Darwin Denied – The Cost of Liberal Social Engineering
|September 19, 2008||Posted by Dave S. under Intelligent Design|
Democrats in congress are trying to deny any blame in the credit crisis. The fact of the matter is they are wholly culpable and if they hadn’t succeeded in subverting what I’m going to term “lending to the financially fittest” none of this would have happened. Watch the video below the fold which I had published separately but decided fit better melded into this article.
In his short time in Congress Senator Obama received more campaign contributions from Fanne Mae than 48 other currently serving Senators had received in their entire careers. Obama is a charismatic crook in the best Chicago political tradition. The socialist policies he’s supported, even as a young Harvard lawyer representing the low-income housing lobby, nearly caused the ruination of the world’s largest economy. Want to see the U.S. crash into some REALLY crushing poverty like that which plagued the former Soviet Union? If so then by all means vote for Mr. Barack “Karl Marx” Obama. On the other hand, if you want to see more of the greatest peacetime economic expansion in history which occured under Ronald Wilson Reagan, the kind of economic expansion that brought the Marx inspired socialist Soviet Union to its knees, then vote for war hero John McCain. The choice is just that simple.
Who’s Responsible further in the past? Read on.
Obama was deeply involved in this first as a community organizer and then later as a lawyer representing the low-income housing lobby long before he became a US Senator.
It all goes back to 1977 with the enactment of the Community Reinvestment Act which encouraged banks to make sub-prime loans to unqualified borrowers in under-represented minorities with an implicit guarantee that the government would use taxpayer money to make whole the lenders on any sub-prime loans that defaulted.
This is social engineering in that liberals want to guarantee results where conservatives want to guarantee opportunity. America is a land of equal opportunity not equal results.
Anyhow, up until 1977, lenders were lending to the fittest. Your race didn’t matter. Your financial history was given the fitness test. A very Darwinian concept.
Study the history of the CRA. It was enacted in 1977 (Jimmy Carter’s watch). Democrats had a filibuster-proof 61/39 majority in the Senate. Democrats had a 292/143 (67%) majority in the House. Republicans were absolutely helpless to stop anything the dems wanted and what they wanted was some social engineering.
In 1995 Bill Clinton and the 104th congress vastly expanded the reach of the CRA. The 104th congress was barely a Republican majority of 54/46 in the senate and 230/204 in the house. With a democrat in the white house and a filibuster-vulnerable majority in congress they had to go along with a lot of what Clinton wanted.
In 2003 George W. Bush recognized the train wreck that was about to happen and tried to fix it.
In 2003, the Bush Administration recommended what the NY Times called “the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.” This change was to move governmental supervision of two of the primary agents guaranteeing subprime loans, Fannie Mae and Freddie Mac under a new agency created within the Department of the Treasury. However, it did not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enabled them to issue debt at significantly lower rates than their competitors. The changes were generally opposed along Party lines and eventually failed to happen. Representative Barney Frank(D-MA) claimed of the thrifts “These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” Representative Mel Watt (D-NC) added “I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing.”
In 2003, Republicans again had such a slim majority in congress (51/49 senate; 229/205 house) that they weren’t able to get Bush’s reform enacted. The 109th congress was still not a solid Republican majority and the 110th congress (the one we have today) is of course Democrat majorities in both house and senate. So Bush never got the reforms pushed through and in 2008 the train wreck finally happened.
HT to Bill Dembski who emailed me this Investor’s Business Daily article Congress Tries To Fix What It Broke which prompted me to check out which presidents and congresses were to blame in all this.
Among other interesting things IBD had this to say:
The regulation grew to monstrous proportions during the Clinton administration, obsessed as it was with multiculturalism. Amendments to the CRA in the mid-1990s dramatically raised the amount of home loans to otherwise unqualified low-income borrowers.
The revisions also allowed for the first time the securitization of CRA-regulated loans containing subprime mortgages. The changes came as radical “housing rights” groups led by ACORN lobbied for such loans. ACORN at the time was represented by a young public-interest lawyer in Chicago by the name of Barack Obama.
HUD, in turn, pressured Fannie Mae and Freddie Mac to purchase more subprime mortgages, and Fannie and Freddie, in turn, donated to the campaigns of leading Democrats like Barney Frank and Pelosi who throttled investigations into fraud at the agencies.
Soon, investment banks such as Bear Stearns were aggressively hawking the securities as “guaranteed.” Wall Street’s pitch was that MBSs were as safe as Treasuries, but with a higher yield.
But they weren’t safe. Everyone in the subprime business — from brokers to lenders to banks to investment houses — absolved themselves of responsibility for ensuring the high-risk loans were good.
The mortgage lenders didn’t care, because they were going to sell the loans to other banks. The banks didn’t care, because they were going to repackage the loans as MBSs. The investors and traders didn’t care, because the MBSs were backed by Fannie and Freddie and their implicit government guarantees.
In other words, nobody up and down the line — from the branch office on main street to the high-rise on Wall Street — analyzed the risk of such ill-advised loans. But why should they? Everybody was just doing what the regulators in Washington wanted them to do.