Well, it looks like the deal has been done. Thankfully, it also looks like some of the House Republicans stood up when it counted and wouldn’t allow stupid to rule the day. For a time it looked like the democrats were going to succeed in their attempt to turn a package meant to restore confidence into Wall Street and the Banking Industry into a political patronage program. And they came close to succeeding.
First, we would be well served to remember how this all started in the first place. Sure, it started with honorable intentions – helping the lower income levels in our country get a chance at moving from the trap of having to put money down the drain of rental housing and actually allow them to invest in their own future through home ownership. Noble enough. And, had that been all, that would have truly been a wonderful thing. It didn’t quite work that way.
The government went too far in promoting this housing dream, all the way to pushing those that shouldn’t, or couldn’t, into purchasing housing they could not afford. The democrats, in their infinite wisdom, came up with a feelie good plan to allow even more ‘availability’ to that end of the market, mandating banks and institutions make loans that were inherently very high risk.
Fannie Mae and Freddie Mac were in fact designed with the intent of facilitating this type of lending. A whole scheme was devised to pump money into the weakest segment of the market. They even bragged that that was what they were doing.
Seventeen times over the past many years President Bush pointed out the fallacy involved with doing so and tried to get the legislature to give more oversight and create more legislation to control this. In hindsight and on face value it was a program destined to fall, and we should have seen this coming.
Some did. John McCain back in 2005 wrote a letter urging something be done. Barney Frank, and others, however, stood up and said that there was no problem, even bragged about the success of the program. Problems did exist however. Problems they all knew about, but chose to ignore.
The “We are family” attitude that the leadership of Freddie and Fannie had with the congressional democrats, and especially with the Black Caucus (of whom Barack Obama was a member, and I do believe present when that “We are family” speech was made) was that the program was catering to their constituency for the most part, so it was natural that those two groups would give it mostly unquestioning support. The thought was that the housing boom would continue and that these loans were self rectifying. If an individual couldn’t pay their mortgage, oh well, they could sell their house and pay the loan and maybe even come out with a bit of money themselves.
All it took for that house of cards to fall was a downturn in housing prices. Downturns are always inevitable. Just like with the stock market itself there are always “corrections”. Maybe with this “correction”, some fundamental flaws will actually get corrected.
As I said in the beginning the republicans seemed to have risen to the challenge and prevented many of our tax dollars going to some of the very groups that caused some of this problem in the first place. ACORN, the Association of Community Organizations for Reform, had qued up to the head of the line with its hand out for part of the money that congress was debating putting out to stabilize things. They shot that down, thankfully.
ACORN is a group that promotes much of the liberal agenda that flows out of Washington. Make no mistake, they aren’t pleased about not getting there hands on some of this money. But ACORN, I’m told, is a part of the problem in the first place.
ACORN’s National President Maude Hurd released this statement:
“Members of Congress worked tirelessly over the weekend to rid Wall Street of its toxic assets, which are responsible for the worst financial crisis since the 1930s. Unfortunately, families who fell victim to Wall’s Street’s toxic lending practices and now risk losing their homes were largely left out.
ACORN members are extremely disappointed that the bailout package does little to assist these homeowners, such as providing them relief through the bankruptcy courts. Although weak, there is language in the bailout package authorizing Treasury Secretary Henry Paulson to facilitate more loan modifications. ACORN members plan to hold Secretary Paulson accountable and ensure he uses this authority to make streamlined loan modifications a priority for struggling American families.”
Even though much of those “toxic” lending practices were mandated by congress, and had ACORN’s full blessings (after all, if I’m not mistaken they were a facilitator of these loans), ACORN points toward Wall Street as if IT were the main culprit. Don’t expect them to go quietly over this business of being cut out of the expected gravytrain. They are right about one thing however, many people were suckered into taking these mortgages and they still come out losers in this mess.
Wall Street IS however where a good bit of this blame lies. The people that inhabit the hollowed grounds of Wall Street are some of the smartest people in this country, and it is ludicrous that they ignored the fact that this was inevitable. They chose to gamble that the market would continue its climb and that they could get out before the bubble burst. The money was too intoxicating however. Many stayed in the game far too long.
Many didn’t. They were mandated to make the loans and make the loans they did, but they sold that paper and didn’t hold it. Others bought it thinking the gain outweighed the risk. Those came up short, and now WE have to come to there rescue. Why, because it was OUR money they used, and it’s OUR money they stand to lose.
The funny thing about all of this is that the ones that are usually against regulating things were FOR regulation of this, and the ones that usually want to regulate everything wanted those regulations relaxed. See, it’s all in who your friends are…