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Old 09-23-2008, 07:43 PM
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Default How the Democrats Created the Financial Crisis

Sept. 22 (Bloomsburg) -- The financial cricis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story.

Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.

But really, it isn't. Enough cards on this table have been turned over that the story is now clear. The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.

Fannie and Freddie (championed by the Democrats) did this by becoming a key enabler of the mortgage cricis. They fueled Wall Street's efforts to securitize sub-prime loans by becoming the primary customer of all AAA-rated sub-prime mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.

In the times that Fannie and Freddie couldn't make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.

The problem was that trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.

TURNING POINT

Take away Fannie and Freddie, or regulate them more wisely, and it's hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have hapened.

It is easy to identify the histoical turning point that marked the beginning of the end.

Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute coleague Peter Wallison, the Securities and Exchange Commission's chief accountant told disgraced FANNIE MAE CHIEF FRANKLIN RAINES ( A democrat and advisor to Obama) that Fannie's position on the relevant accounting issues was not even "on the page" of allowable interpretations.

Then legislative momentum emerged for an attempt to create a "world class regulator" that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themsleves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.

GREENSPAN'S WARNING

The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn't be forseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie "Continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road," he said. "We are placing the total financial system of the future at a substantial risk."

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

DIFFERENT WORLD

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess suply, the market would likely have not existed.

BUT THE BILL DIDN'T BECOME LAW, FOR A SIMPLE REASON: DEMOCRATS OPOSED IT ON A PARTY-LINE VOTE IN THE COMMITTEE, SIGNALING THAT THIS WOULD BE A PARTISAN ISSUE. REPUBLICANS, TIED IN KNOTS BY THE TIGHT DEMOCRATIC OPPOSITION, COULDN'T EVEN GET THE SENATE TO VOTE ON THE MATTER.

That such a RECKLESS political stand could have been taken by the DEMOCRATS was obscene even then. Wallison wrote at the time: "It is a classic case of SOCIALIZING the risk while PRIVATIZING the profit. The Democrats and the FEW Republicans who opose portfolio limitations could not possibly do so if their constituents understood what they were doing."

To be continued......
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Old 09-23-2008, 08:05 PM
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Default How the Democrats created the Finincial Cricis - part 2

MOUNDS OF MATERIALS

Now that the collapse has occurred, the ROADBLOCK BUILT BY SENATE DEMOCRATS IN 2005 IS UNFORGIVABLE. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materialas defending their practices. Perhaps some found their propaganda convincing.

BUT NOW WE KNOW THAT MANY OF THE SENATORS WHO PROTECTED FANNIE AND FREDDIE, INCLUDING BARACK OBAMA, HILLARY CLINTON AND CHRISTOPHER DODD, HAVE RECIEVED MIND-BOGGLING LEVELS OF FINANCIAL SUPPORT FROM THEM OVER THE YEARS.

Throughout his career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.

CLINTON, the 12th ranked recipient of Fannie and Freddie PAC and employee contributions, has recived more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.

There has been a lot of talk about who is to blame for the cricis. A look back at the story of 2005 makes the answer pretty clear.

Oh, and there is one little footnote to the story that's worth keping in mind while Democrats point fingers between now and November 4th. SENATOR JOHN McCAIN WAS ONE OF THE THREE CO-SPONSORS OF S.190, THE BILL THAT WOULD HAVE AVERTED THIS MESS.

(Kevin Hassett, Director of Economic Policy studies at the American Enterprise Institute)


The facts are these; Freddie and Fannie were the brain childs of the DEMOCRATS and the root of this current financial cricis, they were allowed to conduct business on shaky ground, once the danger was known, the Democats kept the time-bomb going.

Barrack Obama continues to lie through his teeth to the American people on how HE will get us out of this mess when it was HE who was a party to the cime. The Democrats cry "Injustice" when it was them tightening the noose around our necks.

