Thanks for that piece, Mel

About the orignial video..

It does lay all of the blame on Democrats and does let a lot of Republicans off the hook.

While it's true that in 2003, the Bush administration tried to stop the runaway train of Fannie Mae and Freddie Mac. It is also true that Republicans controlled Congress. Democrats alone didn’t stop this.

Same thing in 2006, when McCain attempted to fix Fannie and Freddie, Republicans controlled Congress and did nothing to pass that bill. While it's true that Democrats blocked it, but w/o some help from Republicans, both efforts would have passed easily.

This isn’t just a Democratic party problem. They set the wheels in motion, but the GOP should have pushed for oversight and rational regulation when they had the chance to.

OMG! Seriously! Man, that is some scary stuff, Mel!

I am off to hang out with W2S. I also want to look into the deal about the FED and FM/FM buying up bad loans. Post anything you find on it for us, please. Thanks for all the good information you have posted already.

Thanks, Marshmallow...that was the ONLY point we were trying to make. ITA with your post!

I cannot tell you the RAGE I feel towards those SOBs right now, Marsh. They need to be lined up and HORSEWHIPPED. What USE are they if they did not stop this?

If I had made the video, I'd have done it differently.

What I appreciated most from it was how it explained the sub prime mortgage movement and how it became the source of our current financial nightmare.

I hear you, Mel!

Maybe a pay per view public horsewhipping would help pay off this debt they acquired for us.

I don't know, I haven't investigated the sources of all the different data presented as "fact" on one side or the other, and I don't have time to chase down all of those right now... I suspect it isn't as black and white as we'd like to think. But that's just my own opinion, a hunch.

Here's what I do want to say though. I suspect that a large part of the blame lies with people, of whatever stripe, just plain being greedy. Wanting to buy things they can't afford. Wanting to live in houses they can't afford. Wanting to buy now and pay later.

And wanting to invest in the subprime mortgages and just hope the bubble doesn't burst while you're holding it. Hey, I just realized it's kinda like a game of hot potato.

I found the following very interesting (and as far as I recall, non-partisan):

http://www.thislife.org/Radio_Episode.aspx?sched=1242

I think it's Dave Ramsey who talks about how people are buying groceries on credit cards that they don't pay off each month... so that years from now they are still paying interest on food that's been eaten a long time ago.

Buying things on credit used to be almost unheard of. People used to save up to buy something, instead of taking it home first and then paying for it with interest.

Discipline. Consequences. Personal responsibility.

Isn't that just great????

They are guilty and we should throw the book at them.

I haven't read anything that directly indicates that, but the heat map forclosure link I posted sure does suggest that since the hardest hit areas are in the Southwest. Had it been contained to that region and been the only factor though, the US wouldn't find itself in the position we are in today. The rest of the mortgage industry saw what was taking place and began targeting middle class Americans acrossed the country. They saw an opportunity to make HUGE profits and jumped at it. Offering loans to already strapped people that live paycheck to paycheck all in the name of keeping up with the Jones. Using credit to fill in the gaps when income falls short. It wasn't a question of "if" the loans would become bad, but a question of "when." It was a ticking time bomb from the start.

Want2Stay

Marshmallow,


That is why I had to say something. You see, I hold no allegience to either party. I operate under the belief that the entire system is corrupt. Our government stopped being "for the people, by the people" along time ago. It has become about greed, big business and underhanded backroom deals. Where lobbyists dictate the policies that are passed. What I can't stand is for either party to sit back and point fingers claiming to be better than the other. They both SUCK. They both have their hidden agendas that serve their own purposes, instead of the constituents they are supposed to represent.

Want2Stay

Want2, please watch this---->
Who on this panel wanted more regulatory oversight of Fannie and Freddie, and who spent their time attacking the regulators?

We have to hold the people ACCOUNTABLE for the part they played in this. It just so happens that it was one political party who hates the free market, and who tampered w/ it by forcing banks to loan money to people who couldn't pay it back. It was also the same party who protected Fannie and Freddie.

The way I see it, the Dems are 90% at fault for this, and the GOP is 10% at fault for not pressing harder to stop them.

