Paper: Private Sector Loans Triggered Financial Crisis, Not Fannie Or Freddie

McClatchy:

As the economy worsens and Election Day approaches, a conservative campaign that blames the global financial crisis on a government push to make housing more affordable to lower-class Americans has taken off on talk radio and e-mail.

Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.

Read the whole story: McClatchy

Comments

[BBackSoon]

My work group went out for lunch last Friday; we have 4 of the 6 that are 60+ and ultra conservative. When the conversation turned to the financial markets 2 of the Old guys bitterly spouted FIX/Limbaugh talking points about how it was the lending to the unwashed masses. I tried in vain to get the point that there was no way that this whole thing hinged on a bunch of $50k - $100k loans. First the $700b bailout package could put $200k+ into the pockets of each adult in this country so the math simply didn’t work. And I also argued that we were not talking about every loan being bad. We only have foreclosures in the range of what 10 or 15%? During the Great Depression those numbers were around 50%.

Needless to say my arguments meant little and perhaps my points were not as clear as they should be, but in the recent weeks I am amazed how many people are willing to blame poor minorities for all of this bad debt. How can you think poor people have taken almost a Trillion dollars out of our economy? Poor people if they did get all that money would simply spend it and it would actually help.

But then what do I know, it appears I am just a liberal that doesn’t understand the world of high finance like all the Right Wing faithful.

[kapo]

So let me get this straight, Republicans are now against home ownership by blacks (sorry, minorities) and poor people? The government is not to attempt to encourage property acquisition in these groups?
In actual fact Republicans were among its most enthusiastic supporters since Thatcher taught them that property owners were most likely to vote conservative. In the Soviet Union they used to say that history can be so full of surprises, since it is always being rewritten. Will be interesting to see how this racist tactic plays out over the next few years.

[DeSwiss]

Unfortunately, those wonderful efforts you speak of included defunding as many social programs as they could in the process. Like housing counseling. Which would have made homeownership more feasible and would have excluded the use of stupid loan agreements like subprimes for low-income families.

I know, I was there when the Heritage Foundation was first born. They inundated HUD wih their market-based housing ideas which were basically a load. Their example: Thatcher's sale of "Council Housing" in Britain, could not be replicated here in the US. Why? Because the Republicans wanted everything to be funded through the private market banks. And they weren't biting.

Many of these same areas where minorites lived had become prime real estate for gentrifiers, Yuppies, etc. So why sell housing in these nieghborhoods for a pittance, and some lofty goals of helping the poor, when you can make out like a bandit and get the feds help subsidize your project through Community Development Block Grants to boot?

Try again.....

[littlepuffycloud]

Seriously, should we pull our meager savings out of the bank and keep cash in the house? Trying not to get panicked, but losing 40% of 401K in 3 weeks has caused great concern.

[KillTheMessenger]

Why would you keep cash in the house? You can keep it on FDIC insured bank accounts. Up to $100k/account. And you can have several of those on several banks. Unless you have more than $5 million (in which case you wouldn't be asking) this is a perfectly safe way of keeping your money in the bank.

[research]

It's 250k per account now.

cash in the bank is one of the safest bets right now.

[darthdarcy]

The full article is really good and important, it exposes the racist scapegoating the Republicans and Fox News are engaged in..!

[totalliberal]

"In its report Thursday, the World Economic Forum said a recent survey of global executives found that Canada had the world’s financially soundest banks, followed by Sweden, Luxembourg and Australia.

The United States, where major Wall Street investment banks, brokers and insurers have collapsed in recent weeks, ranked 40th in the world, "

I guess strict government regulations do work.

[sonoffestus]

Yup, glad I moved to Canada in 05! Now, if I could only vote against Harper to stop a majority government I'd be really happy. At least I was able to vote for the O - MAN. Yeah, That one!

[KillTheMessenger]

Only if you want stable economies. If you love bubbles, bursts, bank runs, bankruptcies and loads of fun, deregulation is better.

