pass no law while a usurper pretends to occupy “the Office of President.” The Constitution provides that “[e]very Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States” (Article I, Section 7, Clause 2). Not to a usurper posturing as “the President of the United States,” but to the true and rightful President. If no such true and rightful President occupies the White House, no “Bill” will or can, “before it become a Law, be presented to [him].” If no “Bill” is so presented, no “Bill” will or can become a “Law.” And any purported “Law” that the usurper “approve[s]” and “sign[s],” or that Congress passes over the usurper’s “Objections,” will be a nullity. Thus, if Obama deceitfully “enters office” as an usurper, Congress will be rendered effectively impotent for as long as it acquiesces in his pretenses as “President.”
And
He Could not be Removed Except by Force
If Obama does become an usurper posturing as “the President,” Congress cannot even impeach him because, not being the actual President, he cannot be “removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors” (see Article II, Section 4). In that case, some other public officials would have to arrest him—with physical force, if he would not go along quietly—in order to prevent him from continuing his imposture. Obviously, this could possibly lead to armed conflicts within the General Government itself, or among the States and the people.
Bear in mind that as an imposter Commander–in-Chief of the Armed Forces, “he will be entitled to no obedience whatsoever from anyone in those forces. Indeed, for officers or men to follow any of his purported “orders” will constitute a serious breach of military discipline—and in extreme circumstances perhaps even “war crimes.” In addition, no one in any civilian agency in the Executive Branch of the General Government will be required to put into effect any of Obama’s purported “proclamations,” “executive orders,” or “directives” (Viera, J.).
http://texasdarlin.wordpress.com/2008/12/05/stand-by-me/
A transition team in a time of crisis
permanent selections and appointmens of staff and cabinet members. The economic advisor team should at least confer a sense of confidence, which it most definitely did. You probably should be giving ANY president elect more than 3 days before passing judgment on him...after all, he has not even been sworn in, for heaven's sake.
Stop the Obama Constitutional Crisis...
http://www.rallycongress.com/constitutional-qualification/1244/
Evidently he does not understand the gravity of the crisis.
Farewell to Iraq trip timing and all.
25 people to blame for the financial crisis
You can vote on each of these.
http://www.time.com/time/specials/
Bush vs Obama on the current crisis
I think I cannot post the link (?) but go to Youtube and search "timeline shows Bush, McCain warn.... for a news piece aired in Canada (and certainly not in the US on the MSM). Back in 2002 Bush and McCain both warned that Fannie and Freddie needed overhauling ,after the Clinton/dem policy that anyone who wants a mortgage should get one had us on a collision course with financial ruin. But did anyone listen? Noooooooo! Bawney Fwank said: We're all just fine here. No problem. Nothing to look at, people. Move along. Chuck Schumer said: Fannie and Freddie have been doing an outstanding job and there is no problem. So, once again history has vindicated a republican, but we in the US are being protected from such dangerous information. How about a REVERSE fairness doctrine?
The present crisis was not caused by Bush or McCain...
both approached the Democrats a total of 4 times trying to get Fannie/Freddie regulated. We can't afford Reid, Pelosi, Dodd, Frank, AND a Democratic president. Whatever else Bush is or is not, he is NOT responsible for this current financial MESS.
The best explanation I've heard thus far for economic crisis..(sm)
The Real Deal
So who is to blame? There's plenty of blame to go around, and it doesn't fasten only on one party or even mainly on what Washington did or didn't do. As The Economist magazine noted recently, the problem is one of "layered irresponsibility ... with hard-working homeowners and billionaire villains each playing a role." Here's a partial list of those alleged to be at fault:
- The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.
- Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.
- Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.
- Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.
- The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.
- Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.
- Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.
- Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.
- The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.
- An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.
- Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.
The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation. Claiming that a single piece of legislation was responsible for (or could have averted) the crisis is just political grandstanding. We have no advice to offer on how best to solve the financial crisis. But these sorts of partisan caricatures can only make the task more difficult.
–by Joe Miller and Brooks Jackson
http://www.factcheck.org/elections-2008/who_caused_the_economic_crisis.html
I'm sorry, you are aware of what caused the financial crisis aren't you?
or you will just blame BUSH BUSH BUSH/CHENEY.
