Ace explains: How They Built the Bomb
The Men Who Built the Bomb: ... are all working as advisers to Obama now.
Penny Pritzker, "the Michael Milken of subprime mortgages," is Obama's Finance Chair.
Jim Johnson, disgraced former CEO of Fannie, was Obama's vice presidential search chairman, at least until he resigned under fire due to his role in providing subsidized sweetheart loans to Democratic Senators during his stint at CountryWide.
Franklin Raines, who participated in the accounting scandals to fix Fannie's books and deliver unwarranted bonuses to its top executives, is a top Obama adviser.
Corrupt "Community Organizer" organization ACORN, an institutional ally of Barack Obama, lobbied Freddie and Fannie to extend even more risky loans to credit-poor borrowers in the interest of ending "racial redlining." But they didn't end "racial redlining." What they ended was any credit-checking at all, as subprime mortgage providers simply stopped verifying self-reported claims of income and in fact ended even the most basic prudential element of a mortgage -- the down payment.
"Fannie Mae is proud to work with ACORN Housing, " said Thomas Collins, Director, Single Family Business, and Fannie Mae. By working with ACORN and lenders like Citibank, we can support their efforts to expand homeownership opportunities for underserved communities at affordable price points achieve sustainable homeownership."
In this same speech, Collins referred to, Obama, and other members of the Black Congressional Caucus which had worked so diligently to craft the time bomb that would ultimately destroy two key segments of the American economy (both housing/home construction and the financial sectors), members of "the family."
Obama Economics Adviser Austan Goolsbee continued defending and lobbying on behalf of the mortgage industry's no-money-down-no-credit-check policies at least until September of 2007.
McCain on Offense: The election turns on getting this message out. The pubic, wrongly in this instance, assumes that any Wall Street scandal is the fault of Republicans. If that assumption is permitted to stand, we lose the election.
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In the upcoming debate, McCain must read aloud from a sheet of paper his plan for fixing and averting the mortgage crisis by regulating Fannie and Freddie and other subprime lenders.
Then he should set the paper down. And announce those remarks are from a speech from 2005.
Your risk, their reward. You put the money into their corrupt pockets which they then in turn donated to Chris Dodd, Barney Frank, and Barack Obama, who in turn dutifully kept the gravy train chugging along.
Congress Adjourning! Harry Reid admits he has no idea what to do. So he's packing it up, leaving yet another crisis on the table for more responsible people to figure out.
Actually, Harry Reid and the Democrats always knew what to do. They knew the problem was this trillion dollar giveaway to credit-poor homebuyers. They further knew that by making money for homes so cheap and so artificially plentiful, they were driving up the cost of homes to astronomical levels. That's the way it works -- the more cheap, devalued dollars chasing after goods, the more the good rise in price.
Ultimately people who were simply not credit-worthy enough to buy houses at all were not merely buying houses -- they were buying houses that were well beyond their means to purchase even in a normal market, but furthermore, were inflated in price to double their fair value. So ultimately these legions of bad-credit-risks found themselves paying mortgages valued at 150% or 200% or even more of what their actual homes were worth.
So what did they do? They did what anyone would do: They walked away from the mortgages.
They both hyperinflated the housing market and created the bubble, and put the American taxpayer on the hook for all the excesses they created. And would not check -- because they were too busy appeasing ACORN and taking money from Fannie, Freddie, Lehman Brothers, AIG, and Raines, Johnson, and Pritzker.
They created the housing bubble. They created the financial meltdown -- which occurred, inevitably, when the bubble burst.
And now they want to go home.
And they should. We don't need any more of this sort of wisdom.
I don't believe the federal government should be in the home mortgage business at all. The private sector is almost always better at these things.
Banks and insurance companies have been so heavily regulated for so long (for reasons that seemed benign at the outset) that much of the industry is a government-created mess, with normal market incentives distorted beyond recognition. One government-created problem begets the next one.
But most Democrats do believe the federal government should be in the mortgage business with programs like Fannie Mae and Freddie Mac. It is those Democrats in Congress who are responsible for shooting down John McCain's bill that could have headed off this very crisis.
Democrats, including Barack Obama, need to be held accountable for their bad judgment on this issue and others. If not, the latest crisis will be but one of many.