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Burning down the house; How Democrats sparked the Great Recession (book recounts Fannie Mae debacle)
NY POST ^ | 7/3/11 | GEORGE WILL

Posted on 07/03/2011 6:09:37 AM PDT by Liz

“Reckless Endangerment” a scalding new book ....... is another cautionary tale about government’s terrifying self-confidence.........."a story of what happens when Washington decides, in its infinite wisdom, that every living, breathing citizen should own a home.” The 1977 Community Reinvestment Act pressured banks to relax lending standards......... In 1994, Bill Clinton proposed increasing homeownership through a “partnership” between government and the private sector, principally orchestrated by Fannie Mae. Fannie Mae’s political machine dispensed campaign contributions, gave jobs to friends and relatives of legislators, hired armies of lobbyists (even paying lobbyists not to lobby against it), paid academics who wrote papers validating the homeownership mania, and spread “charitable” contributions to housing advocates across the congressional map. By 2003, the government was involved in financing almost half — $3.4 trillion — of the home-loan market..........by summer 2005, almost 40% of new subprime loans were for amounts larger than the value of the properties. “Reckless Endangerment” is a study of contemporary Washington, where showing “compassion” with other people’s money pays off in the currency of political power, and currency.

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


TOPICS: Crime/Corruption; Extended News; Government
KEYWORDS: debt; deficit; fannie; fanniemae; feddie; freddie; freddiemac; gretchenmorgenson; liz; mortgagecrisis; recklessendangerment
Navigation: use the links below to view more comments.
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Let The Inquisition Start With Barney Frank
Investor's Business Daily | 3/6/09
FR Posted on 03/08/2009 by FreeManN

Congressman Barney Frank says he wants some of those responsible for our current financial meltdown to be prosecuted. And we couldn't agree more. First up in the court dock: Rep. Barney Frank, D-Mass. Even by the extraordinarily loose standards of Congress, it takes some chutzpah for someone such as Frank to suggest that he'll seek prosecutions for those behind the housing and financial crunch and for what he called "a strongly empowered systemic risk regulator." Frank: Fannie Mae and Freddie Mac's point man in Washington. For Frank, perhaps more than any single individual in private or public life, is responsible for both the housing market mess and subsequent bank disaster. And no, this isn't partisan hyperbole or historical exaggeration. But first, a little trip down memory lane. (Excerpt) Read more at ibdeditorial.com ...

==========================================

8-5-08----Village Voice
CUOMO AND BILL CLINTON CREATED CONDITIONS FOR MELTDOWN

Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country’s current crisis. He took actions that—in combination with many other factors—helped plunge Fannie and Freddie into the sub-prime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded “kickbacks” to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why. . . SOURCE http://www.villagevoice.com/2008-08-05/news/how-andrew-cuomo-gave-birth-to-the-crisis-at-fannie-mae-and-freddie-mac/

=================================================

Feb 8, 2010
Editorial, The Wall St Journal
FR Posted February 08, 2010 by The Raven ...

HUD's Web visitors learn that in 1999 "Secretary Cuomo established new Affordable Housing Goals requiring Fannie Mae and Freddie Mac—two government sponsored enterprises involved in housing finance—to buy $2.4 trillion in mortgages in the next 10 years. This will mean new affordable housing for about 28.1 million low- and moderate-income families. The historic action raised the required percentage of mortgage loans for low- and moderate-income families that the companies must buy from the current 42 percent of their total purchases to a new high of 50 percent—a 19 percent increase—in the year 2001." ... (Excerpt) Read more at online.wsj.com ...

==================================

REFERENCE Entitled, "Highlights of HUD Accomplishments 1997-1999," the document chronicles the "accomplishments under the leadership of Secretary Andrew Cuomo, who took office in January 1997." HUD's Web visitors learn that in 1999: "Secretary Cuomo established new Affordable Housing Goals requiring Fannie Mae and Freddie Mac—two government sponsored enterprises involved in housing finance—to buy $2.4 trillion in mortgages in the next 10 years. This will mean new affordable housing for about 28.1 million low- and moderate-income families. Cuomo's historic action raised the required percentage of mortgage loans for low-and moderate-income families that the companies must buy from the current 42% of their total purchases to a new high of 50%—-----a 19% increase—in the year 2001."

1 posted on 07/03/2011 6:09:43 AM PDT by Liz
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To: All
Fannie/Freddie are centerpieces of the criminal enterprise called the Democrat Party---where Dem cronies and collaborators loot the organization, get cushy jobs, bonuses, and the like. Fannie Mae’s political machine dispensed campaign contributions, gave jobs to friends and relatives of legislators, hired armies of lobbyists (even paying lobbyists not to lobby against it), paid academics who wrote papers validating the home ownership mania, and spread “charitable” contributions to housing advocates across the congressional map.

REFERENCE---BY MICHELLE MALKIN Fannie Mae serves as an industrial-sized patronage factory -- sharing profits with political allies, spreading taxpayer funds to voting blocs----like ethnic groups-----and doling out jobs to left-wing academics, Washington has-beens and back-scratching buddies. Obama insider Fannie Mae exec Jim Johnson got sweetheart loans from shady subprime Countrywide. Pols raked in six-figure salaries as F/F engaged in Enron-style accounting, plunged into debt and helped usher in the subprime housing meltdown through cockamamie lending practices.

Bill Clinton appointed Franklin Raines, Daley and Rahm Emanuel just as the quasi-governmental F/M engaged in rampant book-cooking so that F/M insider could help themselves to massive bonuses. The Chi/Tribune exposed how Emanuel's "profitable stint" was low-show w/ no work involved. Emanuel was not even assigned to committees, according to company proxy statements (more on Raines and Emanuel below).

Immediately upon joining the board, Emanuel and other insiders qualified for $380,000 in stock and options plus a $20,000 annual fee, public records indicate. W/ Wall Street Emanuel there, accounting tricks were used to mislead shareholders about outsize profits F/M reaped from risky investments. The goal was to cook the books to keep fraudulent earnings on the books, to make Freddie Mac look profitable on paper-----AND to fraudulently obtain humongous annual bonuses for political insiders.

========================================

Freddie and Fannie, the two big quasi-govt mortgage banks that HAVE ALREADY RECEIVED HUGE federal bailouts, had huge lobbying budgets that they used for political contributions to keep regulators off their backs.

So which politicians get Fannie and Freddie political contributions.

The top three U.S. Senators getting big Fannie and Freddie political bucks were Democrats and number two was then-Senator Barack Obama who had only been in the Senate four years but still managed to grab the number two spot ahead of John Kerry, decades in the senate, and Chris Dodd then-chairman of the powerful Senate Banking Committee.

