Journalism at its best. This is what the Fifth Estate should be doing daily. It's all about accountability. Nice job.

I'll grant you that Congress failed to apply the brakes, but it was George Bush and Alphonso Jackson who got the train rolling in the first place. Bush's contribution began in 2002, when he mandated "innovative financing" at a meeting that included the heads of Fannie and Freddie. He put it thus:

"Partners in the mortgage finance industry are encouraging homeownership by purchasing more loans made by banks to African Americans, Hispanics and other minorities."
"Freddie Mae -- Fannie Mae and Freddie Mac -- I see the heads who are here; I want to thank you all for coming -- (laughter) -- have committed to provide more money for lenders. They've committed to help meet the shortage of capital available for minority home buyers."

In 2004, he rolled the program into his "Ownership Society" campaign platform and issued the following press release:

"In June 2002, President Bush issued America's Homeownership Challenge to the real estate and mortgage finance industries to encourage them to join the effort to close the gap that exists between the homeownership rates of minorities and non-minorities. Under his leadership, the overall U.S. homeownership rate in the second quarter of 2004 was at an all time high of 69.2 percent. Minority homeownership set a new record of 51 percent in the second quarter, up 0.2 percentage point from the first quarter and up 2.1 percentage points from a year ago."

Meanwhile, Secretary of HUD Jackson, in his oversight role, directed the pace at which Fannie and Freddie must meet the milestones established by Bush. This language is from the Fannie annual report to the SEC, for 2006:

"The Secretary of HUD establishes annual housing goals pursuant to the 1992 Act for housing (1) for low- and moderate-income families, (2) in HUD-defined underserved areas, including central cities and rural areas, and (3) for low-income families in low-income areas and for very low-income families, which is referred to as "special affordable housing."

"As a federally chartered corporation, we are subject to Congressional legislation and oversight and are regulated by HUD and OFHEO. In addition, we are subject to regulation by the U.S. Department of the Treasury and by the SEC. The Government Accountability Office is authorized to audit our programs, activities, receipts, expenditures and financial transactions."

"All three of our businesses contribute to meeting the statutory housing goals established by HUD. "

"In 2006, approximately 95% of the units financed by the multifamily mortgage loans we purchased or securitized contributed to the achievement of the housing goals established by HUD."

And by 2006, the effects of the 2002 George Bush mandate for "innovative financing" are clearly being felt in the marketplace. Again, this is from the Fannie 10K, 2006:

"We face increasing competition in the secondary mortgage market from other GSEs and from large commercial banks, savings and loan institutions, securities dealers, investment funds, insurance companies and other financial institutions."

"We have modified and enhanced a number of our strategies as part of our ongoing efforts to adapt to recent changes in the industry. . In addition, we have been working with our lender customers to support a broad range of mortgage products, including sub-prime products, while closely monitoring credit risk and pricing dynamics across the full spectrum of mortgage product types."

"As consumer demand for floating-rate and sub-prime mortgage loans grew, so did demand from other mortgage investors, which accelerated the growth of competing securitization options in the form of private-label mortgage-related securities. This development challenged the competitive position of our Fannie Mae MBS in the secondary market and sparked aggressive competition for loans."

"We are responding to these challenges with a focus on understanding and serving our customers' needs, strengthening our relationships with key partners, and helping lenders reach and serve new, emerging and non-traditional markets by providing more flexible, low-cost mortgage options. We also continue to expand our lending options for borrowers with weaker credit histories."

And Fannie did. From 2002 - 2004, purchases of adjustable rate mortgages grew from a total of 9 billion to 109 billion.These numbers were touted as evidence of their responsiveness to Mr. Jackson's mandates. As further evidence, Fannie included these notes:

"Interest-only loans, which represented approximately 5% of our conventional single-family business volumes (which refers to both conventional single-family mortgage loans purchased for our mortgage portfolio and conventional single-family mortgage loans securitized into Fannie Mae MBS) in 2004, increased to approximately 10% in 2005 and approximately 15% for the first nine months of 2006. Most of the interest-only products we acquired during 2004 and 2005 had adjustable-rate terms."

"In addition, there has been an increasing industry trend towards streamlining the mortgage loan underwriting process by reducing the documentation requirements for borrowers. Reduced documentation loans in some cases present higher credit risk than loans underwritten with full standard documentation."