Let's be real here.

Here's an interestng article explaining how the Community Reinvestment Act was used by community organizers...

O'S DANGEROUS PALS
BARACK'S 'ORGANIZER' BUDS PUSHED FOR BAD MORTGAGES

By STANLEY KURTZ
September 29, 2008

WHAT exactly does a "community organizer" do? Barack Obama's rise has left many Americans asking themselves that question. Here's a big part of the answer: Community organizers intimidate banks into making high-risk loans to customers with poor credit.

In the name of fairness to minorities, community organizers occupy private offices, chant inside bank lobbies, and confront executives at their homes - and thereby force financial institutions to direct hundreds of millions of dollars in mortgages to low-credit customers.

In other words, community organizers help to undermine the US economy by pushing the banking system into a sinkhole of bad loans. And Obama has spent years training and funding the organizers who do it.

THE seeds of today's financial meltdown lie in the Commu nity Reinvestment Act - a law passed in 1977 and made riskier by unwise amendments and regulatory rulings in later decades.

CRA was meant to encourage banks to make loans to high-risk borrowers, often minorities living in unstable neighborhoods. That has provided an opening to radical groups like ACORN (the Association of Community Organizations for Reform Now) to abuse the law by forcing banks to make hundreds of millions of dollars in "subprime" loans to often uncreditworthy poor and minority customers.

Any bank that wants to expand or merge with another has to show it has complied with CRA - and approval can be held up by complaints filed by groups like ACORN.

In fact, intimidation tactics, public charges of racism and threats to use CRA to block business expansion have enabled ACORN to extract hundreds of millions of dollars in loans and contributions from America's financial institutions.

Banks already overexposed by these shaky loans were pushed still further in the wrong direction when government-sponsored Fannie Mae and Freddie Mac began buying up their bad loans and offering them for sale on world markets.

Fannie and Freddie acted in response to Clinton administration pressure to boost homeownership rates among minorities and the poor. However compassionate the motive, the result of this systematic disregard for normal credit standards has been financial disaster.

ONE key pioneer of ACORN's subprime-loan shakedown racket was Madeline Talbott - an activist with extensive ties to Barack Obama. She was also in on the ground floor of the disastrous turn in Fannie Mae's mortgage policies.

Long the director of Chicago ACORN, Talbott is a specialist in "direct action" - organizers' term for their militant tactics of intimidation and disruption. Perhaps her most famous stunt was leading a group of ACORN protesters breaking into a meeting of the Chicago City Council to push for a "living wage" law, shouting in defiance as she was arrested for mob action and disorderly conduct. But her real legacy may be her drive to push banks into making risky mortgage loans.

In February 1990, Illinois regulators held what was believed to be the first-ever state hearing to consider blocking a thrift merger for lack of compliance with CRA. The challenge was filed by ACORN, led by Talbott. Officials of Bell Federal Savings and Loan Association, her target, complained that ACORN pressure was undermining its ability to meet strict financial requirements it was obligated to uphold and protested being boxed into an "affirmative-action lending policy." The following years saw Talbott featured in dozens of news stories about pressuring banks into higher-risk minority loans.

IN April 1992, Talbott filed an other precedent-setting com plaint using the "community support requirements" of the 1989 savings-and-loan bailout, this time against Avondale Federal Bank for Savings. Within a month, Chicago ACORN had organized its first "bank fair" at Malcolm X College and found 16 Chicago-area financial institutions willing to participate.

Two months later, aided by ACORN organizer Sandra Maxwell, Talbott announced plans to conduct demonstrations in the lobbies of area banks that refused to attend an ACORN-sponsored national bank "summit" in New York. She insisted that banks show a commitment to minority lending by lowering their standards on downpayments and underwriting - for example, by overlooking bad credit histories.

By September 1992, The Chicago Tribune was describing Talbott's program as "affirma- tive-action lending" and ACORN was issuing fact sheets bragging about relaxations of credit standards that it had won on behalf of minorities.