Fannie and Freddie were creations of the Congressional Democrats and the Clinton White House, designed to make mortgages available to more people, and as it turned out, some many many who couldn’t afford them.

Fannie and Freddie have also been places for big Washington democrats to go to work in the semi-private sector and pocket millions.

The Clinton Administration’s White House budget director Franklin Raines was appointed by Clinton to run Fannie........ and collected $50 million dollars. Jamie Gurilli Gorelick (now BP's attorney), a Clinton Justice Apartment Official, worked for Fannie and took home $26 million dollars in mfg bonuses.

Big Democrat Jim Johnson, recently on Obama’s VP search committee hauled in millions from his Fannie Mae CEO job. Now remember, Obama’s ads and stump speeches attacked McCain and Republican policies for the financial turmoil. It is demonstrably not Republican policy and worse, it appears the man attacking McCain, Senator Obama, was at the head of the line when the piggy’s lined up at the Fannie and Freddie trough for campaign bucks...." - FoxNews, Sept. 2008

2 posted on 07/03/2011 6:12:19 AM PDT by Liz ( A taxpayer voting for Obama is like a chicken voting for Col Sanders.)
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To: Liz

I read this in yesterday’s FR postings and sent to just about everyone I know. The criminality that was/is Fanny and Freddy is beyond belief.


3 posted on 07/03/2011 6:14:15 AM PDT by Eric in the Ozarks (Eh ?)
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To: Liz

ping. On my reading list for summer...but it won’t be a relaxing read. And I don’t know if I can afford to get any more steamed than I already am...


4 posted on 07/03/2011 6:14:15 AM PDT by SueRae (I can see November 2012 from my HOUSE!!!!!!!!)
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To: Liz

Its Bush’s fault...


5 posted on 07/03/2011 6:17:44 AM PDT by zwerni (this isn't gonna be good for business)
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To: Liz
In Their Own Words: The Truth about the Democrats Lying Defense of Fannie Mae/Freddie Mac in 2004

The failure of Fannie/Freddie, and the resulting 'burning down' of the economic house of the U.S., lies completely at the feet of the marxist/socialist liberal Democrats.

The GOP and President George Bush attempted to fix this in 2004 and were emphatically turned back. This historical record is without question. It's on youtube with 3.8 million views already. Continue to forward this video around the net.

6 posted on 07/03/2011 6:22:26 AM PDT by Servant of the Cross (the Truth will set you free)
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To: Eric in the Ozarks; SueRae; Grampa Dave; sickoflibs; thouworm; GOPJ; rabscuttle385; ...
Wait----there’s more. Read it and weep.

The Office of Federal Housing Enterprise Oversight’s report reported that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives.

===================================

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 (by cooking the books).

Ex-Fannie CEO Franklin Raines (Clinton appointee) is a parasitic crook of the first order. This thief cooked the FM books precipitating losses of $9BILLION (that we know of) for the single purpose of creating $50 million fraudulent bonuses for himself (and millions for other F/M insiders). The SEC said Raines broke accounting rules by playing with risky derivatives.

The US Government filed suit against Franklin Raines when the depth of the F/M accounting scandal became clear. READ IT HERE http://housingdoom.com/2006/12/18/fannie-charges/

The Government noted, "The 101 charges reveal how the individuals improperly manipulated earnings to maximize their bonuses, while knowingly neglecting accounting systems and internal controls, misapplying over twenty accounting principles and misleading the regulator and the public.....explains how they submitted six years of misleading and inaccurate accounting statements and inaccurate capital reports that enabled them to grow Fannie Mae in an unsafe and unsound manner."

These charges were made in 2006. The Court ordered Raines to return $50 Million Dollars he received in bonuses based on the misstated Fannie Mae profits. (Soon going to trial.)

Franklin Raines, left, Clinton's appointee to F/M, looted and pillaged Fannie Mae. Raines famously bought into the climate control scam w/ F/M funds. Then hooked up with Ohaha's Chicago mob who organized the Chicago Climate Exchange (now defunct).

==================================================

REFERENCE Ex-Fannie CEO Franklin Raines should be behind bars for life. He is a crook of the first order. This thief Raines cooked the FM books precipitating losses of $9B (that we know of) for the single purpose of creating bonuses for himself and other F/M insiders. The SEC said Raines broke accounting rules by playing with risky derivatives.

RAINES COOKS THE F/M BOOKS---WALKS AWAY A MULTI-MILLIONAIRE After Raines was fired and exposed as a fraudster for cooking the govt books, Raines walked away w/ $90 million dollars, a $26 million parachute,

PLUS..... Raines gets a MONTHLY pension of $116,300 for life. Raines had already collected $4.87 million in special performance shares. Raines owns options giving him $5.8 million in net profit after redemptions, plus another $8.7 million in deferred compensation for six years at the F/M helm.

Raines keeps $5 million of paid-up life insurance. He and his spouse get free medical and dental benefits for life, worth over $1 million. Raines earned $20 million in salary, bonuses and stock awards (that we know of) in one year.

After he was fired, Raines told the F/M board that he's entitled to get paychecks until June 22 giving him another $600,000, which triggers a $2,000 monthly raise in his lifetime pension. He also said he's entitled to disputed options with a gross value of about $5.6 million. To keep Raines happy within philanthropic circles, Fannie Mae will match Raines' charitable contributions by $10,000 a year.

7 posted on 07/03/2011 6:26:35 AM PDT by Liz ( A taxpayer voting for Obama is like a chicken voting for Col Sanders.)
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To: All

December 23, 2009

Attorney General of the United States of America
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530-0001

Dear Attorney General Holder:

We write to demand an immediate investigation into the activities of (then-) White House Chief of Staff Rahm Emanuel. We believe there is an abundant public record which establishes that the actions of the Obama White House have blocked any investigation into his activities while on the board of Freddie Mac from 2000-2001, and facilitated the cover up of potential malfeasance until the 10-year statute of limitations has run out.

The purpose of this letter is to connect the dots to establish both the conduct of Mr. Emanuel and those working with him to thwart inquiry, and to support your acting speedily so that the statute of limitations does not run out before the Justice Department is able to empanel a grand jury.

The New York Times reports that the Obama administration is negotiating to double the commitments to Fannie and Freddie for a total of $800 billion by December 31, in order to avoid the congressional approval that would be needed after that date. But there currently is no Inspector General exercising independent oversight of these entities. Acting Inspector General Ed Kelly was stripped of his authority earlier this year by the Justice Department, relying on a loophole in a bill Mr. Emanuel cosponsored and pushed through Congress shortly before he left for the Obama White House. This effectively ended Mr. Kelly’s investigation into what happened at Fannie and Freddie.

