Real Cause Of Subprime Loan Mess

Must read article “America’s Second Wake-Up Call” here, Investor’s Business Daily

H/T: Obama Watch “Why Obama is ahead”

. . ..Do you know the real cause of the out-of-control subprime loan mess that’s creating so much fear and hurting every American? It’s not something the media or a certain political party wants you to find out. A picture is worth a thousand words, however, and we’ve made notes of key events on the chart above that you can follow as we give you some key facts.

In 1995, President Clinton mandated new regulations that coerced banks to make significantly more subprime loans to inner-city residents previously viewed as unqualified buyers in high-risk areas. Banks were rated on how well they complied and faced big fines if they didn’t do what government regulators wanted.

The government’s worst decision was allowing and encouraging banks, for the first time, to bundle these subprime loans in giant packages with prime loans. These packages were then sold to other investors as safe because they were government-sponsored by Fannie Mae and Freddie Mac.

The first of these government-encouraged packages came to market in 1997. For the banks, they were profitable because they could be sold quickly and thereby absolve the banks of any risk in the loans they made. Many subprimes were variable-rate loans made without down payments or documentation of borrowers’ incomes.

The banks could then use the money to make even more of these lower-quality, government-required loans, and Fannie Mae and Freddie Mac bought them with virtual abandon.

It evolved into a Big Government pyramid scheme with Democrats in charge of Fannie and Freddie making large political donations to Barney Frank, Chris Dodd, Barack Obama and other politicians who continually defended the anything-goes lending of the two agencies. . . .

But Barack Obama went much farther than continually defending the anything-goes lending of the two agencies. Barack Obama organized entire communities, in complete cooperation with ACORN, and taught those who organize entire communities, including ACORN, to force banks to write bad mortgages; to lend to anybody regardless of credit standing, regardless of income, with nothing down, regardless of common sense. Obama did this by educating the ineligible to demand junk mortgages; and by suing banks; and by railing for junk mortgages in public.

The result is world-wide financial disaster; and ruination both for the recipients of the loans, and the banks that wrote them, or bought the bundled toxic “securities.”

Leading architect of disaster, besides a few other social engineers? Barack Obama

Judgment to lead? More like judgment to destroy.

See Also: “How a Young Chicago Litigator Helped Create the Subprime Housing CrisisThe Jawa Report

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