The filth which call themselves the media, either oblivious to or ignoring the facts due to their infatuation and obsession for Obama, parrot these lies that he continues to sell to the American people unchecked. These bums in the media continuously run unpoven and even fictious stories about Gov. Palin in order to besmirch her character. All the while, as usual, it is the radical left, the LICE and BUGS of our body politic, continuing their hijack attempt on our country in an effort to transform us into a paltry, socialist version, of our present composition.
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Old 09-24-2008, 03:27 PM
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Col.,
A lot to the saga; I just see the local results and it isn’t pretty, Actually Nevada is going to be the worst hit and possibly a self-inflicted wound of the most grievous nature and not just in terms home value and repositions. Alas, the predators follow the prey and we got Hispanic gangs up the wazoo now and all feeding off the illegal alien construction worker and local infrastructure and taking a toll, an extreme toll. Hodit, hodit, those punks can take their war back to Mexico and go do their death dance there, goddamn. Most of those macho shits have no intention of being anything other than leaches and parasites a tatin n’ struttin, shootin, cutin n’ spermin. Of course, when the prey can no longer buy-off the predator, we get a new set of dynamics. Ok, punks, new reality on the block. Maria has nothing left to give, she is worn out, tired, scared and likely to be unemployed very soon, perhaps deported.

So, you strike out against my daughter and granddaughter in an attempt to do your shit, will ya, ha.

Didn’t work ha punks, hmm? Unfortunately for you soranos, I was to meet my daughter and grand child for a birthday shopping deal and your bandannas and hidden knives mean diddly to me, so fuk you. Go rot in the Ely Pen now, I’m sure the Mexican consulate will make sure you are paired with the appropriate bunk burro when you are sentenced in November. Long time rot, eh.

Scamp
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Old 09-26-2008, 08:57 PM
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lasts 10 minutes
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Old 09-28-2008, 10:36 AM
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....
Reminder that the bailout allows foreign banks to partake of American taxpayer funding — and that the bailout plan includes buying student loans, car loans, credit card debt and any other “troubled” assets held by banks.
Thanks to Pelosi, the bailout has expanded even further:
....
The Pelosi summary also said the legislation will expand the range of firms that can sell troubled assets to the government to include pension plans, local governments and community banks serving “low- and middle-income families.”
...
foreclosure-prevention measures include an extension of the tax holiday for homeowners who face foreclosure, as well as a tax break for community banks that held shares of Fannie Mae and Freddie Mac. The rescue plan will allow affected banks to take an immediate tax deduction on losses from investments in the two firms, which were taken over by the federal government earlier this month.
....

Sigh

More emails to congress and the president
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Old 09-29-2008, 07:07 AM
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Boy those dems were busy, weren't they? And, where were the repubs, the poor helpless little babes? There is enough blame to go around here, dems, repubs, we the pipple. No one's hands are clean on this one, just as there was no one clean over the savings and loan debacle (talk about not learning from mistakes). This is not a partisan issue.
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Old 09-29-2008, 07:15 AM
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http://www.prospect.org/cs/articles?...ortgage_crisis

