Few things are simplex, most are complex – and when it comes to the current financial meltdown, the failures go beyond complex to multiplex.
Simplex, Complex, Multiplex
Few things are simplex, most are complex – and when it comes to the current financial meltdown, the failures go beyond complex to multiplex. No depression coming, but a serious recession – here’s a lecture that enumerates the multiple sources of the multiplex stall we are in.
* My wife has a quibble with the statement on underwriting standards – she says in the bigger institutions the underwriting standards were there, but were too often over-ridden by Regional Managers to hit volumes. If regulators don’t pay attention to who can over ride an Underwriter’s “NO way in Hell!” as well as the securities risk managers, then we will just be back here in a few decades.
Senator Obama has worked hand in glove with ACORN, the group under investigation for voter fraud in many states, for many years. You won’t find our press reporting these connections, so if you want the true facts on Barack Obama sometimes you have to read foreign papers, strange as it seems. Here you seen an article at Canada Free Press that outlines those recent legislative ties:
Not only did Senator Barack Obama’s presidential campaign pay more than U.S. $800,000 to a front of the Association of Community Organizations for Reform, Now, ACORN, currently under investigation in a dozen States for voter registration fraud and bribery schemes, for “get-out-the-vote-efforts”; Obama co-sponsored legislation called the “Helping Families Save their Homes in Bankruptcy Act of 2007”– that was supported by ACORN and protects them.
On the surface the goal was noble, but like his record with the Chicago Annenberg Challenge, Barack’s efforts on the housing front led to zero results, unless you want to look at the monumental meltdown of financial companies from choking on sub prime loans forced down their throats, which is a very bad result. If you go to the areas Obama organized in, if you look at housing in his state, you see people no better off or worse off. See Here.
Acorn has fought foreclosures but also supported legislation that enabled this credit market meltdown for almost two decades. They are particularly responsible for helping raise the caps on permissible loan to values, lowering of the standards at Fannie Mae and Freddy Mac (FNMA & GMAC,) as well as legislation that increased the percent of subprime loans they had to carry. So in a way Acorn helped open the subprime floodgates and helped create a whole new class of victims to feed into their political causes.
You won’t see the McCain campaign bring this up for a few reasons. Even though Acorn and Democrat legislators created the sub-prime valley of vultures that poor people were fed into, even though they profited with donations from the very predatory lenders that they trailblazed the market for, it’s a no go simply because the defense will be to show America a non stop calvacade of poor people getting foreclosed upon. Poor people who were sold a dream that was really a nightmare by pernicious legislators who would rather crush our economy than lose an election.
UPDATE: From their 2002 Brochure you can see Acorn lobbying for money for their “credit counseling groups”:
Congress should increase funding for the HUD Housing Counseling program from $50 million to
$75 million, with some of the increase earmarked for foreclosure prevention counseling.
Cities, Counties, States, and the Mortgage Industry should provide funding for community outreach to
borrowers in danger of losing their homes and to housing counseling programs to help homeowners
avoid foreclosure.
States and the Federal Government should set up and provide the start-up money for Rescue Funds (such as the state of Ohio is doing), but these funds should be fully financed by the Mortgage Industry.
What this amounts to is creating victim classes and then using them to shake-down the mortgage industry – it took 20 years, but recently Acorn got what they really wanted through their support of regulations in Congress that led to this very debacle, and they are profiting by it just as much as those fat cats at Countrywide.
We must fix or rollback the securitization provisions of the Community Reinvestment Act or we will simply be back here in ten or fifteen years wailing about another near Trillion dollar bailout. This must stop, neither housing nor credit is a right, and neither banks nor Government Sponsored Agencies like Fannie and Freddie should be required by congress to carry ridicoulously large percentages of SUBPRIME loans. They are called subprime for a reason.
Any candidate for any office who does not make reform of draconian CRA requirements on Fannie and Freddie and banking in general part of their platform should be receiving letters now, and I am including McCain in that.
Am I angry? No, I am enraged at Pelosi’s speech. It seems intended to politicize this and ensure that there is no fix. The Dems are not happy unless we are all poor victims and the economy is tanking because they are party-power first people.
The title of the post says it all.
The American people know who has held the US economy hostage for housing the past few years, it’s time for a new speaker. If the Dems want a vote on this, they can put forward a speaker who is less incendiary. IHT 11/08/2006:
Representative Barney Frank of Massachusetts, who will soon become the head of the House Financial Services Committee, said he and other Democrats who have been advising Pelosi, the party’s leader in the House, were planning to propose a “grand bargain” with business interests.
If the Republicans support the Democrats’ efforts to increase minimum wage, extend student loans and expand affordable housing programs, Frank said, then the Democrats would support efforts to reduce trade barriers and burdensome regulation.
Representative John Dingell, who will head the Energy and Commerce Committee, said that he intended to focus on an energy bill that would make America more independent of foreign oil and another one outlining a bill of rights for patients. He also plans to hold hearings on unfair trade practices that have hurt American industries and workers.
