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6.14.2009

Financial

The financial mess was caused by the markets being flooded with bad mortgages.

People get a home loan, or mortgage, to buy a house. The bank lends money, with the house as collateral, which is to be paid back over time with interest. This is considered an "asset" to the bank.



Mortgage assets can be sold to other banks and to investment banks. Groups of mortgage assets can be turned into securities called Mortgage Backed Securities, or MBS. Groups of MBS can be turned into Collateralized Mortgage Obligations, or CMO.  CMOs are put into risk categories and put into Tranches. Something called Credit Default Swaps can be bought, which are like insurance on credit backed assets in case they fail.  These derivatives and financial instruments are bought and sold.


Community groups and "progressive" political forces lowered underwriting standards for lending.


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.



Minority mortgage applications were rejected more frequently than other applications - not because of discrimination but simply because minorities tend to have weaker finances.



A "landmark" 1992 study from the Boston Fed concluded that mortgage-lending discrimination was systemic. The study was tremendously flawed. The president of the Boston Fed said that no new studies were needed, with the US comptroller of the currency seconding the motion.

The Boston Fed, clearly speaking for the entire Fed, produced a manual for mortgage lenders stating that: "discrimination may be observed when a lender's underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants."

The Boston Fed ruled that participation in a credit-counseling program should be taken as evidence of an applicant's ability to manage debt. Bank regulators, not banks, required the loosening of underwriting standards.






In 1977 Jimmy Carter passed the Community Reinvestment Act, or CRA. CRA loans are risky loans. Banks were compelled to make loans they normally wouldn't, violating free market principles. The leftist organization ACORN began harrassing banks, threatening lawsuits under CRA and even harrasing bankers at their homes to make them issue more and more bad loans, sub-prime mortgages. (This is the same ACORN that Barack Obama worked with, which had voter registration fraud charges nationwide.)


A 1995 strengthening of the Community Reinvestment Act required banks to find ways to provide mortgages to their poorer communities. It also let community activists intervene at yearly bank reviews.

Banks that got poor reviews were punished; some saw their merger plans frustrated; others faced direct legal challenges by the Justice Department.





Fannie May and Freddie Mac are Government Sponsored Enterprises which buy mortages. They were directed to buy more and more sub-prime mortgages, under the arguably noble idea of helping minorities and poor people get into houses. Freddie Mac and Fannie May buying up sub-prime mortgages increased the demand for them.



Fannie and Freddie being Government Sponsored Enterprises gave the impression that the mortgages they bought were safe. This, and the political pressure to make bad loans caused the financial markets to be flooded with bad mortgages.

Bank Of America

The mortgage lending free-for-all fueled the housing bubble.

A housing boom caused housing prices to increase. This was a housing bubble. Then the bubble popped and house prices went down. Some people had taken mortgages thinking that if they couldn't afford to pay it, they would just sell the house and pay off the mortgage, keeping the profit. But house values went down. In many cases the value of the house was less than the mortgage, so why pay it? And of course many people had taken mortgages they couldn't afford.



Fannie May paid big contributions to politicians who should have regulated them: the biggest recipient was Democrat Chris Dodd, who received contributions totaling $165,000








In 2005, Senator Christopher Dodd, and all the Democrats on the Banking Committee blocked legislation to regulate Fannie and Freddie.

Senate Republicans introduced a bill in 2006 to regulate, but Democrats voted against.

The second biggest recipient of contributions from Fannie was Barack Obama, who received $126,000.






Republicans have also received contributions, Robert Bennett received $108,000 and John McCain received $21,550.



In 2006, John McCain co-sponsored a bill to address the problem and gave a warning. In a party line vote all the democrats voted against the bill.



In 2004, Democrat Franklin Raines steps down as CEO of Fannie May for bad accounting practices. Franklin Raines was appointed by Bill Clinton. Fannie May had been cooking the books. Raines walked away with $90 million after 6 years.









