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'Crony' Capitalism Is Root Cause Of Fannie And Freddie Troubles
IBD Editorials ^ | September 22, 2008 | TERRY JONES

Posted on 09/22/2008 6:05:29 PM PDT by Kaslin

In the past couple of weeks, as the financial crisis has intensified, a new talking point has emerged from the Democrats in Congress: This is all a "crisis of capitalism," in socialist financier George Soros' phrase, and a failure to regulate our markets sufficiently.

Well, those critics may be right — it is a crisis of capitalism. A crisis of politically driven crony capitalism, to be precise.

Indeed, Democrats have so effectively mastered crony capitalism as a governing strategy that they've convinced many in the media and the public that they had nothing whatsoever to do with our current financial woes.

Barack Obama has repeatedly blasted "Bush-McCain" economic policies as the cause, as if the two were joined at the hip.

Funny, because over the past 8 years, those who tried to fix Fannie Mae and Freddie Mac — the trigger for today's widespread global financial meltdown — were stymied repeatedly by congressional Democrats.

This wasn't an accident. Though some key Republicans deserve blame as well, it was a concerted Democratic effort that made reform of Fannie and Freddie impossible.

The reason for this is simple: Fannie and Freddie became massive providers both of reliable votes among grateful low-income homeowners, and of massive giving to the Democratic Party by grateful investment bankers, both at the two government-sponsored enterprises and on Wall Street.

The result: A huge taxpayer rescue that at last estimate is approaching $700 billion but may go even higher.

It all started, innocently enough, in 1994 with President Clinton's rewrite of the Carter-era Community Reinvestment Act.

Ostensibly intended to help deserving minority families afford homes — a noble idea — it instead led to a reckless surge in mortgage lending that has pushed our financial system to the brink of chaos.

(Excerpt) Read more at ibdeditorials.com ...


TOPICS: Business/Economy; Editorial; Politics/Elections
KEYWORDS: 110th; bailouts; classwarfare; corruption; fanniemae; financialcrisis; freddiemac; housingbubble; pelosi; socialism; wallstreet

1 posted on 09/22/2008 6:05:29 PM PDT by Kaslin
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To: Kaslin

Where are the calls for an investigation from our congress critters?


2 posted on 09/22/2008 6:07:50 PM PDT by listenhillary (Palin accomplished more in the PTA than Obama did as a community organizer)
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To: Kaslin

The New Media is finally learning how to voice this issue with punch.


3 posted on 09/22/2008 6:07:58 PM PDT by Arthur Wildfire! March (DRILL HERE! DRILL NOW! NO STRINGS! You guys are great! FReep on!)
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To: Kaslin

Obama capitalism?


4 posted on 09/22/2008 6:09:58 PM PDT by Nachum (Sarah Palin: Baberaham Lincoln)
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To: Nachum

I think that’s supposed to be Obama communism and socialism


5 posted on 09/22/2008 6:14:02 PM PDT by Kaslin (Vote Democrat if you like high gas prices at the pump)
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To: Kaslin

As of now, 799 stocks cannot be shorted. Stocks that I own are not in that group and continued down today, all the while the ones which were bailed out rallied again, even though they have junk oon their books. And the best part? I am paying for it.

It is beyond crony capitaism.....it is rewarding failure.

And disgusting.


6 posted on 09/22/2008 6:16:11 PM PDT by Red in Blue PA ("I will stand with the Muslims should the political winds shift in an ugly direction" Obama, from Au)
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To: Kaslin
I have seen crony capitalism up close and personal and it is the antithesis of free marker capitalism. Yes our nation is slipping quickly into market manipulation and fraud impersonating business. Hell, just take a critical look at commercials and think about the “wonderful” deals you are being offered.
7 posted on 09/22/2008 6:16:33 PM PDT by JimSEA (just another liberal-bashing fearmonger)
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To: Kaslin

Wow.. somebofy gets it..


8 posted on 09/22/2008 6:17:47 PM PDT by xcamel (Conservatives start smart, and get rich, liberals start rich, and get stupid.)
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To: Kaslin
Well, those critics may be right — it is a crisis of capitalism. A crisis of politically driven crony capitalism, to be precise.

Never confuse capitalism with criminality. Socialists/collectivists/criminals in government (and yes sometimes business...and yes on the street) are the root cause of every problem.

9 posted on 09/22/2008 6:17:49 PM PDT by PGalt
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To: JimSEA

sorry, should read “free market capotalism”


10 posted on 09/22/2008 6:17:54 PM PDT by JimSEA (just another liberal-bashing fearmonger)
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To: Red in Blue PA

can’t stand “brilliant” liberals. they have relatives and friends in the policy-making business and they make money on inside information and then call themselves brilliant and elite. really can’t stand them. they’ve distorted everything and turned the whole system inside out for their own economic well-being. (bunch of low-life scu&bags.)

IMHO


11 posted on 09/22/2008 6:20:37 PM PDT by ripley
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To: Kaslin
In the past couple of weeks, as the financial crisis has intensified, a new talking point has emerged from the Democrats in Congress: This is all a "crisis of capitalism," in socialist financier George Soros' phrase...

Amazing what you can say when you have absolutely no moral inhibition against lying your a&& off.

12 posted on 09/22/2008 6:21:49 PM PDT by Steely Tom (Without the second, the rest are just politicians' BS.)
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To: Kaslin

They need to be doing the perp walk.


13 posted on 09/22/2008 6:24:51 PM PDT by TASMANIANRED (TAZ:Untamed, Unpredictable, Uninhibited.)
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To: Kaslin
"Barack Obama has repeatedly blasted "Bush-McCain" economic policies as the cause, as if the two were joined at the hip.

Funny, because over the past 8 years, those who tried to fix Fannie Mae and Freddie Mac — the trigger for today's widespread global financial meltdown — were stymied repeatedly by congressional Democrats.

This wasn't an accident. Though some key Republicans deserve blame as well, it was a concerted Democratic effort that made reform of Fannie and Freddie impossible."

No, Really?

14 posted on 09/22/2008 6:27:34 PM PDT by xcamel (Conservatives start smart, and get rich, liberals start rich, and get stupid.)
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To: Kaslin
Yep. It sure is about cronyism.

Bush pushed for the subprime mortgages just as hard as anyone else.

Go here. A lot of what happened happened under Bush's administration and his crony HUD secretary appointees Martinez and Jackson.

Prior to HERA, the Secretary of HUD was the mission regulator for the GSEs, with oversight authority to ensure that both GSEs complied with the public purposes set forth in their charters. HUD had general regulatory authority for oversight responsibilities, which included establishing housing goals; monitoring and enforcing compliance with housing goals; new program approval; collecting loan-level data from the GSEs on their mortgage purchase activities; making available to the public a database on non-proprietary GSE loan purchase data; and ensuring GSE compliance with fair lending requirements.From here.

Next.....

But by 2004, when HUD next revised the goals, Freddie and Fannie's purchases of subprime-backed securities had risen tenfold. Foreclosure rates also were rising.

That year, President Bush's HUD ratcheted up the main affordable-housing goal over the next four years, from 50 percent to 56 percent. John C. Weicher, then an assistant HUD secretary, said the institutions lagged behind even the private market and "must do more."

From here.

Bush increased the percentage of sub prime lending required from Fannie and Freddie "each (Clinton and Bush) trying to lay claim to a record percentage of homeowners" here)

There is no question that the problems were created by HUD. Oh, by the way the HUD Secretaries under Bush? Mel Martinez and Alphonso Jackson. Both Bush cronies.

Maybe this is why Bush is pushing just as hard as the dems in using your and my money to bail out Fannie and Freddie.

Go to this thread and read the links.

When HUD released the next set of goals in 2004, it reported that after Cuomo's previous edict, there had been a sudden spurt of GSE subprime investment, "partly in response to higher affordable-housing goals set by HUD in 2000." Fannie had gone from $1.2 billion in subprime-mortgage and securities purchases in 2000 to $9.2 billion in 2001 and $15 billion in 2002. Freddie's numbers were murkier, but clearly also on the rise. In 2003 alone, the two bought $81 billion in subprime securities—which also count against the goals.

That was during Martinez's tenure.

Martinez's successor, Alphonso Jackson, ended up being just as scandalous by receiving sub rate loans from Countrywide.

The whole department appears to be incestuous. Also, note that Martinez and Jackson are both minorities. Did that play a role in their relaxing the loan requirements for Fannie and Freddie? They were obviously put there to appease the minority factions of the U.S.

The whole HUD is corrupt, in my opinion. It's intent has been corrupted by years of abuse and lack of oversight.

I realize a lot of people are trying to deflect blame from Bush but a lot of this stuff happened on his watch under Martinez and Jackson. While I don't expect Bush to be able to monitor every facet of the U.S. govt., he kept putting cronies in charge. They either abused their standing with him or he was too naive to see what they were doing.

In this case, pushing home ownership, these two cronies were doing what Bush expected; pushing ownership to make his administration look good.

Washington D.C. is corrupt from bottom to top. I no longer have any trust in the U.S. govt. As far as I am concerned they can flush the toiled called Congress and start over.

My biggest fear about Palin is that if elected, she spends four or even eight years under the spell of McCain and succumbs to the endless abuse from the MSM and the devil's spawn called democrats thus turning her into another politician to be castigated. I will pray that doesn't happen.

15 posted on 09/22/2008 6:28:38 PM PDT by raybbr (You think it's bad now - wait till the anchor babies start to vote!)
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To: Kaslin

This is why we need to clean up the District of Corruption.
Our lives depend on it.

Pray for W, McCuda and Our Troops


16 posted on 09/22/2008 6:40:24 PM PDT by bray (Drill Congress!!)
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To: Kaslin

Democrats are the Root Cause of Fredie and Fannie Troubles.

There, fixed it.

Say it often, Say it loud. It’s the truth.

And call your Congressional reps tomorrow and tell them no bailoit with your money—it’s your Posterity they’re flushing down the grain here.

Your posterior, too.


17 posted on 09/22/2008 6:44:52 PM PDT by exit82 (The only person that could get me to vote for John McCain is Sarah Palin -God bless her)
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To: JimSEA
“free market capotalism”

Is that "Truman Capotalism"?

18 posted on 09/22/2008 7:05:33 PM PDT by Onelifetogive (Is it too early to open a female wing on Mt. Rushmore?)
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To: raybbr

Upping the amount of sub-prime mortgages that are backed by Fannie and Freddie doesn’t make it cronyism, and it is not the root cause of the chaos. The root cause of the chaos is that mortages were made that should never have been made, and were then packaged up with good loans and sold as investment securities; essentially passing the buck into the entire financial system.

A sub-prime mortage is generally one that has less than 20% down. There’s really nothing wrong with that. In fact, I put 5% down and have one backed by Fannie myself. The difference between what has been going on recently from what happened when I got mine ten years ago is that the lender crawled up my rear with a fine-toothed comb. They wanted to know everything about where my money came from for several years prior and they contacted all my references. From what I hear, people who make 35k/yr, if that, somehow qualified for $1M mortages in recent years, sometimes without even so much as a check of ID. The reason they could do this is because whomever made the loan could package it up and pocket a tidy profit by offloading the risk onto someone else. And it wasn’t just Fannie and Freddie that bought, it was all of them (some more than others, like Bear). That’s why it’s been such a hammer especially on investment banks.

The thing about this is that loans like these were allowed to be made in the first place and to get mixed in with everything else to where no one really knew what they were buying. We put warning lables on nearly everything, but there weren’t any required for this. If there is such a requirement, it clearly wasn’t enforced.


19 posted on 09/22/2008 7:15:42 PM PDT by dajeeps
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To: Kaslin

It is rather breathtaking to hear Obama, Barney Frank, Chris Dodd and others pontificate so loudly and self-righteously about problems they themselves engineered and profited from. For they know the media will not ask any relevant questions and the public will not hold them accountable. The Fannie Mae and Freddie Mac corruption/crisis is thousands of times bigger than anything Haliburton might have done, and the mainstream media are completely covering it up. It is like if someone robbed a bank, is caught in the act, and then the robber demands to be handed the key to the bank, and the bank gives the robber the key and transfers ownership to him!


20 posted on 09/22/2008 7:15:55 PM PDT by Wilhelm Tell (True or False? This is not a tag line.)
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To: dajeeps
The thing about this is that loans like these were allowed to be made in the first place and to get mixed in with everything else to where no one really knew what they were buying.

I guess that was the whole idea. Sort of like a dishonest company selling tainted food - mix the tainted food with the good food and hope no one notices. But then almost everyone thinks they can make a quick buck by selling a tainted product, so things get more tainted until everyone starts to get sick. Or something like that.

21 posted on 09/22/2008 7:24:17 PM PDT by Wilhelm Tell (True or False? This is not a tag line.)
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To: Wilhelm Tell
For they know the media will not ask any relevant questions and the public will not hold them accountable.

The RATS are equally sure that the Republicans will not say a word, either.

22 posted on 09/22/2008 7:30:31 PM PDT by Dahoser (America's great untapped alternative energy source: The Founding Fathers spinning in their graves.)
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To: Onelifetogive
I'm going to bed. Tomorrow will be better, I think.
23 posted on 09/22/2008 7:48:58 PM PDT by JimSEA (just another liberal-bashing fearmonger)
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To: Red in Blue PA

Carl Icahn is one of richest billionaires out there, and he has a theory...read it at http://www.icahnreport.com

I have been watching markets for months and getting Sovereign Society Newsletters saying the Market would tank and the Great Depression coming, and watching CNBC it appeared they had serious concerns. You can read my article at http://thefreedomplatform.blogspot.com
I do believe “the blank check” should have transparency to committee oversight, since Paulson has not been right always. It is necessary to have some intervention because fo severity of situation, however in my article I support the bailout. Not being an economic genius, then I have to listen to the experts.

Ordinarily I would say let it tank, but jobs are down, prices are high on food, gas, and necessities. When a bank closes, all your outstanding checks bounce, even if the money was in the bank. You can’t get money from ATM, and that is no matter how much money you have in the bank. Unless you have a years worth of grocery money at home, then waiting on the FDIC might be stressful. They are saying those 401K’s would be lost, and that isn’t good news no matter how you spin it. This has a national security risk attached to it also...

I don’t claim to have all the answers, and think we may be beyond the point of return, and think the bail out may work...but only time will tell. My feelings are that Bush and Paulson are worried about the terrorism that could come on the news that America’s banks are bust, and people are in turmoil.


24 posted on 09/22/2008 8:02:50 PM PDT by Kackikat ( Without National Security all other issues are mute points; chaos ensues.))
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To: Kaslin
So I take it you agree with Socialism as long as it is being done by the current administration.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

25 posted on 09/23/2008 9:40:36 PM PDT by trumandogz (The Democrats are driving us to Socialism at 100 MPH -The GOP is driving us to Socialism at 97.5 MPH)
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