Monday, September 29, 2008

Sub-prime Mortgages foisted on banks by Clinton

The Community Reinvestment Act (CRA) was pushed hard by Bill Clinton, although it originated under Jimmy Carter. Asked about it the other day on one of the morning TV talk shows, Clinton said times back then were different. Fannie and Freddie had lots of money and he (in his infinite wisdom) decided that the money should not go to share holders or to executive compensation, but should be used to put the poor into homes.

As you can imagine, wonderful things happen when the government strong arms corporations as to how they should spend their money and, better yet, how they should assess the qualifications of home buyers. So the country's biggest buyers of mortgages were pressured into lowering the qualifications of applicants, in order to increase the percentage of poor that got mortgages. By 2006, 30% of all mortgages went to people who in any other circumstances wouldn't qualify.

The Bush administration in 2003 tried to change the system, to no avail. Congressman Barney Frank, (D, MA ) was in the forefront of stopping the Bush proposal to take control out of Fannie and Freddie and put it into a third overseeing organization. Frank too has emerged in the current crisis as one of the major critics of the administration.

Former Federal Reserve Chairman Alan Greenspan continued to raise the alarm over Fannie's and Freddie's weak capitalization. His concerns were ignored.

The best thing that can emerge from the current financial crisis is the realization that the government needs to stop directing economic decision making. In a sense, the government is putting out a fire it started when it both created the CRA and assessed lending institutions by how well they were doing in response to the program. When Clinton decided, in his usual arrogance, that he knew better than the market how banks should lend money, the seeds were sown for the current financial disaster.

full article here

1 comment:

Marcus said...


A comment to start with: you should cite your sources and clearly indicate when you are quoting others right up front in your articles. In this blog, for example, it is not at all obvious that you are citing an article written by another person, until one gets to the end and follows the blind link you provide. When I started reading your blog, I thought it sounded a bit like some extreme-rightist blowing off steam, much like some of the articles which seem to be fairly typical of your favourite American Thinker website...

In this particular article by A. Miller, I sort of agree with about 20% of what he says. I don’t believe the financial meltdown had causes as clear-cut as he makes out – I think it’s a lot more complicated than that, and the blame should be spread amongst many players of both parties, and various other factors.

The more I read of the American Thinker, the less I like it. I looked up their About Us blurb, and this is the entirety of what it says:

American Thinker is a daily internet publication devoted to the thoughtful exploration of issues of importance to Americans. Contributors are accomplished in fields beyond journalism, and animated to write for the general public out of concern for the complex and morally significant questions on the national agenda.

There is no limit to the topics appearing on American Thinker. National security in all its dimensions, strategic, economic, diplomatic, and military is emphasized. The right to exist and the survival of the State of Israel are of great importance to us. Business, science, technology, medicine, management, and economics in their practical and ethical dimensions are also emphasized, as is the state of American culture.


"The right to exist and the survival of the State of Israel are of great importance to us"?? What do these two concepts have in common to be eligible to be included in the same breath? The right to exist is a broad concept which I in general agree with; the survival of the State of Israel is an extremely narrow example of the general concept. Why don’t they mention, equally, the right to survival of the Palestinians, the Lebanese, the Iraqis, the Afghanis, the Tibetans, the Inuit, the American Indians, the Aborigines, the Maori, the Hutu and Tutsi, the Zimbabweans, the Ethiopians, the Sudanese, the Albanians, the Slovenians, the Roma, the Karen, the Hmong, the Tamils, the North Koreans, the Burmese, the Georgians, the Ukrainians, all the jungle tribes of Indonesia, Malaysia, Philippines, Papua-New Guinea and Brazil, and so on and so on...?? What special significance do Israelis have that merits them being selected by AT as being the sole representative individual society among all others having been marked by oppression in the past or currently?? If you mention one such oppressed society, you are bound to mention them all (or at least specify that you are citing only one example by using the expression 'e.g.' or 'such as' instead of 'and'), when incorporated into a sentence based on the generalised rights of existence, if you wish to have any semblance of being objective…

My conclusion has to be that either the staff of AT are predominantly Jewish, in which case their articles must inevitably be biased; or they have a naive sense of worldly priorities, in which case their political articles must inevitably be politically naïve; or they have been effectively brainwashed, in which case their articles must inevitably reflect the inevitably narrow viewpoint of their brainwasher(s).

Personally I pay little attention to the declared policies of political parties. Most is just rhetoric anyway. I listen to what the candidate says, observe his prior and subsequent actions, his achievements, his demeanour, his charisma, his judgment ability under pressure and his instantaneous decision-making abilities in unpredictable real-time events – these are more important to me than blindly adhering to the party doctrine, and I think both McCain and Obama have these qualities; but Obama has the advantage of youth and dynamism, and a very sharp and quick mind making him able to respond well in emergencies, from what I have seen. He also has another, probably unfair, advantage, but which cannot be disputed – he is incredibly popular in most of the rest of the world, especially in Europe; this will give him a relatively easy task in the field of foreign relations, which the US desperately needs to improve right now…

Anyway all this is a moot point. It is becoming increasingly evident that Obama will win the presidency, barring a tragic plane accident or similar (in which case, Heaven forbid, Hillary could well be the next president)…