While Barney Frank was on the House Banking Committee, which had jurisdiction over Fannie, he had a gay relationship with Herb Moses. Moses worked as Fannie’s assistant director for product initiatives, and was at the forefront of relaxing lending restrictions. They broke up in 1998, a few months after Moses ended his seven-year tenure at Fannie Mae.








A Fannie Mae Foundation report singled out a model of lending that worked with community activists and followed "the most flexible underwriting criteria permitted." That lender's $1 billion commitment to low-income loans in 1992 had grown to $80 billion by 1999 and $600 billion by early 2003. The lender was Countrywide.





- Countrywide Loan Scandal -




Senators Christopher Dodd, Democrat from Connecticut and chairman of the Banking Committee, and Kent Conrad, Democrat from North Dakota, chairman of the Budget Committee and a member of the Finance Committee, received loans from Countrywide Financial through a little-known program that waived points, lender fees, and company borrowing rules for prominent people.










Fannie Mae's former CEO, James Johnson, who had been advising presidential candidate Barack Obama on the selection of a running mate, resigned from the Obama campaign after the Wall Street Journal reported that he received Countrywide loans at below-market rates.



Mr. Johnson led Fannie Mae from 1991 to 1998. He and Countrywide's Mr. Mozilo worked together to streamline the underwriting process.

Another former CEO, Franklin Raines, received low-rate home loans from Countrywide, a large originator of higher-risk subprimes mortgages and a major seller of home loans to Fannie Mae.



Mr. Raines, who succeeded Mr. Johnson at Fannie's helm at the end of 1998, became a repeat customer of Countrywide while he was CEO.





The mortgage crisis is a direct result of an intentional loosening of underwriting standards - done in the name of ending discrimination, despite warnings that it could lead to wide-scale defaults.



  • Financial services were not deregulated during the Bush Administration.


  • In 1994, state and federal action eliminated rules banning banks from operating in more than one state.


  • President Bill Clinton signed the 1999 Gramm-Leach-Bliley Act into law, which could be considered a deregulation bill. In 2000, Congress also passed legislation that, among other things, clarified that certain kinds of financial instruments were not regulated by the Commodity Futures Trading Commission (CFTC). Among these were "credit default swaps," which have played a role in this year's meltdown.


  • In the nine years since that legislation--including the eight years of the Bush presidency--Congress has enacted no further legislation easing burdens on financial services industry.

2.16.2009

Financial crisis myths

"Deregulation, the republicans ideology is what ruined the country and everyone knows it."

  • Financial services were not deregulated during the Bush Administration.

  • In 1994, state and federal action eliminated rules banning banks from operating in more than one state.

  • President Bill Clinton signed the 1999 Gramm-Leach-Bliley Act into law, which could be considered a deregulation bill. In 2000, Congress also passed legislation that, among other things, clarified that certain kinds of financial instruments were not regulated by the Commodity Futures Trading Commission (CFTC). Among these were "credit default swaps," which have played a role in this year's meltdown.

  • In the nine years since that legislation--including the eight years of the Bush presidency--Congress has enacted no further legislation easing burdens on financial services industry.

  • In 2004, Clinton appointee Democrat Franklin Raines steps down as CEO of Fannie May for bad accounting practices - he was cooking the books to hide the risks of buying all the subprime mortgages. He left with $90 million after 6 years.

  • Community groups and "progressive" political forces had lowered underwriting standards for lending.

  • 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.

  • Minority mortgage applications were rejected more frequently than other applications - not because of discrimination but simply because minorities tend to have weaker finances.

  • A "landmark" 1992 study from the Boston Fed concluded that mortgage-lending discrimination was systemic. The study was tremendously flawed. The president of the Boston Fed said that no new studies were needed, with the US comptroller of the currency seconding the motion.

  • The Boston Fed, clearly speaking for the entire Fed, produced a manual for mortgage lenders stating that: "discrimination may be observed when a lender's underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants."

