Monday, September 03, 2012

It Wasn't Bush That Caused the Melt Down: It Was Democrats Forcing Banks to Make Bad Mortgage Loans

The Daily Caller today has an article on a theme I have discussed several times:  the melt down of the financial sector and the resulting recession was caused by the subprime mortgage fiasco.  The subprime mortgage fiasco was a project of the Democrats.  Beginning with the Clinton Administration, the Dems began  suing mortgage companies and banks for "racist" red-lining:  not giving mortgage loans to minorities in proportion to the latter's percentage of the population.

The so-called "red-lining" wasn't racist or personal.  Banks generally loan money to people based on their credit rating, their income and their ability to repay.  Down payments on mortgage loans are usually required so that the borrower has something to lose if he defaults on the loan.

All of these safeguards were dispensed with by the Democrats, but they assured the banks and mortgage companies there was no reason to worry:  FHA would cover the loans, and as everyone knows, real estate prices always go up.  The easy loans would allow minorities to participate in gains from real estate appreciation.  However, once subprime mortgages were made available to minorities, they were made available to everyone else as well.

To make a long story short, the easy mortgage money caused real estate prices to rise substantially and artificially, creating a "bubble."  When the bubble burst, home values plummeted and thousands of subprime borrowers simply walked away from their mortgage, which now exceeded the market value of the home.  Banks were stuck with loan collateral that was worth less than the outstanding principal.  Banks, mortgage companies and other financial institutions, including pension plans that had invested in mortgage loans, went bust.  Banks failed by the thousands.  The shockwave through the economy resulted in credit drying up overnight and many non-financial businesses failed as a result.

And the Democrats did it.  Not Bush, who months before the crash warned of the bubble and the need to reign in FHA's easy credit, who held committee hearings on the subject with key Democrats.  The Democrats would have none of it, arguing that real estate would always go up, so no problem.

This week I was disgusted to hear Barack Obama's lying words that it was Republican policies that "caused the problem in the first place, and got us to where we are now" (I am paraphrasing from memory).  No, it was Democrat policies that got us here.

Now the Daily Caller has done some research, and learned that Barack Obama was one of those responsible for creating "the mess that got us to where we are in the first place."  As a plaintiff's attorney in Illinois, he sued Citibank to force them to make risky loans to minorities in Chicago.  The Caller states:
President Barack Obama was a pioneering contributor to the national subprime real estate bubble, and roughly half of the 186 African-American clients in his landmark 1995 mortgage discrimination lawsuit against Citibank have since gone bankrupt or received foreclosure notices.
When the bubble burst, Citibank suffered substantially from the bad loans Obama had forced them to make.
As few as 19 of those 186 clients still own homes with clean credit ratings, following a decade in which Obama and other progressives pushed banks to provide mortgages to poor African Americans.
It pains me to hear people blame Bush for a problem he didn't cause and tried to avoid, and then argue that we should elect or reelect the actual culprits, the Democrats and Barack Obama, who indeed are guilty of the policies that "caused the problem in the first place and got us to where we are now."

Read the Daily Caller article With landmark lawsuit, Barack Obama pushed banks to give subprime loans to Chicago’s African-Americans

Also see:  Subprime Housing Bubble:  Obama "Vampire" Socialism Built It.


LD Jackson said...

I couldn't agree more, Stogie. Even though I liked President Bush, some of his policies did not work, and our debt and deficit are higher as a result. However, it was not his fault that the housing bubble burst, subsequently causing the housing market to plummet. I have pointed out on several occasions that it was the policies of the Democrats that led directly to the catastrophe we witnessed in 2008. That is the facts of the matter, plain and simple.

If you don't mind, I am going to borrow some of your post for one of my own about this. It bears mentioning again, at the very least.

Stogie Chomper said...

LD, sure, borrow anything you like.

Always On Watch said...

The GOP had better run with this information!

facebook-558344060 said...

Yeah no-oversight or regulations fixed it and the dems blah blah blah lmaooo

Stogie Chomper said...

Blabbermouth, the oversight and regulations that we need are ones that will restrict government from social engineering in the private sector and the economy.