The Fakevoer

Michael Ramirez Cartoon

Our dear President is out on the Campaign trail yet again, touting how great he is. And he saved America! Rejoice!

It’s Hope 2.0!

<<barf bag on standby>>

They passed a sweeping Financial Reform bill. But like the Health Care bill where one the biggest problems was totally ignored for political reasons, Tort Reform, in the Financial Reform bill, Fannie & Freddie and the shadow of the subprime mortgages still out there, was ignored.

The Democrats, who created this mess, want to ignore the 800 lb Gorilla Cancer in the body.

With good reason, they were the main force behind creating it!

You can’t talk about the housing crisis or reforms without talking about the affordable-housing goals HUD slapped on Fannie and Freddie. That is, unless you’re Tim Geithner.

The Treasury secretary hosted a summit Tuesday to discuss redesigning the mortgage-finance system — 75% of which is still controlled by Fannie and Freddie, which are still bleeding billions at taxpayer expense.

Geithner vowed to fundamentally “change” the failed government-sponsored mortgage giants. Yet, suspiciously, he didn’t offer how. Nor did he explain why they lowered their underwriting standards and collapsed under the weight of subprime loans and securities. So here’s a refresher:

• In 1996, as part of Clinton housing policy, HUD required that 42% of Fannie’s and Freddie’s mortgage financing go to “underserved” borrowers with unproven or damaged credit.

• To help them meet that goal, HUD, their regulator, authorized them to relax their lending criteria.

• HUD also authorized them to buy subprime securities that included loans to uncreditworthy borrowers.

• Unhappy with the results — despite Fannie and Freddie committing trillions in risky low-income loans — HUD in 2000 raised its affordable-housing target again, this time to 50%.

• By 2008, HUD’s target had topped out at 56%. And Fannie and Freddie had drowned in a toxic soup of bad subprime paper.

HUD Secretary Shaun Donovan insists that affordable-housing goals aren’t to blame. “We should be careful not to learn the wrong lesson from this experience,” he said, “and sacrifice an important feature of the current system: wide access to mortgage credit.”

This is revisionist history. Fannie and Freddie e-mails confirm that executives then were under huge pressure to meet “HUD goals.”

But as Orwell warned, whoever controls the present controls the past. And right now, the people who pushed Fannie and Freddie — along with our entire financial system — off the cliff in the name of “affordable housing” are running the show.

Just look at some of the experts Geithner invited to his Potemkin summit. Like ex-Clinton aide Ellen Seidman, who became head of the Office of Thrift Supervision. She aggressively enforced Clinton’s beefed-up Community Reinvestment Act, which codified the “flexible” underwriting that Fannie and Freddie adopted.

You can’t talk about the housing crisis or reforms without talking about the affordable-housing goals HUD slapped on Fannie and Freddie. That is, unless you’re Tim Geithner.

The Treasury secretary hosted a summit Tuesday to discuss redesigning the mortgage-finance system — 75% of which is still controlled by Fannie and Freddie, which are still bleeding billions at taxpayer expense.

Geithner vowed to fundamentally “change” the failed government-sponsored mortgage giants. Yet, suspiciously, he didn’t offer how. Nor did he explain why they lowered their underwriting standards and collapsed under the weight of subprime loans and securities. So here’s a refresher:

• In 1996, as part of Clinton housing policy, HUD required that 42% of Fannie’s and Freddie’s mortgage financing go to “underserved” borrowers with unproven or damaged credit.

• To help them meet that goal, HUD, their regulator, authorized them to relax their lending criteria.

• HUD also authorized them to buy subprime securities that included loans to uncreditworthy borrowers.

• Unhappy with the results — despite Fannie and Freddie committing trillions in risky low-income loans — HUD in 2000 raised its affordable-housing target again, this time to 50%.

• By 2008, HUD’s target had topped out at 56%. And Fannie and Freddie had drowned in a toxic soup of bad subprime paper.

HUD Secretary Shaun Donovan insists that affordable-housing goals aren’t to blame. “We should be careful not to learn the wrong lesson from this experience,” he said, “and sacrifice an important feature of the current system: wide access to mortgage credit.”

This is revisionist history. Fannie and Freddie e-mails confirm that executives then were under huge pressure to meet “HUD goals.”

