by Tina Grazier
Politicians on both sides of the aisle have talked about getting rid of mortgage giants Fannie Mae and Freddie Mac for some time. Legislation has already been written. Enter President Obama suggesting that we “phase out” Fannie and Freddie…you’d think he just dreamed that idea up:
“For too long, these companies were allowed to make huge profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag.”
It would be easier to swallow this slam if he’d bothered to mention the corruption at the top of these entities carried out by Democrats of the Clinton era…instead, by implication he suggests they were overseen by evil private sector nobodies…people without political ties or agenda driven motivations.
The President continues:
Private capital should take a bigger role in the mortgage market — I know that sounds confusing to folks who call me a socialist.”
Confusing? Not at all! You will propose something that sounds good but behind the scenes you will regulate for control and screw up the private banking system even more than you have already with Dodd/Frank!
Private capital, local banks and mortgage lenders, should have been making the majority of loans all along. They should also have been free to determine the conditions under which they would lend and the level of risk their banks would take. If you want to propose something that would surprise conservatives surprise us with simple regulation of the banking industry and set them free to make decisions that will keep their banks afloat and their customers happy. Look for ways to encourage some of those minority kids in college to become bankers and give them incentives to put their banks in minority neighborhoods. Give them incentives to lend to entrepreneurs who want to start businesses in those neighborhoods. That’s how America was built…that’s how America works!
The socialist president, however, will not consider such a “radical” idea. He is an organizer for po folk and can’t let anything resembling freedom and ownership, prosperity and wealth building happen in minority communities. (And what a shame…he has the talent to lead local communities to prosperity if he would embrace the American ideals that made this country great!)
Mr. President you are definitely full of anything but surprises by now. Those of us that have observed your methods know exactly what you will do. You do not believe in merit; you believe in redistribution. Your preferred system attempts to manage so that the unwilling and unmotivated get the same rewards as those who work, strive, and save. Yours is a terrible way to inspire strength and productivity in our citizens.
The administration has already proposed, and may already be carrying out, regulations that undermine private lenders and compromise their ability to make loans and keep their doors open. These regulations will force banks to risk more than is financially prudent. Keep in mind that it isn’t just the JP Morgan Chases of the world that will be forced to comply. It will be the small bankers in every community. If it sounds familiar, it is:
The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.
President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.
In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.
Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.
Gee, a government assurance…how comforting! Considering what we have recently learned about the methods at the IRS, FEC, FTC, EPA and others I’d bet that the “assurance” would depend on who the bank CEO supported in the last election…who his friends are, what church he attends, maybe even the content of his prayers.
Let’s review! The President wants local banks to take unreasonable risks to make loans to people who don’t qualify under sensible rules but he also wants to close the two government backed entities that used to purchase these toxic loans making the banks responsible for losses they are forced to take…but he also wants to assure the banks that the taxpayers still stand firmly behind them? Smoooth!
This is the same administration that has created a diversity map. The goal is to create a diverse population in every neighborhood. Forced integration! How exactly he can ensure that this happens is a mystery…unless banks are regulated as to the number of loans people of certain ethnic background must be given AND those of whites denied to fill any given neighbiorhood. I wouldn’t put it past this crowd:
The U.S. government is going to log the diversity of every neighborhood in the U.S.
As part of a proposed rule, the U.S. Department of Housing and Urban Development (HUD), would provide detailed demographic information on every single neighborhood in the country in an attempt to get a better understanding of segregation, integration and poverty, the agency said.This racial mapping will be done as part of the new Fair Housing rule proposed by the agency.
Fair housing my a#*! There is nothing fair about this kind of manipulation.
Is there anyone in this administration that isn’t completely motivated by race…that isn’t completely averse to freedom? Is there anyone in this administration that actually cares about seeing things work for all Americans?
The proposal to close F&F within five years was sponsored by Bob Corker (R-Tenn) and Mark Warner (D- VA). It will replace the two government sponsored mortgage giants with private sector entities that rely on government guarantees only after private capital has been exhausted.
