Fannie Mae Eases Credit to Aid Mortgage Lending
| More news stories on Multiculturalism and Diversity |
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Steven A. Holmes, New York Times, September 30, 1999
{snip}
Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. {snip}
{snip}
Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
{snip}
“From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. “If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”
{snip}
Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.
Home ownership has, in fact, exploded among minorities during the economic boom of the 1990’s. {snip}
{snip}
[Editor’s Note: Readers are encouraged to read the entire article, which can be found here.]
(Posted on September 26, 2008)
Comments
Don’t worry, white taxpayers will pick up the bill. What’s going to happen to Third World America when the number of white taxpayers is less than the number of non-white tax users?
Posted by Civilized Neighbor at 6:41 PM on September 26
Lo and behold, Bill Clinton’s “decade of prosperity” was really like a person in seeming perfect health, who has cancer cells growing and spreading inside of them, unbeknownst to themselves or anyone else. Just as cigarette smoking, for example, over time can cause lung cancer, government-mandated lending to people who obviously are poor risks to pay back the money — in this case, blacks and Hispanics — over time can cause the economic crisis the U.S. is now facing. Diversity and multiculturalism, force fed by the federal government: Ain’t they wonderful, folks?
Posted by Wayne Engle at 7:11 PM on September 26
Blacks have one,only one,commonly shared power.
The power to degrade,corrupt and finally destroy everything they touch.If I believed in such things,I would be convinced that the black race was cursed.Cursed with the “bad luck” of not only destroying themselves but,like a plague carrier,speading their “black magic” to everything within their reach.
But as a white man,I do not embrace the commonly held African faith concerning “bad mojo”.
I follow the scientific view.
Posted by Zen at 7:12 PM on September 26
Social investment managers long considered home loan suppliers Fannie Mae and Freddie Mac the preferred vehicle for lending to minority and “underserved” populations. It was simply time for the chickens to return home to roost.
Posted by Unemployed WASP at 7:18 PM on September 26
Yet, they’re all denying that race-pandering mortgages had anything to do with it. One thing I will say is that, while President Clinton started the mania, President Bush took it into overdrive. The motive for President Bush was neoconservative, neoegalitarian, Kempian economic ideology that contended that if only blacks and Hispanics “owned” their domiciles, they would behave and would not riot.
Posted by Question Diversity at 7:49 PM on September 26
Republicans should put this on television day and night from now until the election.
I have been seeing comments after various newspaper articles saying that the current meltdown is due to “deregulation pushed by the Bush administration.” No, this clearly can be pinned on the Clinton years.
Posted by Reader-1 at 8:07 PM on September 26
What a house of cards pumped up as an offer to the God of Diversity.
Peter Wallison was indeed very prescient regarding these “toxic” loans. Here’s a current article of his:
http://www.aei.org/publications/filter.all,pubID.28664/pub_detail.asp
Posted by S & GS at 8:08 PM on September 26
This article reminds me of the editorial Mr. Taylor once quoted about the transition of South Africa to black rule in which the writer spoke ‘tear of joy’.
These people exist on theories and hope. Reality has nothing to do with their logic or thought process.
Giving unqualified minorities with bad credit homes would change racist America over night, or so the theory (and hope) goes.
In the clash of theories vs. reality, reality always wins.
Posted by sbuffalonative at 8:20 PM on September 26
The criteria were set low for blacks, but this is only part of the problem.
Untold number of borrowers, including illegal Mexicans, who were not intended beneficiaries of the push took advantage of it. So, the negative effects of Clinton’s bad social engineering were multiplied.
How similar is this to the fate of 14th Amendment that was intended to award citizenship to black slaves but is now being used by illegal aliens from Mexico to rip us off our country.
140 years passes and some things haven’t changed.
Posted by A Reader at 12:37 AM on September 27
Rodney King was awarded generous $ 2.7 mil. for being beaten by police. He wasted it all just in few short years.
Expect the same outcome of this biggest wealth redistribution (via 0% down lowns that led to government-sponsored speculation) - whatever was the benefit of it for the “minorities”, it will be wasted in a few years.
Vast majorithy of them are poor because they are naturally-born misfits in the American society, and no Liberal propaganda or generous handouts will change that.
