They Gave Your Mortgage to a Less Qualified Minority

by Ann Coulter

09/24/2008

On MSNBC this week, Newsweek's Jonathan Alter tried to connect John McCain to the current financial disaster, saying: "If you remember the Keating Five scandal that (McCain) was a part of. ... He's really getting a free ride on the fact that he was in the middle of the last great financial scandal in our country."

McCain was "in the middle of" the Keating Five case in the sense that he was "exonerated." The lawyer for the Senate Ethics Committee wanted McCain removed from the investigation altogether, but, as The New York Times reported: "Sen. McCain was the only Republican embroiled in the affair, and Democrats on the panel would not release him."

So John McCain has been held hostage by both the Viet Cong and the Democrats.

Alter couldn't be expected to know that: As usual, he was lifting material directly from Kausfiles. What is unusual was that he was stealing a random thought sent in by Kausfiles' mother, who, the day before, had e-mailed: "It's time to bring up the Keating Five. Let McCain explain that scandal away."

The Senate Ethics Committee lawyer who investigated McCain already had explained that scandal away -- repeatedly. It was celebrated lawyer Robert Bennett, most famous for defending a certain horny hick president a few years ago.

In February this year, on Fox News' "Hannity and Colmes," Bennett said, for the eight billionth time:

"First, I should tell your listeners I'm a registered Democrat, so I'm not on (McCain's) side of a lot of issues. But I investigated John McCain for a year and a half, at least, when I was special counsel to the Senate Ethics Committee in the Keating Five. ... And if there is one thing I am absolutely confident of, it is John McCain is an honest man. I recommended to the Senate Ethics Committee that he be cut out of the case, that there was no evidence against him."

It's bad enough for Alter to be constantly ripping off Kausfiles. Now he's so devoid of his own ideas, he's ripping off the idle musings of Kausfiles' mother.

Even if McCain had been implicated in the Keating Five scandal -- and he wasn't -- that would still have absolutely nothing to do with the subprime mortgage crisis currently roiling the financial markets. This crisis was caused by political correctness being forced on the mortgage lending industry in the Clinton era.

Before the Democrats' affirmative action lending policies became an embarrassment, the Los Angeles Times reported that, starting in 1992, a majority-Democratic Congress "mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains."

Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities. Clinton's secretary of Housing and Urban Development, Andrew Cuomo, investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low- to moderate-income borrowers by the year 2001.

Instead of looking at "outdated criteria," such as the mortgage applicant's credit history and ability to make a down payment, banks were encouraged to consider nontraditional measures of credit-worthiness, such as having a good jump shot or having a missing child named "Caylee."

Threatening lawsuits, Clinton's Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage. That isn't a joke -- it's a fact.

When Democrats controlled both the executive and legislative branches, political correctness was given a veto over sound business practices.

In 1999, liberals were bragging about extending affirmative action to the financial sector. Los Angeles Times reporter Ron Brownstein hailed the Clinton administration's affirmative action lending policies as one of the "hidden success stories" of the Clinton administration, saying that "black and Latino homeownership has surged to the highest level ever recorded."

Meanwhile, economists were screaming from the rooftops that the Democrats were forcing mortgage lenders to issue loans that would fail the moment the housing market slowed and deadbeat borrowers couldn't get out of their loans by selling their houses.

A decade later, the housing bubble burst and, as predicted, food-stamp-backed mortgages collapsed. Democrats set an affirmative action time-bomb and now it's gone off.

In Bush's first year in office, the White House chief economist, N. Gregory Mankiw, warned that the government's "implicit subsidy" of Fannie Mae and Freddie Mac, combined with loans to unqualified borrowers, was creating a huge risk for the entire financial system.

Rep. Barney Frank denounced Mankiw, saying he had no "concern about housing." How dare you oppose suicidal loans to people who can't repay them! The New York Times reported that Fannie Mae and Freddie Mac were "under heavy assault by the Republicans," but these entities still had "important political allies" in the Democrats.

Now, at a cost of hundreds of billions of dollars, middle-class taxpayers are going to be forced to bail out the Democrats' two most important constituent groups: rich Wall Street bankers and welfare recipients.

Political correctness had already ruined education, sports, science and entertainment. But it took a Democratic president with a Democratic congress for political correctness to wreck the financial industry.

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Coulter? You're latching onto another of her poison-penned pieces of tripe? She's a biased bitch with no real credentials except a healthy bank account supported by fans who would believe anything she says that is negative toward Dems. Now I begin to understand why your views are so distorted; you're a devout fan of the Bush/Coulter mindset.