We will have to see what’s in it before we can get behind it.
Meanwhile, if the President really wants to help poor people he could start working on Detroit. One house there has been on the market for over a year at the low, low, bargain basement price of $1.00. Heck, you don’t even need a loan for that! So far the owner has had zero takers. It’s a nice little home too…but there are no jobs Mr. P. No jobs and nothing good on the horizon. Your brand of hope and change really bites, sir.
If you have lost a job, can’t find a job, are worried about the future and would like to learn why we are in the mess we are in take an inside peek into stupid banking regulations by reading, “No Thought Regulation” – CATO
Now work to elect people that are as angry as you are and care as much as you do about returning America to a land of freedom and opportunity!
Obumble doesn’t have a clue. He can only read someone else’s words from the teleprompter and is only interested in the perks of the office rather than the responsibilities.
When are the Obama supporters going to realize it is all “slight of hand”, or in this case “slight of mouth”. It is entirely misdirection. How many times has Obama said one thing while he was doing the opposite? How many times has he accused the GOP and the conservatives of doing something they weren’t doing while at the same time doing it himself? Too many people are just listening to the talking points and not to the details. Obama knows this and he has the media in his pocket pushing the talking points and not doing any real reporting.
Unfortunately this bumbling, freedom robbing, destructive, wasteful, and clueless must be endured for another 3.5 years.
Stay vigilant, stay informed, share what you know and Don’t worry!
This too shall pass!
Tom you are an astute observer…I think the 30% or so die hard Obama supporters generally are not.
By the way – what exactly would Obumble know about home refinancing anyway?
He got HIS deal from Tony Rezko and avoided banks altogether!
J. Soden, good point. Isn’t it funny how certain “nefarious people” were always around at just the right time and place to take care of whatever Obama needed to rise to power. What’s alarming is, it was all done rather secretly with almost no paper trails? His mentors, his education tuition, his grades, his college thesis, even his housing and spending money were kept secret. Seems he was on a fast track like some kind of prince in grooming to become the king. Hmmmm…it’s weird, really weird. i’ve never seen aytghing like it before. There’s just too many unknowns about this guy’s past. I never thought I would say this about anyone, not ever, but if there was an anti-Christ, he fits the model.
Tina: “Private capital, local banks and mortgage lenders, should have been making the majority of loans all along.”
They did. You know that they did.
McClatchy:
“Federal Reserve Board data show that:
–More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
–Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
–Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that’s being lambasted by conservative critics.”
Forbes:
“–Fannie and Freddie jumped in the game late to protect their profits: Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom. The vast majority of subprime mortgages — the loans at the heart of the global crisis — were underwritten by unregulated private firms. These were lenders who sold the bulk of their mortgages to Wall Street, not to Fannie or Freddie. Indeed, these firms had no deposits, so they were not under the jurisdiction of the Federal Deposit Insurance Corp or the Office of Thrift Supervision.
–Fannie Mae and Freddie Mac market share declined. The relative market share of Fannie Mae and Freddie Mac dropped from a high of 57 percent of all new mortgage originations in 2003, down to 37 percent as the bubble was developing in 2005-06. More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions. The government-sponsored enterprises were concerned with the loss of market share to these private lenders — Fannie and Freddie were chasing profits, not trying to meet low-income lending goals.”
http://www.forbes.com/sites/stevedenning/2011/11/22/5086/
Tina: “They should also have been free to determine the conditions under which they would lend and the level of risk their banks would take.”
They were. You know that they were.
More data:
http://www.ritholtz.com/blog/2012/10/4-year-flashback-private-sector-not-gses-triggered-crisis/
http://economistsview.typepad.com/economistsview/2012/10/the-community-reinvestment-act-did-not-induce-subprime-lending.html
http://www.nakedcapitalism.com/2010/08/more-debunking-of-the-freddie-and-fannie-caused-the-crisis-meme.html
Chris: 1. “They did. You know that they did.”
