the real cause of the financial meltdown

“If you let the US Chamber's clients go unregulated, they'll just do it to you again in a few years. And you'll deserve every bit of it.

The Republican Party really has become the defenders of massive white collar crime.... that and the gang rape.

Are the voters so stupid that they'll return them to power in so short a span? If they do, then They'll deserve what they get as well.”

“And the reality of the above article speeds over Tilty's pointed head like a homeless person needing a place to stay.

Tilty, kick out any poor people today?”

“XL is turning liberal?”

“the meltdown was caused by an out-of-control market in default-swaps... basically an unregulated insurance business for risky mortgages that turns out is larger than the us stock market. someone learned how to take a turd, wrap it up in pretty paper and claim it didn't smell bad and sell it as a commodity. trouble is that a turd by any other name does smell as sweet and when the music stopped someone had to be left without a chair to sit in...”

“Media Mum on Barney Frank's Fannie Mae Love Connection
Democratic House Financial Services Committee Chair promoted GSEs while former 'spouse' was Fannie Mae executive.

By Jeff Poor
Business & Media Institute
9/24/2008 4:00:57 PM

Are journalists playing favorites with some of the key political figures involved with regulatory oversight of U.S. financial markets?



MSNBC’s Chris Matthews launched several vitriolic attacks on the Republican Party on his Sept. 17, 2008, show, suggesting blame for Wall Street problems should be focused in a partisan way. However, he and other media have failed to thoroughly examine the Democratic side of the blame game.



Prominent Democrats ran Fannie Mae, the same government-sponsored enterprise (GSE) that donated campaign cash to top Democrats. And one of Fannie Mae’s main defenders in the House – Rep. Barney Frank, D-Mass., a recipient of more than $40,000 in campaign donations from Fannie since 1989 – was once romantically involved with a Fannie Mae executive.



The media coverage of Frank’s coziness with Fannie Mae and his pro-Fannie Mae stances has been lacking. Of the eight appearances Frank made on the three broadcasts networks between Jan. 1, 2008, and Sept. 21, 2008, none of his comments dealt with the potential conflicts of interest. Only six of the appearances dealt with the economy in general and two of those appearances, including an April 6, 2008 appearance on CBS’s “60 Minutes” were about his opposition to a manned mission to Mars.



Frank has argued that family life “should be fair game for campaign discussion,” wrote the Associated Press on Sept. 2. The comment was in reference to GOP vice presidential nominee Sarah Palin and her pregnant daughter. “They’re the ones that made an issue of her family,” the Massachusetts Democrat said to the AP.



The news media have covered the relationship in the past, but there have been no mentions since 2005, according to Nexis and despite the collapse of Fannie Mae. The July 3, 1998, Reliable Source column in The Washington Post reported Frank, who is openly gay, had a relationship with Herb Moses, an executive for the now-government controlled Fannie Mae. The column revealed the two had split up at the time but also said Frank was referring to Moses as his “spouse.” Another Washington Post report said Frank called Moses his “lover” and that the two were “still friends” after the breakup.



Frank was and remains a stalwart defender of Fannie Mae, which is now under FBI investigation along with its sister organization Freddie Mac, American International Group Inc. (NYSE:AIG) and Lehman Brothers (NYSE:LEH) – all recently participants in government bailouts. But Frank has derailed efforts to regulate the institution, as well as denying it posed any financial risk. Frank’s office has been unresponsive to efforts by the Business & Media Institute to comment on these potential conflicts of interest.



While the relationship reportedly ended 10 years ago, Frank was serving on the House Banking Committee the entire 10 years they were together. The committee is the primary House body which along with the Office of Federal Housing Enterprise Oversight (OFHEO) has jurisdiction over the government-sponsored enterprises.



He has served on the committee since becoming a congressman in 1981 and became the ranking Democrat on the committee in 2003. He became chairman of the committee, now called the House Financial Services Committee, in 2007.



Moses was the assistant director for product initiatives at Fannie Mae and had been at the forefront of relaxing lending restrictions at the company for rural customers, according to the Feb. 23, 1998, issue of National Mortgage News (NMN).



“Herb Moses, who helped develop many of Fannie Mae’s affordable housing and home improvement lending programs, has left the mortgage industry,” Darryl Hicks wrote for NMN. “Mr. Moses - whose last day was Feb. 13 - spent the past seven years at Fannie Mae, most recently as director of housing initiatives. Over the course of time, he played an instrumental role in developing the company’s Title One and 203(k) home improvement lending programs.”



