Sunday, March 01, 2009

The History of The Crisis

Don't take it from me. Take it, if you must, from the NYT. I have removed the link to the Times article because I will not be caught dead patronizing or causing other to patronize that rag. However, I invite you to visit Ann Coulter's site where I found this and the link, intact.

I post this because I have friends who still believe that our current troubles lie exclusively at the feet of GWB and the GOP. While the Republicans were indeed in control of Congress, they were not always in control of themselves and Bill Clinton was still President.

So for the sake of starting a debate from factual premises rather than from cultish fantasies. I give you....HOW POLITICAL CORRECTNESS CAUSED THE RECESSION.

NYT Sept 30, 1999: Fannie Mae Eases Credit To Aid Mortgage Lending: [F]annie 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 . . .


"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. 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."

". . . Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage [I.E. YUPPIE SCUM HOUSE FLIPPERS]. 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."

There you have it. Let the debate begin. I am sure there are a ton of key words you liberals can use to find some flimsy grounds for your rebuttal.

In fairness, I must admit that I haven't read the NYT version of this truth. However, I have been reading about it for decades in the Wall Street Journal whose editorial pages have been warning at least as long about how Fannie Mae's business model was placing outrageous risks on the US taxpayer.

No comments: