The Mortgage Meltdown Trial of 2010

You may call the final witness.

Your Honor, I call the head of the Federal Reserve.

Sir, could you describe how defendant Dodd -- former Senator Christopher Dodd -- interacted with Fannie, Freddie and the financial services companies under his purview as head of the Senate Banking Committee?

During the past 20 years... PACs and employees of these firms contributed more than $13 million to Dodd... including nearly $6 million in the past two years.

That's $250,000 a month from people who expected protection. And he protected them alright. All the way until the catastrophic meltdown.

Sir, what about defendant Frank? Former Representative Barney Frank?

Well, by now all of us have heard Frank's incriminating tapes... he said, "I don't think we face a crisis; I don't think that we have an impending disaster. ...Fannie Mae and Freddie Mac do very good work, and they are not endangering the fiscal health of this country."

Not only was he wrong, but even in July of '08, he was pitching Fannie stock to investors on CNBC. Retirees, boomers, young people... anyone who listened to him thought Fannie was healthy. Right before everything evaporated.

And Frank had a major conflict-of-interest: his live-in partner, Herb Moses, was a Fannie Mae executive "at the forefront of the agency’s push to relax lending restrictions."

Which one is more culpable, though?

Neither. [Muffled surprise expressed by crowd]

Excuse me?

Is the man behind this mess sitting in the courtroom?

Yes, sir, he is.

Could you please point him out to the jury?

Yes. He's right there.

Phil Spector?

No... that guy right there.

Barack Obama???

Yep. That's him.

But how? We know Obama took more money from Fannie and Freddie per year than anyone else, but how could that be the root cause?

Easy. Mr. Peabody, set the Wayback machine to 1985... *** Schwang!!! ***

This is Barack Obama in 1985 when he was a community activist.

Obama worked with one of the heads of Acorn, the radical leftists who have been heavily involved with voter intimidation and fraud -- even trading crack cocaine for votes.

In those days Acorn "proudly touted 'affirmative action' lending and pressured banks to make subprime loans." When "Acorn was beginning its campaign against these banks, Barack Obama trained the leadership of organizers in Chicago."

Even in February of this year, the mainstream media was decrying the activities of Acorn in setting the stage for the mortgage meltdown: "In the 1980s, groups such as the activists at ACORN began pushing charges of "redlining" - claims that banks discriminated against minorities in mortgage lending." In 1995, the Clinton administration loosened underwriting further, erasing "'outdated' criteria included the size of the mortgage payment relative to income, credit history, savings history and income verification."

"Banks that got poor reviews were punished; some saw their merger plans frustrated; others faced direct legal challenges by the Justice Department... Flexible lending programs expanded even though they had higher default rates than loans with traditional standards. On the Web, you can still find CRA loans available via ACORN with '100 percent financing . . . no credit scores . . . undocumented income . . . even if you don't report it on your tax returns.'

Ironically, an enthusiastic Fannie Mae Foundation report singled out one paragon of nondiscriminatory lending, which worked with community activists and followed "the most flexible underwriting criteria permitted." That lender's $1 billion commitment to low-income loans in 1992 had grown to $80 billion by 1999 and $600 billion by early 2003.

That was Countrywide, the same firm that gave sweetheart loan deals to prominent Democrats including... Senator Chris Dodd.

You see, it was Obama all along. His support for Acorn's intimidation of banks...

...and the millions he provided Acorn using his directorships of the Chicago Annenberg Challenge...

...and the Woods Fund (both with terrorist Bill Ayers)...

-- were primary drivers behind the mortgage meltdown.

Obama designed a slow-motion attack on the American economy, designed to promote "economic fairness" -- an Acorn code-phrase for socialism.

Consider: every one of Obama's mentors -- from communist Frank Marshall Davis to Jeremiah Wright -- were unapologetic Marxists who hate America.

Mr. Obama: what do you have to say for yourself?

Guilty as charged, your honor. I really thought I could get away with it -- what, with the mainstream media in the tank for me.

Bailiff: take all three ex-Senators into custody. Court is adjourned!

