1 Jan

The Mega Scandal Everyone Has Forgotten

John Fund @ NRO:

In Star Wars, Obi-Wan Kenobi used an old Jedi mind trick on Stormtroopers to deflect them from their real quarry: “These aren’t the droids you’re looking for.” It worked.

It looks as if another mind trick, well known in the Congress — delay and deflection — will now work to make Americans forget one of the biggest scandals of our time: the housing collapse that triggered the 2008 financial meltdown we are still suffering from. We shouldn’t just gaze over the fiscal cliff everyone else is scrutinizing; we should also examine the droids who helped set in motion our current economic mess.

Last week, over the holidays, the House Ethics Committee quietly joined its Senate counterpart in finding that no members or staffers — or at least any it claimed jurisdiction over — broke congressional rules while obtaining “VIP” mortgages from Countrywide. This failed lender at one time provided a huge share of the questionable subprime mortgages issued by Fannie Mae and Freddie Mac, the government-backed mortgage lenders that were some of the first players to fall in the 2008 financial collapse.

Fannie and Freddie scooped up Countrywide loans and pooled them and others into mortgage-backed securities that were sold with an implicit taxpayer guarantee that eventually became explicit. The taxpayer guarantee allowed — indeed, encouraged — the lenders to be reckless, creating a moral hazard. In 2008, this set-up helped bring down the whole house of cards built by subprime mortgages.

But far from being dismantled, Fannie and Freddie have avoided insolvency, thanks to massive taxpayer bailouts. Talk of winding them down has faded on Capitol Hill and is being discouraged by the Obama administration. The two entities, along with the Federal Housing Administration, currently back some 90 percent of new mortgages. Talk about there being no consequences for failure.

At least Countrywide had to be sold to Bank of America in 2008; and two years later, Countrywide’s disgraced CEO, Angelo Mozilo, had to pay a $22.5 million fine, the largest ever at that time for a senior executive of a public company, for insider trading and concealing information on Countrywide’s deteriorating mortgages.

But Mozilo avoided criminal charges and to date has never satisfactorily explained Countrywide’s infamous “Friends of Angelo” program, which provided discount mortgages and other benefits to numerous executives at Fannie and Freddie as well as executive-branch officials and up to 30 members of Congress and their staffers. Countrywide wouldn’t have thrived or been allowed to go off the ethical rails without lots of “friends” in government.

Representative Darrell Issa (R., Calif.), chairman of the House Government Reform and Oversight Committee, issued a report last July concluding, among other things, that Countrywide lobbyists would frequently refer members of Congress and their staff to the company’s VIP desk so they could receive “enhanced customer service.” E-mail evidence was found showing that specific requests for personal loans were made to the VIP desk and quickly facilitated. Issa’s committee found that more than six current and former lawmakers — including retiring Senate Budget Committee chairman Kent Conrad, a North Dakota Democrat, and House Armed Services Committee chairman Buck McKeon, a California Republican — obtained mortgages through the Countrywide VIP program.

Read more

       

About Curt

Curt served in the Marine Corps for four years and has been a law enforcement officer in Los Angeles for the last 20 years.

3 Responses to The Mega Scandal Everyone Has Forgotten

  1. FAITH7 says: 1

    I recall the President [Ofraud] answering a question for a young person at a Town Hall meeting in PA…the question was about this young person’s future, and looking at the current economic situation in regard to a person [her] age, would [she] still be able to achieve the American Dream of Home ownership in her future…

    And, the Presidents answer [?]: (paraphrase here) “There are people who are better off being renters”…[and not a homeowner]. In other words, not everyone is cut out [in many ways] to be a home owner. Funny, as a Liberal President, I never heard any disparaging, vicious, blow back to the President O for this remark…

    This was the only time in recent memory I actually agreed with him…I wish someone had the guts to say this before…before we got into this mess… Sheesh!

    The President is a Liberal through and through but, no blow back to this comment?? Gee, the democrats didn’t let up when Bush tried to curtail the Liberal/Democrats bad economic policy of ensuring ‘every’ American who wants it,even those who surely could not afford it..gets the ‘American Dream’.

    Remember the day (D)-MA – Barney Frank, in front of Congress, claimed victory and said Fannie/Freddie was “solvent”??? Just a Big Fat Lie with a straight face…

    Can someone explain to me why the ‘mantra’ in the 80’s and 90’s when this mushroom began to grow… was: ‘Everyone’ regardless of who they are or their economic situation… should be able to the American Dream of home ownership…regardless of their ability to pay back the loan?? Then putting the taxpayers on the hook for defaulted loans?

    …and the liberal community organizers and liberal community activists all jumped on this bandwagon with such viciousness claiming discrimination [? wha..t??] they stormed Banks and held them hostage by demanding loans for home ownership, for everyone and anyone who wanted them??? Touting the emotional mantra that the banks were discriminating against a social class….yes, yes it is all about discrimination and not the fact that loans are actually made to people who can actually pay them back….Now look at the unintended consequences of such bad liberal [social] policy…look where it got all of us…

    Yes, I remember the advertisements, just 3% down, and all the loan gimmicks to guarantee [FHA/HUD] loans to people who the banks and a congress with Democratic pressure, then a Democratic Congress who ‘knew’ these people could never pay the loan back…all because the Liberal mantra was that the banks were discriminating against certain social-economic groups [not Americans mind you - but, "Groups"] by ‘denying’ them a loan…and rightly so…

    Again, BAD Liberal/Democrat policies that ensured a result of terrible economic ramifications that are now felt today and will be well into our future – by everyone….all because of unrealistic, Democratic policies…policies created based on ‘emotion’ and without a shred of common sense…

    And the sad thing is the Government is STILL plying these FHA/HUD loans, only now they are called “The Path to Home Ownership”…and they are still backed by the taxpayer…Huh??

    ReplyReply
  2. liberal1(objectivity) says: 2

    Can someone explain to me why the ‘mantra’ in the 80′s and 90′s when this mushroom began to grow… was: ‘Everyone’ regardless of who they are or their economic situation… should be able to the American Dream of home ownership…regardless of their ability to pay back the loan?? Then putting the taxpayers on the hook for defaulted loans?
    —Faith7

    This was mainly the mantra of real estate brokers, seeking to make fast, easy money.

    And some people might be better off renting. But this economy has made such a big deal out of home-ownership—practically making it a religious mantra, and a symbol of whether you were among the chosen few.

    ReplyReply
  3. Liberal 1
    I think the mantra was made by OBAMA AND CREW,
    TO ADVANTAGE THE BLACKS TO OWN PROPERTY,
    THEY PRESSURE THE BANKS TO LOAN EVEN TO THOSE NOT ABLE TO SUSTAIN THE COST
    THE BANK WHERE FORCE INTO LOANING AND ACCEPTING THE DEAL MADE BY THEIR CORRUPT DEALERS, IT WAS LIKE THE MAFIA DEALS IN THE MOVIES,
    IF THEY REFUSE THEY WOULD HAVE BEEN PUBLICLY EXPOSE AS RACIST,
    BY THE SAME GOVERNMENT YOU SUPPORT

    ReplyReply

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>