Please, do some research.
If my memory serves me, it started going downhill when a democratic congress took over.
Not only that, this MORTGAGE crisis was set into effect by the CLINTON administration and helped by a DEMOCRATIC congress.
Now let me be clear, I do not think Bush was a great president and he made mistakes, but DO NOT tell me that this financial crisis was his doing. I know you are going to flame me, but don't ignore the facts! Actually, that's what liberals do so nevermind, go ahead anyway.
Great and balanced post, so very true, this crisis did not develop.....sm
overnight, and certainly will not be fixed in a short amount of time. And we are All going to have to work together and forget party lines, and forget about the blame, work on a long-term cure and get provisions in government so that this type of unobstructed GREED and thievery CANNOT happen again! Free enterprise yes, runaway deception, elitiism, and legalized loan-sharking and theft, no!!!! Thank you for posting, Z!
I support the plan to LOAN the money to the mortage firms in crisis.
At 2% interest.
Why should they be GIVEN a huge wad of cash to bail them out. If you or I were in desperate straits, our only option would be a loan, not a gimmee. Either way, Congress is going to have to give them the money. But I think we should expect a pay-back plan to be set forth BEFORE they get the dough, and not just give them a blank check for 700 billion.
McCain has fogotten the stock market crash, mortgage/credit crisis,
unemployment rates, job losses, stagnant wages, rising prices in gas, food, health care, etc, etc, etc.
The truth, the whole truth and nothing but...It's probably the biggest...sm
reason why I am voting democrat...they seem more honest than the the republicans and it looks like people are starting to get smart and *bailin' Palin*... We don't need to keep hearing her *greatest hits" version of her acceptance speech over and over and McSame's POW story...that was then, this is now...we need REAL change and we need it NOW. I don't need someone to push the red button, I need someone to fix the economy!
Truth? The truth is she is nuts!
nm
Truth
give me a freaking break, okay? The truth needs to be posted over and over and over again.
the truth
So true and so well put.
You could not be further from the truth. NM
...
Now, now, now... let's tell the TRUTH, which is NOT:
His first guest on his first show was Madalyn O'Hair (very appropo, since he is himself an atheist).
History IS important. Check yours.
Phil Donahue is a Catholic.
Where's the truth in the above?
It's just your fantasy of wanting Bush to get caught getting a B.J....and quoting Marey Carey, a former porn star. Any credibility you had you just flew out the window.
The truth is that no one really knows the truth about 911.sm
I think their secrecy surrounding the matter is creating oddball theories. I do not know if I would call them a subculture, but I know the 911 truth movement is quite large (millions). This will even be used as a political platform for a few running for office. One that comes to mind is Robert Bowman running for Congress.
Truth.
If you believe –
That the Bible is the inspired Word of God
That Jehovah God is a God of integrity and it is impossible for Him to break covenant because of His character,
That Jesus Christ is our example, and we are to follow Him,
Then there is no Biblical alternative to supporting Israel and the Jewish people.
Are you all nonbelievers here?
We already know the truth. nm
nm.
The truth (as you see it)...sm
Quotes from Mizz Coulter:
Freedom of Speech
* They're [Democrats] always accusing us of repressing their speech. I say let's do it. Let's repress them. Frankly, I'm not a big fan of the First Amendment.
o University of Florida speech; October 20, 2005.
Immigration
* I'd build a wall. In fact, I'd hire illegal immigrants to build the wall. And throw out the illegals who are here. [...] It's cheap labor.
o Fox News; The O'Reilly Factor; Transcript via Media Matters; April 14, 2006.
o On illegal immigration
Liberals
* VESTER: You say you’d rather not talk to liberals at all? COULTER: I think a baseball bat is the most effective way these days.
o (FOX News Channel, DaySide with Linda Vester, 10/6
New York Times
* My only regret with Timothy McVeigh is he did not go to the New York Times building.
o New York Observer article; August 26, 2002.