Since that time, despite multiple warnings by Congress that having no independent Inspector General for a federal agency that oversees $6 trillion in mortgages is a serious oversight, the Obama White House has not appointed one.

We recognize that these are extremely serious accusations, but the stonewalling by Mr. Emanuel and the Obama White House has left us with no other redress. A 2003 report by Freddie Mac’s regulator indicated that Freddie Mac executives had informed the board of their intention to misstate the earnings to insure their own bonuses during the time Mr. Emanuel was a director (as an appointee of the Clinton administration). But the Obama White House refused to comply with a Freedom of Information Act request from the Chicago Tribune for those board minutes on the grounds that Freddie Mac was a “commercial” entity, even though it was wholly owned by the government at the time the request was made.

If the Treasury approves the $800 billion commitment to Fannie and Freddie by the end of the year, it will mean that under the influence of Rahm Emanuel, the Obama White House is moving a trillion-dollar slush fund into corruption-riddled companies with no oversight in place. This will allow Fannie and Freddie to continue to purchase more toxic assets from banks, acting as a back-door increase of the TARP without congressional approval.

Before the Obama White House commits any more money to Fannie and Freddie, we call on the Public Integrity Section in the Justice Department to begin an investigation into the cause of Fannie and Freddie’s conservatorship, into Rahm Emanuel’s activities on the board of Freddie Mac (as a Clinton appointee) including any violations of his fiduciary duties to shareholders, into the decision-making behind the continued vacancy of Fannie and Freddie’s Inspector General post, and into potential public corruption by Rahm Emanuel in connection with his time in Congress, in the Obama White House, and on the board of Freddie Mac.

We also call for the immediate appointment of an Inspector General with a complete remit to go after this information.

Signers of this letter come from differing political ideologies. One, the conservative head of a transparency foundation, the other, publisher of a liberal political blog. But we make common cause today out of grave concern for the future of our country in the wake of corruption-riddled bailouts.

These bailouts continue to rob Main Street to benefit Wall Street, and, because of that, we together demand the resignation of Mr. Emanuel, a man who has steadfastly worked to obstruct both oversight and inquiry into the matter. Rahm Emanuel’s conflicts of interest render him far too compromised to serve as gatekeeper to the President of the United States. We will lay out the details further below, and are available at your earliest convenience to meet with you directly.

Sincerely,

Jane Hamsher
Grover Norquist


8 posted on 07/03/2011 6:27:19 AM PDT by Liz ( A taxpayer voting for Obama is like a chicken voting for Col Sanders.)
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To: Eric in the Ozarks

“In 1994, Bill Clinton proposed increasing homeownership through a ‘partnership’ between government and the private sector”

When you hear a politician propose a “public-private partnership”, grab your wallet and run like hell.

In return for campaign contributions and political support, large corporations will be granted license to raid the public coffers and create exclusive markets for their products.


9 posted on 07/03/2011 6:28:24 AM PDT by Walrus (Throw your thief out in 2012; get yourself a Mike Kelly)
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To: Liz

Gorelick made a bundle to keep quiet about Clinton’s RedCom campaign donations.


10 posted on 07/03/2011 6:29:43 AM PDT by y6162
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To: All
REFERENCE Franklin Raines Letter to Shareholders ---- 2003 Fannie Mae Annual Report

Excerpt ...Ten years ago the typical conforming mortgage required a down payment of 10-20%, and low-down payment mortgages were considered too risky. But then we helped to standardize the 3-5% down payment loan, brought it to global capital markets, and made it available to lenders and communities nationwide. Now low-down payment loans are commonplace. And we just adopted a new variance in our underwriting standards that will make the $500 down payment loan widely available as well...

In 1994, we pledged to provide $1 trillion in capital to ten million underserved families by the end of 2000. Thanks to our housing and industry partners, we met that goal early.

Then in 2000, we launched our American Dream Commitment, a pledge to provide $2 trillion in capital to 18 million underserved families by the year 2010, including $400 billion targeted specifically for minority families (later raised to $700 billion in response to President Bush’s Minority Homeownership Initiative). After four of the strongest years in housing and mortgage finance history, we’ve already surpassed the top-line goals of this commitment. But our work is far from complete.

So in January 2004, we announced our Expanded American Dream Commitment and pledged significant new resources to tackle America’s toughest housing challenges. Our new commitment has three main goals.

First, we will expand access to homeownership for six million first-time home buyers in the next ten years, including 1.8 million minority first-time home buyers.We also will help raise the national minority homeownership rate from 49 percent to 55 percent, with the ultimate goal of closing it entirely.

Second, we will help new and long-term homeowners stay in their homes through a series of initiatives, and commit $15 billion to preserve affordable rental housing and $1.5 billion to support the revitalization of public housing communities.

Third, we will increase the supply of affordable housing and support community development activities in at least 1,000 neighborhoods across the country through our American Communities Fund, and through targeted investments like Low-Income Housing Tax Credits that help finance affordable rental housing.

It is because of initiatives like our Trillion Dollar Commitment and our American Dream Commitment that we have exceeded our HUD affordable housing goals for ten consecutive years.

11 posted on 07/03/2011 6:30:32 AM PDT by Liz ( A taxpayer voting for Obama is like a chicken voting for Col Sanders.)
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To: Liz

Jamie Gorelick was another recipient of millions from this government fiasco. I think she got out with something like $20 million...


12 posted on 07/03/2011 6:31:53 AM PDT by Eric in the Ozarks (Eh ?)
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To: zwerni

“Its Bush’s fault...”

In a way, yes. He certainly didn’t mind the bubble building and building, as it masked what should have been a severe recession.

Just per the article, some $800B out of an economy of around $12T was fake (i.e., unsupported) borrowed money.

Now we pay the price...and may pay for DECADES.

As president, there was certainly a lot that Bush could have done (starting with using the bully pulpit), so I am far from giving him a free pass.


13 posted on 07/03/2011 6:34:31 AM PDT by BobL (PLEASE READ: http://www.freerepublic.com/focus/f-news/2657811/posts))
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To: Liz

It only took 50 years for the Civil Rights Act to destroy America.


14 posted on 07/03/2011 6:43:27 AM PDT by screaminsunshine (Socialism...Easier said than done.)
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To: BobL

“Its Bush’s fault...”

W’s admin, along with regulators, warned about the growing danger of the loose lending.

I’m reading Reckless” It’s hair raising. Democrats ripped us off.