Continue Reading »

Slow-motion live-blogging the Mortgage Meltdown

Those crazy, whacky Internet news archives really have the 'progressives' running wild.

• Los Angeles Times: Fannie Mae Moves to Loosen Home Loan Credit Rules; Finance: The agency will encourage lenders to give mortgages to people with blemished records., October 1, 1999:

The nation's largest provider of mortgage funds, moving to increase homeownership among minorities and low-income citizens, unveiled a program Thursday to loosen lending standards for people with "slightly impaired" credit...


It is designed to provide homeownership opportunities for "many borrowers whose credit is just a notch below" qualifying for a loan, said Franklin Raines, Fannie Mae's chairman and chief executive.

• US Newswire: Cuomo Announces Action to Provide $2.4 Trillion in Mortgages for Affordable Housing for 28.1 Million Families, July 30, 1999:

[Clinton administration] Housing and Urban Development (HUD) Secretary Andrew Cuomo today announced a policy to require the nation's two largest housing finance companies [Fannie Mae and Freddie Mac] to buy $2.4 trillion in mortgages over the next 10 years to provide affordable housing for about 28.1 million low- and moderate-income families.


Cuomo said the historic action by HUD raises the required percentage of mortgage loans for low- and moderate-income families that finance companies Fannie Mae and Freddie Mac must buy from the current 42 percent of their total purchases to a new high of 50 percent -- a 19 percent increase -- in the year 2001.

• Associated Press: PROSPECT OF FOR-PROFIT MARKETS RAISES FEARS OF CONFLICT OF INTEREST, July 30 1999:

Concern among securities industry watchdogs is growing as the two largest U.S. stock markets move closer to for-profit status. The fear is they will have difficulty separating their regulatory obligations from their desire to make money.

• The Kansas City Star: Behind the boom in minority homeownership, June 12, 1999:

It's one of the hidden success stories of the Clinton era. In the great housing boom of the 1990s, black and Latino homeownership has surged to the highest level ever recorded. The number of blacks owning their own home is now increasing nearly three times as fast as the number of whites; the number of Latino homeowners is growing nearly five times as fast as that of whites. These numbers are dramatic enough to deserve more detail...

• PressWire: CUOMO issues higher FHA home mortgage loan limits for communities to increase homeownership, October 20 1998:

Housing and Urban Development Secretary Andrew Cuomo today announced higher Federal Housing Administration home mortgage loan limits for communities around the nation, implementing a Clinton Administration initiative that will enable thousands more American families to become homeowners each year.


"These higher loan limits will unlock the door to homeownership for hard-working families, transforming homeownership from an impossible dream into a sweet reality," Cuomo said...

• New York Times: Homebuyers Who Need Help , January 23, 1998:

The Clinton Administration wants to raise the limit on home mortgages insured by the Federal Housing Administration from roughly $170,000 to $220,000. By insuring mortgages made by private lenders, the F.H.A. makes the loans risk-free, a bountiful gift to mortgage lenders and real estate agents throughout the country...

James Wolcott and his blinkered apologists could not be reached for comment.

Continue Reading »

What McCain needs to do right now

Introducing Secretary of the Treasury:

Governor Mitt Romney, proven turnaround specialist.

Get to steppin' John. Name him.


Then contrast him with Obama's economic advisers: Franklin Raines and Jim Johnson, the crack Fannie Mae management team that left in a cloud of accounting scandals, subprime rot and undeserved bonuses.

Update: Linked by Vanity Fair's James ("Extra Lipitor with those Nachos") Wolcott -- renowned "misogynist and antisemite" who calls the idea "desperate and dumbass." Though not nearly as desperate and dumbass as naming disgraced Fannie Mae executives your economic advisers.