And Talbott continued her effort to, as she put it, drag banks "kicking and screaming" into high-risk loans. A September 1993 story in The Chicago Sun-Times presents her as the leader of an initiative in which five area financial institutions (including two of her former targets, now plainly cowed - Bell Federal Savings and Avondale Federal Savings) were "participating in a $55 million national pilot program with affordable-housing group ACORN to make mortgages for low- and moderate-income people with troubled credit histories."

What made this program different from others, the paper added, was the participation of Fannie Mae - which had agreed to buy up the loans. "If this pilot program works," crowed Talbott, "it will send a message to the lending community that it's OK to make these kind of loans."

Well, the pilot program "worked," and Fannie Mae's message that risky loans to minorities were "OK" was sent. The rest is financial-meltdown history.

IT would be tough to find an "on the ground" community organizer more closely tied to the subprime-mortgage fiasco than Madeline Talbott. And no one has been more supportive of Madeline Talbott than Barack Obama.

When Obama was just a budding community organizer in Chicago, Talbott was so impressed that she asked him to train her personal staff.

He returned to Chicago in the early '90s, just as Talbott was starting her pressure campaign on local banks. Chicago ACORN sought out Obama's legal services for a "motor voter" case and partnered with him on his 1992 "Project VOTE" registration drive.

In those years, he also conducted leadership-training seminars for ACORN's up-and-coming organizers. That is, Obama was training the army of ACORN organizers who participated in Madeline Talbott's drive against Chicago's banks.

More than that, Obama was funding them. As he rose to a leadership role at Chicago's Woods Fund, he became the most powerful voice on the foundation's board for supporting ACORN and other community organizers. In 1995, the Woods Fund substantially expanded its funding of community organizers - and Obama chaired the committee that urged and managed the shift.

That committee's report on strategies for funding groups like ACORN features all the key names in Obama's organizer network. The report quotes Talbott more than any other figure; Sandra Maxwell, Talbott's ACORN ally in the bank battle, was also among the organizers consulted.

MORE, the Obama-supervised Woods Fund report ac knowledges the problem of getting donors and foundations to contribute to radical groups like ACORN - whose confrontational tactics often scare off even liberal donors and foundations.

Indeed, the report brags about pulling the wool over the public's eye. The Woods Fund's claim to be "nonideological," it says, has "enabled the Trustees to make grants to organizations that use confrontational tactics against the business and government 'establishments' without undue risk of being criticized for partisanship."

Hmm. Radicalism disguised by a claim to be postideological. Sound familiar?

The Woods Fund report makes it clear Obama was fully aware of the intimidation tactics used by ACORN's Madeline Talbott in her pioneering efforts to force banks to suspend their usual credit standards. Yet he supported Talbott in every conceivable way. He trained her personal staff and other aspiring ACORN leaders, he consulted with her extensively, and he arranged a major boost in foundation funding for her efforts.

And, as the leader of another charity, the Chicago Annenberg Challenge, Obama channeled more funding Talbott's way - ostensibly for education projects but surely supportive of ACORN's overall efforts.

In return, Talbott proudly announced her support of Obama's first campaign for state Senate, saying, "We accept and respect him as a kindred spirit, a fellow organizer."

IN short, to understand the roots of the subprime-mort gage crisis, look to ACORN's Madeline Talbott. And to see how Talbott was able to work her mischief, look to Barack Obama.

Then you'll truly know what community organizers do.

Speaking in general, because I don't know details about this particular issue: The minority party can stop a bill in the Senate with as few as 40 votes. Through a process called 'Cloture', 60 votes are required to end debate and force a vote on a piece of legislation.

Republicans had only a slim majority (something like 51:49), and did not have the votes to pass a measure that was opposed by Democrats. Unless there is significant public outcry, such bills are usually allowed to die a quiet death.

This video was pulled.

Here's a new link to the same video----> LINK

Interesting thread.

Both Parties facilitated this latest debacle.

That video posted by Marsh a couple of posts back, I would label as borderline racist.

It was attacking Democrats, but the only speaking Democrats were black members of the House Finance Committee (and Barney Frank, the gay Massachusetts congressman.)

Maybe not borderline, there was ulterior motives running all thru that video. It's plainly set to pin it on a specific group, and not just Democrats. Sad really.