Gramps

"you're a devout fan of the Bush/Coulter mindset."

you are a devout fan ....

of the Obama/Moore/Soros/Ayers/Wright­/Al-Mansour/etc., etc., mindset....enemies of America ALL.

Thanks but no thanks. I'll pick Bush/Palin/McCain/and Coulter over your guys ANY damned day of the week!

JUST_IN_CASE:

Coulter? You're latching onto another of her poison-penned pieces of tripe? She's a biased bitch with no real credentials except a healthy bank account supported by fans who would believe anything she says that is negative toward Dems. Now I begin to understand why your views are so distorted; you're a devout fan of the Bush/Coulter mindset.

Gramps

Hell, she might be all of that and more.

So? Either her stated facts are correct or they are not.

Last time I checked, truth was truth and lie was lie and the determination didn't rely on who was doing the telling...

I dislike Coulter,but all you have to do is watch the hearings and watch Waxman dance around the Fannie,Freddie mess.

Chris Shay called him on it,as to why he was not including that in his hearings.Waxman's answer was to cut Shay off.

Shay has always been one of the good Republicans.

MAnn Coulter's ramblings notwithstanding, it's hard to see how anything from the Clinton era can be the cause of what's happening now. As I showed in an earlier post, even if you'd over-extended to buy a no-money-down house back at the end of the Clinton era, you would either have defaulted years ago (in which case you're not contributing to the current crisis), or you would have held on and accumulated so much equity between then and now that you're not at much risk of defaulting (in which case you're not contributing to the current crisis). Those defaulting on houses they bought in the Clinton era are doing so due to events post-dating those purchases (like cash-out refinances or job losses in the miserable Bush economy).

Just as an example, say you were a minority who bought a $100,000 home back in October 2000 (a working class home, at about 75% of that era's median price), and let's say that, thanks to Clintonian pressure, you were able to do so with no money down. Today you'd owe about $89,490 on that house (based on fixed 7% interest). Thanks to appreciation, you'd have 40% equity, meaning you could refinance today at a good interest rate. That (and pushing off final payment by eight years) would drop your monthly payment by about a quarter, to about $528 per month. So, even if you were having trouble paying, in all honesty, do you think you'd be defaulting on that loan, when it costs you less than a halfway decent apartment would cost you?

In Coulter's fevered imagination, that's who she must think is causing the sub-prime mess, if she thinks its causes are in the Clinton administration. But that's simply not the case. This wasn't triggered by some minorities who bought no-money-down houses back in 2000 and before. It was triggered by the events of the last eight years. It was the orgy of mortgage securitization, the introduction of liar loans and gimmick loans, the rise of adjustable rate mortgages, the rampant speculation fueled by rock-bottom interest rates, and the non-stop churning that encouraged people to pull as much equity out of their houses to feed their consumption habits as they could. And it was the rise of the poverty rate and fall of middle class incomes on Bush's watch, which left people less able to make ends meet.

Start taking a look at real live cases of people defaulting on their mortgage obligations. I'd wager that in the vast majority of cases you'll find a trigger somewhere in the last seven years. These aren't folks who bought back in the Clinton era and only now have run into trouble. They're people who bought during the Bush era of speculation fever, or who pulled equity out of their houses during this era, or changed over to some weird gimmick loan (like time-bomb interest-only loans) during the last several years. Those financial excesses occurred at a time when Bush was minding the store (or failing to do so). The go-to move of the conservatives, to blame Clinton for everything, just doesn't pass the laugh test here.

Fair enough. One way or the other, it seems clear to me that the current crisis has roots in the last nearly eight years, not in the Clinton era. The proof is pretty simple.

In Clinton's last year, a median house cost $139,000:

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Today, it costs about $206,500, after the freefall.

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So, even if somehow you got some crazy-ass interest-only, no-money-down loan back in 2000, and haven't paid so much as a dime of principal in all that time, today you'd have about 33% equity! Even in this tight credit market, you'd have no trouble refinancing at a decent rate with 33% equity. And even if you were so perverse that you still preferred to default on the loan rather than refinancing, whoever holds your mortgage could auction off your house for only 2/3 its fair value and STILL manage to recoup what they loaned you.

Clearly, houses with enormous amounts of equity aren't what's causing the problem in today's market, so, just as clearly, the problem didn't originate in 2000 or before. The houses that are causing the problem today are those without much, if any, equity -- the houses people can't refinance and that the bank can't recoup theirs loan on when the houses are auctioned off. Those are houses that were either bought during the Bush era or that were refinanced during the Bush era. It's simple math and common sense. The behavior that caused the current problem happened when Bush and the Republican Congress had the power to regulate the market.

Congress ignored Bush's warnings about Fannie and Freddie.

