The Mortgage Blame Game

Buy the Set, Play Along at Home
I see references and polls daily that lay blame for the mortgage crisis (it had many facets but basically boils down to policies and actions of Fannie Mae and Freddie Mac) at the feet of George Bush personally and the GOP collectively.

Given my background I know better, and I’d find it amusing if it wasn’t probably the single biggest factor pushing the presidential election into the hands of the party most culpable for the problem.

The View Depends on Your Vantage Point
I don’t know what everyone else’s field of expertise is, but my Business degree is from the Dept of Finance and Real Estate. I’ve been in the real estate world in varying positions both corporate and entrepreneurial since the early 80s.

I didn’t just hear about this or get my facts on YouTube, I’ve studied it, I’ve lived it, as has my wife… one of many underwriters run off by Countrywide for trying to uphold the meager guidelines remaining. I’ve had a front row seat… only slightly more enviable than a nicely appointed cabin on the Titanic.

Wait… It WASN’T BUSH AND THE GOP?
Since in the short run it looks like they’re gonna take the blame I almost wish it was, but no, the problems we’ve got right now predate Bush. Not only was the bomb planted and the fuse lit long before, but every time his administration or party tried to defuse it, they were shot down by the Dems on the Hill. That’s documented fact, news clips from left or the right support it.

Even papers that love the DNC credited ’em with saving the virtuous Fannie and Freddie from those mean ole GOP fellas… and the Dems repeatedly went on record as saying there was no problem at Fannie/Freddie.

Everyone Gets an Opinion, but Facts are Facts
I’ve posted some clips in various places… but why bother… experts without portfolio don’t like pesky little things like facts. I’ll grant there were some GOP guys on the Hill that were bought and paid for too… but the mess is pretty clearly a result of the DNC getting their way on the topic. People can argue all they want (I’m getting tired of it myself), but I know better than blaming this one on Bush, and I figured out a long time ago trusting the talking heads on TV to be journalists is a wasted effort.

The Supreme Irony
Yes, this will probably be the factor that decides this election, and you probably arent gonna see the following quote a lot on TV… so I’ll put it here. McCain co-sponsored the Federal Housing Enterprise Regulatory Reform Act of 2005, an attempt to rein in the risks posed by Fannie and Freddie.

Quote: John McCain on Senate floor in ’05

I join as a co-sponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation.

If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I urge my colleagues to support swift action on this GSE reform legislation.

Rewarding the Guilty
That’s but one of many attempts by the GOP in the last 8 years to rein in Fannie/Freddie that died to a Congress controlled by the DNC and bought off by special interest money, but it’s funny that this one was co-sponsored by the guy taking the biggest media beating for the catastrophe he correctly predicted.

God Bless Our Media Watchdogs
Meanwhile those that watch only MSNBC and CNN and dont have serious years in the industry are pretty much never gonna hear the facts. Oh the media has plenty of time to engage in weighty discussions about whether Sarah Palin really can see Russia while washing dishes or does she have take a helicopter ride. That’s just super, cause I wouldn’t be able to sleep if I didn’t know the answer to that serious piece of investigative journalism.

Pardon me for pointing out, but Who Freakin Cares, you morons… now can we we talk about who REALLY caused the crisis that precipitated the single most expensive tax grab in the history of mankind for just a second or shall we go back to generating Trivial Pursuit questions about the governor of Alaska?

See No Evil / Hear No Evil… and That’s the News, goodnight.
Meanwhile most of the media seems fully prepared to ignore even the most glaring evidence about this finance crisis that doesn’t support their desired outcome of seeing the #2 recipient of money from those same interests, Barack Obama, become the #1 recipient of electoral votes in November.

Doesn’t say much for our system. Seeing the party that caused this profit politically from it is rich irony.

Only in America.

