Government held 71% of risky sub-prime mortgages in 2008. The GOP wants Obama re-elected so don't expect them to do what's needed to save this country.
.
10/20/11, "Wall Street Did It?" Investors Bus. Daily
"Meltdown: If Republicans are to take back the White House and Senate, they need to do a better job tying Democrats and Washington to the subprime crisis. It's not hard, yet even their front-runner
- struggles to make the case.
On Wednesday night, CNN host Piers Morgan guilted Cain into allowing that banks were, as Morgan put it, "effectively preying on the most vulnerable elements of American society," and that Wall Street deserves at least partial blame for the crisis and should be held to account. "I wouldn't defend the banks," Cain said, "because I happen to think that the banks are part of the problem. Wall Street is."
Cain belatedly also faulted Fannie and Freddie, and the Democrats in Washington who protected them. Piers then pressed him to come up with a pie chart alloting blame — Washington vs. Wall Street—and Cain assigned neither a majority responsibility for the mess.
But based on the number of toxic loans in the system in 2008, the government was responsible for not just a simple majority, but more than two-thirds. It's quantifiable — 71% to be exact (see chart). And the remaining 29% of private-label junk was mostly attributable to Countrywide Financial, which was under the heel of HUD and its "fair-lending" edicts.
To be fair, the blame-Wall Street narrative has cemented in the public consciousness, and is hard to crack. That's because in the wake of the crisis, the Obama White House and Pelosi-Reid Congress engineered a cover-up of Washington's role in the mess through the Democrat-led Financial Crisis Inquiry Commission. The national media now defer to it as the final authority on what caused the crisis and ensuing recession.
"The FCIC's report put the majority of the blame squarely where it belonged: on the shoulders of the Wall Street executives," Bloomberg News opined.
While not blameless, Wall Street is an easy scapegoat. And investment houses that made billions slicing and dicing mortgages into CDOs, derivatives, credit default swaps and other exotic paper are easy to demonize. But the problem wasn't these financial instruments. Or even the obscene profits they generated. Mortgage-backed securities were nothing new, and we've always had speculation in the market.
The problem was the underlying assets: low-quality mortgages. We've never had so many junk home-loans poisoning the financial well before. And who poisoned the well?
- Washington and its affordable-housing policies.
It was Washington that declared prudent home-lending standards racist and gutted traditional underwriting rules in the name of diversity. It was government that created the risk on Main Street. Yes, Wall Street spread it, with the help of Treasury-backed Fannie and Freddie. But who's at greater fault for harming the village — the person who poisons the well or the one who distributes the water?
The biggest applause line in the Las Vegas debate came when Cain told the growing throngs of jobless protesters their anger was misplaced. They should be marching on Pennsylvania Avenue, he said, not Wall Street. But that's not enough. Republicans have to lay out the facts
- that Democrats have swept under the rug.
The historical record is clear, the evidence overwhelming, if only someone would litigate the case on the national stage. While GOP leaders dither, the Democratic National Committee has launched a coordinated attack with the Obama re-election campaign to link GOP candidates closer to Wall Street and the crisis.
By criminalizing Wall Street, they hope to sour voters to their biggest defender. Polls show the strategy is starting to work. Time to fight fire with fire."
-----------------
It's said Mr. Cain is just a placeholder for Romney his good friend so won't fight too hard. Perhaps Cain will be his VP. In any case, the GOP establishment has made sure we have weak candidates. ed.
via Big Government, chart E. Pinto, former head of FannieMae, headline 'Occupy Fannie Mae' from Publius
No comments:
Post a Comment