The sentence of note: “They should also have been free to determine the conditions under which they would lend and the level of risk their banks would take.”
This is the big fat gorilla you seem to what to pretend is irrelevant…when in fact it is KEY!
“More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.”
1. 2006 is a narrow window. (progressive talking point) You need to look between 1996 and 2008.
2. One of the biggest and most troubled, was found to be offering special lending deals to people like Chris Dodd…can you spell corruption?
Had this lender and others been regulated by simple rules to ensure against fraud and abuse, rather than regulations that forced lenders to make bad loans and then create ways to stay afloat, it would have fallen on its own. Instead the entire industry was harmed, the country (the world) was plunged into crisis, and the taxpayers paid a heavy price. And all of it so liberals could play Santa offering handouts to the poor.
The Forbes article you cite has all of the salient points right there within its own argument.
Government tinkering (intrusion):
The conclusion that the private sector drove this is absurd! The buyers, the lenders, the bankers, the investors were all acting on the conditions. The conditions were placed, guided, and encouraged by stupid regulations, non-oversight, tyrannical oversight, and tinkering by government.
Government intrusion amounts to a giant game of wack-a-mole.
They do something to try to fix a problem and the problem isn’t solved but only temporarily and artificially made to look better. Then the unintended consequences arise and we have another problem on our hands. So government tweaks again! This time the intrusion was so grand, and inspired such exuberance, as they called it, that the entire financial industry around the world fell into crisis. (The trouble begins because they aren’t solving problems but only applying band-aids for votes and kick backs)
Those who warned about what was ahead were ignored and criticized. Bush said there was plenty of responsibility to go around. I agree.
What I will not allow you to get away with is letting our government off the hook. I will not allow you to suggest that the Community Reinvestment Act was smart legislation or that the oppressive license it gave government and citizens to pressure banks into making bad loans wasn’t political and dumb…or that the atmosphere of bad lending that followed was not a result of liberal progressives who didn’t give a fig about the attending consequences and once the crisis hit, were quick to blame others for the mess they made!
If our government representatives, including those who are in oversight position, are not able to do their jobs and are not able to resist the pressure of lobbyists they are not fit to be in government positions. The excuse in the article is that these people couldn’t help it…lobbyists are too powerful. Bull hunk! If we citizens buy into that fairy tale we will never be served by those who serve all Americans and look out for America’s best interests.
Your article concludes by referencing an English Book that touts the warnings of the deputy governor of the Bank of England, Sir Andrew Large and others (But NOT Bush) and concluded people who deny truth were the problem: 1. the intellectual crisis that occurs when a failed belief system or philosophy is confronted with proof of its implausibility; 2. people who truly disrespect a legitimate process of looking at the data and making intelligent assessments; 3. (people) who cynically know what they peddle is nonsense, but nonetheless push the stuff because it is effective. These folks are more committed to their ideology and bonuses than the good of the nation; 4. Paid Hacks (There are countless numbers in politics).
Amazing…people are the problem.
People who think they can solve social problems by tinkering with banking and lending law are the problem…and they invite all kinds of nonsense with their tinkering.
I have always advocated for simple regulation that can be understood and monitored by overseers easily. Make the rules clear and understandable and there will be a lot less irrational behavior, “creativity”, fraud, collusion, and crisis!
The free market works. It isn’t without risk but it works. In a free market individuals that try to get around the rules will occasionally fall but will harm a lot fewer people and they will pay the price if regulators and the legal system do their jobs. When the market is manipulated by government all kinds of stupid behaviors are encouraged and/or shielded by politicians in collusion with those that feed them deals or cash or deliver blocks of votes.
2. “They were. You know that they were.”
No, they were not! Not only were they “not” they were likely “not” on purpose!
Regulators were asleep…being people and all.
Does the word responsible come up for anyone?
Our nation has eschewed the notion of responsibility in favor of excuse making. This has not been a bargain for us as excuse making doesn’t result in honorable human behavior.