Our financial crisis has been brought about by Republican economics. Their policy of little or no regulation for Wall Street is directly responsible for this crisis and has allowed and promoted the indiscretions and corruption that take place on Wall Street on a daily basis. Accountability and responsibility should be the order of the day, not bailout!
Let’s face it: Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson are financial handicappers — no different from the sports handicappers at the track. The guys at the track know every particular about a horse — how it trained, how it got to where it is — but there is no guarantee that horse will win after he picks it. Bernanke and Paulson are begging for $700 billion, from us. But after we support their pick, does it win? Or just cost us more? There’s always a chance this horse could fall and break a leg.
Archive for Monday, May 31, 1999 Minorities’ Home Ownership Booms Under Clinton but Still Lags Whites’ By Ronald Brownstein May 31, 1999 in print edition A-5
It’s one of the hidden success stories of the Clinton era. In the great housing boom of the 1990s, black and Latino homeownership has surged to the highest level ever recorded. The number of African Americans owning their own home is now increasing nearly three times as fast as the number of whites; the number of Latino homeowners is growing nearly five times as fast as that of whites.
These numbers are dramatic enough to deserve more detail. When President Clinton took office in 1993, 42% of African Americans and 39% of Latinos owned their own home. By this spring, those figures had jumped to 46.9% of blacks and 46.2% of Latinos.
That’s a lot of new picket fences. Since 1994, when the numbers really took off, the number of black and Latino homeowners has increased by 2 million. In all, the minority homeownership rate is on track to increase more in the 1990s than in any decade this century except the 1940s, when minorities joined in the wartime surge out of the Depression.
This trend is good news on many fronts. Homeownership stabilizes neighborhoods and even families. Housing scholar William C. Apgar, now an assistant secretary of Housing and Urban Development, says that research shows homeowners are more likely than renters to participate in their community. The children of homeowners even tend to perform better in school. Most significantly, increased homeownership allows minority families, who have accumulated far less wealth than whites, to amass assets and transmit them to future generations.
What explains the surge? The answer starts with the economy. Historically low rates of minority unemployment have created a larger pool of qualified buyers. And the lowest interest rates in years have made homes more affordable for white and minority buyers alike.
But the economy isn’t the whole story. As HUD Secretary Andrew Cuomo says: “There have been points in the past when the economy has done well but minority homeownership has not increased proportionally.” Case in point: Despite generally good times in the 1980s, homeownership among blacks and Latinos actually declined slightly, while rising slightly among whites.
All of this suggests that Clinton’s efforts to increase minority access to loans and capital also have spurred this decade’s gains. Under Clinton, bank regulators have breathed the first real life into enforcement of the Community Reinvestment Act, a 20-year-old statute meant to combat “redlining” by requiring banks to serve their low-income communities. The administration also has sent a clear message by stiffening enforcement of the fair housing and fair lending laws. The bottom line: Between 1993 and 1997, home loans grew by 72% to blacks and by 45% to Latinos, far faster than the total growth rate.
Lenders also have opened the door wider to minorities because of new initiatives at Fannie Mae and Freddie Mac–the giant federally chartered corporations that play critical, if obscure, roles in the home finance system. Fannie Mae and Freddie Mac buy mortgages from lenders and bundle them into securities; that provides lenders the funds to lend more.
In 1992, Congress mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains. It has aimed extensive advertising campaigns at minorities that explain how to buy a home and opened three dozen local offices to encourage lenders to serve these markets. Most importantly, Fannie Mae has agreed to buy more loans with very low down payments–or with mortgage payments that represent an unusually high percentage of a buyer’s income. That’s made banks willing to lend to lower-income families they once might have rejected.
But for all that progress, the black and Latino homeownership rates, at about 46%, still significantly trail the white rate, which is nearing 73%. Much of that difference represents structural social disparities–in education levels, wealth and the percentage of single-parent families–that will only change slowly. Still, Apgar says, HUD’s analysis suggests there are enough qualified buyers to move the minority homeownership rate into the mid-50% range.