15 posted on 07/03/2011 6:43:30 AM PDT by y6162
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To: All
The Government filed suit against Franklin Raines when the depth of the F/M accounting scandal became clear. READ IT HERE http://housingdoom.com/2006/12/18/fannie-charges/

The Government noted, "The 101 charges reveal how individuals (F/M insiders) improperly manipulated earnings to maximize their bonuses, while knowingly neglecting accounting systems and internal controls, misapplying over twenty accounting principles and misleading the regulator and the public. The Notice explains how they submitted six years of misleading and inaccurate accounting statements and inaccurate capital reports that enabled them to grow Fannie Mae in an unsafe and unsound manner."

These charges were made in 2006. The Court ordered Raines to return $50 Million Dollars he received in bonuses based on the misstated Fannie Mae profits. (Soon going to trial.)

========================================

Freddie and Fannie had huge lobbying budgets that they used for political contributions to keep regulators off their backs............AND RECEIVED HUGE GOVT BAILOUTS.

So which politicians get Fannie and Freddie political contributions? The top three U.S. Senators getting big Fannie and Freddie political bucks were Democrats and number two was (A) then-Senator Barack Obama who had only been in the Senate four years but still managed to grab the number two spot ahead of (B) John Kerry, decades in the senate, and (C) Chris Dodd then-chairman of the powerful Senate Banking Committee.

Fannie and Freddie were creations of the Congressional Democrats and the Clinton White House, designed to make mortgages available to more people, and as it turned out, many many people who couldn’t afford them.

Fannie and Freddie have also been places for big Washington Democrats to get jobs and pocket millions---(legaklly and illegally).

Clinton appointed his White House budget director Franklin Raines to run Fannie........ Raines was fired for cooking the books so he could get massive $50 Million in bonuses PLUS a staggering exit package worth millions.

Jamie Gurilli Gorelick (now BP's attorney), a Clinton Justice Apartment Official, worked for Fannie and took home $26 million dollars.

Big Democrat Jim Johnson, recently on Obama’s VP search committee hauled in millions from his Fannie Mae CEO job. Keep in mind, Obama’s ads and stump speeches attacked Republican policies for the financial turmoil. But Fannie is demonstrably not Republican policy and worse, it appears then-Senator Obama, was at the head of the line when the piggy’s lined up at the Fannie and Freddie trough for campaign bucks...." - FoxNews, Sept. 2008

McCain spokeout on May 25, 2006, on behalf of the 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 says that Raines and other Fannie Mae bigwigs deliberately and intentionally manipulated financial reports to artificially hit earnings targets in order to trigger bonuses for senior executives like Gorelick.

16 posted on 07/03/2011 6:46:25 AM PDT by Liz ( A taxpayer voting for Obama is like a chicken voting for Col Sanders.)
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To: y6162; BobL

Obama’s Deficit Avalanche isn’t Bush’s Fault / scottuystarnes.com / 2/9/2010
SOURCE http://scottystarnes.files.wordpress.com/2010/02/obama-deficit.jpg?w=400&h=308

Washington Times reports: Even more staggering than the mountains of snow in the capital are the deficits the Obama administration plans for the next decade. Huge spending increases will add about $12 trillion to the national debt for budget years 2009 to 2020.

The scariest part is that these deficits are based on unrealistic budgeting assumptions; the real fiscal outlook is much bleaker. In the proposed 2011 budget, the White House defensively attacks the “irresponsibility of past” deficits.

For example, the 2009 budget deficit of $1.4 trillion is blamed on the George W. Bush administration as if President Obama’s $862 billion stimulus package and more than $400 billion supplemental spending bill had nothing to do with it. Mr. Obama’s planned 2010 budget deficit rises to an even higher record level of $1.6 trillion.

By comparison, all of Mr. Bush’s deficits from 2002 to 2008 – the seven years during which his team had the most control over the budget – produced a combined deficit of $2.1 trillion.

Obama has spent more in 2 years than Bush did in 7 years. Obama’s BIOB (Blame it on Bush) defense just won’t work anymore.


17 posted on 07/03/2011 6:49:20 AM PDT by Liz ( A taxpayer voting for Obama is like a chicken voting for Col Sanders.)
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To: Liz

ping


18 posted on 07/03/2011 6:49:35 AM PDT by rogue yam
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To: y6162

“W’s admin, along with regulators, warned about the growing danger of the loose lending.”

...I did hear a little. But I heard a lot more about the “Ownership Society” coming from Bush. I do not give him a pass...at all.

But I do agree, the rut of the problem clearly traces back to liberalism and it may well be what ultimately takes down this country.


19 posted on 07/03/2011 6:57:28 AM PDT by BobL (PLEASE READ: http://www.freerepublic.com/focus/f-news/2657811/posts))
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To: y6162
Bull crap, that was after he and Martinez increased the program, go read his HUD speech. Clinton may have started the program, but old George was more than happy to push it along for 7 years. To say both parties are not guilty to different degrees in this is pure la la land. After all it was Phil gramme credit modernization act that allowed the banks to start making pie in the sky loans and have those whore house hedge funds and derivatives, investor were convince there was no down side, and we the tax payers bailed their asses out.
20 posted on 07/03/2011 7:03:58 AM PDT by org.whodat
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To: Liz
Besides the Fannie and Freddie fiasco and Bawney Fwank and Chris 'Waitress Sandwich' Dodd. There's' another one of our favorite RATs who contributed to the overall financial meltdown.

Chuck 'The Schmuck' Schumer aka: Up-Chuck & Chuck-U

Tuesday, July 1st, 2008
IndyMac: Mini Bank Run, Thanks to Schumer

July 14, 2008
Charles "Chuck-U" Schumer Causes Run on IndyMac Bank

JULY 15, 2008
The $4 Billion Senator
'The federal takeover of IndyMac Bank over the weekend could cost the Federal Deposit Insurance Corp. between $4 billion and $8 billion. But Senator Chuck Schumer, who helped to precipitate the collapse by publicizing a letter to the bank's regulator last month, has no remorse.

July 13, 2008
Schumer: Don't blame me for IndyMac failure

"Sen. Charles Schumer said the OTS:
"ought to stop pointing false fingers of blame."

Indy/Mac started the Banking Collapse and it was asshat Schoooooomer who pushed over the first domino. It soon after that when the 'Housing Boom' went bust.
And then everything went to hell in a hand basket. And innocent little Chuckie started it all.

Whatta swell guy.

21 posted on 07/03/2011 7:20:22 AM PDT by Condor51 (The difference between stupidity and genius is that genius has its limits [A.Einstein])
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To: Condor51

Thanks for the great info and links. Schumer’s mega-scummy.


22 posted on 07/03/2011 7:24:02 AM PDT by Liz ( A taxpayer voting for Obama is like a chicken voting for Col Sanders.)
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To: SueRae

Ain’t that the truth!!!!


