Our Economic Crisis
Perspectives ranging from the Sierra foothills to Washington social engineering as well as a clear-eyed view from Australia.
First, let's start with an anecdote from the footfhills that illustrates the human nature part of the problem:
Much of the current financial crises came about because of bad home mortgage loans. We have neighbors here . . . who are renters, and we had the opportunity recently to have a conversation with them. Both look to be in their young 50's and neither the man or woman work. The woman named a health condition that she has (can't remember the medical term) that keeps her bedridden on some days. The man says he suffers from a job related injury which has left him disabled. The woman says that she's waiting for financial help from Social Security and the man says that he's waiting for a disability pension from his Union. This couple recently lost a home here . . . because they couldn't make the mortgage payment. They told us how, when they took out a mortgage a few years ago, the Realtor and the Mortgage Company put false employment and personal financial information on their paperwork, and this was how they were qualified for home purchase. The curious thing is that this couple tell their story as if they're innocent victims and they shouldn't have lost their home. Never mind that they put their signatures on this same paperwork under the false information. No mention of that! Meeting and talking with this couple was a first hand education for us. They did 80% of the talking and we just listened without much comment. We have no reason to disbelieve what they said. But, the strange thing is, how this couple feel like they've been treated unfairly. It's our opinion that there are millions of people who should not be home owners. There's nothing at all wrong with being renters. Even life long renters. There shouldn't be any social stigma or feeling of personal inferiority for renters. Most home mortgage holders pay rent, until the mortgage is paid. Right? At our age, we frequently wish that we could just be renters. Home ownership becomes a physical and financial burden for a lot of senior citizens. So does the accumulation of "stuff" ........ we often realize that we have too much "stuff" ........ what a feeling of freedom it would be to have less "stuff." At the end of our worldly life, the "stuff" is very unimportant! Just my opinion.Next, Ed Morrissey has the money quote from Clinton Administration HUD Secretary Andrew Cuomo in 1998:
CUOMO: To take a greater risk on these mortgages, yes. To give families mortgages that they would not have given otherwise, yes. Q: [unintellible] … that they would not have given the loans at all? CUOMO: They would not have qualified but for this affirmative action on the part of the bank, yes. Q: Are minorities represented in that low and moderate income group? CUOMO: It is by income, and is it also by minorities? Yes. CUOMO: With the 2.1 billion, lending that amount in mortgages — which will be a higher risk, and I’m sure there will be a higher default rate on those mortgages than on the rest of the portfolio …Just lovely -- yet more:
In other words, the CRA didn’t get used to fight discrimination, but to force lenders to give money to high-risk borrowers for political purposes. And Cuomo knew it. That was the political arrogance at the heart of the collapse. However, the CRA was more a sideshow than the actual problem. When Congress decided that enforcement alone wouldn’t generate enough mortgages to boost their political fortunes, they had Fannie Mae and Freddie Mac eliminate the risk entirely for lenders through the purchase of the subprime loans. Without that risk and with almost-guaranteed short-term profits of subprime loans, lenders went wild while Fannie and Freddie repackaged them as quasi-government bonds for investors. While Democrats like Barack Obama, Harry Reid, and Nancy Pelosi keep blaming “greed” for the collapse, it was Democrats like Barney Frank and Chris Dodd building that “greed” into the system in order to drive the subprime lending market. And it was Democrats like Frank, Dodd, Maxine Waters, and Lacy Clay who suggested that regulators like Armando Falcon were racists for blowing the whistle on the Ponzi scheme they created. The Democrats decided, as Michelle says, that mortgages were a civil right, and wouldn’t cost the American taxpayers a dime. How well is that working out, America? And now, the question you have to ask yourselves is this: Do you want the nation’s economic policies run by Obama, Pelosi, Reid, Dodd, and Frank for the next two years?Finally, Here is another tutorial on our mess from Down Under -- conveyed with a story that a layman can understand and summarized well with a chart: