Skip to comments.Democrats Fully to Blame for Subprime Mortgage Crisis that Caused 2008 Financial Disaster
Posted on 12/22/2012 2:54:00 PM PST by george76
In his early activist days, Barack Obama the community organizer sued banks to ease lending practices... During his time as a community organizer Barack Obama led several protests against banks to make loans to high risk individuals.
A new study by the respected National Bureau of Economic Research found that Democrats are to blame for the subprime mortgage crisis.
Republicans warned Democrats of the impending doom in 2004.
(Excerpt) Read more at thegatewaypundit.com ...
New Study Finds Democrats Fully to Blame for Subprime Mortgage Crisis that Caused 2008 Financial Disaster.
I have known this since at least 2008. Now show me how we can convince the low information voters in this country. Low Information Voters = at least 51% of the electorate.
We knew this would happen before the crash. It was inevitable. You can't just keep giving housing loans to people who won't pay them back - period. The Republicans in Washington said and did nothing. They let the MSM and the far left blame Bush, who tried to get congress to stop it - twice.
The spineless Republicans seriously dropped the ball on this one. They had the democrat party by the balls, but hid under their desks instead of sounding the alarm.
These democrat policies still stand. The housing for freeloaders is still law. We're still being forced to pay most of their mortgages right along with our own. They're setting the U.S. up for another crash down the line, and the Republicans are standing around like idiots letting it happen.
I’m not buying it , “commitments” ,, What exactly does that mean? Seriously it’s not hard money or loans. I see it (allowing the ponzi that was the real estate bubble) as more of a payoff to the “banks” and their cronies that oversee them .. an excuse , COVER , for bad loans , known to be bad at inception .. loans that were propped up with phony appraisals and sold of before they were even funded.
The gutless cowards never own up to the damage they cause. Their fellow travelers in the media either ignore inconvenient facts or refuse to report them. Imagine how much they must hate the new media.
Banks that lent money to people who couldn’t pay it back and people who lied on their mortgage applications are not at fault?
The banks controlled the process , they implemented the “no doc” policies , they knew the loans were crapola and didn’t care because they had them pre-sold to YOUR PENSION FUND...
Correction: People who “COULD” pay it back but chose not to!
Im in the mortgage biz, banks did not voluntarily give people loans they knew could not afford. They were forced to do so in most instances under community lending guidelines. Most of the loans were still loans that people could afford to pay, even if the rate was adjustable.
Problem is, the people didnt sacrifice the luxuries in an effort to constinue to pay mortgages.
Known this all along. Now, get the talking head sOcIaLisTs to report on it.
Best of luck.
Once responsible banks were infected with charlatans that administered Congressional requirements. That’s unfortunate, but not “odd”.
It wasn't their choice. The law forced them to. It was written in the Act they couldn't refuse a loan based on income. If they tried not to comply, the left wing tried to sue.
people who lied on their mortgage applications are not at fault? Odd.
They didn't have to lie. Because income didn't matter. The banks couldn't ask. They didn't have to be U.S. citizens, either. That question was deemed discriminatory.
The banks had no choice. They took those forced loans to Fanny and Freddie just to get rid of them. F&F bundled them together sold them on the market as GOOD loans.
SOMEONE had to pay off those bogus loans that weren't getting paid, and it had to be us, the U.S. taxpayer. These were OUR "citizens" that scammed the investors of the world.
Once again, the good people of America had to clean up another democrat disaster. And once again, the democrat base walks away debt free.
They were forced to by the government. It wouldn’t be “fair.”
Personally, I'm a little ticked at myself for not realizing this, and taking that lowball offer we got on our California house in 2006. That house, which we still own now as a rental, is down $275,000 from its 2005 high.
Im in the mortgage biz, banks did not voluntarily give people loans they knew could not afford.
BS! In most cases it was the loan officers modifying (falsifying) the income and expense data on apps/HUD-1’s to get people qualified ... and even if it came from a broker the banks still knew of and failed to stop the fraud because they were only in it for the quick 5% commission or such passing the known bad/fraudulent loan onto the end buyer of the product Wall Street was crafting out of it.
I know of dozens of instances where Mexicans , without SSN’s! churned cheap homes , selling them to relatives over and over every 6-12 months ,, never making even payment number one and dealing with the same broker and/or bank again and again ,, taking a 1100 sq. ft. $60k duplex to over $200k and then fleeing to Mexico with the cash or simply not using that name again ...
All banks expected a payback of thier loans. Nobody loans money to people and then doesnt care if it is paid back?
Now, that does not mean that some of the loan programs offered were “smart” in a business sense because many were not.
The “no doc” loan in therory is a good loan for some people. For instance, many business owners make lots of money but cannot prove all their income because of tax deduction allowance, depreciation of assets, etc. These loans were designed for such people. Also, you had to prove that the income was reasonable for someone in the same career or line of work.
However, over time, the “no doc” loan was used to give anybody a mortgage.
No doc loans were common, but made up only a small percentage of the mortgage market.
The biggest default rates are in the GOVERNMENT sponsored loans such as FHA, which still to this day has the some of the loosest qualifying criteria.
Not is “MOST CASES”, you dont know what you are talking about.
Cry BS all you want. I have been extremely involved in all facets of this induastry for almost 20 years. I have spent time on Capitol Hill and also with GW BUSH regarding mortgage issues. I am also past President of several mortgage industry associations.
I now what I am talking about. You have only your opinion.
I am not stating that FRAUD was not happeneing. But dont use words like “most cases” like you have first hand experience.
Mexicans did get lots of mortgages, but that was the program sir. It was allowed under Fannie Mae.
Loan officers did not set those guidelines.
What you fail to understand is that if a customer qualified for the loans that the FED GOV and Fannie Mae endorsed, you were legally obligated to provide it or you could be sued for discrimination in lending.
The GOV is the problem...
Pardon the typos...
“It wasn’t their choice. The law forced them to.”n
Someone I know would shout about it to me every evening, disrobing in the process, and then going to take a shower to was the stink of it off. Every work night. I was amazed.
There’s a spare ‘n’ in there, but ‘was’ should be ‘wash.’
All the CRA loans had federal backing. The banks had to loan the money, and were guaranteed the backing of U.S. tax dollars in case of default. The banks complied, not only because they had no choice, but didn't fight back because every bad loan would be paid by U.S. tax dollars anyway. They had nothing to lose.
Once they got too many bad loans, they shipped them back to the feds, i.e., Fanny and Freddie. F&F had to bury them, because the tax payers were on the hook (not good for democrats if people found out about all this), so F&F (the Feds) dumped them on the market, thinking out of sight is out of mind. BUT, their plan crashed, and international investors wanted their money.
We had to pay it. The democrats promised the banks the tax payers had their backs. The banks got their "promised" money back through the bail out.
I am also past President of several mortgage industry associations.
Mortgage Bankers Association STRATEGIC DEFAULTS on it’s Washington D.C. HQ !!
Government was indeed a problem but so was the mortgage industry. What to do when you take on to much risk? Package it and sell it to CDS specialists like AIG. Then when AIG fails to pay up on insured risk, steal the money from taxpayers. Rinse and repeat.
I am not stating that FRAUD was not happeneing. But dont use words like most cases like you have first hand experience.
When an industry creates an entity like MERS to hide ownership and make FRAUD easier to perpetrate ... and an industry demands the creation of a document forgery outfit such as DocX (there are others owned by Title insurers) that’s sole purpose is to facilitate the theft of homes by entities that have no legal claim on them ...
You are a disgrace.
You can’t hide behind the CRA.
Secondly, the CRA covered loans had lower rates of failure than the non CRA accounts.
If you want a target to blame: Easy money, ie Federal Reserve, local thrifts, Fannie and Freddie, failed credit rating companies.
Finally, the fact that everything was put into housing and 'risk' was securitized, and not diversified in a prudent way led to a financial disaster. Throw in globalization and the middle class being knee capped and you have a financial disaster, not a group of people who couldn't pay back a loan, and that group was poor anyway!
Barney Frank was warned about the likely failure of the idea, and he said, “We want to roll the dice”. His gamble cost the US trillions... and yet the MSM allows him to continue as if he wasn’t primarily responsible for the greatest loss of wealth in world history.
Unfortunately Republican politicians are about as good at explaining these things as Democrats are at understanding economic growth.
So don’t vote for them.
Democraps sent two democraps to head up fannie and freddie, then gave them bonuses tied to their “assets” (loans they bought). So the two democraps made millions while the banks were all too happy to sell them the loans. That’s where the SHTF.
The measure to curtail risky lending was sponsored by rino senators Hagel, McCain, Dole and Sununu.
Where were the vaunted conservatives?
And not a pip squeak out of any Republican as to these events. There have been plenty of times/opportunities for Republicans to set the record straight. However, Boehner and others have been silent or playing golf with Obama from whom they buy doublespeak.
It was banks complying with the law that were at fault. Odd, indeed!
The CRA loans by themselves were not the problem. The problem was the mechanism the Democrats put in place to make it possible for lenders to fulfill the CRA lending goals.
Witness the contributions of Jamie Gorelick, who enriched herself to the tune of $26m off Fannie crony capitalism:
In 2001, Gorelick announced that Fannie was buying subprime loans encouraged by the Community Reinvestment Act (CRA) and bundling them as securitized financial instruments. Securities made from bundles of guaranteed mortgages were to contribute to the banking crisis later in the decade.
Fannie Mae will buy CRA loans from lenders' portfolios; we'll package them into securities; we'll purchase CRA mortgages at the point of origination; and we'll create customized CRA-targeted securities, she said in 2001. This expanded approach has improved liquidity in the secondary market for CRA product, and has helped our lenders leverage even more CRA lending. Lenders now have the flexibility to use their own, customized loan products.
In remarks before the American Bankers Association on Oct. 30, 2000, Gorelick explicitly how the procress would work and what Fannie Mae would do to make it feasible for banks to lend to low-income applicants.
We will take CRA loans off your hands--we will buy them from your portfolios, or package them into securities--so you have fresh cash to make more CRA loans, she said. Some people have assumed we don't buy tough loans. Let me correct that misimpression right now. We want your CRA loans because they help us meet our housing goals.
That's how the housing bubble machine worked. The GSEs backed the bad paper, allowing lenders to comply with the CRA and get rich off origination fees, and Wall Street stepped forward to package the poison and fob it off on suckers. And, of course, you as a taxpayer backed the GSEs.
For me, one of the funnier episodes of the financial crisis was hearing that a Bavarian bank had failed because it had inadvertently invested in obligations of deadbeat California homeowners.
Such is the cost of the Low Information Voter.
BRAVO , That is exactly what happened ... Can you somehow get Rush to understand that it wasn’t the CRA , it was the banks abusing the mechanism... he doesn’t understand and it makes him sound idiotic.
I have always wanted to know what Andrew Cuomo’s roll in this whole fiasco was.
What????? I thought it was George Bush’s fault! ///>>>/s
It's hard to know what level of criminal intent should be ascribed to the particular players in this mess, though it's clear that those who sought to stifle the alarm bells going off can hardly be considered "clean", even if they didn't know most of the dangers the alarm bells signified.
Ability to handle risk is in some sense a commodity, and there is nothing wrong with trading in it, provided that all of the risks are in fact being borne by the people who are being paid to assume them. If a situation arises, however, where people can accept payment for assuming risks on behalf of a third party who has no say in the matter, such a situation will predictably devolve into one where the third party will be stuck holding the bag. Not only will the third party have to assume liability if some potential event occurs, but the event in question will be extremely likely to occur--far more likely than if the situation hadn't existed in the first place.
What's most unfortunate about this whole debacle is that when everything came crashing down, the government undertook a massive money-laundering operation which may have been intended to protect small-time crooks in government, but probably also protected many larger crooks who should have been prosecuted, and from whom it might have been possible to recover some of the loot.
While I detest what the democrats have done, and I believe they are much responsible. It is nonsense to say that they are wholly responsible. I don’t like such misrepresentations, and they can easily be proven false. For one the Big bankers are very much responsible as they committed fraud after fraud in the name of a quick buck. For two the Republicans are also responsible for some pretty heavy things. One of those in fact is what enabled the whole banking system to fail and put the US taxpayer on the hook. That is the repeal of Glass-Steagall by a bill sponsored by 3 Republicans. That is the single worst thing that caused all of this. One could argue that most of the rest of the fraud and corruption was enabled by that one greedy act. Of course the Democrats had quite a hand in Repealing Glass-Steagall as well.
This is a MUST READ for all here .. http://www.zerohedge.com/contributed/2012-12-22/lie-prosecuting-bank-fraud-will-destabilize-economy-what-really-destroying-ec
>>All banks expected a payback of thier loans.
>> Nobody loans money to people and then doesnt care if it is paid back?
LOL. Argent mortgage wasn’t a Bank, yet they claimed to have “revolutionized” the mortgage industry.
How’s all that AAA A$$Paper they originated and then sold up the securitized river floating these days?
This is why the RINO herd got it’s arse handed to it on 11/7.
Show some character - learn from the mistakes, OWN THEM, and drive on.
Under the sap-happy Hobamanated giveaway mtge standards, lenders could no longer turn down a loan from a welfare recepient, from those who recieved unemployment compensation, or child support as their "primary income." One couple receiving only SSI---applied for a mtge w/ a fraudulent app prepared by a greedy latino realty agent.
HERE'S HOW THE SAP-HAPPY CRIMINAL LIBERAL MIND WORKS HObama sued lenders to force them to give out toxic loans, and now---as President---he is suing them for complying, and actually lending the money.
MASSIVE MORTGAGE FRAUD ON CAPITOL HILL:
The Congressional Hispanic Institute, Inc, is an entity organized by Cong Joe Baca (D-Cali) in his capacity as head of the Congressional Hispanic Caucus.
Cong Baca created "HOGAR" (Spanish for home) in 2003 to work with the mortgage industry, F/M, lenders, banks and latino community groups to increase mortgage lending to what savvy observers consider to be unqualified Latinos.
