Obama, ACORN, and the Mortgage Crisis
Posted by Political Pyro in Media Firestorm September 17, 2008The current financial meltdown on Wall Street has editorial boards across the nation scurrying to find a culprit in what has become the largest market dump since 9/11.
Regardless of the accusations of corporate greed and risky miscalculations, the root of the problem for all of the faltering Wall Street giants seems to be in their mortgage investments.
Barack Obama recently made this statement:
So let’s be clear: what we’ve seen the last few days is nothing less than the final verdict on an economic philosophy that has completely failed. And I am running for President of the United States because the dreams of the American people must not be endangered any more. It’s time to put an end to a broken system in Washington that is breaking the American economy. It’s time for change that makes a real difference in your lives.
From the current hand-wringing, you’d think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards - at the behest of community groups and "progressive" political forces.
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 1989, sympathetic members of Congress got the Home Mortgage Disclosure Act amended to force banks to collect racial data on mortgage applicants; this allowed various studies to be ginned up that seemed to validate the original accusation.
The nation’s largest provider of mortgage funds, moving to increase homeownership among minorities and low-income residents, unveiled a program Thursday to loosen lending standards for people with “slightly impaired” credit.The Federal National Mortgage Assn. (Fannie Mae) said it will encourage banks and other financial institutions to accept borrowers with blemished credit who may not otherwise qualify for conventional loans.The pilot program will begin in 15 states, including California, and the District of Columbia. It is expected to expand nationwide early next year.
Government-backed institutions such as Fannie Mae and Freddie Mac, under pressure from the Clinton administration, created such an unfair advantage over private enterprise they had no choice but to loosen their standards as well. The Wall Street Journal reported in 2005:
Some lenders say they are being forced to relax their standards to remain competitive. "We’re just offering the product that a lot of our competitors have offered," says U.S. Bank President Dan Arrigoni. "If anything, we have to think about loosening them if we want to compete."
This is really interesting, thanks for sharing it!
Comment by Affiliate Promotion — March 26, 2009 @ 6:26 pm