I'm Rob Jones... and I approve this message.
I'm Rob Jones... and I approve this message.
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17 thoughts on “The Mortgage Blame Game

  1. Hi Jean – Basically this is just one that raises hackles. Having *taught* changes in national mortgage regs to public & agents for a quarter century… watching folks get blamed for actions that mostly came before their watch (or were performed more recently by their counterparts across the aisle) just rubs my fur the wrong way.

    To hang this on McCain / the GOP requires NOT reading the collected quotes of Banking Chair “Barney Frank” & friends. Blame CANNOT be placed solely on either side (Bush hopped on the bus at one point), but watching prime culprits point sanctimoniously at others is a good argument for making abortion retroactive, because some people just shouldnt have been born.

    Politicians as a collective group are God’s way of reminding us we oughta occasionally chlorinate the gene pool. Suspect we oughta send our entire morally bereft drooling ruling class out to get real jobs and assign running the gov’t to some MBA class as a senior project. Crooked law school grads have already had their shot.

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  2. The party or person in power always gets the blame when things go wrong, on the general principle that they had the power to prevent it. Naturally said party or person often feels hard done by and points to causes beyond their control. This pattern is as old as politics.

    The attempts to cast blame elsewhere are not always mere rhetoric or feeble excuses. For one thing, globalisation ties economies together. For another, democracies are complex political systems and favour short-term gain over long-term planning.

    So I have no difficulty in believing that blame should be spread quite widely on this one. I was interested in what you had to say. But getting your favourite party off the hook looks like a lost cause, regardless of who voted which way on specific measures.

    Still the election is not over yet. Remember that New Year prediction that the next president of the US would be a woman? Could yet happen. If your man wins, but collapses of a coronary in the excitement of victory, then you will have President Palin.

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  3. In the Civil War there were union loyalists present in each of the southern states. There were southern sympathizers in northern states. Usually works like that. Still we tend to say the southern states supported states rights or slavery or whatever motive we consider the root, and the northern states opposed it, though it describes the general populace and not every individual.

    As for them being my favorites… I vote primarily GOP only because we have no strong Libertarian party and they come as close as I can get. The part I dislike about the GOP is magnified even more by the practices of the DNC, so I go with the closest thing (and they haven’t been THAT close lately).

    We have a bicameral system, and a party that holds the White House doesnt automatically hold both houses of legislature. Getting anything through in a closely split Capitol is difficult… but getting DC to rein in an opportunity to play Santa is even harder. In that respect I fault politicians as a whole, but the statements in the paragraph below are why this one goes largely one direction.

    The list of dumb things I’d attribute to Bush and the GOP is available, this just isn’t one of them. The problem programs predate this administration and were set loose with a vengeance in the 90s… I watched it happen. Numerous attempts to curb them were blocked during this administration and the last. I’ll grant there was collusion and stupidity on both sides, but those attempting to raise the alarms were primarily on one side and those leading the charge to defend Fannie and Freddie’s out of control practices on the other. Numerous contemporary news accounts bear that out.

    As long as they were happy to publicly take “credit” for defending Fannie/Freddie from GOP attempts to curb them them then (they said the GOP was trying to fix what wasn’t broke) they should be willing to accept the “credit” for those same actions now that the results are in.

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  4. >We have a bicameral system, and a party that holds the White House doesn’t automatically hold both houses of legislature. Getting anything through in a closely split Capitol is difficult…

    I know. I thought of putting more specifics in my post, to let you know I understand Bush’s position this term, but in the end stuck to generalities. Comes under the heading of complex political systems.

    > but getting DC to rein in an opportunity to play Santa is even harder.

    Ditto. Comes under the heading of short-term gain (our voters like us) v. long-term planning.

    >The list of dumb things I’d attribute to Bush and the GOP is available

    I think I’ve seen bits of it. :)

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  5. Last night I watched highlights of the latest US presidential candidate’s debate. I was amused to see a condensed version of our exchange.

