Also known as how the Democrats set the building on fire and then shot the firemen.
By STEVEN A. HOLMES (New York Times)
Published: September 30, 1999
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
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.
When I read that Clinton was proclaiming that he had tried to increase oversight of Fannie and Freddie but was unable to because of the Democrats I knew that he was getting out in front on the issue to avoid any personal blame.
The above shows you why. It proves that the disease turned terminal and started to spread in late summer 1999 driven by the Democrats. That would be Barney Franks and all the poverty pimps and community organizers.
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''
Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's
Now remember. That was September 1999. Re-read that paragraph directly above. It looks like everyone knew what could happen. Then read the following.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
Link to New York Times.
Of course in doing this the market has lost around 2000 points in the past 7 market days and we are teetering on the brink of disaster.
So we know what started it, but what was the trip wire that has caused the collapse?
Go back to last April. For the previous six months or so the Fed had been dumping money into the markets to keep them liquid and to stem the foreclosures. And it was working. Things didn't look good, but things looked under control.
Oil prices started the year at around $93.00 and had increased a little bit over $5.00 to $98 at the beginning of April, then $12.00 in April to end at $110 and by the middle of July oil was at $146 and gasoline as $4.00 a gallon.
OPEC oil prices.
Along with increased energy prices, everything that it effects jumped in price. The people who could barely hang on started defaulting and the spiral started.
The dagger that was thrust into America's financial heart is oil pricing.
And there is no doubt that it is Democrats who, by opposing drilling in America supported the speculators belief that shortages would occur and that they could safely bid the price up. And dear hearts, they did.
If you want to know who should be tried for high crimes and misdemeanors, start with Nancy Pelosi, Barney Franks, Harry Reid and Chris Dodd. You may find that I don't mention Hussein. As a Leftie he shares blame with them all, but he gets only 20 years where the other get life with out patrol.
Bush? Bush has proven only that he has been inept and too slow to act. History will judge him harshly. Not for the Iraqi war he has won, but for the financial war he has lost.
The one and only thing that will save us from a Depression of 1929 magnitude is for the Congress to declare a national emergency and direct the oil companies to take all necessary actions to drill and bring oil on line. Just the policy and national commitment should drop oil to $50.00 in 4 to 6 weeks.
Frankly, I don't see much of a chance of happening with a McCain administration.
It damn sure won't happen if Hussien is elected.
Hang on chums, it's going to get much rougher.
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