Monday, October 13, 2008

McClatchy Lies to Protect Fannie, Freddie, Barney and the Dems

So, the claim is that McClatchy slams the premise that Fannie and Freddie caused this, by cherry-picking this bit of the article:

Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis. Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006. 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. The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.

Wow, that looks damaging doesn't it. Then we grab a more important piece from the SAME article:

Fannie, the Federal National Mortgage Association, and Freddie, the Federal Home Loan Mortgage Corp., don't lend money, to minorities or anyone else, however. They purchase loans from the private lenders who actually underwrite the loans. It's a process called securitization, and by passing on the loans, banks have more capital on hand so they can lend even more. This much is true. In an effort to promote affordable home ownership for minorities and rural whites, the Department of Housing and Urban Development set targets for Fannie and Freddie in 1992 to purchase low-income loans for sale into the secondary market that eventually reached this number: 52 percent of loans given to low-to moderate-income families.


So, of course, they want to blame deregulation, but what they fail to mention is that Fannie and Freddie bought up the risky loans from Private Issuers like hot-cakes, and investors bought the mortgage back securities that they issued. Why would they do that? Oh yeah, Fannie and Freddie were GSE's and the implicit Uncle Sam guarantee allowed them to write checks that couldn't be cashed.

Sure, they can say it is racist to blame ACORN, Fannie or Freddie, just because they say it doesn't mean it is true. The fact is, Government intervention in free markets caused this issue, plain and simple. The idea that every American can own a home caused this issue. With Obama spouting that we need to spread the wealth around, it seems to me we'll get more of this meddling in the future - Karl Marx style.

In Response To: McClatchy Debunks Latest Conservative, Racist Pack of Lies

3 comments:

Bob Campbell said...

The idea that private companies caused the financial collapse in the Unites States is absurd. All lenders are subject to Federal law when it comes to lending. The Federal government sets the standard. When the Clinton Administration started the "strong-arm" tactics on Lenders and forced them to loan to low-income and minority families that set the ball rolling. The bubble would not have grown if Fanny May and Freddie Mac were not provided the funding (thank you Barney Frank and Chris Dodd) to insure the bad loans. It is primarily the politicians that were buying votes who allowed the system to grow. By circumventing the free market they created the next best socialistic give-a-way known to man, "the free home." Take it one step further and look at how Investment Banks made it worse by packaging and selling sub-prime loans to the public. In that case you might be able to blame private companies, but bottom line, if the Fed had not created the sub-prime business in the first place, the banking collapse as we know it today would be quite a different story.

So you pundits out there who want to blame private corporations on all the ills of society need to take a hike. Your rhetoric sounds like pure liberalism to me and is sounding tired and old. The liberal always tries to blame someone else. Why not look in the mirror and place the blame squarely where it belongs, with big government, reckless spending, and liberal politics.

Mundy said...

Say it Louder!!!

Anonymous said...

For those who really care about this issue, only Bob Barr, the Libertarian Party candidate is moral enough and conservative enough to deal with this issue and the rest of the current mess.

Here’s a recent press release from Bob (who has the backing of Rep. Ron Paul):

Press Releases › Wall Street Benefits Twice from Bailouts

October 11, 2008 11:36 am EST

Senator John McCain attempted to disguise reality by calling the $700 billion Wall Street bailout a “rescue,” but it’s obvious that the only people he and his colleagues were rescuing were the executives who had made bad investment decisions, as well as the politicians who had pushed increased mortgage lending, irrespective of cost, triggering today’s crisis. Now it turns out that the companies getting bailed out will benefit twice.

Most everyone has seen the story of how executives at AIG partied at a resort after the taxpayers were stuck with the bill for an $85 billion bailout—now being supplemented with another Federal Reserve loan of $37.8 billion. But what’s $440,000, including more than $23,380 for spa services, among friends when the taxpayers are paying?

Normally politicians wouldn’t have any business complaining about the cost of a corporate retreat, but what might be unexceptional for high-flying companies in a booming economy becomes outrageous when taxpayers are getting stuck with the bill. In this case they are paying twice, with the company collecting a new loan because its bottom line is even worse than originally thought.

Loan-two to AIG is small change compared to the extra benefits that Wall Street will receive. Many of the largest firms will be going to the spa, figuratively, at least. You see, someone has to manage all of the securities and other assets that the government plans on buying with taxpayer funds. And who better to manage them than the very companies that bought the bad paper in the first place!

The Treasury Department has requested proposals for asset managers, and according to the Wall Street Journal, the government “wants large, established firms with significant assets to work for the government’s program.” That means managing at least $25 billion, and in some cases at least $100 billion, in private assets. There will be a lot of money in fees—typically 1 percent of the assets managed, which could come to as much as $7 billion a year or more if government purchases go past $700 billion, as is widely expected.

Wall Street is looking forward to milking this latest cash cow. Since government jumped into the investment business, the Journal tells us that “a range of firms—from large investment banks to boutique real-estate companies—have been angling to grab some of the advisory business.” Representatives of some companies showed up in Washington to lobby even before Congress approved the bailout. And who can blame them? The Journal reports that “sales, financing and other traditional forms of real estate business have dried up with the credit crisis.”

Of course, most of these firms helped cause that very crisis. Most of the companies bidding for government business are suffering big losses and preparing to unload lots of bad paper on the government. Bad paper that other big companies with big losses and lots of bad paper will manage.

And so the circle will go on endlessly, at taxpayer expense.

The only problem is potential conflicts of interest, since companies will, notes the Washington Post, “be managing the assets while also selling their own troubled securities to the government.” But officials say they will attempt to “minimize” any conflict. No doubt, Washington won’t let a little thing like ethics stand in the way of letting everyone on Wall Street profit.

Indeed, politics are starting even before the president’s signature on the bill is dry. One analyst predicts that the Treasury Department will focus bailout funds on regional banks and thrifts, thereby providing “critical political support for Treasury’s efforts.” After all, “Congressmen who had to swallow hard to vote for this think will feel a lot better about it if they see the impact in their local communities.” Which is just another name for pork, like the spending programs and tax preferences loaded into the $700 billion bailout bill to win votes for passage.

All of this is politics as usual in Washington, and it won’t change whether Sen. Barack Obama or Sen. John McCain is elected president. Both of them supported the $700 billion Wall Street bailout, as well as the many other bailouts that preceded it. Both of them are part of the political establishment that helped create today’s economic problems. Neither of them will take the steps necessary to ensure that this sort of economic crisis doesn’t hit again. Only Bob Barr and the Libertarian Party are offering the sort of fundamental change that the American people need and deserve.

And here’s an article about the upsurge of interest in Bob Barr from the Atlanta Constitution:

The Wall Street debacle and the Barr effect

Friday, October 10, 2008, 04:20 PM

The Atlanta Journal-Constitution

Just checked in with Russ Verney, the campaign manager for Libertarian presidential candidate Bob Barr.

Verney said the Wall Street crash and bailout has revived Barr’s standing as a factor in the 2008 presidential race.

“We’re seeing an enormous amount of activity coming in from the web site, from people opposed to the bailout,” Verney said.

Many are die hard Republicans, he said. “They’ve had it, they’re coming over and they’re bringing their friends.”

This low-key but effective criticism of the $700 billion Wall Street rescue, videotaped in Barr’s Smyrna headquarters and posted on YouTube, is driving much of the traffic.

Verney said Barr’s new standing in the presidential campaign remains hard to measure. “Most of the polling eliminates us,” he said — under the label of “other.”

Here’s Bob’s Web site: http://www.bobbarr2008.com/