But as Orwell warned, whoever controls the present controls the past. And right now, the people who pushed Fannie and Freddie — along with our entire financial system — off the cliff in the name of “affordable housing” are running the show.

Just look at some of the experts Geithner invited to his Potemkin summit. Like ex-Clinton aide Ellen Seidman, who became head of the Office of Thrift Supervision. She aggressively enforced Clinton’s beefed-up Community Reinvestment Act, which codified the “flexible” underwriting that Fannie and Freddie adopted.

Seidman argued that Fannie’s and Freddie’s support for “low-income and minority communities” — especially now amid a wave of foreclosures — is “absolutely critical.” She wants government to take an even larger role in pushing housing for “underserved markets.”

The “underserved” were the poor, and minorities, that couldn’t pay them anyhow. But what the hell, if you can get a million dollar house with a multi-thousand dollar mortgage and a job at 7-11 for nothing down, why not. 🙂

Let’s buy some votes. Then when it all blows up in our face, blame it on “the rich” and George W. Bush!!

Yeah, that’s the ticket!! 🙂

Comment on the article: It’s simple! Underserved means undeserved but we will give it to you anyway in exchange for your vote. Problem is it works, for the short term but with h*** to pay in the long term.

Seidman argued that Fannie’s and Freddie’s support for “low-income and minority communities” — especially now amid a wave of foreclosures — is “absolutely critical.” She wants government to take an even larger role in pushing housing for “underserved markets.”

“The private sector will not do it on its own,” Seidman said, “and we should just stop having that debate.”

Excuse us, but homes aren’t a right. People who lost their homes can go back to renting. There’s no shame in that. The shame came when government pushed them into homes they couldn’t afford. And the housing bubble it created hurt everybody in the end.

Echoing Seidman, Geithner asserted that whatever replaces Fannie and Freddie must continue to “provide access to affordable housing for lower-income Americans” and to guarantee loans.

In other words, Fannie and Freddie aren’t going anywhere. They’ll just be absorbed into the government, most likely Treasury or HUD, or both.

Why must taxpayers continue subsidizing homeownership through a government-guaranteed secondary mortgage market run by a government-protected duopoly?

Within the proper framework, we’re confident that private firms can originate and securitize mortgages more efficiently — and do so without the politically injected risk or taxpayer liability.

Wells Fargo, for one, would gradually replace Freddie and Fannie with private “mortgage conduits” that buy loans on the primary market and roll them into a common mortgage-backed security.

They’d assume the risk on the underlying mortgages, while the government would guarantee only the MBSes. To protect taxpayers, the conduits would pay into an insurance fund.

The plan maximizes the use of private capital while limiting Washington’s role to assuming catastrophic risk.

Other charter privileges enjoyed by Fannie and Freddie would be eliminated, including their Treasury line of credit, state and local tax exemptions, and weak capital requirements.

Above all, the plan would curb HUD’s interference in the mortgage market. No more unrealistically high affordable-housing goals. No more NINJA — no income, no job or assets — loans.

After years of dissembling and denial, Rep. Barney Frank has finally come out. He now says bankrupt government mortgage giants Fannie Mae and Freddie Mac “should be abolished.” Better late than never.

‘There were people in this society who for economic and, frankly, social reasons can’t and shouldn’t be homeowners,” Frank said in an interview with the Fox Business Network and sounding a lot more like an elephant than a donkey. “I think we should, particularly, stop this assumption that you put everybody into homeownership.”

After years of blaming heartless Republicans and Wall Street for the crisis caused by Fannie Mae and Freddie Mac — and their predominantly Democratic supporters in Congress — it’s refreshing to hear a member of the Democratic Party admit his mistakes.

It’s especially true of Frank, who, more than any other elected official, championed the cause of the government-sponsored enterprises Fannie Mae and Freddie Mac. Indeed, Frank is most responsible for stopping GSE reform in the early 2000s, at a time when such a move might have prevented the financial meltdown.

Maybe Frank, like so many others in his party, is feeling the heat in this November’s election. Democrats’ popularity is plunging after years of economic incompetence that has left America’s once-thriving economy a shambles.

But give him his due: Frank’s comments mark a major departure.

In 2000, when Rep. Richard Baker proposed more oversight for the GSEs, Frank called concerns about Fannie and Freddie “overblown,” claiming there was “no federal liability whatsoever.”

