Sep

How Did This Financial Crisis Happen?

Posted by: Scott @ 7:02 am in Barack Obama, Bush Derangement Syndrome, Congress, Dem eats Dem, Economy, Immigration, John McCain, Pelosi, Politics, Real Estate & Lending, Sarah Palin, The Clintons, Videos | 7 views

In the past few days-since we’ve been all of a sudden told how dire America’s financial situation has become-I’ve wondered why we didn’t hear about it earlier. The Fed’s been warning about it for years. So has the SEC. So has the Bush Admin. In all those cases, I didn’t pay attention. Economics is boring, and when I hear doom/gloom I just droned out. Then, when everyone went into freakout mode, I wondered why it went from routine complaining to freakout mode? What? Wasn’t Congress watching to make sure agencies were doing their jobs? Where was Congressional oversight? Where was Sen Dod, Congressman Barney Frank? Where was all that oversight the Democrats said they would do when they took Congress?

What exactly IS this financial crisis?

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This entry was posted on Friday, September 26th, 2008 at 7:02 am and is filed under Barack Obama, Bush Derangement Syndrome, Congress, Dem eats Dem, Economy, Immigration, John McCain, Pelosi, Politics, Real Estate & Lending, Sarah Palin, The Clintons, Videos. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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12 comments so far

MataHarley

Scott, this is a fabulous video! The first half of it is my “perfect storm” post in visuals…. detailing all the components/events it took to create this financial storm.

The second half of this video is about the politics and politicians. I deliberately left out the political players in the “perfect storm” post in order just to get everyone up to speed on the reality, and not point partisan fingers. If I brought politics into it too heavily (tho I knew), the post’s information would have been rejected as partisan, and not factual.

It was the Clinton admin itself (specifically Robert Rubin’s Treasury Dept) who rewrote the compliance rules that caused the explosure of exotic loan packages. This wasn’t even an act of Congress. The DNC control was on the way out, and the GOP Congress on the way in.

Despite warnings of trouble at Fannie and Freddie, in 1994 Clinton unveiled his National Homeownership Strategy, which broadened the CRA in ways Congress never intended.

Addressing the National Association of Realtors that year, Clinton bluntly told the group that “more Americans should own their own homes.” He meant it.

Clinton saw homeownership as a way to open the door for blacks and other minorities to enter the middle class.

Though well-intended, the problem was that Congress was about to change hands, from the Democrats to the Republicans. Rather than submit legislation that the GOP-led Congress was almost sure to reject, Clinton ordered Robert Rubin’s Treasury Department to rewrite the rules in 1995.

The rewrite, as City Journal noted back in 2000, “made getting a satisfactory CRA rating harder.” Banks were given strict new numerical quotas and measures for the level of “diversity” in their loan portfolios. Getting a good CRA rating was key for a bank that wanted to expand or merge with another.

Loans started being made on the basis of race, and often little else.

“Bank examiners would use federal home-loan data, broken down by neighborhood, income group and race, to rate banks on performance,” wrote Howard Husock, a scholar at the Manhattan Institute.

But those rules weren’t enough.

Clinton got the Department of Housing and Urban Development to double-team the issue. That would later prove disastrous.

Clinton’s HUD secretary, Andrew Cuomo, “made a series of decisions between 1997 and 2001 that gave birth to the country’s current crisis,” the liberal Village Voice noted. Among those decisions were changes that let Fannie and Freddie get into subprime loan markets in a big way.

Despite the rewrite and compliance mandates, the higher loan rates between 1997 and 2000 kept the housing prices… tho rising… still somewhat in check. But after 911 and the rate cuts, the influx of buyers multipled like rabbits in spring, and the housing prices shot up out of control. And it is, as this video confirms, housing prices that also is n important component to this “perfect storm” of events.

Conversely, housing prices are also a part of “the cure”… something the lawmakers are not hep to in this legislation. They want to force them to remain unnaturally high. And that’s a huge mistake.