So there we have it - an increasingly risky portfolio of loan originations sparked by the need to compete with other financial institutions who were also bundling and selling high-risk loans. In other words, the slop was in the trough and all the little piggies were fighting over every last morsel.

But all this makes it appear that the minority loans are solely to blame for the mortgage meltdown, and that is the biggest lie in the whole mess. In the words of Treasury Secretary Paulson:

"There are approximately 7 million outstanding subprime mortgage loans. Available data suggests that 10 percent of subprime borrowers were investors or speculators. This figure is likely higher, as some investors misrepresented themselves to take advantage of a cheaper rate, and others speculated on a primary residence, expecting prices to continue going up."

And in a piece at CNN:

"Sharga said that more than 38 percent of properties in foreclosure through the end of April were classified as "not-owner occupied," meaning they were second homes, investment homes or rental property. That's roughly 280,000 of the nation's 720,000 foreclosed properties.
The hardest-hit areas are California, Arizona, Nevada and Florida."

"What you had was dramatically overheated markets where people overextended themselves to buy overvalued properties and they used risky loans to get those properties," Sharga said."

http://www.cnn.com/2008/LIVING/wayoflife/05/28/renters.booted/index.htm l

These hard facts demonstrate the hollowness of the howls of rage from Nancy Pelosi's pitchfork congress. Sure, the bonuses were an outrage but the initiating outrage was the way the fat cats in Congress got themselves elected by taking payouts from Freddie and Fannie and then failing to insist these agencies capitalise themselves adequately. ."Let's roll the dice" said the blowhard Barney Frank. Of course, Blind Hog seeks to blame George Bush for everything. Won't wash. If the Democrats in Congress had done their job we wouldn't be in the mess. The Left finds it impossible ever to admit error.

Boy I didn't think I would find myself making a comment like this, but I have to stick up for Congress, Democrats and Republicans, on this one. This article purports to be revealing the truth about those in congress, whom the writers apparently feel are really responsible for the financial crisis. That is a bit of sophistry. I do not debate that congress does share in the responsibility for this mess in their failures. However, the congress was pursuing a social policy to foster home ownership in the United States. This had broad bipartisan support, so we can skip the dems vs reps on this issue. Fannie and Freddie were able to borrow at preferred rates. Note the words "quasi-governmental" status. So they borrowed funds that should have been used in a responsible way to fuel the growth of home ownership.

Fannie and Freddie were under the control of CEO's who were compensated in similar fashion to any private sector executives. The more the company apparently "earned" the higher their compensation. Note the word "quasi-governmental". Congress did not direct these executive to abandon prudent risk management and due dilligence. They made these poor business decisions without any congressmen of either party directing them to do so.

Now did congress accept PAC money. Yes, welcome to DC. Kind of a separate issue with a life of its own. We have to figure out a way to curtail, even completely stop this practice. There is a separate debate about this issue that is clouded by constitutional issues that have to be addressed. That is a discussion for another thread. Bottom line - the PAC money didn't make the bad decisions at Fannie and Freddie, their executives did. They had the latitude to make these decisions without congressional approval. Note the words "quasi-governmental".

So what congress is really guilty of is creating an environment in which this could take place without putting any oversight in place. This is a direct consequence of the myth of self regulating markets that has been foist on our nation by those who believe capitalism was somehow handed down from God along with the 10 commandments.

The real issue here, the real cause of our financial meltdown, is one of greed, avarice, and low character. Part of the reason executives might be worthy of a large compensation package should be their ethical behaviour born out of honesty and good character, and a deep sense of obligation toward their fiduciary trust. The money hungry corporate culture that has been fostered in this country since the early 80's is, in fact, one in which character is rare, but the willingness to lie, cheat, and decieve, with no regard of consequence to others is rewarded.

You can't legislate character, and you can't compensate to insure it. In fact, the excess levels of compensation paid by Wall Street and in corporate board rooms generally insures that we will get those of the lowest character, driven by avarice and greed, in positions of trust and responsibility. So it is really no wonder that trust is broken by these people.

Our society loves to blame. We need to stop blaming and start being responsible, all of us from the board room to the mail room. We label ourselves as a Christian nation. Has everyone forgotten the admonition that "the love of money is the root of all evil". Then there is the admonition regarding the prospects of those with great material wealth after they pass from this earth - "they have their reward".