And, this debacle started, not with the CRA, but when Fannie and Freddie, (Not the FED!) reduced lending requirements to a signature.

FM and FM could have loaned on every house in the inner-city (I use this term not as a perjoritive, but as to place) to illegal aliens and impoverished folks and we would NOT have the crisis we are facing. When the loans offered spread through out the nation, from main street, to mayberry street to suburban homes, et al., the problem exploded.

Once FM and FM were allowed to relax thier standards, then every loan to any person who could sign, was approved.

Had FM and FM just loaned into certain areas and under some controls and then segregated those loans for resale into the broader investment market, we MIGHT have been able to fix that easily.

But, they didn't. It was "Free MONEY time" as long as you bought a house.

Then when housing prices started to drop, everything got crushed.

For years, there where a number of banks that offered "no doc" or "low Doc" loans to poor credit risks. It was a business model. These banks COULD make money because they kept the loans in house, and everyone KNEW what these banks were doing. Once FM and FM started buying these loans, many banks started to originate these loans and sell them on the FM and FM. The clock had started on the timebomb.

Tick, Tick, Tick...

Both parties have enough dirt on themselves for this debacle.

Not allowing proper oversight of FM and FM by the Office that they set up to monitor it. And ignoring its warnings, and NOT funding it properly.

Disgraceful.

Yes, having a couple of FM and FM executives and Members of Congress and thier attendant lobbyist's and attorneys swinging on front of the Capitol would be a VERY good thing.

Horsewhipping isn't good enough for them.

LG

I would label it as the truth...and sometimes that is not very pretty.

Wow, that's amazing.

Didn't see that perspective.

What I did notice was Lacy Clay saying, "This hearing is about the political lynching of Franklin Raines."

It was not about the political lynching of anybody. We all know the regulator was right. Like you said, it was a ticking time bomb! They were defending Franklin Raines, who was a thief! They were propping up a failed institution. And Lacy Clay certainly didn't mind using racial politics to do it.

Farmer Bob of Colorado built a beautiful chicken coop on his property. Seeing that the coop was located near the woods and this was wolf & fox country he hired him a night security guard whose job it was to protect the coup from invasion of all sorts critters.

Well...after many uneventful nights of watching and protecting the coop the night watchmen became very relaxed about his duties. He even took naps, ran out for subway or just punched in and left only to come back in the morning to open the door for the early shift.

Of course...we all know what happened. After several nights of digging (a hole the guard surely would have seen had he not been derelict of duty) the wolf pack made their way into the coop and CLEANED OUT the farmer's stock down to the last chicken nugget.

When the security guard was later interviewed by the Colorado Gazette...he conveniently blamed the FARMER, stating "why the heck did he build his coop so close to the woods in wolf country...it's clearly HIS fault". [btw - his back-up defense was to blame the wolves (i.e. - the poor) as their NATURAL INSTINCTS took over after being TEMPTED by the farmers placement of the coop in their territory...meaning "the poor" are stupid people that should have known they were being conned by these predatory lenders and how dare they "instinctively" want to own a home...they should have faced "reality" (you're poor and can't afford a home) and resisted money being literally THROWN at them)

A second undeveloped analogy would be:

Blaming the democrats for economic collapse because they sponsored and passed the CRA Act in 1977 and expanded in the 1990's would be like blaming the person that sponsored the 1965 act which built the I35W bridge over the Mississippi river in Minneapolis for the deaths of those 18 or so people when it eventually failed in 2007.


This is how I see it. The poor people aren't responsible for ruining our financial markets. Their $30,000 to $60,000 loans are a mere pittance of the huge FRAUDULENT loans that were given to suburban households. Bear Sterns had one portfolio that I read about containing 3000 mortgages with an average size of $450,000. These ARE NOT typical nor anticipated CRA loans. IMO, the predatory lenders were not curbed and the REBUBLICAN administration was asleep at the wheel. LENDERS and their cronies were breaking laws. The loans that REALLY are getting us in big trouble WERE illegal...and the EXECUTIVE branch is charged with enforcing the laws of the land and FAILED to do so.