"HOGAR" colluded w/ Cong Baca in what was to become a massive bilking of taxpayers. Cong Baca calculatedly hyped the fact that the national Latino homeownership rate was 47%, compared with 68% for the overall population.
HOGAR was coached to call the figure "alarming," and to say "a concerted effort was required to ensure that by the end of the decade Latinos will share equally in the American Dream of home ownership."
HOGAR and Cong Baca conned the public, failing to note that most of the "dreamers" were illegals, citizens of Third World countries who had violated US borders.
Predictably, HOGAR colluded w/ co-conspirators which included:
(a) shaky mortgage companies that ran into big trouble;
(b) Fannie Mae and Freddie Mac, both now under federal control after billions in taxpayer bailouts;
(c) Countrywide Financial Corp., sold to Bank of America Corp;
(d) Washington Mutual Inc., taken over by the US government and sold to J.P. Morgan Chase & Co.; and,
(e) New Century Financial Corp. and Ameriquest Mortgage Corp, both now defunct, killed by defaulted subprime Latino mortgages.
HOGAR's ties to the subprime mortgage industry were substantial. Bribery and self-dealing were rampant:
<><> Companies that donated $150,000 to Cong Baca got the right to have their own research fellow who would conduct fraudulent studies, which were cunningly used by industry lobbyists to pump lending.
<><> Bribery and extortion in the form of $100,000 annual donations to Cong Baca, for which HOGAR provided phony news releases from Cong Baca's Hispanic Caucus promoting a lender's commercial products to the Latino market,
<><> The most shocking example of bribery well-substantitated by Hogar's literature..... HOGAR announced it worked with Freddie Mac on a self-serving two-year examination of Latino homeownership in 63 congressional districts.
The "study" found Hispanic ownership on the rise thanks to "new flexible mortgage loan products" that the industry was adopting at the urging of Cong Baca's collusive coterie.
<><> HOGAR conned lenders into even more lenient down-payment and underwriting standards.
<><> As the subprime debacle unfolded, HOGAR declined repeated requests for comment despite the economic havoc their activities precipitated.
The mortgage schemes demonstrated the criminal activities of border violators with multiple identities---perhaps violent, terrorist-connected foreigners---colluding and conspiring to defraud private companies and public entities. And mortgage racketeering enterprises which employed sub rosa finance and business practices to carry out deceptions and frauds.
The alleged ring of swindlers---a Congresman, individuals with multiple identities, banks, insurance companies, mortgage nrokers--might be charged with cheating the US govt, taxpayers and bank share holders out of hundreds of millions of dollars via an elaborate web of mortgage and bank frauds.
The mortgage Dreamers used multiple phony identities, fraudulent Social Security numbers, purchased from identity forgers in order to obtain govt-subsidized benefits.
L/E will find that individuals with multiple identities obtained fraudulent mortgages then flipped the houses at ever-higher prices to family member who then absconded to foreign countries, sticking banks (and taxpayers) with hundreds of millions in fraudulent mortgages.
BACKGROUND A Wall Street Journal investigative report related that, according to the Federal Financial Institutions Examination Council examination of the borrowing spree, uncovered financial schemes by low-income housing groups, Hispanic lawmakers, a congressional Hispanic housing initiative, mortgage lenders and brokers, all colluding in fraduent schemes to increase homeownership among Latinos with forged documents which enabled massive fraud.
This was not simply the mortgage market at work. It was fueled by avarice, greed, and Congressional enabling fraudulent practices. In 2005 alone, mortgages to Hispanics jumped by 29%; Latinos with multiple fraudulent identities in low-paying jobs obtained subprime mortgages for prime properties---soaring to 169%.
(Research provided by Wall Street Journal. Some material excerpted from the NY Times).
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 Bushs Minority Homeownership Initiative). After four of the strongest years in housing and mortgage finance history, weve 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 Americas 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. (End Raines excerpt.)
FANNIE-MAE--THE DEMOCRATS' CRIMINAL ENTERPRISE / By Michelle Malkin
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 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 home ownership mania, and spread charitable contributions to housing advocates across the congressional map.
Fannie Mae serves as an industrial-sized patronage factory sharing profits with political allies, spreading taxpayer funds to voting blocslike ethnic groups-and doling out jobsto 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 political whore Rahm Emanuels profitable stint was low-show w/ no work involved. Emanuel was not even assigned to committees, according to company proxy statements. 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 Rahm Emanuel at F/M, 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.
>> The alleged ring of swindlers ... might be charged with cheating the US govt, taxpayers and bank share holders
Unfortunately, that didn’t happen.
Interesting info. Thanks!
Thanks for the ping, Liz.
This is the kind of stuff that makes my head explode.
Needless to say, it’s been exploding quite a bit in recent years.