23 posted on 07/03/2011 7:28:31 AM PDT by gibsosa
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To: BobL
......the rut of the problem traces back to liberalism and it may well be what ultimately takes down this country.....

THERE FIXED IT ......the rut of the problem traces back to liberalism "phony tolerant and compassionate liberals" and it may well be what ultimately takes down this country....

You can bet when they start spouting "tolerance and compassion," conniving libs are planning to make a buck on it.

24 posted on 07/03/2011 7:30:20 AM PDT by Liz ( A taxpayer voting for Obama is like a chicken voting for Col Sanders.)
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To: org.whodat

Republicans did not feed off the housing bubble. Democrats did. There is no way W can be blamed for the size and scope of the sub prime debacle.

Some right wingers, like you, are all to happy to collaborate with the Kenyan’s blame Bush meme. Shame on you.


25 posted on 07/03/2011 7:33:04 AM PDT by y6162
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To: org.whodat

Republicans did not feed off the housing bubble. Democrats did. There is no way W can be blamed for the size and scope of the sub prime debacle.

Some right wingers, like you, are all to happy to collaborate with the Kenyan’s blame Bush meme. Shame on you.


26 posted on 07/03/2011 7:33:11 AM PDT by y6162
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To: Liz
Great post/thread, Liz!

Here's a couple of gems:

Shocking Video Unearthed Democrats in their own words Covering up the Fannie Mae, Freddie Mac Scam

Inside Look: Fannie Mae & Freddie Mac

27 posted on 07/03/2011 7:35:11 AM PDT by Las Vegas Ron (Woah, Obama will appease Trump, but not Lakin? Thanks LSM)
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To: Eric in the Ozarks
I'm about a third of the way through this book. Even though I've closely followed the whole scandal, there is one thing in the book that I didn't learn from the other sources.

As many of us remember, Clinton, at least ostensibly to save money, went from long to short in issuing bonds and notes to finance the Federal deficit, meaning it became somewhere between difficult to impossible to buy 30 year T-bills. Fannie and Freddy, being Government sponsored Enterprises with implied, but not explicit, guarantees for their paper stepped into the gap and started issuing long term mortgage backed securities, mostly backed by substantially worthless subprime mortgages. Nevertheless, those securities were treated as AAA investment grade due to the implied Federal guarantee by the rating agencies, which did not inquire about the soundness of the underlying paper. Hence, the substantially worthless Fannie/Freddie securities were in turn purchased by multiple pension plans and other institutions, all to the tune of about 4 $$ trillion, IOW about 4 $$ trillion of queer sold as AAA investment grade securities. Thus, when the whole thing collapsed in 2007-2008, the entire world economy was at risk, and we got TARP.

28 posted on 07/03/2011 7:41:10 AM PDT by libstripper
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To: y6162
The facts as the occurred can be read in the order they occurred, the old garbage about barney the queer did this and that, but if you look at the time line republicans were in controls of the house at the time and they did not do crap to stop it. Phil Gram’s credit modrnatization act written for ken lay was added to an omnibus bill in the middle of the night and there was never one vote are committee meeting on it and that is a damn fact.
29 posted on 07/03/2011 7:46:36 AM PDT by org.whodat
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To: Liz

why isn’t he in jail? why won’t republicans
make huge deal out of this? why do they allow
clinton to be popular after his crooked
minions, robert rubin, franklin raines, jamie
gorelick, andrew cuomo and alice rivlin
effectively wrecked economy for future generations?


30 posted on 07/03/2011 7:47:48 AM PDT by gussiefinknottle (woof!woof!woof!)
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To: libstripper
Didn't I just read where, finally, S & P and Moodys, etc are being investigated for giving fictitious ratings on this paper ?
31 posted on 07/03/2011 7:49:03 AM PDT by Eric in the Ozarks (Eh ?)
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To: Liz

Ping 4 later


32 posted on 07/03/2011 7:49:43 AM PDT by RedCell (Honor thy Father (9/6/07) - Semper Fi / "...it is their duty, to throw off such government...")
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To: Servant of the Cross; Ol' Dan Tucker
The GOP and President George Bush attempted to fix this in 2004 and were emphatically turned back.

After using the system for three years and causing a good portion of the problem....

From "Ol Dan Tucker's" page:


Keep in mind this is just Wells Fargo and that sub-prime lending would not reach its peak until 2005-2007. This does not include all the other major banks, such as CitiGroup, Bank of America, Chase, Washington Mutual, or the hundreds of other smaller regional banks and lenders who were also taking part in this feeding frenzy.

The IRS says they've issued over 11 million ITINs since its inception. Mexico says they've issued over 5 million Matricula Consular cards.

But, none of this would be workable if ICE was deporting the banks' new customers. Once again, Bush swung into action, hobbling border and interior enforcement.

Worksite arrests of illegal aliens fell some 97 percent, from 2,859 in 1999 to 159 in 2004. Investigations targeting employers of illegal immigrants fell more than 70 percent, from 7,637 in 1997 to 2,194 in 2003. Arrests on job sites fell—precipitously, from 17,554 in 1997 to 445 in 2003. Fines levied for immigration-law violations fell from 778 in 1997 to 124 in 2003. Notices of intent to fine employers fell from 865 in 1997 to just 3 in 2004.

When the USA PATRIOT Act came up for renewal in 2004, some republicans wanted to remove the provision that allowed banks to accept Matricula Consular ID as the consular ID is unreliable.

Barney Frank (D-MA) and some of his Republican and Democrat friends swung into action to protect it:

Anti-matrícula proposal defeated; financial institutions can continue accepting consular ID's:

In a vote of 222 to 177, the U.S. House of Representatives passed a bipartisan amendment, H.Amdt. 754, introduced by Reps. Michael Oxley (R-OH), Barney Frank (D-MA), Jim Kolbe (R-AZ), Ed Pastor (D-AZ), and Rubén Hinojosa (D-TX) to strike the so-called Culberson amendment that would have prohibited the Treasury Dept. from implementing regulations that allow financial institutions to accept matrícula consular identification cards as part of a valid customer identification program under the USA PATRIOT Act... In countering Culberson’s allegations that the FBI and the Justice Dept. were opposed to the bipartisan amendment to preserve the use of matrícula consular cards, Bachus presented a letter for the record written by Deputy Atty. Gen. James B. Comey and addressed to Speaker of the House Dennis Hastert. The letter, dated Sept. 14, 2004, stated: The Department of Justice fully supports the Administration’s current policy under the USA PATRIOT Act that requires banks and other financial institutions to establish reasonable procedures for the identification and verification of new account holders, which is set forth in regulations of the Department of the Treasury. Therefore the [Justice] Department supports the Oxley-Frank-Kolbe amendment to H.R. 5025 that preserves these regulations. . . . The Department of Justice, including the FBI, continue[s] to work closely with the Treasury Department on this and other issues related to halting all financing of terrorists.

