October 7, 2008

Less Money, More Problems

Mortgages, Fannie, Freddie, "predatory lending," CSA, Obama, ACORN and Clinton: what do all these things have in common? They're all components of an economic mystery that recently surfaced and I, for one, am disastrously confused by.

Fortunately for me there is National Review, full of intelligent and forthright journalists who fill in all the gaps for me.

And fortunately for you, you've got me to read and report back to you. Ain't life grand?

Stanley Kurtz wrote an excellent article today about the whole loan debachle. Covering the history of these "militants unafraid to confront the powers that be" (author Heidi Swarts) from 1977 to 2008, this informative piece will bring you up-to-speed on the financial tumult, who's involved, and how it all turns out to be a good ol' Democratic conspiracy (they set 'em up, knock 'em down, then blame it on someone else!).
For anyone whose head is spinning from the Stock Market stats and the confusing buying-lending speak of the pundits, this one's for you. Please note the systematic accomplishment of ACORN's strategy (paraphrased from article):

1. [Use] provisions of a 1977 law called the Community Reinvestment Act (CRA) to delay and halt the efforts of banks to merge or expand until they had agreed to lower their credit standards.

2. Pressure local banks into offering poor or minority applicants a 5-percent down-payment rate, instead of the normal 10-20 percent (leaving all the responsibility of these mortgages to the local banks, because Fannie and Freddie would, at that rate, refuse to buy them).

3. Accuse Fannie and Freddie of loan bias, thus coercing them into relaxing credit standards on the loans they would buy, so they are politically-moved into buying them.

"Housing activists have been pushing hard to improve housing for the poor by extracting greater financial support from the country’s two highly profitable secondary mortgage-market companies. Thanks to the help of sympathetic lawmakers, it appeared...that they may succeed."
Chicago Tribune, 1991

4. Celebrate the victory of formerly-bankrupt, poor credit historied peoples being able to mortgage a home. (Um... hooray?)

Here's the excerpt:

At first, ACORN’s anti-bank actions were relatively few in number. However, under a provision of the 1989 savings and loan bailout pushed by liberal Democratic legislators, like Massachusetts Congressman Joseph P. Kennedy, lenders were required to compile public records of mortgage applicants by race, gender, and income. Although the statistics produced by these studies were presented in highly misleading ways, groups like ACORN were able to use them to embarrass banks into lowering credit standards.

At the same time, a wave of banking mergers in the early 1990's provided an opening for ACORN to use CRA to force lending changes. Any merger could be blocked under CRA, and once ACORN began systematically filing protests over minority lending, a formerly toothless set of regulations began to bite.
Planting the Seeds of Disaster, Stanley Kurtz

1 comment:

Parisienne Farmgirl said...

AHHHHH! Happy Birthday! The day got away from me-teething babies, two broken nails and resumes, resumes, resumes... I am SOOOOOO sorry!!!! It's too late to call now! Please, please check my blog tomorrow!!! I love you so much!!!!!

PS - Big raid on ACORN today! Foxnews.com


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