The market itself will probably produce some of that progress. For many builders and lenders, serving minority buyers is now less a social obligation than a business opportunity. Because blacks and Latinos, as groups, are younger than whites, many experts believe they will continue to lead the housing market for years.
But with discrimination in the banking system not yet eradicated, maintaining the momentum of the 1990s will also require a continuing nudge from Washington. One key is to defend the Community Reinvestment Act, which the Senate shortsightedly voted to retrench recently. Clinton has threatened a veto if the House concurs.
The top priority may be to ask more of Fannie Mae and Freddie Mac. The two companies are now required to devote 42% of their portfolios to loans for low- and moderate-income borrowers; HUD, which has the authority to set the targets, is poised to propose an increase this summer. Although Fannie Mae actually has exceeded its target since 1994, it is resisting any hike. It argues that a higher target would only produce more loan defaults by pressuring banks to accept unsafe borrowers. HUD says Fannie Mae is resisting more low-income loans because they are less profitable.
Barry Zigas, who heads Fannie Mae’s low-income efforts, is undoubtedly correct when he argues, “There is obviously a limit beyond which [we] can’t push [the banks] to produce.” But with the housing market still sizzling, minority unemployment down and Fannie Mae enjoying record profits (over $3.4 billion last year), it doesn’t appear that the limit has been reached.
All signs point toward a high-velocity collision this summer between two strong-willed protagonists: HUD’s Cuomo and Fannie Mae CEO Franklin D. Raines, the first African American to hold the post. Better they reach a reasonable agreement that provides more fuel for the extraordinary boom transforming millions of minority families from renters into owners.
This hearing took place in September of 2003. Listen to Barney Franks' insight to the potential disaster with Fannie and Freddie. Barney starts speaking 4:40 into the hearing.
What complete rubbish from Chet of Scotia. This fiscal crisis was caused by both parties and especially liberal Democrats, like Barney Frank, who wanted to relax financial standards for home ownership. Nothing down, no income verification, no problem. Until the foreclosure.
Fannie May and Freddie Mack are wholly owned subsidiaries of the Democratic Party. Acorn of Obama fame also is involved in this crisis. The GOP tried 12 times to improve standards at Freddie and Fanny. Each time the Democrats balked. Maybe we should think twice before sending yet another liberal Democratic to Congress to vote with Barney Frank?
Day of Reckoning by Patrick J. Buchanan Posted 09/26/2008 ET Updated 09/26/2008 ET
How did the United States of America, the richest nation on earth, whose economy represents 30 percent of the Global Economy, arrive at the precipice of a financial panic and collapse?
The answer lies in the abject failure of both America's financial elite and the political elite of both parties -- the same elites now working together to determine how much of our wealth will be needed to bail the nation out of the crisis of their own creation.
Big Government is riding to the rescue -- saddlebags full of our tax dollars -- to save us from the consequences of the stupidity and folly of Big Government. New York and Washington, the twin cities responsible for the crisis, are now being hailed by the media as the 7th Cavalry, coming to rescue a beleaguered nation.
Had there not been a steady and constant infusion of easy money and credit into the U.S. economy by the Fed, for years on end, a housing bubble of the magnitude of the one that has just exploded could never have been created.
Had the politicians of both parties not coerced and pressured banks, S&Ls, Fannie Mae and Freddie Mac to make all those sub-prime mortgages, then to tie this rotten paper to good paper, convert it into securities and sell to banks all over the world, there would have been no global financial crisis.
Had they seen this coming and acted sooner, the Federal Reserve and U.S. Treasury would not today, like Henny Penny, be crying, "The sky is falling!" and the end times are at hand, unless we give them 5 percent of our gross domestic product to buy up suspect securities backed by sub-prime mortgages.
Consider what the "Paulson Plan" of Treasury Secretary Hank Paulson, against which Sen. Richard Shelby and the House Republicans rebelled, entails.
Since Americans save nothing and have to borrow from abroad to finance our trade and budget deficits, wars and foreign aid, what the secretary proposes is this: that Congress authorize the Treasury to spend $700 billion to buy up the toxic paper on the books not only of U.S. banks, but of foreign banks operating in the United States. According to The Washington Times, the Treasury would also be authorized to buy up securities backed by rotten auto loans, student loans and credit card debts.