In 2002, again, Frank said: “I do not regard Fannie Mae and Freddie Mac as problems. I regard them as assets.”

In 2003, he repeated himself in opposing reform, saying he did not “regard Fannie Mae and Freddie Mac as problems.”

Even after a multibillion dollar accounting scandal hit Freddie Mac just a month after those remarks, Frank insisted nothing was wrong. “I do not think we are facing any kind of crisis,” he said.

By 2004, Fannie had its own accounting scandal. Frank again insisted it posed no threat to the U.S. Treasury. Even if the two went belly-up, he said, “I think Wall Street will get over it.”

Of course, he had it exactly backward. We’ve already spent $148 billion of taxpayer money on the two losers. The Congressional Budget Office estimates it will ultimately cost taxpayers $389 billion to bail them out. Even that may be too little; at least one private estimate put the final toll at $1 trillion.

No surprise here. Even today, more than half of all mortgages are funded or underwritten by Fannie and Freddie. They hold more than $5 trillion of the $10.7 trillion or so in total U.S. mortgages.

We’ve spent a lot of money for Barney Frank’s education in financial reality. Today, he’s basically saying he and his party were wrong all along.

That’s a good start. But how about an apology? Or even a frank admission that his party’s indefatigable support of Fannie and Freddie — which, prodded by the Community Reinvestment Act, created and funded the massive subprime market that later collapsed — was to blame for our multitrillion dollar meltdown and the loss of millions of jobs?

Others are edging in that direction. Treasury Secretary Tim Geithner this week held a conference on Fannie’s and Freddie’s future, and he too seems chastened. “We will not support returning Fannie and Freddie to the role they played before conservatorship, where they fought to take market share from private competitors while enjoying the privilege of government support,” he said.

That, too, is good to hear. As we have advocated for years — since 1996, to be exact — Fannie and Freddie should be dismantled or privatized.

We hope actions match the rhetoric — that Geithner’s “conference” on Fannie and Freddie wasn’t just political window dressing before November’s midterm elections.

Let’s get government out of the business of encouraging homeownership, an undertaking at which it has failed miserably.

Now that the idea is dead, let’s bury it once and for all.

As late as 2008, after the tide of losses and foreclosures washed away Fannie’s and Freddie’s remaining capital, Frank was adamant that it was all Wall Street’s fault: “The private sector got us into this mess … the government has to get us out of it.” (IBD)

But dear, Barney, it was thy.

“Slowly but surely, we are moving in the right direction. We’re on the right track,” Obama told a group of about 40 in the backyard of Rhonda and Joe Weithman’s home, a Cape Cod on quiet E. Kanawha Avenue in Clintonville,OH. “After 18 months, I have never been more confident that our nation is headed in the right direction,” Obama said.

Rasmussen:  Twenty-eight percent (28%) of Likely Voters say the country is heading in the right direction, according to a new Rasmussen Reports national telephone survey taken the week ending Sunday, August 15.

While down slightly from the last two weeks, confidence in the nation’s current course has ranged from 27% to 35% since last July. Following Congress’ passage of the national health care bill in late March, the number of voters who said the country was heading in the right direction peaked at 35%, the highest level of optimism measured since early September 2009.

Fifty-four percent (54%) of Democrats feel the country is heading in the right direction. Eighty-eight percent (88%) of Republicans and 77% of voters not affiliated with either political party feel the country is heading down the wrong track.

Sixty-seven percent (67%) of all voters say the country is heading down the wrong track, up two points from last week.

So let’s review: 60+% are against the Health Care Bill. 60+% are for a secure border. 60+% are against the Ground Zero Mosque. 60+% are saying we are on the “wrong track”.

Sixty percent (60%) of U.S. voters say most members of Congress don’t care what their constituents think, according to a new Rasmussen Reports national telephone survey.

So that’s why Democrats think they are doing a good job! 🙂

After all, your alternative is…<cue evil organ music> REPUBLICANS! <<dramatic music sting>> and we all know that is the way to Hell itself! 🙂

Personally, I’d rather just have Conservatives. Which leaves out Democrats anyhow but also leaves out the RINOs.

What we don’t need now is to go from a Progressive Cancer to a RINO Virus.

But we really don’t need is more government “involvement”. 😦