Hicks explained in his story how Moses orchestrated a collaborative effort between Fannie Mae and the Department of Agriculture.

“The Dartmouth grad also played a crucial role in brokering a relationship between Fannie Mae and the Department of Agriculture,” Hicks wrote. “This led to the creation of Fannie Mae’s rural housing program where the secondary marketing agency agreed to purchase small farm loans insured through the department.”



While Moses served at Fannie Mae and was Frank’s partner, Frank was actively working to support GSEs, according to several news outlets.



In 1991, Frank and former Rep. Joe Kennedy, D-Mass., lobbied for Fannie to soften rules on multi-family home mortgages although those dwellings showed a default rate twice that of single-family homes, according to the Nov. 22, 1991, Boston Globe.



BusinessWeek reported in its Nov. 14, 1994, issue that Fannie Mae called on Frank to exert his influence against a Housing & Urban Development proposal that would force the GSE to focus on minority and low-income buyers and police bias by lenders regardless of their location. Fannie Mae opposed HUD on the issue because it claimed doing so would “ignore the urban middle class.”



Moses left Fannie in 1998 to start his own pottery business. National Mortgage News called Moses a “mortgage guru” and said he developed “many of Fannie Mae's affordable housing and home improvement lending programs. Moses ended his relationship with Frank just months after he left Fannie.



Even after the relationship ended, however, Frank was a staunch defender of Fannie Mae even as other experts suggested there were serious problems building in Fannie Mae and Freddie Mac.



According to an article by Kathleen Day in the Oct. 8, 2003, Washington Post, Frank opposed giving the Bush administration the right to approve or disapprove business activities that “could pose risk to the taxpayers.” He told the Post he worried the Treasury Department “would sacrifice activities that are good for consumers in the name of lowering the companies’ market risks.”



Just a month before, Frank had aggressively thwarted reform efforts by the Bush administration. He told The New York Times on Sept. 11, 2003, Fannie Mae and Freddie Mac’s problems were “exaggerated,” a gross miscalculation some five years later with costs estimated to be in the hundreds of billions.



“These two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis,” Frank said to the Times. “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”



Frank has also reaped campaign contribution benefits from Fannie Mae and its counterpart Freddie Mac. According a front page story in the Sept. 19, 2008, Investor’s Business Daily by Terry Jones, Frank has received $40,100 in campaign cash over the past two decades from the GSEs.



Frank is ranked 16th on a list that includes both houses of Congress and fifth among his colleagues in the House. According to data from the Center for Responsive Politics’ OpenSecrets.org, political action committees financed by both Freddie and Fannie have contributed $3,017,797 to members of Congress since 1989. And according to the July 16 issue of Politico, the two entities have spent a whopping $200 million to buy influence – including not only campaign donations to members of Congress, but also presidential campaigns and lobbying efforts.



In a July 23 op-ed, Wall Street Journal Editorial Page Editor Paul Gigot put the blame for the GSEs’ collapse firmly on the members of the liberal establishment who took money from Freddie and Fannie. “Fan and Fred also couldn't prosper for as long as they have without the support of the political left... This includes Mr. Frank and Sen. Chuck Schumer (D., N.Y.) on Capitol Hill, as well as Mr. [Paul] Krugman and the Washington Post's Steven Pearlstein in the press.”



Frank was asked by CNN’s John Roberts on the Sept. 22, 2008 “American Morning” about this and his opposition to reform Fannie Mae and Freddie Mac. Originally, he claimed he didn’t think the two GSEs were facing any problems when the issue first surfaced in 2003. He instead blamed the Republican-controlled Congress for their ultimate fall, failing to mention his friendly relationship with Fannie Mae and the contributions it had made to his campaign over the years.



“Yes, I did not think we were facing a crisis in 2003, but that didn't mean we didn't have to have reform,” an animated Frank said when confronted with the question. “Here’s the deal, the Republicans controlled Congress from 1995 through 2006. They did zero to reform Fannie Mae and Freddie Mac.”



However, on Sept. 17, 2008, former Bush administration Deputy Chief of Staff Karl Rove elaborated on the Bush administration’s efforts to curb abuses at the two GSEs in 2003. He told Fox News’ “Hannity & Colmes” that Frank was among the most aggressive opponents of White House attempts to reform Fannie Mae and Freddie Mac.