Thus America would be borrowing from China, Japan and the Middle East to tidy up the balance sheets of the banks of China, Japan and the Middle East. And all the rotten paper will be offloaded onto U.S. taxpayers, who hopefully will be able to recoup some of their losses, because some of the paper will be good.
Why should we do this? Because otherwise there will be a financial panic, followed by a market collapse, wiping out pensions, 401Ks, portfolios and defined benefit plans of Middle America, forcing millions into bankruptcy and millions more to put off retirement and continue working until they drop.
In a democracy, it is said, you get the kind of government you deserve. But what did the American people do to deserve this? What did they do to deserve the quality of financial, corporate and political leadership that marched them into this mess -- and that today postures as their rescuers?
Consider what this mess has already cost taxpayers: $29 billion to buy the rotten paper of Bear Stearns so J.P. Morgan would buy the investment bank; $85 billion for 80 percent of AIG to nationalize it; $150 billion in a stimulus package to flood the nation with cash; perhaps $300 billion to bail out Fannie Mae and Freddie Mac; and now $700 billion to begin taking the toxic paper off the hands of America's big banks.
And even if this is passed, say Paulson and Fed Chairman Ben Bernanke, there is no guarantee this will resolve the crisis. If the $700 billion is not provided and the toxic paper is not pulled off the books of the world's banks by U.S. taxpayers, however, we face an almost certain collapse, surging bankruptcies, rising unemployment, a shrinkage of GDP and a recession, if not worse.
Yet, the fellows who tell us we face a financial mushroom cloud over every American city if we do not act at once to provide the $700 billion did not see this coming and can make no guarantee that this will succeed and end the crisis.
Nevertheless, it must be done, and done now, as collapse is imminent.
Looking at all the money being ladled out by the U.S. government to prevent a collapse, and the diminished revenue coming in, it is hard to see how America avoids future deficits that reach $1 trillion a year. These will imperil both the dollar itself and the ability of the United States, which saves nothing, to borrow from the rest of the world. The downsizing of America is at hand.
Yes, indeed, we have arrived at the Day of Reckoning for Uncle Sam.
Is anyone else as scared as I am regarding the bailout plan proposed by Bush/ Paulson et al? McCain and [ex-Texas Sen. Phil] Gramm push for deregulation of Wall Street. President Bush and [Vice President] Cheney enact it, ignore the greed and then want us to pay to fix it. Has anyone read the bailout plan? Henry Paulson will be king. All decisions, once this is passed, will be made by the secretary of the Treasury! He will make decisions regarding who gets what. The who in this case is not us, the taxpayers; it is the huge investment firms on Wall street who were completely on their own, unregulated (thanks, John McCain). The Republicans are for less government at our expense. Their philosophy apparently is not working. The current administration has mortgaged our future, along with our children’s and now their children’s to finance mess after mess. I say do not rush. Examine the bailout plan carefully. Call your legislators. Should one person be assigned to make all decisions without review? Should the CEOs of the Big Five investment firms be allowed to keep the up-front money they received or be made to pay it back to help finance the mess we are in because of their greed? Enough! DEBRA DODD Amsterdam
Mona Charen Blame mess on Democratic regulations Mona Charen is a nationally syndicated columnist.