* Of course I regret it. I should have added 'after everyone had left the building except the editors and the reporters.'
o rightwingnews.com; June 26, 2003.
o On her (above) statement concerning Timothy McVeigh
* [Learning difficulties are a cover for] rich parents with dumb kids...That's why 'Pinch' Sulzberger, the publisher of The New York Times, is alleged to have dyslexia - because he's retarded.
o The Independent; August 16, 2004.
o Arthur O. Sulzberger, Jr., publisher of New York Times
Stevens, Justice John Paul
* We need somebody to put rat poisoning in Justice Stevens's creme brulee. That's just a joke, for you in the media.
o Philander Smith College January 26, 2006 [6]
Women
* I think [women] should be armed but should not vote...women have no capacity to understand how money is earned. They have a lot of ideas on how to spend it...it's always more money on education, more money on child care, more money on day care.
o Comedy Central; Politically Incorrect; February 26, 2001.
* It would be a much better country if women did not vote. That is simply a fact. In fact, in every presidential election since 1950 - except Goldwater in '64 - the Republican would have won, if only the men had voted.
o [8]; May 17, 2003.
* I think the other point that no one is making about the [Abu Ghraib] abuse photos is just the disproportionate number of women involved, including a girl general running the entire operation. I mean, this is lesson, you know, number 1,000,047 on why women shouldn't be in the military. In addition to not being able to carry even a medium-sized backpack, women are too vicious.
o Fox News; Hannity & Colmes; May 5, 2004.
Voting
* I think there should be a literacy test and a poll tax for people to vote.
o Fox News; Hannity & Colmes; August 17, 1997.
Liberals hate religion because politics is a religion substitute for liberals and they can't stand the competition.
* Slander (2002) ISBN 1400046610, p. 194
Liberals hate America, they hate flag-wavers, they hate abortion opponents, they hate all religions except Islam, post 9/11. Even Islamic terrorists don't hate America like liberals do. They don't have the energy. If they had that much energy, they'd have indoor plumbing by now.
* Slander (2002) ISBN 1400046610, p. 5-6
I think the government should be spying on all Arabs, engaging in torture as a televised spectator sport, dropping daisy cutters wantonly throughout the Middle East and sending liberals to Guantanamo.
* Her column; December 21, 2005
* Governmental responsibility
* We were terrified that Jones would settle. It was contrary to our purpose of bringing down the president.
o Uncovering Clinton: A Reporter’s Story (1998), pg. 183.
o Paula Jones
* If those kids had been carrying guns they would have gunned down this one [teenage] gunman. ... Don't pray. Learn to use guns.
o Politically Incorrect; December 18, 1997.
o Heath High School shooting (where a gunman killed 3 students at a prayer meeting at the school). When she said Don't pray, Coulter may have been asked whether she approved of praying in school.
* [A] cruise missile is more important than Head Start.
o From a speech, November 2001, rebroadcast by C-Span in January, 2002.
o Education spending vs. defense spending
The list goes on:
These broads are millionaires, lionized on TV and in articles about them, reveling in their status as celebrities and stalked by griefparrazies. I have never seen people enjoying their husband's deaths so much. -on 9/11 widows who have been critical of the Bush administration
We need somebody to put rat poisoning in Justice Stevens' creme brulee. That's just a joke, for you in the media.
Liberals love America like O.J. loved Nicole.
There are a lot of bad republicans; there are no good democrats.
We need to execute people like (John Walker Lindh) in order to physically intimidate liberals.
Whether they are defending the Soviet Union or bleating for Saddam Hussein, liberals are always against America. They are either traitors or idiots.
We should invade their countries, kill their leaders, and convert them to Christianity.
Liberals are stalwart defenders of civil liberties -- provided we're only talking about criminals.
We've finally given liberals a war against fundamentalism, and they don't want to fight it. They would, except it would put them on the same side as the United States.
Press passes can't be that hard to come by if the White House allows that old Arab Helen Thomas to sit within yards of the President.
The swing voters -- I like to refer to them as the idiot voters because they don't have set philosophical principles. You're either a liberal or you're a conservative if you have an IQ above a toaster.
How about this truth.
All life is sacred or no life is sacred, no exceptions.
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