“All of this bad stuff on Wall Street happened because people got greedy and the greed started at Fannie Mae and Freddie Mac,” Rove said. “And I know this because five years ago, the administration was alerted by the regulator, James Lockhart, that there was insufficient authority and that these institutions – particularly Fannie – were out of control.”



Rove said the Bush administration’s efforts to reform Fannie and Freddie were opposed by congressional Democrats – specifically Frank and Senate Banking Committee Chairman Christopher Dodd, D-Conn.



“And I got to tell you, for five years, I was part of an effort at the White House to fight this and our biggest opponents on the Hill who blocked this every step of the way were people like Chris Dodd and Barney Frank. And Fannie and Freddie are the $200 billion contagion at the center of this.”



Frank has been quick to blame deregulation for some of the problems in the financial environment, as he did on Bloomberg television’s Sept. 19 “Political Capital with Al Hunt.” However, as earmark crusader Rep. Jeff Flake, R-Ariz. pointed out – it’s not deregulation, but it was the structure of Fannie Mae and Freddie Mac that had been guarded by Frank and other members of Congress.



“Some people point at deregulation,” Flake said to the Business & Media Institute on Sept. 23. “It’s not deregulation at all. We have for far too long shielded Fannie and Freddie for example, with the implicit and now explicit guarantee. I just found it humorous.”



Flake specifically named Frank as one of the members behind letting allegations of transgressions at the two GSEs for slipping by without oversight from Congress.



“Just a few minutes ago, a reporter was asking me about this and saying, ‘Barney Frank is saying that’s just – because there were allegations,’ correct ones – ‘that Fannie and Freddie have been the playground for politicians for years and now the other side is saying Fannie and Freddie were just a small part of this and this goes far beyond.’ It does, but these same people a couple of weeks ago said, ‘You got to bail out Fannie and Freddie because they touch everything out there. They touch nearly every mortgage out there.’ And because of that explicit guarantee – that we would come and bail them out, nobody has been subject to market discipline.”



Frank claims differently, according to a letter to the editor published in the Sept. 17, 2008 Wall Street Journal. Frank noted that in 2005 he supported regulating compensation for Fannie and Freddie executives.



“In fact, my reform efforts had begun when we were still in the minority. In 2005, I joined Michael Oxley, then chairman of the House Financial Services Committee, in supporting legislation to increase the regulation of Fannie and Freddie that passed the House by a vote of 330 to 90,” Frank wrote. “When former Congressman Richard Baker proposed to examine the compensation structure of Fannie and Freddie's top executives, and some members of Congress tried to block him, I explicitly spoke out in support of his right to do that and our right, as a Congress, to examine the GSE’s compensation practices.”



The red flags were raised long before the government bailed out the two GSEs in August 2008. The first egregious scandal involving Fannie Mae occurred in 2004. A 2004 Wall Street Journal editorial was first to point out claims in an OFHEO report that showed accounting malpractices by the GSE.

“For years, mortgage giant Fannie Mae has produced smoothly growing earnings. And for years, observers have wondered how Fannie could manage its inherently risky portfolio without a whiff of volatility, the Oct. 4, 2004, editorial, “Fannie Mae Enron?” said. “Now, thanks to Fannie’s regulator, we know the answer. The company was cooking the books. Big time.””

“Frank's fingerprints are all over the financial fiasco
By Jeff Jacoby
Globe Columnist / September 28, 2008

THE PRIVATE SECTOR got us into this mess. The government has to get us out of it."

That's Barney Frank's story, and he's sticking to it. As the Massachusetts Democrat has explained it in recent days, the current financial crisis is the spawn of the free market run amok, with the political class guilty only of failing to rein the capitalists in. The Wall Street meltdown was caused by "bad decisions that were made by people in the private sector," Frank said; the country is in dire straits today "thanks to a conservative philosophy that says the market knows best." And that philosophy goes "back to Ronald Reagan, when at his inauguration he said, 'Government is not the answer to our problems; government is the problem.' "

In fact, that isn't what Reagan said. His actual words were: "In this present crisis, government is not the solution to our problem; government is the problem." Were he president today, he would be saying much the same thing.

Because while the mortgage crisis convulsing Wall Street has its share of private-sector culprits -- many of whom have been learning lately just how pitiless the private sector’s discipline can be -- they weren't the ones who "got us into this mess." Barney Frank's talking points notwithstanding, mortgage lenders didn't wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers. It would be closer to the truth to say they woke up to find the government twisting their arms and demanding that they do so - or else.