Posted by A Reader at 1:06 AM on September 27
Only in our dreams will there ever be a legitimate, unbiased investigation into this whole sordid series of events, and who is the blame, with the help of the mainstream press the Dems will again get away with putting it all on Bush.
Posted by abc at 5:38 AM on September 27
Yes, this madness was started under Clinton and accelerated under Bush.
From the White House website:
http://www.whitehouse.gov/infocus/homeownership/homeownership-policy-book-ch2.html
“the Administration has issued “America’s Homeownership Challenge” to homebuilders, realtors, nonprofits, and government-sponsored enterprises that purchase the mortgages made by lenders, to unite in a concerted, multifaceted and collaborative effort to dismantle barriers to homeownership in each community and increase the number of minority homeowners by at least 5.5 million families by the end of this decade.”
“Some of the measures to be taken include:
A substantial increase of at least $440 billion in the financial commitment made by the government-sponsored enterprises involved in the secondary mortgage market, specifically targeted toward the minority market;
Twenty-five different local initiatives to be undertaken across the nation, geared toward eliminating the specific homeownership barriers faced by minority families in those communities;
A commitment to raise $750 million in below-market-rate investments by 2007, which will work in collaboration with local homeownership initiatives and be targeted to heavily minority program areas;
Pursuing strategic partnerships in 20 top housing markets between homebuilders, lenders, local officials, and community leaders to develop approaches that address the local challenges to building homes for minority families living in urban centers;
Establishing of faith-based housing partnerships between the participants and at least 100 churches, mosques, synagogues, and other faith-based institutions;
Aggressively developing new mortgage products so that conventional market alternatives are available to combat the predatory loan products that are disproportionately targeted to minorities;
Creating new mortgage products to meet the unique needs of recent immigrants;
Dramatically expanding financial education efforts for minorities, providing financial counseling to at least 380,000 minority families, and taking measures at the local level to reduce predatory lending; and
Establishing multilingual, consumer-oriented internet Web sites designed to help minorities overcome barriers to homeownership, including creation of a central data bank of affordable housing programs made available to real estate agents when working with clients.”
Posted by Vito Danelli at 7:55 AM on September 27
Here’s more history on the housing crisis.
Check out this video about the “Community Reinvestment Act”. It gives a good overview of what contributed to this mess:
http://uk.youtube.com/watch?v=H5tZc8oH—o
Posted by sbuffalonative at 10:36 AM on September 27
I guess we can consider this “reparations” for slavery, because it’s going to cost us trillions. Happy now, Rev. Jackson?
Posted by Xenophon at 12:13 AM on September 28
Changing the standards for which someone can qualify for a mortgage or car loan is the same thing as lower testing standards so that more blacks and other minorities will qualify for certain jobs. Only this crazy plan to provide mortgages is going to cost white america a lot of money, just like it’s been costing us for the past 44 years since LBJ began his “Great Society.”
My only worry in all of this is - are our politicians being truthful with us about the economy. How do we really know? I know that Bill Clinton signed legislation to reduce the banking regulations so more of his black brothers and sisters could get home mortgages and that started the problem. But I cannot give these politicians the benefit of the doubt. I gave that George Bush when I voted for him twice and look how he repaid us.
I can’t help thinking that this is a scam, a huge one but no different than the scams that Washington has been playing on us for years now.
Posted by Gayle Sollenberger at 1:47 PM on September 28
Well, as the saying goes…. the road to Hell is paved w/ good intentions!!!
Posted by Ken in Fishkill, NY at 4:41 PM on September 28
I don’t know enough about the effects of this bailout on the economy but I’m wondering if it wouldn’t be such a bad idea to let these banks and their bad loans go under. Is it really such a bad idea if foreign investors, who have too much influence over us, were to pull out? How many of those nonwhite immigrants who’ve been coming here for the past twenty years might just think about pulling up stakes and leaving? Why not put the breaks on globalization since it doesn’t seem to have benefited us that much? This would lead to drastic cuts in government spending and the downsizing or elimination of government agencies like the Department of Education.