I'm trying to keep partisanship to a minimum in my comments, but Johnnorth seems to be the pot calling the kettle black. There is plenty of blame to go around on both sides of the aisle. You comment is very disingenuous. This was not a democratic problem. The blame must be shared by both parties.

Johnnorth:
The Left finds it impossible ever to admit error.

----------------------------------------------


Ironic ... Because the RIGHT is just the same way ALSO ...

Now, you tell us.

The liberal media are also enablers - of the Democrats. There is a lot of bias against Republicans and has been for the last 15 or so years.

I think it's fair to say that Bush contributed to the mess by pushing home ownership as part of his "compassionate conservative" agenda. But the real pros and originators of this game appear to be mostly in the other party, and somehow I think this kind of thing needs much more gestation time than 6 or 7 years. From the Village Voice, no right-wing source to be sure:

"There are as many starting points for the mortgage meltdown as there are fears about how far it has yet to go, but one decisive point of departure is the final years of the Clinton administration, when a kid from Queens without any real banking or real-estate experience was the only man in Washington with the power to regulate the giants of home finance, the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC), better known as Fannie Mae and Freddie Mac.

Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis. He took actions that-in combination with many other factors-helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded "kickbacks" to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why."

http://tinyurl.com/5krq3l

There's plenty of blame to go around for this current financial turbulence, but most agree that one of the root causes was sub-prime mortgages. And I think we all know which party tends to do the most to help poorer people get things. Sounds admirable, but seemingly ignorant of one of the most basic and sometimes painful truths of life: There is no free lunch.

As a result of theTribune article, I believe that the Tribune will be sitting in the back of the press conference. It is the same old dance, but a different tune. Politics as usual.

Politicians being bought off.

Who'd a thunk it?

Then acting self-righteous by attacking their enablers

in order to cleanse and distance their dirty little pathetic souls.

SHOCKING !!!

Hey Blind Hog: Read the article from the New York Times dated Sep 30 1999. This was written when George Bush was still suckin long neckers in Texas. Then check out the You Tube black congressmen that prohibited reforms to the lending practices to unqualified borrowers. Yeah, it was on GWs watch and he should have had the balls to stand up and tell the American people what was going on. But then nobody really paid any attention to him...did they?

At this point I am not sure of the relevance of this article I am sad to say. The democrats have been rewarded for thier malice and greed with the white house. They have been rewarded with the ability to condemn on prime time the same greedy and unethical behavior that they routinely partake in. They have been rewarded with the management of trillions of the taxpayers dollars. Why should we believe they will now find religion and actually act ethically and responsibly on behalf of the American people? Why should we trust when even the decisions on cabinet staffing were idiotic? Where's the credibility in condemning those who accept bonuses when the condemners have a history of not paying thier taxes? No we can't. No we can't. No we can't.

Is it possible we can come to an agreement that both parties are to blame for our current mess? There's enough blood on the hands of both, don't you think? I don't think either political party is evil at it's root, but rather the corrupt system in which they exist creates the opportunities for doing bad things. Bad things like taking too much political contribution from unfortunate sources or passing legislation that in retrospect was ultimately flawed.

We were just talking about this last night and many people said that they felt pressured by realtors and bankers when getting a loan for a house. These are the very people who are telling us our lending potential. They are completely untrustworthy but in positions where they gain people's trust. If you are a busy working person in a real job and you do your job, you expect that what they say is correct. Okay, I can buy that house for zero down... You need one group of totally unrelated people (real accountants) TELLING banks and realtors what one can loan. sort of like mortgage brokers with ethics... This should be very easy. 20 years ago it was...

So what this reveals is that politicians take money from special interests. It also shows how they are turning on them. It would have been refreshing if Bush had turned on big oil and Haliburton. I would have applauded it, not called it hypocritical.

But what's more interesting is as the public mood changes, and the politicians with it, people in the financial sector are screaming socialism. Watch CNBC or Fox Business, and you will see just how out of touch the investor class is becoming.

It's about time that organizations, which don't vote, don't have feelings, can't die a natural death shouldn't be allowed to manipulate our (real people) representatives. If you can't vote you shouldn't be allowed to contribute money that might influence a representative. Or, if, as is more likely corporations, PAC etc. continue to sway our representatives then they should have their own representatives so that ours can represent us. It's just not fair having a big corporation by my senator and congressman just because they can.

Otherwise, It's going the be the tea party all over again.

That's a good picture of Rahm.

What a joke, the daily bust copy n paste talking points as journalism.