The roots of this crisis go back to the Carter administration. That was when government officials, egged on by left-wing activists, began accusing mortgage lenders of racism and "redlining" because urban blacks were being denied mortgages at a higher rate than suburban whites.

The pressure to make more loans to minorities (read: to borrowers with weak credit histories) became relentless. Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to "meet the credit needs" of "low-income, minority, and distressed neighborhoods." Lenders responded by loosening their underwriting standards and making increasingly shoddy loans. The two government-chartered mortgage finance firms, Fannie Mae and Freddie Mac, encouraged this "subprime" lending by authorizing ever more "flexible" criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued.

All this was justified as a means of increasing homeownership among minorities and the poor. Affirmative-action policies trumped sound business practices. A manual issued by the Federal Reserve Bank of Boston advised mortgage lenders to disregard financial common sense. "Lack of credit history should not be seen as a negative factor," the Fed's guidelines instructed. Lenders were directed to accept welfare payments and unemployment benefits as "valid income sources" to qualify for a mortgage. Failure to comply could mean a lawsuit.

As long as housing prices kept rising, the illusion that all this was good public policy could be sustained. But it didn't take a financial whiz to recognize that a day of reckoning would come. "What does it mean when Boston banks start making many more loans to minorities?" I asked in this space in 1995. "Most likely, that they are knowingly approving risky loans in order to get the feds and the activists off their backs . . . When the coming wave of foreclosures rolls through the inner city, which of today's self-congratulating bankers, politicians, and regulators plans to take the credit?"

Frank doesn't. But his fingerprints are all over this fiasco. Time and time again, Frank insisted that Fannie Mae and Freddie Mac were in good shape. Five years ago, for example, when the Bush administration proposed much tighter regulation of the two companies, Frank was adamant that "these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis." When the White House warned of "systemic risk for our financial system" unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing.

Now that the bubble has burst and the "systemic risk" is apparent to all, Frank blithely declares: "The private sector got us into this mess." Well, give the congressman points for gall. Wall Street and private lenders have plenty to answer for, but it was Washington and the political class that derailed this train. If Frank is looking for a culprit to blame, he can find one suspect in the nearest mirror.”

“Mr. Walllison is a senior fellow at the American Enterprise Institute.


I just love this line: Since the early 1990s, the government has been attempting to expand home ownership in full disregard of the prudent lending principles that had previously governed the U.S. mortgage market.

That's so funny, I nearly cried. When did we have to bail out the S&L's again?”

“Agreed VILE...but WHO was in "Charge" in the "early 1990's?

OH Cleenton thas right.”

“1994 republican 'Contract On (& Impeachment Of) America' congress, didn't fix it.”

“Barney Frank, Predatory Lender
Almost two-thirds of all bad mortgages in our financial system were bought by government agencies or required by government regulations.


By PETER J. WALLISON

Recent reports that the Federal Housing Administration (FHA) will suffer default rates of more than 20% on the 2007 and 2008 loans it guaranteed has raised questions once again about the government's role in the financial crisis and its efforts to achieve social purposes by distorting the financial system.

The FHA's function is to guarantee mortgages of low-income borrowers (the mortgages are then sold through securitizations by Ginnie Mae) and thus to take reasonable credit risks in the interests of making mortgage credit available to the nation's low-income citizens. Accordingly, the larger than normal losses that will result from the 2007 and 2008 cohort could be justified by Barney Frank, the chairman of the House Financial Services Committee, as "policy"—an effort to ease the housing downturn through the application of government credit. The FHA, he argued, is buying more weak mortgages in order to help put a floor under the housing market. Eventually, the taxpayers will have to judge whether this policy was justified.

Far more interesting than the FHA's prospective losses on its 2007 and 2008 book are the agency's losses on its 2005 and 2006 guarantees, when the housing bubble was inflating at its fastest rate and there was no need for government support. FHA-backed loans during those years also have delinquency rates between 20% and 30%. These adverse results—not the result of a "policy" effort to shore up markets—pose a significant challenge to those who are trying to absolve the U.S. government of responsibility for the financial crisis.

