Given previous comments by Mr. Smith, taxpayers may soon be longing for the return of acting FHFA director Edward DeMarco. The Journal reports that, at a 2007 Senate hearing, Mr. [Joseph] Smith blamed predatory lenders and a lack of federal regulation for the housing crisis. Blaming the bankers and calling for more bureaucracy will earn Mr. Smith plenty of new Beltway friends, but if he remains unaware of the myriad steps regulators took to inflate the credit bubble and misallocate capital into housing, then no one should expect him to drive reform.
1. robroy wrote:
There was an interesting op-ed piece by the conservative African American woman, Star Parker, that had some bullet points that I was not aware of:
Whereas in 1990 a tiny fraction of mortgages had downpayments less than 3%, by 2006 “an estimated 30% of all homebuyers put no money down.”
According to Pinto’s AEI colleague Peter Wallison, by 2008, “almost 50% of loans…were subprime…and two thirds of them were held by government agencies or firms required to buy them by government regulations.”
And they re-elected Barney Frank.
One of the comments from the WSJ article:
November 16, 9:25 am | [comment link]
It’s amazing to me that the FMs have gone 15 months without replacing the previous director and now coming up with another “advocate for affordable housing” for “all” Americans. We don’t need people in Washington advocating that “everyone” deserves to be a homeowner.
2. Jim the Puritan wrote:
The financial collapse was not caused by the markets. It was caused by government: Fannie, Freddie and the Community Reinvestment Act, and the government requiring and/or underwriting trillions of dollars of bad loans. Bank of America alone was required to commit to making $1.5 trillion in non-market qualified investments, including $1 trillion in subprime real estate loans, in return for needed government approvals.
From the BOA website:
$1.5 trillion Community Development Goal
Announced in 2008, our Community Development lending and investment goal - $1.5 trillion over 10 years - is our most ambitious yet, and the largest community development goal ever established by an American financial institution. This ambitious goal, which commenced in January 2009, replaces the previous goal of $750 billion. For final four-year results, click here.
To this day, the government will not tell you why our economy collapsed, but that is why. The making of these loans is still going on, despite the financial debacle our country is in. See “Bank of America ahead on $1.5 trillion pledge,” Charlotte Observer, 5/27/10. http://www.charlotteobserver.com/2010/05/27/1462108/bank-of-america-ahead-on-15-t.html Why? Because of the financial bailouts, the federal government now effectively controls BOA and many other financial institutions and can continue to force them to make bad loans to prop up the economy. States BOA, as to why they are continuing to make billions of dollars in loans to prop up the government’s social policies, without regard to whether they are prudent:
“The importance of extending credit and making direct investments into America’s underserved communities cannot be overstated, as our nation’s economic recovery depends on the stability of these neighborhoods,” Andrew Plepler, Bank of America’s global corporate social responsibility and consumer policy executive, said in a statement.
It is a scandal of unbelievable proportions, and the media will not breathe one word about it. But one of these days, the house of cards is all coming down. At the rate we’re going, sooner rather than later.
November 16, 1:58 pm | [comment link]
3. Septuagenarian wrote:
Who was President in 2006?
What Party controlled the House and Senate in 2006?
November 16, 2:30 pm | [comment link]
4. Jim the Puritan wrote:
Fannie and Freddie were controlled by ex-Clinton administration members, including Jamie Gorelick and Fanklin Raines. The Bush Administration began sounding warnings regarding the housing bubble being created by Fannie/Freddie when it came into office in 2001, but all attempts to rein Fannie / Freddie and the CRA in were blocked by Barney Frank and the Democrats. It had become their social action piggy bank.
You can see a number of videos setting forth the timeline of the Fannie/Freddie corruption problem here:
Also read articles like this from Slate:
November 16, 2:55 pm | [comment link]
5. robroy wrote:
The real insanity is allowing Fannie and Freddie, both public government sponsored enterprises (GSE), to lobby Congress. It’s pretty much like having the Department of Energy lobby congress using government money (that is to say OUR money) to get more money.
November 16, 3:48 pm | [comment link]
6. Capt. Father Warren wrote:
Jamie and Franklin had a direct interest in going along with Barney: it was called BONUS and they raked in millions. They could have cared less about Pres Bush or John McCain when he tried to warn of the mortgage crisis to come. In fact, wasn’t it Maxine Waters who declared “we have examined the situation and F & F are doing just fine”? Maybe Maxine meant F & F were doing just fine by her husband’s bank that had its nose in the public trough also?
