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While President Clinton was putting the Community Reinvestment Act on steroids in the 1990's to move our financial industry to move heavilly into the subprime lending market, Community Organizer Obama was on the grass roots end of it assisting the far left organization ACORN and bringing law suits against banks to force them to engage in subprime lending. (See here). Maintaining lending standards was apparently racist, don't you know. Stanley Kurtz follows up with his article on this in an interview with Fox News
Tuesday, September 30, 2008
Obama, ACORN, & The Subprime Crisis
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3 comments:
This is just unbelievable - there isn't anything out there that is good about Obama.
What is unbelievable is the campaign of lies and deception about Obama. The truth of the matter is the subprime crisis was caused in large part by the Bush Administration policies between 2001 and 2006 as well as the Republican congress who was the majority party for 12 of the last 13 and 1/2 years. The documentation of this is incredible.
The Bush Administration created "America's Homeownership Challenge" in 2001/2002 to push private lenders and Fannie and Freddie to "loosen credit" standards and to create more "creative loan products" to get low income and minorities into loans. Under Bush's "leadership," we had the largest increases in subprime loans in U.S. history. Check Bush's own White House press releases on this. Bush and the Republican Congress pushed these loans to stimulate Housing to keep the economy out of a recession. Bush and the Republican Congress challenged the private sector to make 1.1 trillion dollars in low income and minority loans and they "accepted his challenge."
Then, Bush and the Republican Congress threatened Fannie and Freddie. Bush said that Fannie and Freddie were "trailing the private sector" in making low income and minority loans and that the Administration would rewrite their charters in 2003, when they were set to expire, if they did not make more low income and minority loans. In response to Bush's "Challenge" or threat, Fannie and Freddie committed to increase their loan income and minority loans by 66 percent to 700 billion dollars. Bush said that was not enough and he mandated that Fannie and Freddie offer the same risky loans available in the private sector. Bush created his Zero-down initiative, forcing Fannie and Freddie to offer Zero-down loans. Then, through HUD, he mandated that they offer risky, 3, 5, and 7 year arms too. The Republican Congress also passed America's Dream Downpayment Act which gave taxpayer dollars to give low income people and minorities, with no savings and blemished credit, downpayments so that they could buy a home. So, to stimulate the economy, Bush and the Republican Congress pushed for lower interest rates, lower credit standards, and more "creative" loan products.
The problem with this is that the riskiest loans were pushed on the riskiest buyers. When the arms started to adjust and interest rates started to shoot up, many could not afford to pay the closing costs to refinance. Many others could not refinance because their homes were now worth less than they owed on the homes. Bush and the Republican Congress did indeed stimulate housing and the economy, all to our detriment now. This is not partisan spin. I served in the Republican party for 3 years. The documents are all available online. Look for "America's Homeownership Challenge;" America's Dream Downpayment Act; HUD 3, 5, and 7 year arms; and Bush Zero-Down payment initiative.
The anti-CRM arguments sound great, but ask yourself, if local banks were being pushed into making these loans what percentage of the subprime mess do they account for?
A little research provides the answer that about 50% of the loans were made by mortgage companies that don't fall under CRM and another 30% were made by bank affilitates again not falling under any CRM guidelines.
So there was no government mandate for 80% of the loans to be made. What banking regulation forced lenders to create self-verified employment income loans? Who forced S&P and Moodys to sign off on these loans as AAA instruments?
Certainly not the CRA and not Acorn or any other attempt to help out lower and middle income borrowers.
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