View Full Image
Wallison
David Klein
Wallison
Wallison

When the crisis first arose, the left's explanation was that it was caused by corporate greed, primarily on Wall Street, and by deregulation of the financial system during the Bush administration. The implicit charge was that the financial system was flawed and required broader regulation to keep it out of trouble. As it became clear that there was no financial deregulation during the Bush administration and that the financial crisis was caused by the meltdown of almost 25 million subprime and other nonprime mortgages—almost half of all U.S. mortgages—the narrative changed. The new villains were the unregulated mortgage brokers who allegedly earned enormous fees through a new form of "predatory" lending—by putting unsuspecting home buyers into subprime mortgages when they could have afforded prime mortgages. This idea underlies the Obama administration's proposal for a Consumer Financial Protection Agency. The link to the financial crisis—recently emphasized by President Obama—is that these mortgages would not have been made if regulators had been watching those fly-by-night mortgage brokers.

There was always a problem with this theory. Mortgage brokers had to be able to sell their mortgages to someone. They could only produce what those above them in the distribution chain wanted to buy. In other words, they could only respond to demand, not create it themselves. Who wanted these dicey loans? The data shows that the principal buyers were insured banks, government sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac, and the FHA—all government agencies or private companies forced to comply with government mandates about mortgage lending. When Fannie and Freddie were finally taken over by the government in 2008, more than 10 million subprime and other weak loans were either on their books or were in mortgage-backed securities they had guaranteed. An additional 4.5 million were guaranteed by the FHA and sold through Ginnie Mae before 2008, and a further 2.5 million loans were made under the rubric of the Community Reinvestment Act (CRA), which required insured banks to provide mortgage credit to home buyers who were at or below 80% of median income. Thus, almost two-thirds of all the bad mortgages in our financial system, many of which are now defaulting at unprecedented rates, were bought by government agencies or required by government regulations.

The role of the FHA is particularly difficult to fit into the narrative that the left has been selling. While it might be argued that Fannie and Freddie and insured banks were profit-seekers because they were shareholder-owned, what can explain the fact that the FHA—a government agency—was guaranteeing the same bad mortgages that the unregulated mortgage brokers were supposedly creating through predatory lending?

The answer, of course, is that it was government policy for these poor quality loans to be made. Since the early 1990s, the government has been attempting to expand home ownership in full disregard of the prudent lending principles that had previously governed the U.S. mortgage market. Now the motives of the GSEs fall into place. Fannie and Freddie were subject to "affordable housing" regulations, issued by the Department of Housing and Urban Development (HUD), which required them to buy mortgages made to home buyers who were at or below the median income. This quota began at 30% of all purchases in the early 1990s, and was gradually ratcheted up until it called for 55% of all mortgage purchases to be "affordable" in 2007, including 25% that had to be made to low-income home buyers.

It was not easy to find candidates for traditional mortgages—loans to people with good credit records or the resources for a substantial downpayment—among home buyers who qualified under HUD's guidelines. To meet their affordable housing requirements, therefore, Fannie and Freddie reduced their lending standards and reached into the FHA's turf. The FHA, although it lost market share, continued to guarantee what it could, adding to the demand that the unregulated mortgage brokers filled. If they were engaged in predatory lending, it was ultimately driven by the government's own requirements. The mortgages that resulted are now problem loans for the GSEs, the FHA and the big banks that were required to make them in order to burnish their CRA credentials.

The significance of the FHA's troubles is that this agency had no profit motive. Yet it dipped into the same pool of subprime and other nontraditional mortgages that the GSEs and Wall Street were fishing in. The left cannot have it both ways, blaming the private sector for subprime lending while absolving the government policies that created the demand for subprime loans. If the financial crisis was caused by subprime mortgages and predatory lending, the government's own policies made it happen.”

“Pricks trying to shift blame.”

“In 2001, President Bush made his first of many calls for regulatory reform of Fannie Mae and Freddie Mac.

In 2003 Republican Congressman Richard Baker introduced a House Bill calling for Regulatory Reform of Fannie Mae and Freddie Mac. Republican Congressmen Richard Baker was quoted in 2003 in Money Magazine about his reform he wanted for Fannie Mae and Freddie Mac, “I have concerns that if appropriate resources aren't allocated for internal risk management, the consequences will be far more severe than just a real estate slowdown. The losses would fall quickly through the capital these companies have and down to shareholders and taxpayers. These companies have some of the lowest capital margins of any financial institution in the nation, yet, at the same time, they are two of the largest. The concern is that if something doesn't work out the way they predict, the American taxpayer could be called on to pay off the debt in some sort of bailout.”