  • The Boston Fed ruled that participation in a credit-counseling program should be taken as evidence of an applicant's ability to manage debt. Bank regulators, not banks, required the loosening of underwriting standards.

  • A 1995 strengthening of the Community Reinvestment Act required banks to find ways to provide mortgages to their poorer communities. It also let community activists intervene at yearly bank reviews.

  • Banks that got poor reviews were punished; some saw their merger plans frustrated; others faced direct legal challenges by the Justice Department.

  • A Fannie Mae Foundation report singled out a model of lending that worked with community activists and followed "the most flexible underwriting criteria permitted." That lender's $1 billion commitment to low-income loans in 1992 had grown to $80 billion by 1999 and $600 billion by early 2003. The lender was Countrywide.

  • While Barney Frank was on the House Banking Committee, which had jurisdiction over Fannie, he had a gay relationship with Herb Moses. Moses worked as Fannie’s assistant director for product initiatives, and was at the forefront of relaxing lending restrictions. They broke up in 1998, a few months after Moses ended his seven-year tenure at Fannie Mae


In 2005, Senator Christopher Dodd, and all the Democrats on the Banking Committee blocked legislation to regulate Fannie and Freddie.

In 2006, John McCain co-sponsored a bill to address the problem. In a party line vote all the democrats voted against the bill.

1.15.2009

Cold

17 below zero and sunny. Beautiful!






11.29.2008

Financial Crisis

The mess we're in is because the markets are flooded with bad mortgages.

People get a home loan, or mortgage, to buy a house. The bank lends money, with the house as collateral, which is to be paid back over time with interest. This is considered an "asset" to the bank: a mortgage asset.

Mortgage assets can be sold to other banks and to investment banks. Investment banks can turn groups of mortgage assets into securities called Mortgage Backed Securities, or MBS. Groups of these MBS can be turned into Collateralized Mortgage Obligations, or CMO. CMOs are put into risk categories and put into Tranches. Something called Credit Default Swaps can be bought, which are like insurance on credit backed assets in case they fail.

In 1977 Jimmy Carter passed the Community Reinvestment Act, or CRA. CRA loans are risky loans. Banks were compelled to make loans they normally wouldn't, violating free market principles. The leftist organization ACORN began harrassing banks, threatening lawsuits under CRA and even harrasing bankers at their homes to make them issue more and more bad loans, sub-prime mortgages. (This is the same ACORN that Barack Obama worked with, and had voter registration fraud charges nationwide.) The free market was unnaturally influenced.

Fannie May and Freddie Mac buy mortages. They were directed to buy more and more sub-prime mortgages, under the arguably noble idea of helping minorities and poor people get into houses.

Fannie May paid big contributions to politicians who should have regulated them: the biggest recipient was Democrat Chris Dodd, who received contributions totaling $165,000.







In 2005, Senator Christopher Dodd, and all the Democrats on the Banking Committee blocked legislation to regulate Fannie and Freddie.

Senate Republicans introduced a bill in 2006 to regulate, but Democrats voted against.

The second biggest recipient of contributions from Fannie was Barack Obama, who received $126,000.



Republicans have also received contributions, Robert Bennett received $108,000 and John McCain received $21,550.

In 2006, John McCain co-sponsored a bill to address the problem and gave a warning. In a party line vote all the democrats voted against the bill.

In 2004, Democrat Franklin Raines steps down as CEO of Fannie May for bad accounting practices. Franklin Raines was appointed by Bill Clinton. Fannie May had been cooking the books. Raines walked away with $90 million.




Freddie Mac and Fannie May buying up sub-prime mortgages increased the demand for them, causing banks to make even more. Fannie and Freddie are GSEs, Government Sponsored Enterprises, which gave the impression that the mortages were safe. This, and the political pressure to make bad loans caused the financial markets to be flooded with bad mortgages.