And It All Started with Deregulation


There was a time, not too long ago, when Washington did regulate banks. The Depression triggered the creation of government bank regulations and agencies, such as the Federal Deposit Insurance Corporation, the Federal Home Loan Bank System, Homeowners Loan Corporation, Fannie Mae, and the Federal Housing Administration, to protect consumers and expand homeownership. After World War II, until the late 1970s, the system work. The savings-and-loan industry was highly regulated by the federal government, with a mission to take people's deposits and then provide loans for the sole purpose of helping people buy homes to live in. Washington insured those loans through the FDIC, provided mortgage discounts through FHA and the Veterans Administration, created a secondary mortgage market to guarantee a steady flow of capital, and required S&Ls to make predictable 30-year fixed loans. The result was a steady increase in homeownership and few foreclosures.
In the 1970s, when community groups discovered that lenders and the FHA were engaged in systematic racial discrimination against minority consumers and neighborhoods -- a practice called "redlining" -- they mobilized and got Congress, led by Wisconsin Senator William Proxmire, to adopt the Community Reinvestment Act and the Home Mortgage Disclosure Act, which together have significantly reduced racial disparities in lending.
But by the early 1980s, the lending industry used its political clout to push back against government regulation. In 1980, Congress adopted the Depository Institutions Deregulatory and Monetary Control Act, which eliminated interest-rate caps and made sub-prime lending more feasible for lenders. The S&Ls balked at constraints on their ability to compete with conventional banks engaged in commercial lending. They got Congress -- Democrats and Republicans alike -- to change the rules, allowing S&Ls to begin a decade-long orgy of real estate speculation, mismanagement, and fraud. The poster child for this era was Charles Keating, who used his political connections and donations to turn a small Arizona S&L into a major real estate speculator, snaring five Senators (the so-called "Keating Five," including John McCain) into his web of corruption.
The deregulation of banking led to merger mania, with banks and S&Ls gobbling each other up and making loans to finance shopping malls, golf courses, office buildings, and condo projects that had no financial logic other than a quick-buck profit. When the dust settled in the late 1980s, hundreds of S&Ls and banks had gone under, billions of dollars of commercial loans were useless, and the federal government was left to bail out the depositors whose money the speculators had put at risk.
The stable neighborhood S&L soon became a thing of the past. Banks, insurance companies, credit card firms and other money-lenders were now part of a giant "financial services" industry, while Washington walked away from its responsibility to protect consumers with rules, regulations, and enforcement. Meanwhile, starting with Reagan, the federal government slashed funding for low-income housing, and allowed the FHA, once a key player helping working-class families purchase a home, to drift into irrelevancy.
Into this vacuum stepped banks, mortgage lenders, and scam artists, looking for ways to make big profits from consumers desperate for the American Dream of homeownership. They invented new "loan products" that put borrowers at risk. Thus was born the sub-prime market.
At the heart of the crisis are the conservative free market ideologists whose views increasingly influenced American politics since the 1980s, and who still dominate the Bush administration. They believe that government is always the problem, never the solution, and that regulation of private business is always bad. Lenders and brokers who fell outside of federal regulations made most of the sub-prime and predatory loans.
In 2000, Edward M. Gramlich, a Federal Reserve Board member, repeatedly warned about sub-prime mortgages and predatory lending, which he said "jeopardize the twin American dreams of owning a home and building wealth." He tried to get chairman Alan Greenspan to crack down on irrational sub-prime lending by increasing oversight, but his warnings fell on deaf ears, including those in Congress.
As Rep. Barney Frank wrote recently in The Boston Globe, the surge of sub-prime lending was a sort of "natural experiment" testing the theories of those who favor radical deregulation of financial markets. And the lessons, Frank said, are clear: "To the extent that the system did work, it is because of prudential regulation and oversight. Where it was absent, the result was tragedy."
Some political observers believe that the American mood is shifting, finally recognizing that the frenzy of deregulation that began in the 1980s has triggered economic chaos and declining living standards. If they needed proof, the foreclosure crisis is exhibit number one.
Those who profited handsomely from the sub-prime market and predatory lending, the mortgage bankers and brokers, are working overtime to protect their profits by lobbying in state capitals and in Washington, DC to keep government off their backs. The banking industry, of course, has repeatedly warned that any restrictions on their behavior will close needy people out of the home-buying market. Its lobbyists insisted that the Bush plan be completely voluntary.
This isn't surprising, considering who was at the negotiating table when the Bush administration, led by Treasury Secretary Henry Paulson, forged the plan. The key players were the mortgage service companies (who collect the homeowner's monthly payments, or foreclose when they fall behind) and groups representing investors holding the mortgages, dominated by Wall Street banks. The Bush plan reflected both groups' calculation that -- for some loans -- they would do better temporarily freezing interest rates than foreclosing. Groups who represent consumers -- ACORN, the National Community Reinvestment Coalition, the Greenlining Institute, Neighborhood Housing Services, and the Center for Responsible Lending -- were not invited to the negotiation.
The best hope for real reform rests with a Democratic Party victory in November. And after an electoral win, it will require that Democrats make sure that these consumer groups are key participants in shaping legislation..
And wouldn't it be nice to hear the next president tell the American people that, "the era of unregulated so-called free-market banking greed and sleaze is over"?
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Old 09-29-2008, 08:37 AM
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Yo M'dude..you're indirectly criticizing Ronne Raygun, which is heresy in these here parts.
(You're right tho)
A dangerous brew...greed, stupidity, and political clout...and laziness on the part of tha pipple.
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