In 2003 Republican Senator Chuck Hagel introduced his first of several Senate Bills, calling for Regulatory reform of Fannie Mae and Freddie Mac. Later in an open letter, 24 Republican Senators including Senator McCain said, “If effective regulatory reform legislation ... is not enacted this year, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole,"

Every single Democratic Senator opposed the Hagel bills, including Senator Obama. Senator Obama received $120,349 in political donations from employees of Freddie Mac and Fannie Mae.

Barney Frank stopped all the Republican reform bills in the House that would have prevented the current Barney Frank Recession.”

“Yeah and don't forget Obama's buddy, Franklin Raines got away with some $60 million from Franny Mayk.

Oh, but me and prosecuter are just pricks trying to shift blame....”

“I guess you missed the obvious humor XL.

Since the early 1990s, the government has been attempting to expand home ownership in full disregard of the prudent lending principles that had previously governed the U.S. mortgage market.


Prudent lending principles? Really? How the hell did prudent lending principles lead to the need for the S&L bailout?

I remember one of my economics professors at Rutgers predicting that the Reagan administration's deregulation of the thrifts would lead to disaster. He was right - within a decade we had to shell out $150 billion to clean up that mess.

Instead of re-regulating our banking industry, we had several more administrations that continued to deregulate it (Clinton included). The result was an economic disaster of unbelievable proportions.

Wallison and others like him want to blame this mess on government regulation when the history of the last thirty years very clearly shows how wrong-headed Thatcherism/Reaganism is.

If the public expected to ensure the stability of the world financial system, we sure as hell have a say in how the market should function.

If you want to listen to self-serving bastards, be my guest, but please don't expect the rest of us to follow them over the cliff yet again.”

“Every single Democratic Senator opposed the Hagel bills, including Senator Obama. Senator Obama received $120,349 in political donations from employees of Freddie Mac and Fannie Mae.

Barney Frank stopped all the Republican reform bills in the House that would have prevented the current Barney Frank Recession.�”

“Why did not the controlling republicans push that through as the dems are trying with health care?”

“Sen. Carl Levin To Ex-Goldman Partner: "Should Goldman Sachs Be Trying To Sell A Sh--ty Deal?": http://www.youtube.com/watch?v=jACostBxlno”

“Way too kick 'em in the nuts, Senator!”

“McGain fogged them, tue.”

“What do you mean, violin? What, we can't expect private business to refrain from engaging in shltty deals? You're stiffling growth with all of that regulating 'n' stuff...”

“Ever heard of a little company called Magnetar. Now I'm not saying they were the ones who fvcked us but they were at least one of 'em at the gangbang.”

“chort dix unly gits slop pie 2nds. Jizt ax Dper.”

“Well at least this gets the heat off Congressmen who forced lenders to sell to Human Leeches who could never pay.”

“You never mention the people who were selling the houses at Three times the price and paying everyone in the escrow side of things. This was an all out effort by a whole industry to pretend Real Estate is really not REAL in any way, not too unlike, the religion this country is based on.”

“From Confessions of a Subprime Lender by Richard Bitner:

Taking a position as an account rep for the Residential Funding Corporation (RFC) division of GMAC in 1999 introduced me to the world of niche lending. As the largest securitizer of non-agency mortgages in the country, RFC bought loans that didn�t fit the conforming guidelines of Fannie Mae and Freddie Mac. While most of the products were geared toward borrowers with good credit, RFC was just starting to make a name in subprime. It didn�t take long for me to realize that buying high-risk mortgages held a lot of promise.

A few months before I took the job the subprime mortgage industry imploded the first time, forcing most of these specialty lenders out of business. When the dust settled, RFC was one of the few survivors, which created an opportunity. My income was directly proportional to the revenue I generated, and subprime was three to five times more profitable than any other type of loan we securitized. Even though RFC gave me seven different products to sell, ranging from jumbo mortgages to home equity lines of credit, I ditched most of them in favor of subprime.”

“Lenders tried to hard sell sub-prime loans, no one forced them.

XLax is peddling bullschitt.”

“XLax is peddling bullschitt

No way!”

“Could I be wrong?”

“If you were, in this case, a wrong makes a right.”

“

http://www.buzzflash.com/contributors/03/09/17_franken.html”

“The libs in congress went nuts screaming that the lenders HAD to make it possible for the little guy to buy a home. After all, even the poor were entitled to a share of the American dream. These were people like Dodd and Pelosi and a lot of others. They made it clear that there would be some serious regulations coming if they didn't. But somehow they don't get their share of the blame.”