A housing boom caused housing prices to increase. This was a housing bubble. Then the bubble popped and house prices went down. Some people had taken mortgages thinking that if they couldn't afford to pay it, they would just sell the house and pay off the mortgage, keeping the profit. But house values went down. In many cases the value of the house was less than the mortgage, so why pay it? And of course many people had taken mortgages they couldn't afford. People started defaulting on their mortgages, with the house being forclosed upon. Often the value of the house is less than the money lent out.

Now many banks and financial institutions have mortage assets on their balance sheets. And now some of these assets are worthless, and the value of the others cannot be determined.

I heard a good analogy: Imagine that mortgage assets are a salad ingredient. They are mixed with other ingredients to make a salad. Imagine that under each piece of lettuce you find a small piece of toxic waste. Pretty soon no one would want the salad, and everyone would stop ordering the salad.

The toxic waste is the bad mortgage assets.

Assets are required to lend. Banks and financial institutions need to get these assets off their balance sheets - but no one wants the salad.




The April, 2001, Bush Administration budget request identified GSE's like Fannie May as a potential problem.

On February 2, 2002, The Wall Street Journal editorial page warned about it.

On September 10, 2003, John Snow warned about GSEs like Fannie May. Barney Frank, on the Financial Services Committee, said that everything was OK.



Some are raising questions about Frank's relationship with Herb Moses, who was Fannie’s assistant director for product initiatives. Moses worked at the government-sponsored enterprise from 1991 to 1998, while Frank was on the House Banking Committee, which had jurisdiction over Fannie.

Lawmaker Accused of Fannie Mae Conflict of Interest
Frank met Moses in 1987, the same year he became the first openly gay member of Congress. The two lived together in a Washington home until they broke up in 1998, a few months after Moses ended his seven-year tenure at Fannie Mae, where he was the assistant director of product initiatives. According to National Mortgage News, Moses "helped develop many of Fannie Mae’s affordable housing and home improvement lending programs." Critics say such programs led to the mortgage meltdown.

Who is Herb Moses?

Media Mum on Barney Frank's Fannie Mae Love Connection

In 2004, Clinton appointee Franklin Raines steps down as CEO of Fannie May for cooking the books.



On February 24, 2004, Alan Greenspan spoke and gave a warning about problems with Fannie May.

On April 7, 2005, Democrat Chuck Schumer says everything is OK.



In 2005, Chris Dodd and all the Democrats on the Banking Committee block legislation to regulate Fannie and Freddie.

In 2008, Bear Stearns failed. The government bought $29 million of mortgage assets and J.P. Morgan bought Bear Stearns.

In July, 2008, Barney Frank said that Fannie May had problems, but would be OK going forward.



On July 11, 2008, IndyMac bank fails.

On September 7, 2008, Fannie May and Freddie Mac are bailed out at a max taxpayer cost of $200 billion.

A week later Merril Lynch is bought by Bank Of America, and Lehman Brothers goes bankrupt.

On September 16, 2008, the Federal Reserve Bank saves AIG at a cost of $85 billion. On October 8 they get $37 billion more.

On September 17, 2008, Morgan Stanley and Goldman Sachs stocks plummet.

On September 21, Treasury Secretary Henry Paulson introduces his bailout plan, $700 billion to give the treasury power to buy bad mortgages.

Congress works on a bill, and before voting on the first bailout bill which does not pass, House Speaker Nancy Pelosi stands up and tries to blame the financial crisis on George W. Bush. Unbelievable.


Watch the venomous Nancy Pelosi speech that caused the failure of the bill:




Countrywide Loan Scandal

Countrywide's Many 'Friends'

Senators tied to special 'VIP' mortgage deals

Countrywide Friends Got Good Loans


Senators Christopher Dodd, Democrat from Connecticut and chairman of the Banking Committee, and Kent Conrad, Democrat from North Dakota, chairman of the Budget Committee and a member of the Finance Committee, received loans from Countrywide Financial through a little-known program that waived points, lender fees, and company borrowing rules for prominent people.