As I write, news is coming across the wire that a bill to bail out the financial industry is likely to pass. That is a relief. We have not seen a real financial panic for 80 years — but that doesn’t mean we couldn’t. Just as the psychology that creates bubbles (whether for tulips or real estate) does not change over time, neither does the psychology that stampedes for safety during crashes. If large numbers of people transfer their money to Treasury bonds (as many appear to be doing already), the pool of capital available for business and personal loans will dry up and America’s economy will find out what a 21st century depression looks like. Conservatives rightly detest government bailouts of any kind. It violates our free market principles. But if some government rescue is not forthcoming, a worse scenario (from the conservative perspective) is very likely. We could slide into a deep recession just weeks before an election. As of today, banks have stopped lending to one another. When voters look around for someone to blame, they will find a fable offered by Democrats. That fable goes like this: The Republicans presided over an “anything goes” party during the Bush administration and failed to properly regulate the superrich of Wall Street. They did this because they are capitalists who disbelieve in regulation. Democrats, never wild about capitalism, will correct the lax oversight of the Republican regime and make it possible for happy days to be here again. By a 2 to 1 margin, according to a CNN poll, voters blame Republicans more than Democrats for the present crisis. Democratic spin is working. Republicans need to wake up. At the root of this mess is not the failure of capitalism but political interference in the market. It was Democrats who pushed for and passed the Community Reinvestment Act of 1977 that forced banks to serve their “whole communities” and required them to offer loans to people who were not creditworthy. In 1995, the Clinton administration’s Department of Housing and Urban Development, headed by Andrew Cuomo, implemented new regulations requiring banks to meet numerical quotas in lending and demonstrate the diversity of their borrowers. While housing prices were rising, the bad loans were hidden. But as soon as prices began to fall and adjustable ARMs kicked in, the defaults began. It was Democrats who closed ranks to insulate their pet projects — Fannie Mae and Freddie Mac — from proper oversight and regulation. A New York Times article from 2003 described the opposition to a Bush administration proposal to enhance oversight: “Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing lowincome and affordable housing.” Rep. Barney Frank (D-Mass.) claimed of the thrifts, “These two entities ... are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” Representative Mel Watt (D-N.C.) added, “I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing.” As for the regulations that were adopted, some, like the “mark to market” accounting rule, have taken a serious situation and transformed it into a disaster. An estimated 6 to 7 percent of home mortgages are in default (compared to 40 percent in the 1930s). Under the old cost accounting system, investment banks would have been able to manage the losses with patience and time. But the mark to market rule (imposed by many, including the Securities and Exchange Commission, in response to the S&L debacle and the Enron scandal) requires that banks value their assets based on what they can fetch at any given moment in the open market. Well, because the housing market was in a temporary dither, banks were forced to wildly write down their portfolios, spreading the contagion of panic even further. The secret good news beneath today’s terror is that 93 or 94 percent of America’s mortgages are sound. Once the liquidity crisis is blunted and the bad loans sorted out, taxpayers should see most, if not all, of their $700 billion back. But the moral of the story must be understood — it wasn’t lack of regulation that got us here, it was bad regulation.
Crisis causing credit freeze-up BY DAVE CARPENTER AND ANNE D’INNOCENZIO The Associated Press
When Deb Freitag applied for a credit card so she could replace her roof, her leaky refrigerator and her old dishwasher, she was offered a $1,000 line of credit, not the $5,000 she needed. When Mark Ryan finally scraped together more than enough to buy a home, he found that the mortgage a bank promised him earlier in the year was no longer available. In a land where TV blares nomoney-down pitches and everything from homes to furniture to college education is bought with borrowed money, the crisis on Wall Street is causing the credit market to seize up. On Main Street, this means fewer loans and smaller loans at higher rates — when they are available at all. No one is quite sure how bad it will get, especially with the fate of the proposed $700 billion government bailout unknown. But people’s inability to borrow has potentially dire effects, since consumer spending accounts for two-thirds of U.S. economic activity. “If not fixed fairly soon, we may find that individuals and smaller businesses have much higher costs for borrowing — or in the worst case are unable to borrow at all,” said David Stowell, finance professor at Northwestern University’s Kellogg School of Management. Freitag, a 43-year-old