Update II: Wolcott's apologists are still hysterically claiming that Franklin Raines never advised Obama. For the 162nd time:

• The Washington Post, 7/16/08: “In the four years since he stepped down as Fannie Mae’s chief executive under the shadow of a $6.3 billion accounting scandal, Franklin D. Raines has been quietly constructing a new life for himself. He has shaved eight points off his golf handicap, taken a corner office in Steve Case’s D.C. conglomeration of finance, entertainment and health-care companies and more recently, taken calls from Barack Obama’s presidential campaign seeking his advice on mortgage and housing policy matters.”
• The Washington Post, 8/28/08: “In the current crisis, their biggest backers have been Democrats such as Senate Banking Committee Chairman Christopher J. Dodd (Conn.) and House Financial Services Committee Chairman Barney Frank (Mass.). Two members of Mr. Obama’s political circle, James A. Johnson and Franklin D. Raines, are former chief executives of Fannie Mae.“

Remember: these weren't lobbyists, they were running the show at Fannie Mae.

* * *
Of course, real Obama backers may need to report this post to the Missouri Truth Squad.


I've got some board games to play while I wait for the authorities to show up.

Linked by: American Digest. Thanks!

Continue Reading »

The Fannie Mae testimony that will make you scream in anger

In 1997 President Clinton's HUD secretary, a man named Andrew Cuomo, claimed Fannie Mae had exhibited "racial discrimination" and proposed that 50 percent of the GSEs' (Fannie and Freddie) loan portfolio be made up of loans to low- and moderate-income borrowers by 2001.

Wayne Barrett at the Village Voice:

[Clinton appointee] Andrew Cuomo... made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis. He took actions that... helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration...into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded "kickbacks" to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why.

At the time, Democrat Cuomo said "GSE presence in the subprime market could be of significant benefit to lower-income families, minorities, and families living in underserved areas..."

...as Paul Krugman noted in the Times recently, "homeownership isn't for everyone," adding that as many as 10 million of the new buyers are stuck now with negative home equity... So many others have gone through foreclosure that there's been a net loss in home ownership since 1998...

From 2001 to 2008, the Bush administration tried more than 18 times to bring Fannie and Freddie under heel.

For example, consider October 6, 2004. Location: The House of Representatives. Richard Baker -- the Republican Chairman of the House Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises -- reads an opening statement as he issues his report on "Allegations of accounting and Management Failure at Fannie Mae."

The Capital Markets Subcommittee meets today for the purpose of receipt of a report from the Office of Federal Housing Enterprise Oversight. It is indeed a very troubling report. But it is a report of extraordinary importance, to those who wish to own a home, as well as the taxpayers of this country who would pay the cost of cleanup.

...The matters detailed in this report are serious and raise concerns regarding the validity of previously reported financial results, the adequacy of regulatory capital, the quality of management supervision, and the overall safety and soundness of the Enterprise...

We all know that the Enterprise is very thinly capitalized, but the potential effect of requiring a responsible capital level would be to adversely affect earnings per share, and consequently make the payment of bonuses [to Fannie executives] much less likely...

I also wish to inform members of the Committee of another troubling incident, which I now choose to make public. About a year ago, I corresponded with the Director’s office making inquiry about the levels of executive compensation at the enterprise for the top twenty executives...

Now I understand why the Enterprise [Fannie Mae] was so anxious not to have public disclosure of compensation of an entity that was created by the Congress, and supported by the taxpayer... As a direct result of abhorrent accounting practices, executives have been able to award themselves bonuses they did not earn and did not deserve...

In 2003, the effort to rein in Fannie began in earnest with a GOP bill ("H.R. 2575—THE SECONDARY MORTGAGE MARKET ENTERPRISES REGULATORY IMPROVEMENT ACT"). The bill would have strengthened an independent regulator that did not have to kowtow to the political establishment. Like most efforts aimed at reformation of Fannie, the committee votes were typically on the straight party line.

Rep. Barney Frank (D-MA): I think it is clear that Fannie Mae and Freddie Mac are sufficiently secure so they are in no great danger... I don't think we face a crisis; I don't think that we have an impending disaster. ...Fannie Mae and Freddie Mac do very good work, and they are not endangering the fiscal health of this country.