Chris Dodd, Chairman of the Senate Banking Committee which regulates mortgage lending, received preferential treatment from Countrywide CEO Angelo Mozilo in obtaining mortgage loans. He participated in a special program for "friends" of Mozilo that awarded discounts and waived fees for those friends.

Fannie Mae's former CEO, James Johnson, who had been advising presidential candidate Barack Obama on the selection of a running mate, resigned from the Obama campaign after the Wall Street Journal reported that he received Countrywide loans at below-market rates.

Mr. Johnson led Fannie Mae from 1991 to 1998. He and Countrywide's Mr. Mozilo worked together to streamline the underwriting process.

Another former CEO, Franklin Raines, received low-rate home loans from Countrywide, a large originator of higher-risk subprimes mortgages and a major seller of home loans to Fannie Mae.

Mr. Raines, who succeeded Mr. Johnson at Fannie's helm at the end of 1998, became a repeat customer of Countrywide while he was CEO.



Franklin Raines, a onetime Clinton administration budget director, left Fannie Mae amid an accounting scandal in 2004. Mr. Raines, was forced to retire from Fannie Mae in 2004 when its regulator found it had violated accounting rules in an effort to conceal fluctuations in profit and hadn't maintained adequate risk controls.

Mr. Raines's successor as Fannie Mae CEO, Daniel H. Mudd, received two mortgage loans for about $3 million each in 2001 and 2003 while he was a Fannie Mae officer.


THE REAL SCANDAL
HOW FEDS INVITED THE MORTGAGE MESS



US Fed announces $800bn stimulus



Global stock markets in 2008

6.17.2008

Obama



Obama with Trinity United Church of Christ pastor, Rev. Jeremiah Wright in Chicago

Black Liberation Theology was taught at the church.


Obama and Tony Rezko

Rezko helped bankroll Obama in five election runs — for the state Senate, U.S. House and U.S. Senate.

Obama said he sometimes talked strategy with Rezko daily

Antoin "Tony" Rezko, a Chicago real estate developer and fundraiser for U.S. presidential contender Barack Obama and other politicians, was found guilty on Wednesday of fraud, attempted bribery and money laundering.

Obama's terrorist connections - William Ayers




Ayers told the New York Times in September 2001, "I don't regret setting bombs...I feel we didn't do enough."




Michelle Obama, this is the first time she is proud of her country...




Obama in his own words...




Rashid Khalidi

Rashid Khalidi held a fundraiser for Obama. Khalidi is a harsh critic of Israel, has made statements supportive of Palestinian terror and reportedly has worked on behalf of the Palestine Liberation Organization while it was involved in anti-Western terrorism and was labeled by the State Department as a terror group.

In 2001, the Woods Fund, a Chicago-based nonprofit that describes itself as a group helping the disadvantaged, provided a $40,000 grant to the Arab American Action Network, or AAAN, for which Khalidi's wife, Mona, serves as president. The Fund provided a second grant to the AAAN for $35,000 in 2002.


"And it's not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations."



During the Pennsylvania primary, Obama said, "Countrywide Financial was one of the folks, one of the institutions that was pumping up the subprime lending market and inducing people to take out these subprime loans. These are the folks who are responsible for infecting the economy and helping to create a home foreclosure crisis. Two million people may end up losing their homes." Obama also blamed Countrywide's top two executives, who, he said, paid themselves $19 million in bonuses as part of the sale of their company.

Former Fannie Mae Chairman James Johnson said he has quit Senator Barack Obama's vice presidential search committee after the Wall Street Journal reported he may have received preferential mortgage terms from Countrywide Financial Corp.





Obama's childhood mentor, Frank Marshall Davis, was a communist

In his books, Obama admits attending "socialist conferences" and coming into contact with Marxist literature.









Raila Odinga

Mr Odinga has said he is a cousin of Mr Obama’s, although the senator’s representatives deny that the two men are related.











Barack Hussein Obama