In the final roll call vote, 49 Republicans supported the Oxley-Frank-Kolbe-Pastor-Hinojosa amendment and 16 Democrats opposed it. This legislative victory was a joint effort by financial institutions, immigrants’ rights groups, consumer groups, and many others who worked in coalition to defeat, once again, efforts to limit the acceptance of consular ID cards by banks, credit unions, thrifts, and other financial entities.

In Bush's June 17, 2002 speech, he also called for the creation of the American Dream Down Payment Fund.

"And so here are some of the ways to address the issue. First, the single greatest barrier to first time homeownership is a high downpayment. It is really hard for many, many, low income families to make the high downpayment. And so that's why I propose and urge Congress to fully fund the American Dream Downpayment Fund. This will use money, taxpayers' money to help a qualified, low income buyer make a downpayment. And that's important."

And, the 108th Congress (2003-2005) responded with the American Dream Downpayment Act:

"Amends the Cranston-Gonzalez National Affordable Housing Act to: (1) authorize the Secretary of Housing and Urban Development to make grants to State and local participating jurisdictions for downpayment assistance and related home repair to low-income, first-time home buyers; and (2) limit family assistance to the greater of six percent of the purchase price or $10,000. Requires a participating jurisdiction to include intended grant uses in its fiscal year comprehensive housing affordability strategy under such Act."

"Sets forth State and local jurisdiction allocation formulas. Permits fund reallocation."

"Requires the Comptroller General to report respecting the impact of such grants on a State-by-State basis."

"Terminates grant authority after December 31, 2007. Authorizes specified FY 2004 through 2007 appropriations."

"Makes the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 inapplicable to such assistance."

The act was authorized to appropriate up to $200 million per year of US taxpayer funds between FY2004 through FY2007 to go to Bush's 'minorities'.

The sponsor and co-sponsors of this $800 million giveaway:

Sponsor: Sen. Wayne Allard [R-CO]

Co-sponsors:
Sen. Samuel Brownback [R-KS]
Sen. Conrad Burns [R-MT]
Sen. Ben Campbell [R-CO]
Sen. Michael Crapo [R-ID]
Sen. Michael Enzi [R-WY]
Sen. Charles Hagel [R-NE]
Sen. Lisa Murkowski [R-AK]
Sen. Richard Santorum [R-PA]
Sen. Jefferson Sessions [R-AL]

Park Place South is, in microcosm, the story of a well-intentioned policy gone awry. Advocating homeownership is hardly novel; the Clinton administration did it, too. For Mr. Bush, it was part of his vision of an “ownership society,” in which Americans would rely less on the government for health care, retirement and shelter. It was also good politics, a way to court black and Hispanic voters.

But for much of Mr. Bush’s tenure, government statistics show, incomes for most families remained relatively stagnant while housing prices skyrocketed. That put homeownership increasingly out of reach for first-time buyers like Mr. West.

So Mr. Bush had to, in his words, “use the mighty muscle of the federal government” to meet his goal. He proposed affordable housing tax incentives. He insisted that Fannie Mae and Freddie Mac meet ambitious new goals for low-income lending.

Concerned that down payments were a barrier, Mr. Bush persuaded Congress to spend up to $200 million a year to help first-time buyers with down payments and closing costs.

And he pushed to allow first-time buyers to qualify for federally insured mortgages with no money down. Republican Congressional leaders and some housing advocates balked, arguing that homeowners with no stake in their investments would be more prone to walk away, as Mr. West did. Many economic experts, including some in the White House, now share that view.

The president also leaned on mortgage brokers and lenders to devise their own innovations. “Corporate America,” he said, “has a responsibility to work to make America a compassionate place.”

And corporate America, eyeing a lucrative market, delivered in ways Mr. Bush might not have expected, with a proliferation of too-good-to-be-true teaser rates and interest-only loans that were sold to investors in a loosely regulated environment.

“This administration made decisions that allowed the free market to operate as a barroom brawl instead of a prize fight,” said L. William Seidman, who advised Republican presidents and led the savings and loan bailout in the 1990s. “To make the market work well, you have to have a lot of rules.”

But Mr. Bush populated the financial system’s alphabet soup of oversight agencies with people who, like him, wanted fewer rules, not more.

The president’s first chairman of the Securities and Exchange Commission promised a “kinder, gentler” agency. The second was pushed out amid industry complaints that he was too aggressive. Under its current leader, the agency failed to police the catastrophic decisions that toppled the investment bank Bear Stearns and contributed to the current crisis, according to a recent inspector general’s report.

As for Mr. Bush’s banking regulators, they once brandished a chain saw over a 9,000-page pile of regulations as they promised to ease burdens on the industry. When states tried to use consumer protection laws to crack down on predatory lending, the comptroller of the currency blocked the effort, asserting that states had no authority over national banks.

The administration won that fight at the Supreme Court. But Roy Cooper, North Carolina’s attorney general, said, “They took 50 sheriffs off the beat at a time when lending was becoming the Wild West.”

The president did push rules aimed at forcing lenders to more clearly explain loan terms. But the White House shelved them in 2004, after industry-friendly members of Congress threatened to block confirmation of his new housing secretary.

"In the 2004 election cycle, mortgage bankers and brokers poured nearly $847,000 into Mr. Bush’s re-election campaign, more than triple their contributions in 2000, according to the nonpartisan Center for Responsive Politics. The administration did not finalize the new rules until last month."

Among the Republican Party’s top 10 donors in 2004 was Roland Arnall. He founded Ameriquest, then the nation’s largest lender in the subprime market, which focuses on less creditworthy borrowers. In July 2005, the company agreed to set aside $325 million to settle allegations in 30 states that it had preyed on borrowers with hidden fees and ballooning payments. It was an early signal that deceptive lending practices, which would later set off a wave of foreclosures, were widespread.

Andrew H. Card Jr., Mr. Bush’s former chief of staff, said White House aides discussed Ameriquest’s troubles, though not what they might portend for the economy. Mr. Bush had just nominated Mr. Arnall as his ambassador to the Netherlands, and the White House was primarily concerned with making sure he would be confirmed.

“Maybe I was asleep at the switch,” Mr. Card said in an interview.