Rep. Maxine Waters (D-CA): I have sat through nearly a dozen hearings where, frankly, we were trying to fix something that wasn't broke. [sic] ...These GSEs have more than adequate capital for the business they are in: providing affordable housing. As I mentioned, we should not be making radical or fundamental change... If there is anything to fix or improve, it is the [regulators].

Rep. David Scott (D-GA): ...affordable housing goals for both Freddie Mac and Fannie Mae require that 50 percent of units should be built for low-and moderate-income home buyers, and 20 percent for very low-income families... Yet, from 1998 to 2002, African-American home ownership rates only rose from 45.6 percent to 47.3 percent, less than 2 percent compared with the white average increase from 72 percent to 74.5 percent, huge gap remains. Clearly, the mission of Freddie Mac, and especially Fannie Mae, is to close that gap...

Rep. Gregory Meeks (D-NY): ...I have to go to another hearing, I will try to be just real quick... I am just pissed off at [the regulator] because if it wasn't for you I don't think that we would be here in the first place. ...we are faced with is maybe some individuals who wanted to do away with GSEs in the first place, you have given them an excuse to try to have this forum [to change the] mission of what the GSEs had, which they have done a tremendous job... There has been nothing that was indicated is wrong, you know, with Fannie Mae... The question that then presents is the competence that your agency has with reference to deciding and regulating these GSEs.

Franklin Raines, Chairman and CEO of Fannie Mae: ...In 1994, we launched our trillion-dollar commitment, a pledge to provide $1 trillion in financing for 10 million underserved families before the decade was over... In 2000... we launched a redoubled new pledge... to provide $2 trillion for 18 million underserved families before this decade is over. (I guess we didn't quite make it, did we Frank?) ...we are one of the best capitalized financial institutions in the world, when compared to the risk of our business...

Rep. Barney Frank (D-MA): I don't see any financial crisis.

Rep. Artur Davis (D-AL): A concern that I have... is you are making very specific... broad and categorical judgment about the management of this institution, about the willfulness of practices that may or may not be in controversy. You have imputed various motives to the people running the organization... That sounds to me as if you have gone from being a dispassionate regulator to someone who is very much involved and has a stake in this controversy... And I will follow up on Ms. Waters's point because I think it is very well taken: Her observation is that the political context surrounding your investigation was that serious doubts were being raised about OFHEO... In fact, frankly, doubts were raised about your leadership of OFHEO. And all of a sudden, the response to that is to produce an enormously critical report.

Franklin Raines, Chairman and CEO of Fannie Mae: ...these assets are so riskless that their capital for holding them should be under 2 percent.

This week even ex-President Clinton admitted that the Democrats were guilty of destroying Fannie and Freddie... and responsible for the current crisis that threatens to bring the entire U.S. economy to the brink of recession: I think that the responsibility that the Democrats have may rest more in resisting any efforts by the Republicans and the Congress or by me when I was President to put some standards and tighten up a little on Fannie Mae and Freddie Mac.

Who were the top recipients of Fannie Mae's money-dispensing leaf-blower? The top three were Chris Dodd (D-CT), Barack Obama (D-IL) and John Kerry (D-MA).

And where are these Fannie Mae executives now?

• Franklin Raines ($90 million in compensation): Economic Adviser to Barack Obama
• Jamie Gorelick ($26 million): Major Democratic Fundraiser
• James Johnson ($21 million): Adviser to Barack Obama

That's change you can bank on!

As recently as 2007, Gorelick -- who lives in a $1.7 million home -- was still donating money to disgraced Senator Christopher "Nero" Dodd, who fiddled while homes burned.

I have just one question for FBI director Mueller. Why aren't these people in prison?

Updates: Gateway Pundit has some ominous news regarding WaMu... and Dan Riehl parses a critical moment in the debate relating directly to the financial mess.

Hat tips: Naked Emperor News, Ann, Barking Moonbat, Country Store ("Jamie Gorelick: the pinup girl for Democrat foolishness strikes again") and the incredibly prolific, always on-point Gateway Pundit.
Linked by: The Anchoress, Gina Cobb, Liberty Peak Lodge and Madville. Thanks!

Continue Reading »