Thursday, September 25, 2008

email to my Dad

It's not because it was written by a Republican, it's because this is the truth, and the American People can't handle the truth.

The program that the author is referring to was started under Bill Clinton. The effort was trying to get more minority families to "own their own homes". The program decided that someone qualified as an "owner" when they qualified for a mortgage, so the objective became tainted from the very beginning. We don't "own" our homes until the mortgage is paid off. Until that point, we don't hold the title to the property and it can be taken away if we fall on hard times.

So, the easiest way to show that more minorities "owned" their homes was to make more people qualify for mortgages. Lower the requirements, lower the standards, lower the bar, and "Mission Accomplished". Both James Johnson and Franklin Raines, CEO's of Fannie Mae, got huge kickbacks for their efforts. George W. Bush announced his support for the program in 2002 as well. 10 years from the start of that effort, we have another Great Depression staring us in the face.

Mortgages should be dependent on having an income that can support the payments over the long term. They should have a high initial deposit requirement, Cash On Hand. They should be a fixed rate through the life of the loan. If a family will be spending more than 33% of their income on the mortgage, they should not qualify for the loan. Creating the secondary mortgage market in the 1930's was the only way to keep people in their homes, but it should have been phased out in the 1950's and 1960's when most working people had incomes capable of supporting the structure of the economy. The Reagan tax cuts should not have been passed by Congress. NAFTA, GATT, the WTO, etc should never have been approved. Our manufacturing sector should not be outside of our borders, and the derivatives market should not have been allowed to exist. Thank you Ronald Reagan, George H. W. Bush, Bill Clinton and the Congress of the 1990's. The Democrats in Congress in the 1990's were a joke, with a few exceptions like Paul Wellstone.

It's a mess. The solution is to get back to what worked. Tariffs to keep manufacturing and jobs here, and a tax code designed to prevent the corrupting influence of extreme wealth and power from accumulating in too few hands. Health care for everyone, College or the Trades for everyone who wants to work (most of us), and high civic participation. A banking system and economic system that rewards work, keeps wealth growing in local communities, and strong families supported by those strong communities.

That's what I want, that's what I'm working for, that's what I'm pushing for.


---Original message---

Why is it we don't read about this or hear about this in the major media?

Because this is written by a Republican.

Here is an explanation of the current economic situation showing the unintended consequences of well-intentioned acts.
I would only add that the Bush administration didn't do anything to derail the ever-worsening situation either.

This crisis was caused by political correctness being forced on the mortgage lending industry in the Clinton era.
Before the Democrats' affirmative action lending policies became an embarrassment, 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.
Instead of looking at "outdated criteria," such as the mortgage applicant's credit history and ability to make a down payment, banks were encouraged to consider nontraditional measures of credit-worthiness, such as having a good jump shot or having a missing child named "Caylee."
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! The New York Times reported that Fannie Mae and Freddie Mac were "under heavy assault by the Republicans," but these entities still had "important political allies" in the Democrats.
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.
Political correctness had already ruined education, sports, science and entertainment. But it took a Democratic president with a Democratic congress for political correctness to wreck the financial industry.

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