XPost: alt.non.racism, alt.politics, alt.society.liberalism   
   XPost: talk.politics.misc   
   From: here@home   
      
   On Thu, 23 Oct 2008 12:21:54 -0700, "Gandalf Grey"   
    wrote:   
      
   >So. Jack, what's the underlying cause of the   
   >financial crisis?   
      
   How A Clinton-Era Rule Rewrite Made Subprime Crisis Inevitable   
   By TERRY JONES   
   INVESTOR'S BUSINESS DAILY | Posted Wednesday, September 24, 2008 4:30   
   PM PT   
      
   One of the most frequently asked questions about the subprime market   
   meltdown and housing crisis is: How did the government get so deeply   
   involved in the housing market?   
      
      
   The answer is: President Clinton wanted it that way.   
      
   Fannie Mae and Freddie Mac, even into the early 1990s, weren't the   
   juggernauts they'd later be.   
      
   While President Carter in 1977 signed the Community Reinvestment Act,   
   which pushed Fannie and Freddie to aggressively lend to minority   
   communities, it was Clinton who supercharged the process. After   
   entering office in 1993, he extensively rewrote Fannie's and Freddie's   
   rules.   
      
   In so doing, he turned the two quasi-private, mortgage-funding firms   
   into a semi-nationalized monopoly that dispensed cash to markets, made   
   loans to large Democratic voting blocs and handed favors, jobs and   
   money to political allies. This potent mix led inevitably to   
   corruption and the Fannie-Freddie collapse.   
      
   Despite warnings of trouble at Fannie and Freddie, in 1994 Clinton   
   unveiled his National Homeownership Strategy, which broadened the CRA   
   in ways Congress never intended.   
      
   Addressing the National Association of Realtors that year, Clinton   
   bluntly told the group that "more Americans should own their own   
   homes." He meant it.   
      
   Clinton saw homeownership as a way to open the door for blacks and   
   other minorities to enter the middle class.   
      
   Though well-intended, the problem was that Congress was about to   
   change hands, from the Democrats to the Republicans. Rather than   
   submit legislation that the GOP-led Congress was almost sure to   
   reject, Clinton ordered Robert Rubin's Treasury Department to rewrite   
   the rules in 1995.   
      
   The rewrite, as City Journal noted back in 2000, "made getting a   
   satisfactory CRA rating harder." Banks were given strict new numerical   
   quotas and measures for the level of "diversity" in their loan   
   portfolios. Getting a good CRA rating was key for a bank that wanted   
   to expand or merge with another.   
      
   Loans started being made on the basis of race, and often little else.   
      
   "Bank examiners would use federal home-loan data, broken down by   
   neighborhood, income group and race, to rate banks on performance,"   
   wrote Howard Husock, a scholar at the Manhattan Institute.   
      
   But those rules weren't enough.   
      
   Clinton got the Department of Housing and Urban Development to   
   double-team the issue. That would later prove disastrous.   
      
   Clinton's HUD secretary, Andrew Cuomo, "made a series of decisions   
   between 1997 and 2001 that gave birth to the country's current   
   crisis," the liberal Village Voice noted. Among those decisions were   
   changes that let Fannie and Freddie get into subprime loan markets in   
   a big way.   
      
   Other rule changes gave Fannie and Freddie extraordinary leverage,   
   allowing them to hold just 2.5% of capital to back their investments,   
   vs. 10% for banks.   
      
   Since they could borrow at lower rates than banks due to implicit   
   government guarantees for their debt, the government-sponsored   
   enterprises boomed.   
      
   With incentives in place, banks poured billions of dollars of loans   
   into poor communities, often "no doc" and "no income" loans that   
   required no money down and no verification of income.   
      
   By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12   
   trillion U.S. mortgage market — a staggering exposure.   
      
   Worse still was the cronyism.   
      
   Fannie and Freddie became home to out-of-work politicians, mostly   
   Clinton Democrats. An informal survey of their top officials shows a   
   roughly 2-to-1 dominance of Democrats over Republicans.   
      
   Then there were the campaign donations. From 1989 to 2008, some 384   
   politicians got their tip jars filled by Fannie and Freddie.   
      
   Over that time, the two GSEs spent $200 million on lobbying and   
   political activities. Their charitable foundations dropped millions   
   more on think tanks and radical community groups.   
      
   Did it work? Well, if measured by the goal of putting more poor people   
   into homes, the answer would have to be yes.   
      
   From 1995 to 2005, a Harvard study shows, minorities made up 49% of   
   the 12.5 million new homeowners.   
      
   The problem is that many of those loans have now gone bad, and   
   minority homeownership rates are shrinking fast.   
      
   Fannie and Freddie, with their massive loan portfolios stuffed with   
   securitized mortgage-backed paper created from subprime loans, are a   
   failed legacy of the Clinton era.   
   _________   
      
      
   >   
   >"Way Back Cracker"  wrote in message   
   >news:4900caf9.26887062@news.newsguy.com...   
   >>   
   >> Trailer park cracker forced to 'marry' pig   
   >>   
   >> A trailer park man has been forced to take a pig as his "wife", after he   
   >> was caught having sex with the animal.   
   >   
   >Fixed that for you, cracker.   
   >   
   >   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)