HT to Dr. Sanity for this one, inspired by her post, “Who Knew Ignoring Reality had Consequences?”
A lot of finger pointing is going on at the moment over the financial crisis of which Freddie Mac and Fannie May are the main area of contention at present.
Democrats are pointing the finger at the fact that this has happened on George Bush’s watch, and in this they are correct only to the extent that it has come to a head at this time. The roots of the crisis go much further back and are entrenched in populist political agendas from the previous administration which, were the potential for this event to have been foreseen, would have been almost impossible to get changed through congress.
The banks would have found it impossible to get the money which caused the housing bubble and distorted the whole economy, if it was not for an implied government guarantee of those loans.
It is in fact more than just the implicit guarantee that is at the heart of the problem, the blatant use of Fannie and Freddie as a mechanism of social policy since the Clinton administration is at the real root of the problem. The guarantee, implied or otherwise was the only thing that could make the whole thing work.
A recent in World Net Daily under the heading, “Guess again who's to blame for U.S. mortgage meltdown: Analysts point not to greed, but to social activist politics.” Has this to say: -
While many pundits are pointing to corporate greed and a lack of government regulation as the cause for the American mortgage and financial crisis, some analysts are saying it wasn't too little government intervention that cased the mortgage meltdown, but too much, in the form of activists compelling the government to pressure Freddie Mac and Fannie Mae into unsound – though politically correct – lending practices.The following video is illuminating: -
"Home mortgages have been a political piñata for many decades," writes Stan J. Liebowitz, economics professor at the University of Texas at Dallas, in a chapter of his forthcoming book, Housing America: Building out of a Crisis.
Liebowitz puts forward an explanation that he admits is "not consistent with the nasty-subprime-lender hypothesis currently considered to be the cause of the mortgage meltdown." ……..
OK we have the CEO calling Obama and Dems the "Family Conscience" of Fannie Mae, making large donations to them to look the other way, and the politicians doing so.
The Clinton administration used the banks to push the idea of getting minorities and poorer people into housing which led to people without the means to repay to get loans, which led to the derivatives market to support it and the whole fiasco.
Obama is attempting to make political capital out of the situation and is dirty himself.
Patrick Conlon found the following story at Astute Bloggers: -
Barack Obama has slammed the banking industry for its predatory use of sub-prime mortgages, which are pushing millions of American homeowners toward foreclosure.
But his campaign's Finance Chair, Penny Pritzker, owned a failed Chicago thrift that helped pioneer sub-prime financial instruments and faced accusations of abuse.
Superior Bank of Chicago went belly up in 2001 with over $1 billion in insured and uninsured deposits. This collapse came amid harsh criticism of how Superior's owners promoted sub-prime home mortgages. As part of a settlement, the owners paid $100 million and agreed to pay another $335 million over 15 years at no interest...