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February 25, 2009

Flashback to 1999:

Green Cars, Green Energy and Green Highways

Source: STEVEN A. HOLMES Published: September 30, 1999 NY Times
Fannie Mae Eases Credit To Aid Mortgage Lending

Rick Santelli "Rant of the Year"

Rick Santelli is right -- Cuba used to have a robust economy of individuals, but is now a collectivist hell-hole 90 miles from Florida.

A country that our government initially supported and then never did anything about, once the communism of Castro shown through. We never did anything about Castro back-stabbing us throughout the years, while we were fighting communism in places like Korea and then Vietnam, way on the other side of the world.

Strange enough that we never won against either Korean communists nor Vietnamese communists, but we didn't even try to fight against Cuban communism. We can't fight communism right in our own back yard? Yeah, right!

One fact remains -- Communists NEVER tell you they are communist, until it is too late to fight them.

Before we tackle the Obama communist takeover of America, let's review how we got here:

    In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

    --Steven Holmes, Sept 30, 1999

Even before the Internet bubble, the seeds of the housing bubble were being formed. (Obama is planting and liberally fertilizing the seeds of the "Green Bubble" right now.)

    Fannie 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 and felt pressure from stock holders to maintain its phenomenal growth in profits. --Sept 30, 1999

The problem was not capitalism. The problem was not President Bush or the Republicans (,although they did nothing at all to stop it). The problem was created by Clinton Administration -- The same people who are in the Obama Administration today.

    'Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

    Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market. --Sept 30, 1999

Not only that, but it had started at the beginning of the Clinton Administration. Black man Franklin Raines had been race baiting -- accusing white bankers of being racists, of red-lining black neighborhoods.

So, after crashing our entire financial system and taking the rest of the country with it trying to help poor blacks with bad credit, can we say that we have been punished enough for our evil slavery days?

    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.' -- Sept. 30, 1999

Great! They knew in advance that it would all crash in on itself. Now if we can only get our politicians to admit the same for Social Security.

    Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

This is how the banks got sucked into this. The government took all the risks. --- Or so they thought!

    Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent. -- Sept 30,1999

    In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.

The results speak for themselves. The government wanted to spread the wealth and they succeeded. Even White-Americans and Asian-Americans were helped.

    In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers.

    The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants. --Sept 30, 1999

So, there you have it.

The Federal government used the "carrot" of allowing more lending business, without the risk, in order to encourage risky lending practices that the banks would have not otherwise have done, and then used the "club" of race-baiting against private business who did not play the game the way the government wanted.

Then the Fed created a culture of easy money after the internet bubble crash of 2000-2001, which just put fuel into the already primed housing bubble.

This started a false housing bubble with this fountain of loaning money suddenly available. And it was being given to the worst possible borrowers.

The government's handwriting is all over this, but capitalism is being blamed and "the masses" are looking for the government for their "opiate".

In President Obama's speech last night, he laid out his "five-year plan" for the economy.

GM will make "green cars", Exxon will make "green energy", while our government will be making "green highways".

Anyone see any troubles down the road?

Article located at:
Last Hope for America
Christian Libertarian: Harmonious Union
Church and State

The Christian Solution ©             First Release: March 15, 2008