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.
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 fellprecipitously, 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:
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 Culbersons 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 Administrations 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]
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. Bushs 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 systems alphabet soup of oversight agencies with people who, like him, wanted fewer rules, not more.
The presidents 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 generals report.
As for Mr. Bushs 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 Carolinas 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. Bushs 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 Partys top 10 donors in 2004 was Roland Arnall. He founded Ameriquest, then the nations 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. Bushs former chief of staff, said White House aides discussed Ameriquests 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 fools 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 dont think this is what the president had in mind here, he recalled telling Ryan Streeter, then the presidents 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. Bushs 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 industrys 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 sectors 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. Falcons 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)