Circle of bad decisions still haunts system.
Mon 24 Nov
President Johnson created the Great Society and the modern welfare system. Today, free public housing buildings are being torn down in major inner cities because the occupants rendered them uninhabitable and drug infested. Jimmy Carter gave us the Community Reinvestment Act (1977), enabling Fannie Mae and Freddie Mac, founded in the 1930s, to give loan guarantees. Bill Clinton claims to have mended the modern welfare system and rolled back his tax increases to fund the welfare system. But, he also turned the Community Reinvestment Act into a stealth welfare system by putting pressure on banks to make large numbers of increasingly risky subprime loans defined by people who are unable to repay debts.
Hence the infamous NINJA (no income-no job-no assets) loans came into being and Fannie Mae and Freddie Mac were expanded to soak up these subprime loans. I was working in the mortgage department at Nation's Bank in Rockville, Md., and saw what was happening at the time.
Meanwhile, Barack Obama trained the street activists at ACORN in tactics to force banks to make these subprime loans in Chicago. The commercial mortgage banks like Bank of America knew these subprime loans were going to kill them, so they either sold subprime loans to Fannie and Freddie or to investment banks like Bear Stearns who repackaged them into mortgage-backed securities and CDOs (collateralized debt obligations) to protect themselves against risk. These securities and CDOs were sold to other investment banks domestically and around the world. At each step, risk was spread, and the connection between the investment money and the underlying asset (a property) became more opaque and less understood.
Congressional Democrats, including Reps. Barney Frank and Nancy Pelosi and Sens. Chris Dodd, Chuck Schumer and Harry Reid, blocked every effort to fix or minimize the problem before the bubble burst. When the system crashed under the weight of the enormous risk, the bailout bill was passed, which is nothing more than an expansion of the stealth welfare system created by Jimmy Carter, which will allow people who bought properties with no investment of their own to now be essentially given equity in those properties that they have not earned. How in the world can anyone believe Obama and the democrats are good for the economy?
Source:http://www.myrtlebeachonline.com/opinion/story/673603.html