“As usual the connies are pointing in the wrong direction with blame. They blame those who are at the economic bottom when they know good and well it is those who control the capital who are really in control..........of the capital AND The Capitol.

Shame on yuz.”

“Those deregulation yardbirds have come home to roost and the cons treat them like strangers.”

“@supplysideroseyridingonthedashboredofmycar.
last edited: 4/28/10 3:34:05 PM”

“http://article.nationalreview.com/432663/we-ididnti-deregulate/veronique-de-rugy

But unlike FDR, Obama won�t have to create a new regulatory system from scratch: For all the lamentation of our allegedly scanty policing of Wall Street, the financial industry already answers to a host of regulators, including the Federal Housing Finance Agency, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Federal Reserve, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and, not least, the Securities and Exchange Commission.

In fact, as Peter J. Wallison of the American Enterprise Institute explained in 2008, �almost all financial legislation, such as the Federal Deposit Insurance Corp. Improvement Act of 1991, adopted after the savings and loan collapse in the late 1980s, significantly tightened the regulation of banks.� In other words, we�ve had regulation, not deregulation.

The great villain in the deregulation myth is the Gramm-Leach-Bliley Act, signed into law by Bill Clinton in 1999, which repealed some restrictions of the Depression-era Glass-Steagall Act, namely those preventing bank holding companies from owning other kinds of financial firms. Critics charge that Gramm-Leach-Bliley broke down the walls between banks and other kinds of financial institutions, thereby allowing enormous systemic risk to percolate through the financial world. This critique is the keystone of the �blame deregulation� case, but it doesn�t hold up: While Gramm-Leach-Bliley did facilitate a number of mergers and the general consolidation of the financial-services industry, it did not eliminate restrictions on traditional depository banks� securities activities. In any case, it was investment banks, such as Lehman Brothers, that were at the center of the crisis, and they would have been able to make the same bad investments if Gramm-Leach-Bliley had never been passed.”

“Wasn't that a Really big (R)Congress? 'Contract on America' no doubt, just after hanging Willy over the impeachment fire for how long?”

“Consumer Agency as part of the FED. LMAO. Let the pigs run the farm. Why don't we let the FED run our military and all the churches?”

“Looks like the libbies here (rosey,V. tilt, etal) are perfectly willing to keep their heads in the sand (or up their butts) and ignore the fact their their liberal heros in congress had a large hand in causing the meltdown, by forcing the lenders into making loans that should never have been considered.”

“Dick Fuld of Lehman Bros unstated his income by $200million before congress. Jail time!!”

“Now who's the BIGPROB---BIGGOV or BIGBIZ- have BIGa BIGnice BIGday????!!!!?????!!!!!”

“BIGBIZ http://finance.yahoo.com/news/Goldmans-Shares-Plunge-on-nytimes-1231824169.html;_ylt=AlJks3Mv7zTESVPJZKMaXuW7YWsA;_ylu=X3oDMTE1bWs5OWkwBHBvcwMyBHNlYwN0b3BTdG9yaWVzBHNsawNnb2xkbWFuc2hhcmU-?x=0&sec=topStories&pos=main&asset=&ccode=”

“Yes Stovie, Another American Exaggerated Reflex(AAER) to the horrors of Bush/Cheney, which was an AAER to Clinton/Gore, which was an AAER to Bush/Turkey ...to Washington/Adams.”

“Billionaire Warren Buffett in serious danger of having his "hero to the Left " card revoked as he says based on his expert opinion of the tranasactions, Goldman Sachs did absolutely nothing wrong”

“Warren is old and doesn't want his legacy to have blood stains making his goodness illegible.”

“Borrow less?

http://finance.yahoo.com/news/Treasury-plans-to-auction-78B-apf-3157069187.html?x=0&sec=topStories&pos=6&asset=&ccode=”

“Hedge funds donate big to Democrats
By Silla Brush - 05/03/10 07:25 PM ET

The world’s top-earning hedge fund managers have bankrolled almost exclusively Democratic campaigns.

The top 10 highest-paid hedge fund managers in 2009 have dished out campaign contributions almost only to Democrats.

Over their lifetimes, those managers have given almost $33 million in campaign contributions to Democrats, according to research by the National Republican Congressional Committee (NRCC) and that is based on data maintained by the nonpartisan CQMoneyline.

The same managers gave roughly $600,000 to Republicans, according to the research. The contributions went 98 percent to Democrats and two percent to Republicans.

The money went to Democratic campaign committees, individual lawmaker’s election bids and other political action committees.

