oink oink  look it is ACORN at the trough dang the pig is big

We must shut down the abuse and the cause of this economic meltdown.

Look to the past to see how the present was created and we continue to repeat history if we don’t learn from past mistakes.

JM will resume work on the pigfest after the debate this evening because as we all know, 0bama will hold an infomercial otherwise.  http://hotair.com/archives/2008/09/26/whats-more-important-a-debate-or-a-financial-crisis/

ACORN — NUTS! [Jack Fowler]

So a huge chunk of this proposed bailout is going to end up in the coffers of the Association of Community Organizations for Reform Now? Before you do anything else, check out this report – “ACORN’s Hypocritical House of Cards: How One “Community” Group Helped the Housing Crisis Harm Taxpayers” — by the Consumers Rights League. Just two days ago James Terry, CRL’s chief counsel, was testifying before Congress about ACORN’s long record of widespread voter-registration fraud — is there any mischief of shakedown ACORN isn’t into? CRL is all over this hyper-left outfit so beloved by Obama: you’ll find additional charges of ACORN corruption here and here

http://corner.nationalreview.com/post/?q=YTNlZDMwODViMjM1NjY2YWRmMjVkOWZjZmNhNWY1NGQ=

The campaign will resume “all activities and the senator will travel to the debate this afternoon,” the McCain campaign said in a statement released around 11:30 a.m. ET. “Following the debate, he will return to Washington to ensure that all voices and interests are represented in the final agreement, especially those of taxpayers and homeowners,”

STICKING POINT FROM LAST NIGHT:

“Senator Graham is referring to Section 5 of the Dodd counter-proposal to the Paulson Plan. To summarize, it promises a minimum 20% of the ‘profits’ from the Treasury’s sale of assets to The Housing Trust Fund and the Capital Magnet Fund.”

The Los Angeles Times proves that with an article from 1999 heaping praise on the very people most responsible for the credit-market meltdown. Ronald Brownstein lauded the Clinton administration for boosting minority ownership by forcing lenders to offer better terms to marginally-qualified borrowers and noted the financial creativity from Fannie Mae and Freddie Mac.
It also demonstrates why Congress mandated the failure of the lending system, and why it has to act to fix it (via Hot Air reader abinitoadinfinitum) referring to the Clinton era:

In the great housing boom of the 1990s, black and Latino homeownership has surged to the highest level ever recorded. The number of African Americans owning their own home is now increasing nearly three times as fast as the number of whites; the number of Latino homeowners is growing nearly five times as fast as that of whites.

Home-ownership rates are a positive sign in any community.  It indicates investment in the community.

In 1992, Congress mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers.  Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains. It has aimed extensive advertising campaigns at minorities that explain how to buy a home and opened three dozen local offices to encourage lenders to servethese markets. Most importantly, Fannie Mae has agreed to buy more loans with very low down payments–or with mortgage payments that represent an unusually high percentage of a buyer’s income. That’s made banks willing to lend to lower-income families they once might have rejected.

No problema, the government  had figured out a way for them to SPREAD that risk throughout the investment community cuz you know SHARING IS CARING:

Congress told the two government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, to buy up the paper and transform these marginally-qualified loans into what’s known as mortgage-backed securities (MBS).  The purchase of these loans made them much more attractive to lenders, who rushed to create more of them.  Fannie and Freddie then kept buying the paper and turning them into MBSs and selling them to investors, who assumed that the government would back the GSE securities Congress mandated into existence.

So, thank you?  Fallout:

  • The massive influx of new home buyers drove up housing prices.
  • The rising prices pushed borrowers and lenders into adjustable-rate mortgages to allow the purchase of homes for no down, on the premise that the rising prices (which reacted to massive new demand) would allow them to refinance before the ARMs adjusted to their maximum, at which point borrowers would refinance with the new-found equity as their down payment to get better rates and lower monthly payments they could afford.
  • Housing prices rose so quickly that builders invested in new houses on a massive scale to produce inventory to meet the demand.
  • As long as prices continued to rise, and as long as the two GSEs kept issuing the MBSs, investors kept buying them — with their government backing.

Late last year when the housing market began to slow down.  Remember, must have a steady and significant increase in housing prices to keep what is happening now from happening.

When prices fell, an entire class of overextended borrowers could no longer refinance their ARMs to get affordable mortgage payments, and they began to default. The bottom fell out of the housing market, and thanks to the massive sale over the previous decade of MBSs based on marginal loans, the collapse didn’t just get limited to the lenders or the borrowers, but investors around the world. Again sharing is caring.

The LA Times article from 1999 makes the case even more credibly, because it praises all of the stupidity and government intervention that created the bubble and the collapse.

This was not the fault of a free market out of control.  Congress and the executive created this problem by extorting banks into poorly-considered lending practices under the threat of prosecution as “unfair lenders”.  They compounded that extortion with an artificial mechanism to incentivize lenders by having GSEs buy the paper and resell it, with government imprimatur as its guarantee.

Not too many of us complained about the rapid escalation of our own equity that came from this housing/lending bubble, and in the end most of us will still benefit from it, if not quite as much as it seemed a year ago.

Three years ago, Alan Greenspan tried to get Congress to act, and only John McCain, Chuck Hagel, John Sununu, and Elizabeth Dole responded — while politicians of both parties made sure to keep the Ponzi scheme in full swing.  And those MBSs were minted at the behest of Congress, the people’s branch of government.  We broke it, and we own it.

We need a way to make sure that government doesn’t interfere in lending markets again. We wouldn’t be in the trashcan right now if government had not butted in.

Ed Morrisey

http://hotair.com/archives/2008/09/25/a-great-example-of-how-we-got-to-the-credit-market-meltdown/

Another excellent article about the trough feeders and how we will repeat history.  Do you really want that?

http://uppitywoman08.wordpress.com/2008/09/26/the-rules-no-credit-no-stable-income-no-down-payment-no-problem/

http://hotair.com/archives/2008/09/26/the-democratic-acorn-bailout/

You know, that is where ACORN and La Raza do their deed.  Requiring banks to serve their low-income communities.

That meant MORE risk and lowering the standard prerequisites for purchasing homes.

These numbers are dramatic enough to deserve more detail. When President Clinton took office in 1993, 42% of African Americans and 39% of Latinos owned their own home. By this spring, those figures had jumped to 46.9% of blacks and 46.2% of Latinos.

Now you thought as I did for many years, it was those bad banks out there just lending away.  Oh no, government forced them to do business this way.

Under Clinton, bank regulators have breathed the first real life into enforcement of the Community Reinvestment Act, a 20-year-old statute meant to combat “redlining” by requiring banks to serve their low-income communities. The administration also has sent a clear message by stiffening enforcement of the fair housing and fair lending laws. The bottom line: Between 1993 and 1997, home loans grew by 72% to blacks and by 45% to Latinos, far faster than the total growth rate.

Lenders used to ask for a minimum of 10% down, but preferred 20%, and verifiable stable income, of which the mortgage payments would not exceed 30%.  Under threat of prosecution for bigotry, lenders had to start taking less-qualified borrowers as clients. Yes, that dirty word Racism that we have heard played over and over from Obama’s campaign.  I believe that the Dems will continue to use Racism as it has gotten them a lot in past history.  No questions asked.

Lenders also have opened the door wider to minorities because of new initiatives at Fannie Mae and Freddie Mac–the giant federally chartered corporations that play critical, if obscure, roles in the home finance system. Fannie Mae and Freddie Mac buy mortgages from lenders and bundle them into securities; that provides lenders the funds to lend more.