Skip to comments.Burning down the house; How Democrats sparked the Great Recession (book recounts Fannie Mae debacle)
Posted on 07/03/2011 6:09:37 AM PDT by Liz
Reckless Endangerment a scalding new book ....... is another cautionary tale about governments 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 Maes 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 peoples money pays off in the currency of political power, and currency.
(Excerpt) Read more at nypost.com ...
Thanks for the great links.
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 ...
Odd the MSM doesn't seem to care about this.../s
Ut oh---that doesnt 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.
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!!
TITLE ITROUBLED 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 Manhattans Waldorf-Astoria Hotel Sept. 15, 2008, after a sleepless night, feeling hed done all he could to minimize the damage from that mornings 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 worlds 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.
Bents $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 Bents 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.
Yup-----in that June 17, 2002 speech, Bush called for the creation of the "American Dream Down Payment Fund."
As I posted above----that doesnt 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.
MSM doesnt like bad news about Dems.
You are simply wrong.
I know it will be hard to take the truth but try it anyway.
“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.
Yes, it does. Think McCain, Graham, Bush, etc.
It certainly doesn't sound like a conservative.
It rankles me seeing the defense of Bush on these housing threads. There is ample evidence to condemn Bush as well as the republicans who were riding on the back of the housing market as an indicator of the economy. There are many instances where the GOP let this stuff slide because it made the look good.
That ties a lot of it together. I remember Clinton reducing the maturity of our debt and therefore interest payments. I never thought that it would make MBS more attractive.
And, if I recall correctly, many NON-citizens.
And George Bush should have prosecuted every one of them. Especially those who made themselves rich at Fannie and Freddie.
The dick was an attorney on one of these anti-redlining lawsuits against Citibank.
apparently jorge bush’s great compassion and new tone
kept him from doing any investigations of crooks in
previous administration and the republicans who
held congress were still concerned about being
blackmailed by clintons. besides fbi files, i’m sure their
phones were tapped. since clinton, it
has been a gilded age for democrats but idiot republicans
let carville smear them with enron and ken lay.
karl rove wouldn’t respond that lay spent more time
with bill clinton. everyime i think about bush 1 and 2
i want to scream.
I agree. Does anyone know where I can find a few stats on the racial makeup of the F/M borrowers? I tend to think it was weighted very heavily toward families of color, but would like some proof, if it can be found.
I'm currently reading "Reckless Endangerment." Scary!
Please note, as per Liz’s post, Wall Street’s short trem commercial paper, much of which was sold to money market funds, was used to acquire the toxic mortgages that Wall Street bundled into bonds, meaning the whole money maket industry, in which I and, I suspect, you, hold some interests was also jeopardized.
The subprime mortgage meltdown could be attributed to illegal invaders fraudulently getting loans with stolen identities. No questions asked about citizenship status, employment, etc----- if they could breathe and make an X, they got a mortgage.
The conniving illegals then flipped the mortgaged houses among relatives at higher and higher prices.......the last relative absconds to Mexico with loads of cash, leaving banks (and taxpayers) holding the bag.
The buzz is Mexico actually ran newspaper ads on how to get free US housing.
CNBC featured an illegal who mowed lawns for a living who got a mortgage on a luxurious home by lying about his salary on the mortgage app. Then came the R/E bust. Naturally he couldn't keep up the payments---and had to move out.