Brian Montgomery, the Federal Housing Administration commissioner, understood the significance. His agency insures home loans, traditionally for the same low-income minority borrowers Mr. Bush wanted to help. When he arrived in June 2005, he was shocked to find those customers had been lured away by the “fool’s gold” of subprime loans. The Ameriquest settlement, he said, reinforced his concern that the industry was exploiting borrowers.

In December 2005, Mr. Montgomery drafted a memo and brought it to the White House. “I don’t think this is what the president had in mind here,” he recalled telling Ryan Streeter, then the president’s chief housing policy analyst.

It was an opportunity to address the risky subprime lending practices head on. But that was never seriously discussed. More senior aides, like Karl Rove, Mr. Bush’s chief political strategist, were wary of overly regulating an industry that, Mr. Rove said in an interview, provided “a valuable service to people who could not otherwise get credit.” While he had some concerns about the industry’s practices, he said, “it did provide an opportunity for people, a lot of whom are still in their houses today.”

The White House pursued a narrower plan offered by Mr. Montgomery that would have allowed the F.H.A. to loosen standards so it could lure back subprime borrowers by insuring similar, but safer, loans. It passed the House but died in the Senate, where Republican senators feared that the agency would merely be mimicking the private sector’s risky practices — a view Mr. Rove said he shared.

‘We Told You So’

Armando Falcon Jr. was preparing to take on a couple of giants.

A soft-spoken Texan, Mr. Falcon ran the Office of Federal Housing Enterprise Oversight, a tiny government agency that oversaw Fannie Mae and Freddie Mac, two pillars of the American housing industry. In February 2003, he was finishing a blockbuster report that warned the pillars could crumble.

Created by Congress, Fannie and Freddie — called G.S.E.’s, for government-sponsored entities — bought trillions of dollars’ worth of mortgages to hold or sell to investors as guaranteed securities. The companies were also Washington powerhouses, stuffing lawmakers’ campaign coffers and hiring bare-knuckled lobbyists.

Mr. Falcon’s report outlined a worst-case situation in which Fannie and Freddie could default on debt, setting off “contagious illiquidity in the market” — in other words, a financial meltdown. He also raised red flags about the companies’ soaring use of derivatives, the complex financial instruments that economic experts now blame for spreading the housing collapse.

Today, the White House cites that report — and its subsequent effort to better regulate Fannie and Freddie — as evidence that it foresaw the crisis and tried to avert it. Bush officials recently wrote up a talking points memo headlined “G.S.E.’s — We Told You So.”

But the back story is more complicated. To begin with, on the day Mr. Falcon issued his report, the White House tried to fire him. (See: White House Philosophy Stoked Mortgage Bonfire)


33 posted on 07/03/2011 7:50:45 AM PDT by raybbr (People who still support Obama are either a Marxist or a moron.)
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To: y6162; org.whodat
Republicans did not feed off the housing bubble. Democrats did.

BWAHAHAHAHAHAHAHAHAHAHA!

In Bush's June 17, 2002 speech, he also called for the creation of the American Dream Down Payment Fund.

"And so here are some of the ways to address the issue. First, the single greatest barrier to first time homeownership is a high downpayment. It is really hard for many, many, low income families to make the high downpayment. And so that's why I propose and urge Congress to fully fund the American Dream Downpayment Fund. This will use money, taxpayers' money to help a qualified, low income buyer make a downpayment. And that's important."

34 posted on 07/03/2011 7:52:43 AM PDT by raybbr (People who still support Obama are either a Marxist or a moron.)
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To: raybbr

Yes but that damn, not head of the committee, queer franks caused this. Green wet BS.


35 posted on 07/03/2011 7:58:50 AM PDT by org.whodat
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To: gussiefinknottle
The Jorge bush administration had years to bring charges against Franklin Raine's, they did nothing. Why?????
36 posted on 07/03/2011 8:04:02 AM PDT by org.whodat
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To: Eric in the Ozarks

I sort of recall reading something like that, but can’t give you a citation.

Skipping to a different point, my one REALLY BIG criticism of the book is it has NO source notes, making it a lot more like a mostly unsourced newspaper article rather than a serious scholarly work. That’s reallly inexcusable since most serious political books, including works by Ann Coulter, Jerome Corsi, Michelle Malkin, and Jack Cashill, to name a few, are heavily and carefullly footnoted.


37 posted on 07/03/2011 8:13:59 AM PDT by libstripper
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To: Eric in the Ozarks
People keep forgetting that Qbama was a significant player in sub-prime loans in Chicago, agitating and organizing agitations against banks to pressure them to make bad loans

(------or else be tagged "RACIST!")

38 posted on 07/03/2011 8:14:54 AM PDT by cookcounty (Would someone PLEASE give the President a calculator for his birthday???)
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To: Liz
"Jamie Gurilli Gorelick (now BP's attorney)

It seems like where there is a scandal, there you will find Jamie Gorelick. I half expect to find her involved with Fast and Furious.

39 posted on 07/03/2011 8:22:42 AM PDT by cookcounty (Would someone PLEASE give the President a calculator for his birthday???)
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To: raybbr

Aren’t you needed back at Huff Po? I think they need you to have a quorum for their group session on how to hate yourself.

Democrats are 100% responsible for the size and scope of the housing bubble and subsequent financial sector collapse.


40 posted on 07/03/2011 8:25:40 AM PDT by y6162
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To: Las Vegas Ron

Thanks for the great links.


41 posted on 07/03/2011 8:35:51 AM PDT by Liz ( A taxpayer voting for Obama is like a chicken voting for Col Sanders.)
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To: All
REFERENCE ----- Subprime Scandal: The Angst Of Phil Angelides / IBD Editorial
FR Posted 6/30 by Kaslin

Democrats thought they'd dammed up the truth about government's role in the financial crisis. But the levies are breaking, thanks to a spate of rogue new books on the subject. The latest, "Reckless Endangerment," shreds the narrative carefully constructed by Democrats and the liberal media that Fannie Mae and Freddie Mac were only bit players in the crisis and followed Wall Street into subprime lending. It details how the federally chartered mortgage giants in fact led the way in relaxing underwriting standards for the entire industry — thanks to relentless pressure from Democrats, who used them as off-budget piggy banks to fund their social crusade to boost minority homeownership (and shore up their voting base).

Though "Reckless Endangerment" largely repeats what conservative books like "The Great American Bank Robbery" and "The Housing Boom and Bust" have said, "Reckless" is written by a New York Times business writer. And that's got Rush Limbaugh touting it as a weapon Republicans can use against Democrats in the next election. Suddenly, the debate over the causes of the epic housing crisis — which has plumbed Great Depression depths and only appears to be worsening — has reopened. And that's got Democrats nervous.