Dingell, who is the chamber’s senior member, said he intended to work with Republicans in crafting legislation because “it’s best to legislate from the middle.” But he also said that “it won’t be the easiest task because the far right has controlled the House and I’m not sure how we can emancipate the Republican party and work with them.”
For some large companies, the Democratic victory is a major one. Fannie Mae and Freddie Mac, the two mortgage finance giants, which have been recovering from accounting scandals, had faced the possibility of tight new oversight laws pushed largely by Republicans. But some powerful Democrats had resisted, preferring to promote the companies’ housing mission over tighter capital standards and portfolio limits.
Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, would be allowed to expand their $1.5 trillion mortgage portfolio to buy subprime loans under a Democratic plan to help struggling borrowers.
Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi and other leading Democrats also called on President George W. Bush to increase funding for foreclosure prevention and appoint a coordinator to oversee the administration’s response to the mortgage-market turmoil in the plan they unveiled today in Washington.
“Our country faces a challenge that threatens the economic security and the dream of homeownership of many of America’s working families,” Pelosi, of California, said at a news conference.
Just a year ago she was begging to shove more crap loans down the american taxpayer’s throats.
Here’s her friends Chuckie Schumer and Barney Frank trying to lower lending standards on homes costing nearly half a million dollars — yes we should give half million dollar homes to people not worthy of credit Chuck & Barney, I mean the taxpayers are always willing to take it up the bum from Dems in congress right?:
Schumer and other Democrats have called on the Office of Federal Housing Enterprise Oversight to relax government restraints barring Fannie Mae and Freddie Mac from buying home loans exceeding $417,000 and from expanding their assets.
The senator introduced legislation last month to let Fannie Mae and Freddie Mac temporarily increase their mortgage portfolios by 10 percent. The bill would also allow the companies to buy loans in “high-cost areas” where values are 50 percent higher than the current $417,000 cap.
U.S. Representative Barney Frank, chairman of the House Financial Services Committee, said Congress would pursue “sensible regulation” to restore investor confidence in the mortgage markets. Frank, a Massachusetts Democrat, said he wants to meet with mortgage lenders to urge them to help borrowers refinance.
“We need the people who hold the paper to be more flexible,” Frank said.
Am I angry? No, I am enraged at Pelosi’s speech. It seems intended to politicize this and ensure that there is no fix. The Dems are not happy unless we are all poor victims with a tanking economy because they are party-power first people.
“From the minute John McCain suspended his campaign and arrived in Washington to address this crisis, he was attacked by the Democratic leadership: Senators Obama and Reid, Speaker Pelosi and others. Their partisan attacks were an effort to gain political advantage during a national economic crisis. By doing so, they put at risk the homes, livelihoods and savings of millions of American families.
“Barack Obama failed to lead, phoned it in, attacked John McCain, and refused to even say if he supported the final bill.
“Just before the vote, when the outcome was still in doubt, Speaker Pelosi gave a strongly worded partisan speech and poisoned the outcome.
“This bill failed because Barack Obama and the Democrats put politics ahead of country.” — McCain-Palin senior policy adviser Doug Holtz-Eakin
More History from 2006 — When the Bankers and the Dems shot the fix for this down in flames.
Here’s the timeline:
Along the same vein, I want to know who in the WUSSANIMOUS Republican leadership decided not to put John McCain’s bill up for a vote in 2006. What are the names?
UPDATE: I’m taking a bit of heat over this post, so let me clarify, I am in favor of doing this save for the credit markets, and unlike most I always have been. What I don’t think we need to do is rush into it and be hammerlocked by expediency into bad choices. Like Steve Forbes I do think it absolutely necessary to prevent a deep recession. However I also have a lot of faith and confidence in both the breadth and depth of our economy, and do not think it would lead to depression.
What we don’t need with it is political posturing of the sort Pelosi pulled that is transparently false and riddled with Bush derangement syndrome. The Dems in the house have fought off any reform or any change to FNMA GMAC and CRA since 2001, to point at Republicans as the cause is very heinous demagoguery and a flat out big lie. She needs to be replaced by the Dems, or she needs to resign, or she needs censure. Holding this bill hostage a day or two until she at least does a mea culpa isn’t going to absolutely kill the economy, and it will give people a couple more days to digest why it’s necessary, and to improve it.
In these hearings you see congressional Republicans calling for better oversight and regulation of the two GSE’s, and you see Democrats beating back any regulation.
First you must read Robert Bidinotto’s synopsis here:
While Barack Obama was getting campaign contributions from Fannie Mae’s Franklin Raines, John McCain was sounding the alarm about the crisis to come and trying to do something about it. On May 25, 2006, McCain spoke on the floor of the Senate on behalf of his proposed Federal Housing Enterprise Regulatory Reform Act of 2005:
Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.
The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.
The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.
For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac–known as Government-sponsored entities or GSEs–and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.
I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
I urge my colleagues to support swift action on this GSE reform legislation
Robert’s done the best collection of pertinent links, after poking through those please read Lee Cary’s piece on the Obama/Daley housing debacle in Chicago at the American Thinker.
This is one of the harder hitting McCain ads so far, but there’s much more that could be said regarding each of the “callouts” in this video, and many others in Obama’s background.
