Teach Voters Patience and End Sitcom Politics

This is completely wrong. Bush only warned about F/F at a time when there was no problem. The real problem was in the private mortgage market not with F/F. It was the private mortgage lenders that threw lending standards out the window to make profits, not banks beholden to CRA lending standards; they have strict standards and rules to adhere to in making loans to low and moderate income people. It was the subprime loans that defaulted, not the loans made to those the government sought to help. These people didn't get subprime loans nor did F/F purchase very many of these loans. It was all done by the private mortgage markets. The reason F/F got into the subprime market at all was due to pressure from their shareholders, not the federal government. You have it all wrong.

The reason private mortgage lenders threw lending standards out the window (and they lent to many affluent people who also defaulted) was because when the stock market declined, bottoming out in 2003, Wall Street investors needed a new high yield category of financial derivative to invest in. The housing bubble gave them the MBS and they ran with it. Subprime loans began to be securitized in great quantities. According to an analysis by the Fed, over 3.5 million subprime loans were made by December 2007 when the recession began. Most of these were made by private mortgage lenders who had nothing to do with government requirements to make loans to the poor.

"By 2006, the market had surpassed $600 billion and accounted for one-fifth of mortgage originations. Independent mortgage companies made 46 percent of these loans...Nondepository mortgage providers such as mortgage lenders and brokers are regulated by 50 different state banking supervisors instead of a federal body responsible for comprehensive oversight. Comptroller of the Currency John Dugan reported that these companies “originated the overwhelming preponderance of toxic subprime mortgages” and these loans “account for a disproportionate percentage of defaults and foreclosures nationwide...The Federal Reserve Board researched whether the CRA played a substantial role in the subprime loan crisis. Its staff analysis of 2006 Home Mortgage Disclosure Act (HMDA) data and other sources concludes that the CRA did not contribute to or cause this crisis...Contrary to the widely held perception that most higher-priced loans were made to lower-income groups targeted by the CRA, 55 percent of higher-priced loan originations went to middle- and upper-income borrowers or borrowers in middle- and upper-income neighborhoods in 2005 and 2006. Only 6 percent of higher-priced loan originations made by banking institutions and their affiliates in 2005 and 2006 went to lower-income borrowers or borrowers in lower-income neighborhoods within CRA assessment areas..."

http://www.dallasfed.org/ca/bcp/2009/bcp0901.cfm

Your accusations clearly refer to the CRA and F/F. They had nothing to do with the subprime crisis that sank the economy.

steve of IL 5:41PM July 30, 2010

Bill, I'm sure you missed the author's point. Bush didn't fulfill his promises. He wasted $6 trillion dollars which didn't create one net private sector job by the end of his administration. Even by the end of his first term, he had lost a net number of jobs despite the fact that 2004 had the highest rate of GDP growth of his entire eight years in office. Talk about a jobless recovery!!

Bush's tax cuts, over half of which went to the top 5% of earners, didn't spur growth or create jobs. The money spent on Medicare Part D was a giveaway to big pharmaceutical companies and the wars only gave away billions in war profits to GOP connected corporations. The bank bailouts didn't loosen up credit for American consumers or small business nor did it lead to very many mortgage modifications; foreclosures still continue mostly due to job loss not bad loans;

"Bankers, economists and regulators studying the housing crisis believe unemployment is now the primary cause of foreclosure, the Washington Post reported Aug. 17. A housing counseling group, NeighborWorks, told the newspaper that 65% of borrowers they helped this year have cited unemployment or a pay cut as a reason for seeking help, up from 40% last year -- and fewer are citing subprime loans."

http://www.californiabankruptcyattorneyblog.com/2009/08/economists-say-unemployment-has-overtaken-subprime-loans-as-chief-cause-of-foreclosures.html

Obama's stimulus package was not only half the required size but was poorly targeted. The federal government should have directed the stimulus spending itself on well chosen projects to maintain control of the program. Even the WSJ praised the stimulus's early success;

"Many forecasters say stimulus spending is adding two to three percentage points to economic growth in the second and third quarters, when measured at an annual rate. The impact in the second quarter, calculated by analyzing how the extra funds flowing into the economy boost consumption, investment and spending, helped slow the rate of decline and will lay the groundwork for positive growth in the third quarter -- something that seemed almost implausible just a few months ago. Some economists say the 1% contraction in the second quarter would have been far worse, possibly as much as 3.2%, if not for the stimulus. For the third quarter, economists at Goldman Sachs & Co. predict the U.S. economy will grow by 3.3%. "Without that extra stimulus, we would be somewhere around zero," said Jan Hatzius, chief U.S. economist for Goldman."

http://online.wsj.com/article/NA_WSJ_PUB:SB125185379218478087.html

The public option was popular. A June Gallop poll shows wide support for health care reform;

The 49% of Americans who today say passage of healthcare reform was a good thing, compared with 46% calling it a bad thing, is a bit more positive than the two prior readings in which the slight plurality called it a bad thing.

http://www.gallup.com/poll/140981/Verdict-Healthcare-Reform-Bill-Divided.aspx

steve of IL 8:34PM July 27, 2010