November 16, 4:56 pm | [comment link]
7. Jim the Puritan wrote:
A lot of people lined their pockets in this pit of government corruption and no one has been prosecuted or gone to prison.
November 16, 5:09 pm | [comment link]
8. Septuagenarian wrote:
Again. Who was President in 2001 through 2008?
What party had control of the House of Representatives from 1995 through 2006? Surely a majority of Republicans could block anything Barney Frank was doing.
What Party controlled the Senate from 1995 through 2006 except for the period from June 2001 through 2003?
Surely a President and a Party controlling Congress could do more than “warn.” Who was minding the store? Where did the buck stop?
November 16, 5:51 pm | [comment link]
9. Capt. Father Warren wrote:
“Who was minding the store?”
Barney, Maxine, Chris, Jamie, Franklin, and the whole ACORN effort to pressure the banks to make risky loans that F & F were only too happy to buy on behalf of taxpayers everywhere.
Again, when McCain sounded the alarm over F & F, Barney and Maxine were johnny on the spot to coo sweet assurances that “everything was alright”, and the rest is (sadly our) history.
November 16, 7:03 pm | [comment link]
10. Septuagenarian wrote:
Again, which party had a majority in the House of Representatives from 1995 through 2006? (Hint: It wasn’t the party of Barney, Maxine, Chris, Jamie, Franklin, and ACORN.)
Which party had a majority in the Senate from 1995 through 2006 except for 31 months? (Hint: It wasn’t the party of Barney, Maxine, Chris, Jamie, Franklin, and ACORN.)
Who was President from 2001 through 2008? (Hint: It wasn’t Clinton.)
If Fannie Mae and Freddie Mac were acting irresponsibly why didn’t the administration submit legislation to its majorities in the House and Senate to correct the problem? Why didn’t the majorities in the House and Senate introduce legislation to correct the problem?
If the Community Development Act was so awful, why didn’t the administration submit legislation to this majorities in the House and Senate to correct or repeal it? Why didn’t the majorities in the House and Senate introduce legislation to correct or repeal it?
Barney and Maxine were not in charge in the House. That other party was. Bush should have done more than “warn;” after all he was the President. McCain should have done more than “sound the alarm;” after all he was with the majority in the Senate for over 100 months from 1995 through 2006.
Who had oversight responsibility in the legislature? (Hint: It wasn’t the party of Barney, Maxine, Chris, Jamie, Franklin, and ACORN from 1995 through 2006.)
Where did the buck stop? (Hint: It wasn’t Clinton from 2001 through 2008.)
The President and that other party could have stopped the mess. They chose not do so.
November 16, 11:24 pm | [comment link]
11. Sick & Tired of Nuance wrote:
You asked: “If Fannie Mae and Freddie Mac were acting irresponsibly why didn’t the administration submit legislation to its majorities in the House and Senate to correct the problem? Why didn’t the majorities in the House and Senate introduce legislation to correct the problem?”
I believe the answer is “race card”. The moment anyone tried to rein things in, they were accused of being racists…which as we all know is a thought crime. It is a devilishly sticky label hurled with great effect by the Left to get their way when they can’t win by persuasion. Funny thing though; ever since we voted in Obama it has started to lose its power. People are starting to actually think about the issues rather than feel the issues. I hope it lasts. Spin is becoming less effective too. Oh yes, the old refrain that “it is Bush’s fault” has become nearly useless because Obama focussed like a laser on Obamacare rather than the economy and fixing Fannie and Freddie. What a waste of a good crisis.
Did you hear that R. Emanuel has admitted that he never wanted bipartisanship? Oh, and Charlie Rangel is guilty.
November 17, 4:57 am | [comment link]
12. robroy wrote:
That Freddie and Fannie weren’t reined in by Republicans is why Republicans got their butts handed to them in 2008. Are tax and spend Republicans as bad as tax and spend Democrats. At least the “compassionate” Republicans were sounding warning bells instead of denying the problems but the end result is the same - taxpayers stuck with a staggering bill.
Criticize the RINO’s (McCain, Bush, Murkowski, Snow, etc.) all you want. I will give you a big, “Amen, brother”.
November 17, 5:12 am | [comment link]