    It’s no good trying to laugh off Bush’s de-regulation as a contributory factor in the present mess. That was real and has been cited by plenty of media sources other than the Huffington Post. In fact the BBC ran a programme months ago explaining the credit crunch in such detail my head whirled with all the tricky manipulations of toxic debt which ended up poisoning the system.

    There is plenty of blame to go around.

    PS Our government’s rescue package was announced yesterday.

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  6. There were multiple inputs… the root of the issue being the loosened mortgage regs, which as I said were a product of the 90s… that exploded later. I saw them go into place. He was governor of Texas when they were created.
    1999 NYT: Fannie Mae Eases Credit to Aid Mortgage Lending

    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.

    In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates — anywhere from three to four percentage points higher than conventional loans.

    Might also see the attached article where Bush is taking office and the NY Times is crowing about how the new DNC controlled Senate (yes, during the Bush Administration) will be able to ward off GOP attempts to curb Fannie/Freddie. Helps put current events in perspective.

    2001 NYT: Senate Switch Alters Outlook for Businesses

    “This is a city about power and what we have witnessed this week is a massive, massive power shift,” said Kenneth Guenther, a top lobbyist with the Independent Community Bankers of America.

    Traditional power centers in Washington, like organized labor and the government-sponsored enterprises (Fannie Mae and Freddie Mac), will now have important political allies back in positions of leadership in the Senate after coming under heavy assault by the Republicans.

    Those contemporary sources shows where the battle lines were drawn. The GOP can’t be exonerated entirely but you can tell who was on which side as a general rule by reading the papers from the period in question.

    But heck, the media guys of today probably know more about the history of mortgage regulation, after all they have degrees in journalism and a decade or two making a living talking about everything from economics to beauty pageants. My opinion’s tainted by a degree in the subject and 25 years of actual experience.

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  7. I was in an IRC chat room the other day. Someone came in and began gloating because the CEO of Lehman got attacked at a gas station (or something like that). I commented that CEOs aren’t entirely responsible for what their corporations do (blah blah). He went off on me, accusing me of not having a clue (despite me having been in mortgage banking for 15 years… hmmmm)

    My entire point being – people have stopped using their brains to decide what’s going on in our world – they’ve switched over to emotions (owww, that hurts!) and are striking out at the easiest targets they can find.

    And if we think *now* is scary, just wait until the inevitable happens and we’re stuck with social economics…

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  8. Not that any of this is particularly funny, but I did burst into laughter when I heard Jimmy Carter criticize President Bush on his handling of the economy.

    Pot, meet Kettle.

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  9. >just wait until the inevitable happens and we’re stuck with social economics…

    It is inevitable, yes. Regulation of financial institutions will be back with a vengeance in the US, whoever gets elected President.

    Over my lifetime and a bit more we have seen the struggle between two ideologies (capitalism v. communism/socialism) gradually give way to pragmatism. One country after another has groped towards a middle way that works better in practice (never mind the theory). It’s a balancing act. The US I suppose took the first steps towards the centre with the New Deal. China and the countries of the former Soviet Block have moved towards capitalism. Most European countries are now centrist democracies of varying shades.

    This centrist drift may not be as scary as you think. But I’d say that there is a big role for voices like Rob’s. The danger lies in immobilisation by red tape.

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  10. Thanks for the kind word Jean. As today’s blog post (RE: Sam Houston bio) indicates, we’ve had steps like the mortgage bailout long before FDR’s “New Deal” hit town… his was just the biggest version of socialism to hit us on a national level.

    The New Deal did some good short term but increased the number and scope of government bureaucracy that like a goldfish will grow to fit whatever tank is provided. Think that was later codified as “Weber’s Law”… a bureaucracy will grow to meet the budget available. Sadly we failed to “sunset” far too many of ’em and many serve little purpose aside from employing bureaucrats.

    There’s never anything new in politics, just new players. If Americans have ONE great fault… (no, please dont offer the others for consideration, there are so many to chose from)… it is our inability to learn the lessons of history. Heck, ours is comparatively short, you’d think we could at least learn our own.

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