Excellent video that traces the current economic crisis to its origin. Its real origin, as opposed to what Sen. Christopher Dodd (D-MA) says was the origin. There’s a good political (for him) reason he doesn’t go ALL the way back. The seed for this failure was planted by the peanut farmer and Nobel Peace Prize recipient, former President Jimmy Carter.
This video moves along at a pretty good clip, so if you want to get a look at some of the screenshots that are shown, have your mouse pointer ready on the pause button.
Thanks to Sen. Jim DeMint (R-SC) for distribution of this video.
Ann Coulter picks it up in 1992 . . .
The Los Angeles Times reported that, starting in 1992, a majority-Democratic Congress “mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains.” Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities. Clinton’s secretary of Housing and Urban Development, Andrew Cuomo, investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low- to moderate-income borrowers by the year 2001.
Threatening lawsuits, Clinton’s Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage. That isn’t a joke — it’s a fact. When Democrats controlled both the executive and legislative branches, political correctness was given a veto over sound business practices.
In 1999, liberals were bragging about extending affirmative action to the financial sector. Los Angeles Times reporter Ron Brownstein hailed the Clinton administration’s affirmative action lending policies as one of the “hidden success stories” of the Clinton administration, saying that “black and Latino homeownership has surged to the highest level ever recorded.” Meanwhile, economists were screaming from the rooftops that the Democrats were forcing mortgage lenders to issue loans that would fail the moment the housing market slowed and deadbeat borrowers couldn’t get out of their loans by selling their houses.
A decade later, the housing bubble burst and, as predicted, food-stamp-backed mortgages collapsed. Democrats set an affirmative action time-bomb and now it’s gone off.
In Bush’s first year in office, the White House chief economist, N. Gregory Mankiw, warned that the government’s “implicit subsidy” of Fannie Mae and Freddie Mac, combined with loans to unqualified borrowers, was creating a huge risk for the entire financial system. Rep. Barney Frank denounced Mankiw, saying he had no “concern about housing.” How dare you oppose suicidal loans to people who can’t repay them!
Now, at a cost of hundreds of billions of dollars, middle-class taxpayers are going to be forced to bail out the Democrats’ two most important constituent groups: rich Wall Street bankers and welfare recipients.
Three years ago in 2005, in a party line vote, Democrats voted to against a bill that, BTW was co-sponsored by Sen. John McCain, would have introduced some reforms to Freddie and Fanny called the Federal Housing Enterprise Regulatory Reform Act of 2005. That bill would have introduced some sanity, some fiscal responsibility, into underwriting home mortgages. The bill failed to pass. Sen. Barack Obama, btw, was on the side of Democrats and was against this bill. In fact, ten years previous, in 1995, Barack Obama was the Chicago attorney representing ACORN that was instrumental in getting the Clinton administration to ‘strengthen’ the Community Reinvestment Act.
As a New York Post article describes it:
A 1995 strengthening of the Community Reinvestment Act required banks to find ways to provide mortgages to their poorer communities. It also let community activists intervene at yearly bank reviews, shaking the banks down for large pots of money. Banks that got poor reviews were punished; some saw their merger plans frustrated; others faced direct legal challenges by the Justice Department.
The larger lesson to be learned here is how a market reacts when it is artificially manipulated. In this case, the government, with its liberal ‘feel good’ policies, altered the housing market which would have been stable by its own corrections, like free markets do. It’s a nice thought, full of good intentions, to want people to become homeowners. But when you ‘make’ people able to buy real estate in order to become homeowners, you are interfering with the market and creating the unintended consequences we see today. The reality is, there is a market for renters too, and if you can’t afford to buy, you rent.