All Is Not Whale
-
- October
- 7
Mcain/Palin need to sow just enough seeds of doubt about Obama among “swing” voters in order to tip the election, so they have devised a surprise strategy to label him a terrorist. Of course, they also have to overcome voters doubts about McCain/Palin’s ability to comprehend and handle the economy.
So they are wisely sticking with “Obama is a terrorist.” I’m glad they have gone with a substantive, ideas-based campaign for October. That should certainly get the attention of someone who has lost a job, a nest egg, or is in say, foreclosure.
This entry was posted
on Tuesday, October 7th, 2008 at 7:07 am by Matt Davies.
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Matt, i don’t believe Obama is anymore capable of getting us
out of this mess than McCain. People just think Obama is more capable because all of this is happening under George w.’s Administration. You can blame Bush for alot of things but not this bailout. Both Dems and Repubs dropped the ball on this. As far as a trying to point out that Obama is a terrorist this is not the case. They are only trying to
publicize that Obama and his radical wife were associated for 20 years to an Anti-White and Anti-American black preacher which is true. this has nothing to do with terrorism. To be honest, i have to wonder myself why he would be associated with a racist. If McCain was associated with a white racist preacher the Obama campaign would be doing the same thing. Don’t you think?
Hey Bulldog, nice to have you back!
No one is going to get us out of this mess. But I honestly think McCain or Obama would both be more practical, effective (read: non-ideological) than the current President in trying to prevent a bad debt-based securities crisis like this from happening again. (Governor Palin is another matter of course.)
I still think the charge against Obama hanging with a racist preacher is rich when one considers the fact that a lot of people probably won’t vote for Obama because he’s not white. That would be, er, racist, no? And the McCain camp is poised to happily invoke racial code words in order to mine those votes.
Also, McCain was associated with a white racist preacher: Cornerstone Church’s Pastor John Hagee.
Thanks for the reply Matt. I have never heard of this fellow
John Hagee,but since you are more aware of politics than i am i will take your word for it. It’s a shame on both sides.
You are correct in the fact that some people will not vote
for Obama because he is black. However, on the other end of that 90% of all black people will vote for Obama ONLY because he is black. Equally racist in my opinion. I’m going to the Army football game on Sat. at West Point. My
offer of a juicy burger and a few ice cold beers is still
open to you buddy if you’re ever up in that area.
THE REAL SCANDAL
HOW FEDS INVITED THE MORTGAGE MESS
By STAN LIEBOWITZ
PERHAPS the greatest scandal of the mortgage crisis is that it 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.
At the crisis’ core are loans that were made with virtually nonexistent underwriting standards – no verification of income or assets; little consideration of the applicant’s ability to make payments; no down payment.
Most people instinctively understand that such loans are likely to be unsound. But how did the heavily-regulated banking industry end up able to engage in such foolishness?
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.
In fact, minority mortgage applications were rejected more frequently than other applications – but the overwhelming reason wasn’t racial discrimination, but simply that minorities tend to have weaker finances.
Yet a “landmark” 1992 study from the Boston Fed concluded that mortgage-lending discrimination was systemic.
That study was tremendously flawed – a colleague and I later showed that the data it had used contained thousands of egregious typos, such as loans with negative interest rates. Our study found no evidence of discrimination.
Yet the political agenda triumphed – with the president of the Boston Fed saying no new studies were needed, and the US comptroller of the currency seconding the motion.
No sooner had the ink dried on its discrimination study than 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.”
Some of these “outdated” criteria included the size of the mortgage payment relative to income, credit history, savings history and income verification. Instead, the Boston Fed ruled that participation in a credit-counseling program should be taken as evidence of an applicant’s ability to manage debt.
Sound crazy? You bet. Those “outdated” standards existed to limit defaults. But bank regulators required the loosened underwriting standards, with approval by politicians and the chattering class. 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, shaking the banks down for large pots of money.
Banks that got poor reviews were punished; some saw their merger plans frustrated; others faced direct legal challenges by the Justice Department.
Flexible lending programs expanded even though they had higher default rates than loans with traditional standards. On the Web, you can still find CRA loans available via ACORN with “100 percent financing . . . no credit scores . . . undocumented income . . . even if you don’t report it on your tax returns.” Credit counseling is required, of course.
Ironically, an enthusiastic Fannie Mae Foundation report singled out one paragon of nondiscriminatory lending, which 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.
Who was that virtuous lender? Why – Countrywide, the nation’s largest mortgage lender, recently in the headlines as it hurtled toward bankruptcy.
In an earlier newspaper story extolling the virtues of relaxed underwriting standards, Countrywide’s chief executive bragged that, to approve minority applications that would otherwise be rejected “lenders have had to stretch the rules a bit.” He’s not bragging now.
For years, rising house prices hid the default problems since quick refinances were possible. But now that house prices have stopped rising, we can clearly see the damage caused by relaxed lending standards.
This damage was quite predictable: “After the warm and fuzzy glow of ‘flexible underwriting standards’ has worn off, we may discover that they are nothing more than standards that lead to bad loans . . . these policies will have done a disservice to their putative beneficiaries if . . . they are dispossessed from their homes.” I wrote that, with Ted Day, in a 1998 academic article.
Sadly, we were spitting into the wind.
These days, everyone claims to favor strong lending standards. What about all those self-righteous newspapers, politicians and regulators who were intent on loosening lending standards?
As you might expect, they are now self-righteously blaming those, such as Countrywide, who did what they were told.
Stan Liebowitz is the Ashbel Smith professor of Economics in the Business School at the University of Texas at Dallas.
Thanks Bulldog. One of these days, (when I have one of those elusive things known as a free weekend…) I’ll take you up on your kind offer.!
Bulldog—
I think the “terrorist” reference was to the alleged close relationship between Obama and Bill Ayers, who was the founder (in the ‘60s) of the Weather Underground. This when Obama was 8 years old.
In more recent years, Ayers has gone on to earn higher college degrees, and to become a well-respected professor at the University of Illinois, advocating for education reform. Indeed, Obama has met Ayers more recently than the ‘60s, although they are not what anyone (other than McPalin) would, apparently, call “tight”.
-jp
o.k. JP understood. What about the Reverened wright though?
Obama didn’t seem to cut ties with him until recently when
he knew he had a chance to be president.