You're very short sighted. Clinton didn't ignore them, he refused to accept them because his goal was a "house for everyone", no matter if they deserved, could afford or what, just get them a loan and into a home.

LOL - Kiss his ass in one thread, down him in another. You're a hoot!

Arkady,the beginning of the sub prime mess started with Fannie and Freddie. Barney Frank ,Maxine Walters and many others fought regulation with a venegence.

I was like you,Thinking it was mostly republicans,but not this time.There are times I wish I could not see all the corruption the democrats have brought with their welfare and yes, face it,Class warfare.

My first notice was when I watched people work like dogs to support their families and being turned down for any help ,while others sat and collected more than the workers.

I was pleased that Clinton and Gingrich reformed welfare. This subprime mess is just more of the same.They were pushed by Dems to give mortgages to anyone,whether they could afford it or not. Then greed took over and all got on the bandwagon.Both sides,the borrowers and lenders.

Have you independently researched the legislative history of efforts to regulate Fannie and Freddie? Or are you just taking Republican propaganda as a matter of faith?

If you look into it, you'll see that the Democrats and Republicans agreed on tightening regulations on Fannie and Freddie. In 2005, they came close to doing so. But, if you research this independently you'll also see that the Democrats were concerned that tightening those markets would make it harder for Fannie and Freddie to perform their mission of making housing affordable for everyday Americans. So, the Democrats wanted to couple the new regulations with a tax on Fannie and Freddie's profits, to fund an affordable-housing program. The House Republicans agreed to that compromise solution. The SENATE REPUBLICANS, on the other hand, preferred to see the legislation go down in flames rather than tax Fannie and Freddie more to ensure housing remained affordable for working Americans.

Mary Anne, I urge you to stop swallowing Republican propaganda whole. You know better than that. All I ask is that you do your own research. If you do, you'll see the truth.

Arkady,I seldom post off the top of my head.I have the time to read,study and see what really happened.

I do wish you could catch some of these hearings.They remind me of a cat covering it's on mess and frankly,are not even trying to hide it.Waxman is a disgrace and so is Barney Frank. They are in this so deep there is no way we can clean up the mess without cleaning house.

You keep referring to me swallowing Republican TP's .Let me assure you I have voted and I did not, vote republican!

Arkady:

Fair enough. One way or the other, it seems clear to me that the current crisis has roots in the last nearly eight years, not in the Clinton era. The proof is pretty simple.

In Clinton's last year, a median house cost $139,000:

<link>

Today, it costs about $206,500, after the freefall.

<link>

So, even if somehow you got some crazy-ass interest-only, no-money-down loan back in 2000, and haven't paid so much as a dime of principal in all that time, today you'd have about 33% equity! Even in this tight credit market, you'd have no trouble refinancing at a decent rate with 33% equity. And even if you were so perverse that you still preferred to default on the loan rather than refinancing, whoever holds your mortgage could auction off your house for only 2/3 its fair value and STILL manage to recoup what they loaned you.

Clearly, houses with enormous amounts of equity aren't what's causing the problem in today's market, so, just as clearly, the problem didn't originate in 2000 or before. The houses that are causing the problem today are those without much, if any, equity -- the houses people can't refinance and that the bank can't recoup theirs loan on when the houses are auctioned off. Those are houses that were either bought during the Bush era or that were refinanced during the Bush era. It's simple math and common sense. The behavior that caused the current problem happened when Bush and the Republican Congress had the power to regulate the market.

This is an incredible exercise in faulty logic. Of course houses with equity aren't the problem per se, but HOW that equity was created is.

What you fail to consider is the REASON that homes appreciated so fast, which was because at the behest of the Gov't, everybody and his dog could get a loan and buy one, causing a housing shortage. When demand goes up without an equivalent supply increase, prices go up. Not even the most addled economist will argue that.

The equity that was created was a result of demand, not inherent value, and the demand was a result of loose lending policies, and the loose lending policies started well before the previous 8 years.

...off his love-wagon for Bill Clinton and the Democrats. He is thoroughly, irreversibly brainwashed. The term I use for his ilk is "resolutely ignorant", meaning that they cling to their close-minded beliefs no matter how overwhelming the evidence is to the contrary. THEIR truth is the only truth, and don't attempt to introduce facts into the picture.

They certainly are to be pitied.

Arkady may be the way I used to be.I thought Democrats were the best of the two parties. They were supposed to be for the middle class. Along the way they have ignored and cheated the middle class.

That does not mean I think Republicans are better.That is also why I became an Independent. When your party ignores you it is time to leave.Turn out the lights.

Arkady is younger than I am. He still has dreams of what he thinks may happen.

I have reality staring me in the face and it is not good.