Home Prices Still Falling – State Revenues Drying Up

by Jack Lee

It looks like we’re becoming a nation of renters. The latest news is home prices have fallen more than expected, down a whopping 2.9% in the first quarter of this year. Home owners continue to lose thousands in equity, and property taxes that keep essential services going continue to decline. No doubt this will lead to another round of layoffs at the local level. Butte County is preparing for more cuts – and it has to happen because the revenue just isn’t there.

The anger and frustration among homeowners contrasts sharply with the denial by those responsible for this disaster. The list of responsibles is too many to name, but essentially they’re the politicians, Wall Street Sharks and the mega-banks. The meld between incompetence in high office and financial crooks on Wall Street has gone without any satisfactory accountability. I don’t know how we can ever move forward and repair the mistake until those responsible are held accountable.

The Bush Administration and a number of ranking republicans sounded the alarm and warned the housing bubble was growing to dangerous proportions and that’s a fact. Bush called for reform 17 times in 2008 alone and the Dems ignored the warnings. We have it on video, and its part of the Congressional record. Anyone who would dare refute this loses all credibility. Maybe Bush should have done more, but whatever shortcomings his administration had pales compared to what the democrats did to this nation in the years leading up to the great housing implosion.

We have clear evidence going back to Clinton banks were coerced into making weak low income loans. The democrats played the populace card chanting over and over; everyone has a right to own a home! That’s the stupidest thing I’ve ever heard. Nobody has a “right” to own a home – if they can’t afford it! But, obviously this played out well with the sappy liberal voters who never questioned where the money was coming from or what would happen to home prices when the foreclosures started.

The poster boys for this home ownership movement was Bill Clinton and Barney Frank. They both led the charge for this fatally flawed idea. These two guys and their democrat colleagues blocked many opposition attempts to restrain risky lending practices and to shore up Fannie Mae and Freddie Mac. The dems during that period controlled the banking committees that encouraged major banks to make high risk loans and that’s why we should hold them responsible, but here in California voters still don’t get it. We’re broke, we are dead broke and facing a dark and uncertain future in this state, one wonders what it will take to wake up our voters?

“Homes may see an ebb and flow in the price at a certain percentage level. But you’re not going to see the collapse that you see when people talk about a bubble and so those of us on our committee in particular will continue to push for home ownership!” Barney Frank

The banks were not fooled and they were not the innocent victims of heavy handed government. They knew that many of these government encouraged low income loans were bound to fail, but they played along with the understanding this is just a cost of doing business with the government. It was like a form of extortion. However, they went along because the government’s carrot and stick approach. Where it started to get really out of control was when the mid-level banking bureaucrats and loan underwriters exploited this situation. They were often paid bonuses and commissions on approved loans. They had every reason to seek creative ways to approve loans and little to no incentive to deny them. And why not? Government was encouraging them, and it wasn’t their money. They rationalized that was why the bank sold those loans to government backed mortgage institutions like Fannie Mae; this was a huge safety net. And then there was the safety net of the mortgage insurance companies. Mortgage insurance was required for loans with less than 20% down payment. So the underwriters and loan officers’ rubber stamped loans and made millions in commissions. Home prices soared and it seemed everyone was a winner in this wonderful ponzie scheme, until it all blew up in their face like all pyramid schemes must do.

Many democrats in office are probably embarrassed by their part and they should be, but almost nobody is willing to accept responsibility and that’s kinda scary. This tells me those who needed to learn a lesson haven’t. You’ve never heard Barney Frank or former President Bill Clinton take any blame have you? How many politicians, banks or Wall Street firms ever issued a public apology or pressed for legislation to prevent such a thing happening ever again? It just been a bunch of finger pointing, excuses and denial. That’s why when we hear how home price are falling years after the bubble burst we are still damned mad and disgusted!