In addition...the Bush Administrations destructive economic policies which shipped our jobs overseas and destroyed our inner-cities are also to blame for this mess. These sub-prime loans are NOT solely responsible for the reduction of ALL home values across the country. If people were working and the economy was continuing along as it had under Bill Clinton (and LIKELY would have under a Gore/Kerry presidency absent this money pit mistake of a war in Iraq)...personal income at the Blue Collar lever in this country would have expanded and MOST of these sub-prime loans would have remained viable. The "cascading effect" of these foreclosures would have been merely a manageable trickle. No doubt...a "bubble" would have eventually occurred but NOT to anywhere near this degree.

Be certain...the Democrats bear some burden in this (near unanimous BI-partisan repeal of the Glass-Steagall Act of 1933 in 1999 which was signed by Clinton [when Republicans still controlled Congress)....however, 93.5% of the blame goes upon the Bush Administrations complete FAILURE to enforce the laws of this country which ALREADY existed to curb this ILLEGAL FRAUDULENT behavior of lenders, brokers, title companies, appraisers AND the lendees that ALL committed these crimes. Congress MAKES laws...the executive branch enforces them and BUSH and his oil buddies were out getting subway sandwiches for FAR too long.

Mr. Wondering

p.s. - I have seen how these criminals work. When any house goes into foreclosure anywhere around Detroit, a bunch of maggots were contacting such homeowners offering them a way out. They came in. Found a minority purchaser. Got inflated appraisals and facilitated a fraudulent sale/purchase of the home.

Example.

A home in Detroit owned by Rick with a value of about $100,000 (a nice neighborhood for Detroit) goes into foreclosure because Rick lost his job and couldn't make his payments on his home equity loan of $40,000. Bob, the foreclosure savior comes to his rescue and just so happens to have a minority purchaser ready to purchase the house for $90,000 (giving Rick, after paying off the foreclosure amount a check for around $60,000 (less fees and penalties to the foreclosing bank). However, when Rick shows up at closing, he realizes that the Purchaser is REALLY buying the home for $180,000 and getting a loan for $175,000 from some predator lender after some crack pot appraiser stamps an inflated appraisal on the home. The Title Company is in on the scheme and they prepare two sets of paperwork and a convoluted closing statement that Rick doesn't begin to understand but surely make him a part of the fraud (and any attorney that happens to sign off on such deal). However, Rick is desperate and MUST sell/sign off on the deal because he's being foreclosed upon and this is his ONLY out. He's upset that he's not getting what he thinks is now the FMV of his home ($180,000) and is clueless about the scam but happy to have a check. Bob...literally walks away with a $90,000 profit (though he likely pays the buyer a sort of commission of say $5,000 or $10,000 CASH for being part of the scam...more likely Bob just pony'ed up the $5,000 down payment). Bob likely doesn't even pay taxes on the money as the Title Company is hesitant to 1099 him and make the IRS aware of the scam as that $90,000 is supposed to be part of the home's equity. Instead they cut a check to the Buyer and he signs it over to Bob at the closing. Tax Free Money (another crime). The buyer has a SUB-PRIME mortgage so he can likely afford the somewhat nice house for a few years, at least until the interest kicks up. He's got a home to live in for awhile. The buyer KNOWS he will likely let the home go into foreclosure but what the heck...that's a few years away and just another 6 months (during the foreclosure period) with NO rent or mortgage payments. He can always go bankrupt AGAIN in the end. All he did was sign a paper and get a house. No cash required.

This is CRIMINAL behavior. The lenders, the title companies, the appraisers, the brokers, the lawyers...were all in on it. After a few years...the inner city wasn't a big enough hit anymore and these predators repeated the same practices in the suburbs and then things got REALLY big. $1,000,000 homes were appraised as $2,000,000 homes and the TAKE/SCAM was magnified tremendously.

The New York Times

Fannie Mae Eases Credit To Aid Mortgage Lending

Permalink

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.

[size:20pt]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.[/size]

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.''

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

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. [size:20pt]''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.'' [/size]

Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.

Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.

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.

OMG...someone give this man a cigar!!!!!!!!!