No Agreement On Bailout Plan

No agreement yet on the bailout plan:

Alabama Sen. Richard Shelby, the top Republican on a the Senate Banking Committee spoke briefly after meeting with congressional leaders, President Bush and both presidential candidates. He said that there is “no agreement” in congress on the bailout.

Shelby said he presented documents from top economists who were very critical of Henry Paulson’s plan. The economists who were all from top universities, said that Paulson’s plan was a “bad plan”, and would create more problems than it would solve, and was a rush to judgment.

Which is a good thing I believe (See Mata’s post below for more information on those economist views presented to the Congressional leaders). I have rarely disagreed with Bush much except on immigration and now this silly plan. Hopefully McCain can push through something that will really help instead of socializing our government any more then it already is.

Meanwhile Ed Morrissey writes about a LA Times article from 1999 that is pretty much a roadmap for how we got to this point:

this LA Times article from 1999 makes the case clearly — and maybe even more credibly, since it praises all of the stupidity and government intervention that created the bubble and the collapse. Clearly, this was not the fault of a free market out of control. Congress and the executive created this problem by extorting banks into poorly-considered lending practices under the threat of prosecution as “unfair lenders”. They compounded that extortion with an artificial mechanism to incentivize lenders by having GSEs buy the paper and resell it, with government imprimatur as its guarantee.

What does the article say?

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.

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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.

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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 yeah, keep blaming Bush for this mess….just makes the Democrats look more and more foolish.

Curt

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