freelance writer in Cincinnati, was surprised when she tried to get a credit card from home improvement chain Lowe’s Cos. this month. She got the skimpy $1,000 credit line bumped up to $2,000 after she complained, but even that wasn’t enough. Freitag calculated that her purchases would add up to almost $9,000, including the $6,000 for her roof, which was damaged in a wind storm this month. Now she will have to take out a consumer loan, which has bad consequences: Merely searching for the loan could hurt her credit rating, and she will have to start paying it back right away. “These are needs,” said Freitag, whose husband recently lost his job in corporate video production. “I am not going out and buying a designer kitchen.” Ryan, 37, a social worker in New York City, can finally afford a home in one of the most expensive housing markets. But he can’t get a mortgage. Swiftly pre-approved by his bank for a loan last February, he went back this month after finding the apartment he wanted. But he was told he had to fill out a 17-page application to get re-approved — even though he had since added $50,000 to his bank account. While he waited for approval that ultimately never came, the apartment was sold out from under him. “As a first-time homebuyer, in a way conditions couldn’t get any better,” he said. “If you can get your mortgage, rates are going down to the point where average people can afford them. But with the banks so paranoid, it’s just tough getting one.” Homebuyers are not the only ones hard-pressed to get a loan. Calvin Parker, 39, a mechanic, was shopping for car parts in Harrisburg, Pa., to keep his 1997 Dodge Caravan going until he can meet the daunting terms for a new car. “They want too much down,” he said. “And the interest rates are too high. I believe I wouldn’t be able to get a loan without paying $1,500 to $2,000 down.” Oona Rokyta felt the credit squeeze in her education loans. The 27-year-old publicist consolidated her four student loans — one for each year of college — in late August. She paid an average of 9 percent on them but wanted them redone as a single loan, in part to benefi t her parents by removing them as co-signers. The intention was good but the math worked out against her: Wells Fargo & Co. offered her an 11.75 percent interest rate and wanted the new loan paid back within seven years rather than the standard 15. Those changes boosted her monthly payment to $502 a month, from $301.
I was in the 1st Niagara Bank and was talking to the branch manager there. I asked her if this banking crisis effected their bank at all. She said no and that the bank was very sound. She said that they never got into the subprime mortgages. She also said that there are many banks around that never became a part of the subprime mortgages and that they are equally as sound as 1st Niagara.
Although Obama is accused of being far left, it is the Republican Party that is bringing socialism to the United States — that is, socialism for the rich. What timing! At the same time that New York City taxpayers start shelling out $220 million to replace “The House That Ruth Built” with multi-millionaire Steinbrenner’s new stadium, our “Great Decider” is saddling our children and grandchildren with a $700 billion debt to save mismanaged capitalist enterprises. Bush perfected the scam of “corporate socialism” in 1990, as owner of the Texas Rangers, when he finagled $135 million from the Arlington, Texas, citizens to build and hand over a baseball stadium to him and his wealthy partners. This enabled him to transform his borrowed investment of $500,000 into his personal fortune of $14.9 million — a 2,400 percent profi t. Now he wants to make Treasury Secretary Paulson a “super decider”: Decisions by the secretary pursuant to the authority of this act would be nonreviewable and committed to agency discretion, and could not be reviewed by any court of law or any administrative agency. These are dictatorial powers that Stalin would have envied! Does this explain why President Bush said he saw a kindred spirit when he first gazed into the eyes of Russian President Putin, the former KGB lieutenant colonel? BERNARD BLOOM Saratoga Springs
Bush perfected the scam of “corporate socialism” in 1990, as owner of the Texas Rangers, when he finagled $135 million from the Arlington, Texas, citizens to build and hand over a baseball stadium to him and his wealthy partners. This enabled him to transform his borrowed investment of $500,000 into his personal fortune of $14.9 million — a 2,400 percent profi t.
Mr.Obama should be very very very very careful when he talks about the wallstreet issue------ WHERE WAS HE WHEN IT WAS HAPPENING-----------AND IT DIDN'T JUST HAPPEN IN THE PAST 8YEARS.......DOES HE REALLY THINK WE ARE THAT DUMB???
...you are a product of your environment, your environment is a product of your priorities, your priorities are a product of you......
The replacement of morality and conscience with law produces a deadly paradox.
STOP BEING GOOD DEMOCRATS---STOP BEING GOOD REPUBLICANS--START BEING GOOD AMERICANS
Logged
What complete rubbish from Chet of Scotia. This fiscal crisis was caused by both parties and especially liberal Democrats, like Barney Frank, who wanted to relax financial standards for home ownership. Nothing down, no income verification, no problem. Until the foreclosure. 
