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.

Barack Obama's Brazen Dishonesty on What Caused the Recession

In Barack Obama's recent "State of the Union" speech, he ruminated on what caused the mortgage crisis and the resulting recession.  He knows what caused it:  the Democratic Party and its support for subprime mortgages for poor people, mainly blacks.  The federal government forced banks and mortgage companies to make very risky loans to people who had no income or low income and no way to repay the loans.  This was the Democrats' cure for mortgage loan "red lining," the alleged practice in which blacks and other minorities were denied real estate loans based simply on their race.

However, "red-lining" was a myth.  The people who were being denied loans were those with no credit and no way to repay.  Nonetheless, what a wonderful opportunity for the Democrat Party to press its creds as the party who protects minorities from alleged "racism"!

Christopher Booker of the U.K. Telegraph summarizes Obama's conceit on the matter, quoting from his State of the Union speech:

“The house of cards collapsed,” he recalled. “We learned that mortgages had been sold to people who couldn’t afford or understand them.” He excoriated the banks which had “made huge bets and bonuses with other people’s money”, while “regulators looked the other way and didn’t have the authority to stop the bad behaviour”. This, said Obama, “was wrong. It was irresponsible. And it plunged our economy into a crisis that put millions out of work.”

Obama is the personification of Democrat dishonesty.  They create a major recession through governmental malfeasance, then blame it on the victims of their own bad behavior, i.e. the banks and mortgage companies.  Hence we have Obama promising to create a governmental "mortgage fraud" unit to investigate such matters.  They ought to start with Obama himself.  As Booker writes:

I recalled a piece I wrote in this column on January 29, 2009, just after Obama took office. It was headlined: “This is the sub-prime house that Barack Obama built”. As a rising young Chicago politician in 1995, no one campaigned more actively than Mr Obama for an amendment to the US Community Reinvestment Act, legally requiring banks to lend huge sums to millions of poor, mainly black Americans, guaranteed by the two giant mortgage associations, Fannie Mae and Freddie Mac.

It was this Act, above all, which let the US housing bubble blow up, far beyond the point where it was obvious that hundreds of thousands of homeowners would be likely to default. Yet, in 2005, no one more actively opposed moves to halt these reckless guarantees than Senator Obama, who received more donations from Fannie Mae than any other US politician (although Senator Hillary Clinton ran him close).

 The recent outrage against Bank of America underscores the cynicism of the Democrats.  Bank of America was forced to pay $335 million to settle the government's charges that its Countrywide lending unit engaged in "predatory lending" practices, i.e. convincing black borrowers to enter into real estate loans that they couldn't afford to repay.  So Countrywide was forced to make bad loans to blacks by the federal government, and now is excoriated by that same federal government for doing what they were told.  The Democrats create a mess, then require their victims to pay for it and take the blame.  Disgusting.

Read Christopher Booker's article today, "How I Woke Up to the Untruths of Barack Obama."

Liberal Eleanor Clift Lies Like Hell About the Subprime Mortgage Meltdown; is Refuted by New York Times

One of the most glaring examples of Democrat economy-ruining policies is the subprime mortgage meltdown.  The meltdown brought on the worst recession in my six decades of life.  It was caused by the Clinton Administration forcing banks and mortgage companies to make bad home loans to minorities, which caused a real estate bubble that eventually burst, causing thousands of banks and mortgage companies to fail, thereby spreading the failure throughout the financial sector like a tsunami of bad debt, uncollectible because the loans were collateralized by real estate worth less than the loan balances.

The Democrats have been acting like contortionists ever since, in order to avoid taking responsibility for the disaster that they caused.  Now Eleanor Clift, well-know Democrat propagandist, has asserted on television that it was Wall Street who caused the meltdown, not the bad loans through Fannie Mae and Freddie Mac, who were only innocently following Wall Street down the road to serfdom.

This is B.S. and doesn't square with the recorded facts.  Newsbusters proves that it was indeed the Democrats, through the lending agencies Freddie Mac and Fannie Mae, that planned, executed and carried off the disaster.  Newsbusters quotes articles from the New York Times, circa 1999, that explains the Dem plan to bring home ownership to minorities, through relaxed lending standards at Freddie Mac and Fannie Mae.  Clift is shown to be a liar.  But you knew that.