On the politics?

Frankly, yes… the DNC does deserve a bit more of the blame for this whole event. And tho Bush and McCain did attempt to get this under control, they also have to share the blame. After all, they did have a GOP Congress during some of these attempts. And despite a WH, and some leaders like McCain, they couldn’t get a majority.

This means there were all too many GOPers that were on board with the DNC when it came to the homeownership issue, and the loose loan criteria they mandated. Ample blame for both sides of the aisle.

Oddly enough, you can’t blame either Bush or McCain… save for not trying harder. But that’s like blaming the firefighter for the death of a victim because nobody gave him a ladder. In this case Bush/McCain and a few other GOPers are the firefighters, the US citizen is the victim, and the DNC and some GOP Congress are those refusing to provide the ladder.

September 26th, 2008 at 9:59 am

ThomNJ

Just. An. Awesome. History. Lesson.

September 26th, 2008 at 10:49 am

Craig

BELIEVE IT OR NOT, I have found an article in the NEW-YORK TIMES dated September 30, 1999, read correctly: 1999….stating that:

“Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.”
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=print

September 26th, 2008 at 6:09 pm

Real American Patriot

There is plenty of blame to go around.. your hero Bush for example.. do you recall the ownership society???

http://www.usatoday.com/news/washington/2005-03-21-ownership-society_x.htm

google the ownership society … there is plenty of blame to go around on the GOP side… don’t kid yourselves righties…

September 26th, 2008 at 9:05 pm

Ryan

There’s plenty of blame to go around for both sides, Real American Patriot. Or should I say Faux American Partiot, the shining epitomy of a one sided shit stain.

September 26th, 2008 at 9:19 pm

Craig

What are you talking about “Real American Hater”? Ownership society was a good thing. People SHOULD be responsible for what they buy. What do you see wrong in that?

“‘I think every citizen — every citizen — has got the capacity to manage his or her own money,” Bush said.

September 26th, 2008 at 9:48 pm

Craig

Here are two well done videos on the subject:

FOX NEWS SPECIAL REPORT ON THE BANKING CRISIS
http://www.youtube.com/watch?v=VgctSIL8Lhs

WHO’S RESPONSIBLE FOR THE FREDDIE/FANNIE MESS?
http://www.youtube.com/watch?v=AHj8-HSi5AA

September 26th, 2008 at 9:50 pm

billy

great video, Im going to send this all over the place.

September 27th, 2008 at 2:47 am

Missy

Here you go Scott, not as good as your video but still very informative.

http://www.youtube.com/watch?v=_MGT_cSi7Rs

For Craig and Yonason. Check out this site, lots of interesting Obama videos for your libraries.

http://www.nakedemperornews.com/

September 27th, 2008 at 8:35 am

damnifiknow

The truth is that all the politicians in DC have broke it off in the working people’s posterior! What they should do, instead of debating the bailout plan, is start packing their stuff up. All the Democrats and Republicans. They have all lost touch. I blame the Republicans for not being more passionate and outspoken about what was going on. We as Americans owe to ourselves to demand term limits, and require that all politicians are held accountable for their actions. When you are voted into office you should be held to a much higher standard than hustlers and thieves. Now that we will all be feeling the pain and smelling the stench from this pile of crap that is our economy, perhaps we can come together and work on getting America back on track. The underprivileged, and under served (AKA underachievers) should step up and participate in working for a better America. If you don’t want to work but still want the benefits of working hard, then might I recommend going to the North Pole, France, China, or some other communist country. I hope the rest of America wakes up when the discomfort starts to spread…

Just my .02 cents worth.

September 27th, 2008 at 11:28 am

Terry g.

Check out this RAP music video about the financial meltdown. It’s pretty funny, yet entertaining.

http://www.youtube.com/watch?v=LrBuPsvbHB8

October 11th, 2008 at 12:56 am