The data looks at the 10 highest-paid hedge fund managers in 2009, as identified by AR: Absolute Return+Alpha magazine. The New York Times published a story in March identifying the hedge fund managers, including John Paulson and George Soros.

As the Senate prepares to debate possibly hundreds of amendments to a Wall Street overhaul bill, labor unions and others have criticized the bill for not having tough restrictions on hedge funds.

“It’s very disconcerting to see this legislation moving forward that gives them a complete pass,” said Heather Slavkin, of AFL-CIO.

Sen. Jack Reed (D-R.I.) is planning an amendment that would require tougher disclosure requirements for hedge funds and private equity firms.

A request for comment at the Democratic Congressional Campaign Committee (DCCC) was not returned by press time.

Last week, Republicans prevented Democrats for three days from opening debate on the Wall Street overhaul bill. Democrats repeatedly criticized the GOP for standing up for Wall Street.

Since 1990, finance, insurance and real estate interest have given nearly $2.4 billion to Democrats and Republicans, according to the Center for Responsive Politics. The contributions went 45 percent to Democrats and 55 percent to Republicans.

In the 2010 campaign cycle, 54 percent of the contributions have gone to Democrats and 45 percent to Republicans, according to the center.”

“You do realize that these companies knew who was going to win and had to jump on for the favors the newly elected could provide.”

“by Morgen Richmond

http://www.youtube.com/watch?v=6CgJq8OYEl0&feature=player_embedded

If any further proof is needed that Barney Frank has been completely incompetent in his oversight of the financial services industry, one need look no further than this past week. Just one day after Frank sent a memo to the White House urging the President to reject the attempt by Republicans to include GSE reform in any financial reform bill, Freddie Mac requested an additional government bailout of $10.6 billion to cover losses incurred in the first quarter. Only one day (!) after Frank defended the GSE’s, writing that “as Fannie and Freddie operate today, going forward, there is no loss”.

There is no loss.

Rep. Frank, of course, has a distinguished history of ineptitude when it comes to regulation of the housing industry, and his role in the financial market collapse. But when it comes to avoiding culpability, he is second to no one in his ability to spin a web of deceipt and reinvent history.

“It was Tom DeLay’s fault, he was in charge back then. Republicans were the ones pushing home ownership on the poor. I only advocated for rental housing.”

Lies, demonstrable lies.

But let’s not forget that Frank became chair of the House Financial Services Committee in January 2007, after the Democrats re-took congress. While the housing market decline had already begun, it would be well over a year before the financial crisis really began to accelerate. Fannie and Freddie, in fact, were not placed under federal control until September 2008.

Surely Barney Frank, with his vast intellect and experience, saw these problems developing and was preparing to do everything within his power to reign in the mortgage industry, and stem this crisis, as he assumed his new leadership role. Right?


Source: CSPAN

Let it be noted that in May 2007 Barney Frank and the Democrat-controlled House would go on to pass GSE reform legislation. Legislation which was adamantly opposed by the Treasury Dept. and the Bush Administration for limiting federal oversight of Fannie and Freddie’s mortgage holdings. Legislation which included Frank’s pet project, an “affordable housing” fund backed by tax payers.

Let it also be noted that going into 2007 Fannie and Freddie had never in history been allowed to purchase or finance sub-prime mortgages. But under pressure from Democrats in Congress (including Frank), they were granted this authority by regulators in September 2007.

Let it also be noted that in 2007 Frank aggressively pushed to increase the maximum loan limits which could be underwritten by the GSE’s. A move which would ultimately transfer tens of billions of dollars of loan liabilities from private financial institutions to tax payers.

It’s no wonder that even after the total collapse of Fannie and Freddie in 2008, at an ultimate cost to tax payers which could exceed $400B, Barney Frank is still adamantly opposed to legislation which would prevent any further federal bailouts of the GSE’s. For Democrats like Frank, continued control over Fannie and Freddie represents the effective nationalization of the entire mortgage industry. It’s a dream come true for those who wish to use the power of the federal government to implement their desired social and redistributive policies.

Barney Frank’s willful ignorance and gross negligence leading into the financial crisis has already burdened tax payers with hundreds of billions of dollars of debt. It is incomprehensible to me that someone so cavalier about the damage this crisis has done, and his role in it, remains in a position to inflict further damage on the American public.

It’s time for Frank to go.”

“He be a good CEO @ 'Rent A Boy Inc.'.”