Read the Newsbuster's article here.

Democrats Learn Nothing From Their Mistakes: A New Push for Subprime Mortgage Lending

Investors Business Daily is reporting a new push for the same insanity that caused the current recession.  The Department of Justice is forcing banks to make bad mortgage loans to minorities with bad credit and no income:

the Justice Department has asked several banks to relax their mortgage underwriting standards and approve loans for minorities with poor credit as part of a new crackdown on alleged discrimination

Many times I have argued with liberals about the causes of this mini-depression we are now suffering through.  They simply reject the overwhelming evidence that the Democrats caused the melt-down with their forced subprime mortgage lending program.  Now the Democrats are right back at it:

Prosecutions have already generated more than $20 million in loan set-asides and other subsidies from banks that have settled out of court rather than battle the federal government and risk being branded racist. An additional 60 banks are under investigation, a DOJ spokeswoman says.

Read it all here.

When it comes to race and finances, Democrats are just plain nuts.  If you like the recession, if you enjoy going without, if you crave poverty, then by all means, vote Democrat.

...

The True Causes of the Financial Crisis

Liberals and Democrats have continually tried to evade blame for their overwhelming guilt in causing the 2008 financial crisis and the resulting recession.  Congress appointed a Financial Crisis Inquiry Commission to determine the causes of the financial crisis, but it was a whitewash of the federal government's culpability and a disingenuous effort to blame "Wall Street."

The Obama Administration used this whitewash as a basis for enacting the Dodd-Frank Act (DFA) to more heavily regulate the financial services sector.

Peter J. Wallison was a member of the Inquiry Commission and a dissenter in the Commission's erroneous conclusions.  He tells why in an article for the American Spectator.  He writes:

The DFA was sold to the American people by the media and the Obama administration as necessary to prevent another financial crisis, but as outlined in this article and made very clear in my dissent, the financial crisis was not caused by weak or ineffective regulation. On the contrary, the financial crisis of 2008 was caused by government housing policies -- sponsored and promoted by many of the same people who framed and ultimately enacted the DFA.

Read his entire article here.  It is a good article to bookmark because Dems will issue all sorts of propaganda in the coming election campaign, in order to sidestep their guilt in the financial disaster.

It Wasn't Wall Street Greed, It Was Government-Imposed Lending Policies

It grieves me to hear even Sarah Palin stating that the mortgage meltdown and financial crisis is the result of "Wall Street greed and corruption." Nothing could be further from the truth. However, the truth is politically unfeasible. Once again, we can't tell the truth because it has racial ramifications, and any honest or open discussion on the subject is stricly verboten in our racially hyper-sensitive society.

The financial crisis was caused by the Democratic Party in general, and Barack Obama was a warrior in their cause: to end "redlining" of granting mortgages based on the ability to repay the loans. The Democrats forced banks and lending institutions to make many bad loans to poor people and minorities, just because the borrowers were poor and/or minorities. It was racial norming applied to the economy, like the racial norming liberals once applied to university admissions, i.e. accepting lower SAT scores from blacks and hispanics while requiring higher SAT scores from whites and asians.

Racial norming didn't work for university admissions - the unqualified still flunked out. It didn't work for mortgages either, as the financially unqualified couldn't repay and soon defaulted on the loans. Racial norming merely sets up the intended beneficiaries for failure, leaving the rest of us to clean up the mess. It's as if results don't matter, just the glorious symbolism of the intent.

This is the kind of racial norming/economically disasterous/income redistribution nonsense the Democrats will continue to impose on the country as soon as they are fully back in power -- and they are now headed towards electing the most leftwing president in American history who will, in all probability, have a filibuster-proof, leftwing Congress to back him up.

The Jawa Report has a great article today on the subprime mortgage mess and Barack Obama's hand in it.

The frustrating thing is this: many Americans simply don't know the truth about Obama because the mainstream media are openly, flagrantly and disgustingly biased in his favor. They absolutely will not report any of it.