:-)

[sonoffestus]

Maybe it's time to invest in gum.......­..........­....what, too late for that you say.

[Tanyars5]

I am actually comforted some by the post below. Lets hope the word gets out about this lie. I want JM and the empty vessel SP to answer questions about this subect. JM has been in congress for years how anyone would vote for a man who been part of the "system" is beyond reason. Keep the facts coming!!!!!! OBAMA Biden 08!!!!!!!!!

[sonoffestus]

Yup, yup, it's always those po folk, blacks, homos that screw everything up for us white wealthy christians. Oh, did I forget those jews, yeah, those people. Boy,if everyone was white and wealthy we wouldn't be havin problems.

Can we send all the racists and bigots somewhere far, far away. Tell me we can, please , please.

[Carolab]

...a nd look who is sitting at the top of the pyramid, laughing down as the peons scramble around, blaming immigrants, Muslims and others for the situation: the new class of uber-wealthy robber barons. Mission accomplished, indeed.

[KillTheMessenger]

Don't excuse racism and failed education with some mythical scheming overloards. If some can't do better than to listen to Rush, it's their own failed lives that drive them into the arms of hate mongers.

[memojames]

This is from "The Greeks and Greek Civilization " by Jacob Burckhardt about declining Athens in the middle of the fourth century B.C.E.

"Fingers were pointed at some who had come from beggary to riches, or from obscurity to eminence, who built themselves splendid houses, and whose rise in the world kept pace with the decline of the state; but even when they had committed the worst crimes and were publicly accused, they were acquitted in return for producing a couple of favours, and if one was found guilty, it was only for a trivial offence. Athens still clung to these men though they had deceived her a thousand times; the explanation was that they always succeeded in posing as friends of the people....­"

[KillTheMessenger]

Yawn. Everyone with half an education knows that this isn't exactly happening for the first time. That's just one of the reasons why they want you to read at least on Greek Drama in high school. Better maybe even a couple.

[hypnotoad72]

Conservatives blaming plans to make housing more affordable?

What about the “American Dream Down Payment Act” of 2003?

And I quote: "Homeownership is more than just a symbol of the American dream; it is an important part of our way of life. Core American values of individuality, thrift, responsibility, and self-reliance are embodied in homeowners­hip."

Conservatives and pretty much everyone yummed it up back then.

[mellene]

Isn't it ironic that the Republicans are still spreading lies about this, trying to blame the poor again in this country. Have they no moral compass--guess not.

[Americatortures]

They view politics as WAR! The Dems, unfortunately, view politics as a hobby to be played with every 4 years!! They have no moral compass with regard to ANYTHING..­.but to take away our rights!!!

[Carolab]

By "they", I assume you mean "Republicans".

[MadAppraiser]

Secretary Paulson rushed through Washington, DC Congressional chambers to avert an economic calamity first set in motion by the financial sector early in the 20th century, and destined to occur before he was born! Mortgage lender administrative mismanagement in concert with Wall Street’s secondary market intricate debt distribution mechanisms caused the financial market collapse to occur at an accelerated rate, but the economic collapse was a built-in design feature of a credit based economy. When the multiplying factor of increasing compounding debt exceeds the financial sector’s economic resources to sustain those debt mechanisms, the credit lending processes stop.

The early 20th century Wall Street interests, and American bankers met their 2 original objectives in terms of federal government economic policy implementation, and redistribution of American wealth to the top 1% of the population. America comprehends the expensive economic folly of trickle-up, and free market economics (financial sector license to cheat). The American economist, and Wall Street financial wizards will have to develop new terminology to define new economic methodology for expensive lying, cheating and stealing from American citizens.

[Carolab]

I'm just going to repost what I linked which is now the last post on this thread. If you don't get this, I don't know what else there is to say.

http://www.buzzflash.com/hartmann/05/07/har05007.html

[Carolab]

An excerpt from the above synosis:

"...when it becomes widely known that the real crisis is that Reagan set the course to steal Boomers' Social Security savings, it will destroy the reputation of both supply-side economics and the Republican Party for generations to come.