Earlier this week, Phil Angelides, the Democratic hack who ran the Financial Crisis Inquiry Commission's sham investigation, felt compelled to write a column for the Washington Post to try to plug the holes in the dike before it can spring any more inconvenient facts. He insists his final report proves the crisis was caused by "the recklessness of the financial industry," and that the history books should be closed on the subject — period, end of story. But Angelides' report is a 550-page cover-up. (Excerpt) Read more at investors.com ...

42 posted on 07/03/2011 8:38:20 AM PDT by Liz ( A taxpayer voting for Obama is like a chicken voting for Col Sanders.)
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To: Liz
Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives.

Odd the MSM doesn't seem to care about this.../s

43 posted on 07/03/2011 8:41:10 AM PDT by GOPJ (Black flash mobs: street level reflections of elite liberal hate for middle class America..)
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To: raybbr
In a June 17, 2002 speech, Bush called for the creation of the "American Dream Down Payment Fund."

Ut oh---that doesn’t sound like a Republican.

Sounds more like one of those frickin neocons----conniving Democrats who infiltrated the Repub party----the con/artists managed to dupe Bush into all kinds of atrocities.

Neocons main goal was to decimate the party and kick Repub so/cons to the curb.

44 posted on 07/03/2011 8:48:45 AM PDT by Liz ( A taxpayer voting for Obama is like a chicken voting for Col Sanders.)
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To: Liz
Good morning...

It is forgotten because of 9/11, but in Bush's FIRST SOTU, he called for more government programs to provide the down payments for first time homebuyers..

Have a GREAT 4th!!

45 posted on 07/03/2011 8:49:45 AM PDT by ken5050 (Save the Earth..It's the only planet with chocolate!!!)
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To: libstripper
The $700B TARP Bailout is now being called, "A MASTERFUL DECEIT." Pres Bush's Secy of Treasury, Henry Paulson, et al, may not have pulled a fast one when he testified in favor of the TARP before Congress----but Congress' phony outrage is a puzzlement. If HR 1424 was a 'MASTERFUL DECEIT' then CONGRESS didn't do its job.

TITLE I—TROUBLED ASSETS RELIEF PROGRAM (required 'Congressional Oversight' sections listed)
Sec. 101. Purchases of troubled assets.
Sec. 102. Insurance of troubled assets.
Sec. 103. Considerations.
Sec. 104. Financial Stability Oversight Board.
Sec. 105. Reports.
Sec. 107. Contracting procedures.
Sec. 108. Conflicts of interest.
Sec. 111. Executive compensation and corporate governance.
Sec. 116. Oversight and audits.
Sec. 118. Funding.
Sec. 119. Judicial review and related matters.
Sec. 121. Special Inspector General for the Troubled Asset Relief Program.
Sec. 125. Congressional Oversight Panel.
Sec. 127. Cooperation with the FBI.
Sec. 129. Disclosures on exercise of loan authority.

In HR 1424, there are enough rules, regs and CONGRESSIONAL OVERSIGHT REQUIRED that not one Thin Dime should have been 'misspent.' So if anything crooked did go on Congress should look in a mirror. They dropped the ball -- again.

===================================

REFERENCE Treasury Secretary Henry M. Paulson Jr. left his suite at Manhattan’s Waldorf-Astoria Hotel Sept. 15, 2008, after a sleepless night, feeling he’d done all he could to minimize the damage from that morning’s collapse of Lehman Brothers Holdings Inc.

At meetings concluded the previous evening at the Federal Reserve Bank of New York, Paulson and executives of the world’s largest financial institutions worked to head off two threats they anticipated in the wake of the biggest bankruptcy in U.S. history. The bankers spent hours trying to unwind Lehman-related credit-default swaps, bets made on whether companies will repay their debts. And with the help of a rule change by Federal Reserve Chairman Ben S. Bernanke, they were confident bank-to- bank loans would keep flowing.

Nobody accounted for Bruce R. Bent. The 72-year-old who created the first money market fund in 1971, the Reserve Primary Fund. He touted it as an investment so safe it would lull clients to sleep -- so safe that, even with $785 million in loans to tottering Lehman, Bent and his wife had jetted to Rome that Sunday evening to celebrate their 50th wedding anniversary.

Bent’s $62.5 billion fund had lent money to Lehman, mostly by acquiring short-term notes called commercial paper, used by companies to pay everyday expenses such as utilities and payroll and by Wall Street to fund everything from takeovers to the mortgages it turns into bonds. Money funds like Bent’s are the biggest buyers of commercial paper, purchasing about 40 percent of outstanding issues, according to the Fed.

It was commercial paper and the $3.6 trillion money market industry that traded the notes that came close to sinking the global economy -- not a breakdown in credit-default swaps or bank-to-bank lending. The bankers were focused on saving themselves, and commercial paper, as invisible as the air they breathed, never came up at the meetings, according to one of the two dozen executives invited to the New York Fed by its president, Timothy F. Geithner, 48, and Secy Paulson.

46 posted on 07/03/2011 9:00:09 AM PDT by Liz ( A taxpayer voting for Obama is like a chicken voting for Col Sanders.)
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To: ken5050
......in Bush's FIRST SOTU, he called for more government programs to provide the down payments for first time homebuyers......

Yup-----in that June 17, 2002 speech, Bush called for the creation of the "American Dream Down Payment Fund."

As I posted above----that doesn’t sound like a Republican. Sounds more like a cockamamie plan from those frickin' neocons----conniving Democrats who infiltrated the Repub party----the con/artists managed to dupe Bush into all kinds of atrocities. Neocons main goal was to decimate the party and kick Repub so/cons to the curb.

47 posted on 07/03/2011 9:18:27 AM PDT by Liz ( A taxpayer voting for Obama is like a chicken voting for Col Sanders.)
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To: GOPJ

MSM doesn’t like bad news about Dems.


48 posted on 07/03/2011 9:19:42 AM PDT by Liz ( A taxpayer voting for Obama is like a chicken voting for Col Sanders.)
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To: y6162
Democrats are 100% responsible for the size and scope of the housing bubble and subsequent financial sector collapse.

You are simply wrong.

Go to Ol' Dan Tucker's page to see the truth.

I know it will be hard to take the truth but try it anyway.

49 posted on 07/03/2011 9:23:14 AM PDT by raybbr (People who still support Obama are either a Marxist or a moron.)
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To: screaminsunshine

“It only took 50 years for the Civil Rights Act to destroy America.”

Bending over and pandering to 11-12%, the non productive Democrat population at the expense of the entire country.


50 posted on 07/03/2011 9:30:05 AM PDT by Cheetahcat ( November 4 2008 ,A date that will live in Infamy.)
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