Posted by at 7:45 PM on September 28
Remember these times in your old age because they mark a historic end to almost 90 years of global financial dominance by the US. Without economic power the country can’t finance it’s military operations and we’ll see bases all over the world closing and soldiers coming home. There will be no one that will be willing to step into this power vacuum and the world will destabilize over the years and possibly end in another world war.
Posted by at 9:14 PM on September 28
Bloomberg today is reporting that there is NO liquidity crisis in the banking system. This is a scam.
The banks have been ‘borrowing’ 188 Billion dollars a day from the FED. That more in a week that the 700 Billion bailout bill. After this 700 Billion, they will be back in January for Billions more.
Remember the movie The Sting? The housing loans and the derivatives are the Setup. This bailout is the bank robbery, the Sting. The Blow Off is the destruction of this country, the overthrow of the Constitutional Republic, and the creation of a ‘new’ political order. Hope to see you all on the other side…I expect to see a lot of blood in the streets.
Posted by at 3:30 AM on September 29
Someon wrote:
Remember these times in your old age because they mark a historic end to almost 90 years of global financial dominance by the US. Without economic power the country can’t finance it’s military operations and we’ll see bases all over the world closing and soldiers coming home. There will be no one that will be willing to step into this power vacuum and the world will destabilize over the years and possibly end in another world war.
Yes, Wars have been started over much less!!
Posted by Ken in Fishkill, NY at 10:17 PM on September 29
The rot goes even deeper. The government of the People’s Republic of China recently complained about the rate at which the US government was printing more money. Remember; any time the Federal Reserve Bank talks about “increasing the money supply”, they really mean just printing more paper. I find it a little alarming that a nominally Communist regieme would find it necessary to complain about US fiscal policy.
There’s a Chinese curse that goes “May you live in interesting times.” I suspect we have progressed beyond the merely “interesting” to the downright surreal.
Posted by Michael C. Scott at 2:42 PM on September 30
So, there we have it… Clinton and the Dems pressured lenders to lend to subprime minorities, and now that the bottom fell out, Republicans and white Wall Streeters get the blame, and us taxpayers are expected to foot the bill.
I hope people will call and email their elected representatives and inform them of the real causes and genesis of this crisis, and to tell them to stop blaming whitey and artifically propping up non-whitey.
Posted by Awakening Citizen at 1:00 PM on October 1
OK. So now the bill has passed and Congress has told you that your opinion doesn’t matter. The Dems probably put the current housing crises into motion; but there seems to be lots of help from Repubs. The time is here, and the timing is good for the people to attempt to send a strong message. I would suggest we vote against ALL incumbents in the upcoming election. Yes, Baby and Bathwater. We can not determine the truth of who is or is not guilty; but everyone in Congress has had the opportunity to either act in our best interests and/or warn us of the pending doom. Too little of that has occurred. Perhaps with a significant turnover of PEOPLE - Both Parties - we can get the remainder to pay attention. May be too late - but it is a start.
Posted by Dave Lamm at 1:28 PM on October 4
I saw this disaster coming a year and a half ago. When will these stupid white liberals ever learn. If Obama wins, I think all conservative whites should move to certain states, take them completely over and let the rest of the country rot. I cannot stand these parasites anymore!!!
Posted by regina at 9:17 PM on October 5
Whites let white leaders give $700 Billion to greedy executives who each often make 400 million per year in personal income. I don’t believe whites are smart.
Posted by Fanny80Mae24 at 2:28 AM on October 9
Lest we lay this entirely at the doorstep of the underclass, the following article pinpoints the date that helped make a localized mortgage crisis grow into a global credit and banking crisis. It’s one thing to push for more home ownership, quite another to create capital out of mortgage-backed securities and feed unsafe levels of risk into the system.
October 3, 2008
The Reckoning
Agency’s ‘04 Rule Let Banks Pile Up New Debt
By STEPHEN LABATON
“We have a good deal of comfort about the capital cushions at these firms at the moment.” — Christopher Cox, chairman of the Securities and Exchange Commission, March 11, 2008.
As rumors swirled that Bear Stearns faced imminent collapse in early March, Christopher Cox was told by his staff that Bear Stearns had $17 billion in cash and other assets — more than enough to weather the storm.