And the Social Security fraud just outlined is only the beginning.­..Greenspa­n steadily worked for over two decades to sell out America's sovereignty and economic interests to those of the multinational corporations he so loves, and to sell out the working people of America (and their Social Security Trust Fund) to the super-rich who Greenspan has always represented.

Greenspan manipulated the stock market so his buddies could get rich, then warned them just in time to get out before it blew up. He's kept together tax cuts and pay increases for the CEO class by pumping cheap money into the economy so the Middle Class will go ever deeper into debt, setting up a housing bubble that could crash in a way that would make 1929 look like a mild bump in the economic road. And he's helped engineer and support international "free" trade policies that have disemboweled America's manufacturing and information technology sectors, with the happy result for Republicans that the once-polit­ically-act­ive and heavily unionized middle class is being replaced by a politically impotent mass of the working poor, too busy to worry about politics or challenge corporate news. "

[ErnestineBass]

BRAVO!

I've been an avid Project Censored reader for years. Thomas Hartmann is da man!

[Americatortures]

This needs better placement on the home page!! This story will expose the scoundrals in the GOP like Froggy Phil Gramm and McSubprime and the fabrications they're telling the public!!

[bygollymissmolly]

contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.
----------­----------­-
That's a bunch of BS and they know it. The law that was passed did not tell the financial institutions to make bad loans, it told them they couldn't discriminate by not lending to a credit worthy person just because they were a minority or lived in a "flagged" neighborhood. The financial institutions made the decision to make these bad predatory loans on their own. It was no risk for them because they immediately sold the paper on the loan to financial institutions which bundled the bad loans in with good loans and sold them as a commodity. There was zero reason for them to not make the bad loans because they got their money up front and passed the bad loan onto someone else. And all this comes because of the deregulation of the financial industries coordinated by the likes of John McCain, Phil Graham and other complicit Republicans.

[Carolab]

Correct. And ACORN fought predatory lending.

[Americatortures]

Too bad the Obama campaign doesn't tell it like you did!! They had a chance to clear this up over 2 weeks ago.....an­d can't seem to get out the words that prove McSpinit is lying about this !!

[MadJeffersonian]

As always, Rethugs need to create a "boogeyman" or some bogus enemy to rail against. This election cycle, it is minorities.

"The world economy, particularly our American economy, has been destroyed by minorities. It's ALL THEIR FAULT."
I'm a thoughtless xenophobic Rethug, and I approve of this message.

[Carolab]

And by extrapolation: it's all Obama's fault. Dimwits.

[bluekatz]

The repupugs don't realize how stup*d that sounds to blame the poor people for this mess. When they started spewing this mess I asked a few dumba^^ where did the poor and barely able to afford get the money in the first place? See they could not answer and then the education lesson began. It was not the minorities but the fact that you had no regulations in the markets. There was not oversight. The cooking of the books and the derivatives is what sank this economy. This was put in play a long time ago and the neocons just did not know how bad this would have backfired.

[Carolab]

No, they knew. And they have plans.

[research]

The Conservative GOP core belief in Deregulation caused the economy to crash.

Again.

FDR, the the president the GOP hates the most, saved the economy and capitalism by busting up the banks and regulating the economy.

Capitalism and the free market are powerful, like fire, and dangerous if not regulated.

As soon as the GOP had dismantled enough of FDR's regulations, the Economy crashed.

All the blather about the GOP "wanting" regulation is pure "Big Lie" BS.

BushCo appointed the director of the Fanny and Freddi.

The GOP had absolute control of the government for 6 years, and absolute veto power in the last 2 years. (remember the Nuclear option?)

Laugh in the face of anyone who tries to deflect blame for this economic crisis away from the conservatives and the GOP.

[GrainOSand]

Send Fox a box of laughter.