http://www.youtube.com/watch?v=H5tZc8oH--o

Not saying its factually correct, just throwing more meat to the political dogs....

Here is what the great W had to say. Looks to me like he's not complaininfg a bit about the crappy loans. BTW his Secretary of Treasury took a 35 Million payoff from Goldman Sacks then wants us to bail out GS. A good start might be him giving back the 35M- then resign.

http://www.youtube.com/watch?v=GkAtUq0OJ68

Yup everyone knows it's all Bush's fault!


By STEVEN A. HOLMES

Published: September 30, 1999

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

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. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

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.

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''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.''

Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

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. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.

Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.

In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.

Bush and company have been in power for eight years. When does the buck stop at his desk ? Should his administration have taken any action in the past eight years? Or should they have ignored the problem so they could blame cliunton later?

If McCain should win will everything still be Clinton's fault eight years from now? What ever happened to assuming responsibility? How long do you have to be in power before you are responsible for the ship of state?

interesting article jhook, but i do have a few questions.

much is made of subprime loans, but are the loans written about in this article (30 year with a higher initial interest rate) the problem dragging down the banks and investment firms today? while some of those homeowners might be struggling, it seems that the orgy that occured between the fed, mortgage brokers, and investment banks is the real problem... not minority home ownership described in that article.

it seems that the bundling and selling of mortgages to reduce the risk (laughable now, huh?) is the real problem... since these mortgage securities are now impossible to value and are carried on the books of the businesses that have failed or been bailed out... and which the us government will now probably be buying.

these adjustable rate mortgages that were then sold and combined with other subprime mortgages while the rating agencies said they were high quality securities. the low interest rates under greenspan kept the housing market inflating and all the players (mortgage brokers, investment banks, hedge funds, banks, market speculators, real estate speculators, home builders, home owners tapping equity, retailers) went into an orgy of greed found in so many bubbles in the past... and it will happen again with the next tulip mania.

as far as blame it goes around. but i think it is dishonest to not lay a bunch at those who felt that deregulating the markets is a good thing (and had 100% control for the majority of that time).

oh well, whatever happens the victims (us) will be negatively affected regardless of political affiliations.... even those who save, live within our means and didn't get some in this latest orgy of greed.

Dave, not saying there isn't any blame on the present admin. But if it doesn't get to the desk then what? Everything that has occurred on Bush's watch has been his fault (according to the Dems). Like I say, maybe we will finally get our chance to watch the Dems. screw it up. There won't be any excuses then. Unless of course they tell us they can't reverse the wrongs.

I just shudder when I think back to the Warren Court era. You think the criminals have all the rights now? Just wait till we get a few more ACLU attorneys in the mix.
Better sharpen up your defense skills.

I know it's an old tired argument that Clinton did this and Clinton did that. It's also an old tired argument that Reagan screwed up the economics plan. And how long did we hear about Nixon? There are plenty of screw ups dating back to when I can remember by Harry Truman,(Korean Conflict, still there) John Kennedy, Bay of Pigs, Vietnam, Lyndon Johnson, Richard Nixon, and of course beloved JC (loved those 18% interest rates).

Just show me one bill that got to GWs desk for signature that would have helped this crisis. There has to be one. Bush is probably as much at fault by his silence as anyone. But other than speaking out what is it that he could have done? I blame them all. And I hope we don't see chest thumping and grandstanding if they actually pull this off. All I want to see is apologies to the American public and assurance they will at least try to do better in the future.








******************GUESS MCCAIN DID NOT LIE IN THE DEBATE LAST NIGHT!***********

In 2005, Sen. Charles Hagel sponsored the Federal Housing Enterprise Regulatory Reform Act with McCain, Dole and Sununu as co-sponsors. But the bill was prevented from coming up for a vote by the Democrats, therefore it died.
Below is McCain's floor speech advocating the Bill. Had it been voted on, we probably wouldn't be in the Financial crisis that we are in.
Congressional Record > May 25, 2006
FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005
The United States Senate
May 25, 2006
Section 16

Se n. John McCain [R-AZ]: Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were 'illusions deliberately and systematically created' by the company's senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight's report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae's former chief executive officer, OFHEO's report shows that over half of Mr. Raines' compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator's examination of the company's accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac--known as Government-sponsored entities or GSEs--and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay.

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I urge my colleagues to support swift action on this GSE reform legislation.

Democrats blocked this bill before it could come to a vote.

Dave,

I believe the Bush Admin. was well aware of the problems Clinton started with Fannie and Freddie. It would appear the Admin. warned more than 17 times about the expected failure and the Democrats voted against doing anything to change it.

http://www.gather.com/viewArticle.jsp?articleId=281474977461051

Joe,

We are on the same page, at least in this area.

The Biggest Scam In History

http://www.wtv-zone.com/Mary/BIGGESTSCAMINHISTORY.HTML