Drained of most of its cash three days later, Bear Stearns was forced into a hastily arranged marriage with JPMorgan Chase — backed by a $29 billion taxpayer dowry.
Within six months, other lions of Wall Street would also either disappear or transform themselves to survive the financial maelstrom — Merrill Lynch sold itself to Bank of America, Lehman Brothers filed for bankruptcy protection, and Goldman Sachs and Morgan Stanley converted to commercial banks.
How could Mr. Cox have been so wrong?
Many events in Washington, on Wall Street and elsewhere around the country have led to what has been called the most serious financial crisis since the 1930s. But decisions made at a brief meeting on April 28, 2004, explain why the problems could spin out of control. The agency’s failure to follow through on those decisions also explains why Washington regulators did not see what was coming.
On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.
They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.
The five investment banks led the charge, including Goldman Sachs, which was headed by Henry M. Paulson Jr. Two years later, he left to become Treasury secretary.
A lone dissenter — a software consultant and expert on risk management — weighed in from Indiana with a two-page letter to warn the commission that the move was a grave mistake. He never heard back from Washington.
One commissioner, Harvey J. Goldschmid, questioned the staff about the consequences of the proposed exemption. It would only be available for the largest firms, he was reassuringly told — those with assets greater than $5 billion.
“We’ve said these are the big guys,” Mr. Goldschmid said, provoking nervous laughter, “but that means if anything goes wrong, it’s going to be an awfully big mess.”
Mr. Goldschmid, an authority on securities law from Columbia, was a behind-the-scenes adviser in 2002 to Senator Paul S. Sarbanes when he rewrote the nation’s corporate laws after a wave of accounting scandals. “Do we feel secure if there are these drops in capital we really will have investor protection?” Mr. Goldschmid asked. A senior staff member said the commission would hire the best minds, including people with strong quantitative skills to parse the banks’ balance sheets.
Annette L. Nazareth, the head of market regulation, reassured the commission that under the new rules, the companies for the first time could be restricted by the commission from excessively risky activity. She was later appointed a commissioner and served until January 2008.
“I’m very happy to support it,” said Commissioner Roel C. Campos, a former federal prosecutor and owner of a small radio broadcasting company from Houston, who then deadpanned: “And I keep my fingers crossed for the future.”
The proceeding was sparsely attended. None of the major media outlets, including The New York Times, covered it.
After 55 minutes of discussion, which can now be heard on the Web sites of the agency and The Times, the chairman, William H. Donaldson, a veteran Wall Street executive, called for a vote. It was unanimous. The decision, changing what was known as the net capital rule, was completed and published in The Federal Register a few months later.
With that, the five big independent investment firms were unleashed.
In loosening the capital rules, which are supposed to provide a buffer in turbulent times, the agency also decided to rely on the firms’ own computer models for determining the riskiness of investments, essentially outsourcing the job of monitoring risk to the banks themselves.
Over the following months and years, each of the firms would take advantage of the looser rules. At Bear Stearns, the leverage ratio — a measurement of how much the firm was borrowing compared to its total assets — rose sharply, to 33 to 1. In other words, for every dollar in equity, it had $33 of debt. The ratios at the other firms also rose significantly.
The 2004 decision for the first time gave the S.E.C. a window on the banks’ increasingly risky investments in mortgage-related securities.
But the agency never took true advantage of that part of the bargain. The supervisory program under Mr. Cox, who arrived at the agency a year later, was a low priority.
The commission assigned seven people to examine the parent companies — which last year controlled financial empires with combined assets of more than $4 trillion. Since March 2007, the office has not had a director. And as of last month, the office had not completed a single inspection since it was reshuffled by Mr. Cox more than a year and a half ago.
The few problems the examiners preliminarily uncovered about the riskiness of the firms’ investments and their increased reliance on debt — clear signs of trouble — were all but ignored.
The commission’s division of trading and markets “became aware of numerous potential red flags prior to Bear Stearns’s collapse, regarding its concentration of mortgage securities, high leverage, shortcomings of risk management in mortgage-backed securities and lack of compliance with the spirit of certain” capital standards, said an inspector general’s report issued last Friday. But the division “did not take actions to limit these risk factors.”
Posted by at 1:18 AM on October 10