We are now able to see that from the very beginning of the Obama administration, the Republican Party has again and again demonstrated that they were completely right and Democrats were completely wrong. Whether you look at the stimulus, cap-and-trade, bogus climate change claims, health care, or terrorism, Americans now solidly agree that Republicans were represent the people; and that Democrats do NOT represent the people.
Right now, a solid plurality of Americans thinks the stimulus (that 99% of Republicans voted against) harmed the economy. And the people are starting to realize what an ideological partisan slush fund the stimulus was (also predicted by Republicans).
When Obama was elected, unemployment was at 6.6%. He promised that his stimulus would prevent unemployment from reaching 8%. And now it’s at 10%, and it’s going to get higher.
Obama demagogued Bush’s spending. But Bush deficits -bad as they were – were only 2-3% of GDP. Obama’s deficits are 12.8% of GDP – which is five to six times higher.
Now that your eyes are finally beginning to open wide and see Obama and the Democrats for who and what they truly are, let me point out a few things about the past collapse.
What Americans – and particularly Americans who actually vote – need to realize is that Democrats were trying to do this kind of crap and play these kind of games all along. They were trying to do it throughout the Bush years, when George Bush tried 17 times to regulate the out of control and Fannie-Mac-and-Freddie-Mae-dominated housing mortgage markets – and Democrats thwarted him over and over again.
Why do I mention the Government Supported Enterprises (GSEs) Fannie Mae and Freddie Mac? Because they were at the very heart of the mortgage meltdown.
The LA Times writes on May 31, 1999 that:
Lenders also have opened the door wider to minorities because of new initiatives at Fannie Mae and Freddie Mac–the giant federally chartered corporations that play critical, if obscure, roles in the home finance system. Fannie Mae and Freddie Mac buy mortgages from lenders and bundle them into securities; that provides lenders the funds to lend more. . . .
LaVaughn M. Henry, Ph.D. Director, U.S. Economic Analysis The PMI Group, Inc. December 9, 2008, pointed out:
The Role of the GSEs is to provide liquidity and stability to the U.S. housing and mortgage markets. Step 1 Banks lend money to Households to purchase and refinance home mortgages Step 2 The GSEs purchase these mortgage from the banks Step 3 GSEs bundle the mortgages into mortgage-backed securities Step 4 GSEs sell mortgage-backed and debt securities to domestic and international capital investors Step 5 Investors pay GSEs for purchase of debt and securities Step 6 GSEs return funds to banks to lend out again for the issuance of new mortgage loans.
It was steps 3-5 that messed us up. Fannie and Freddie bought mortgages – including many mortgages that poor and minority homeowners couldn’t begin to afford under the mandate of the Community Reinvestment Act – bundled them such that no one could assess their risk, and then sold them to private companies such as Bear Stearns and Lehman Brothers. Fannie and Freddie were exempt from SEC [Securities and Exchange Commission] regulations. The GSEs could bundle up mortgages, which would then be rated AAA, with no requirement to make clear what was in the bundle. Private companies believed that the bundled securities were guaranteed, since they were essentially being sold by the federal government.
But there were many who predicted that this system – created and maintained by Democrats – could explode.
From the New York Times in September 30, 1999:
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.“
”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.” . . .
And that is precisely what happened. There was a downturn (and there will ALWAYS be downturns, won’t there?), and Fannie and Freddie were so leveraged that they collapsed and caused the collapse of the entire industry. Financial experts anxiously pointed out that a decline of only 1.3% would bankrupt Fannie and Freddie because they were leveraged to the tune of 60%? to 78%.
Democrats were the priests and acolytes of the GSE system. They protected it, and they were the ones who pressed all the buttons and pulled all the levers.
Keven Hasset concludes an article titled, “How the Democrats Created the Financial Crisis“, concludes by saying:
Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.
Watch this video showing how Goerge Bush and John McCain repeatedly warned of the economic collapse (length=4 min):
Watch this video of Democrats protecting and covering for Fannie Mae (length=8 min):
Here’s a video entitled “Burning Down the House: What Caused Our Economic Crisis?” (length=11 min)
And then we find that Barack Obama was in bed with Fannie and Freddie and their shockingly risky policies:
Who really exploded the economy in 2008, liberals or conservatives? Who do you think? The liberal mainstream media allowed Democrats to blame George Bush simply because he was president at the time, never mentioning that the Democrats who controlled both the House and the Senate relentlessly opposed everything Bush tried to do; and it allowed Democrats to not have to account for the fact that they’d been in complete control of both the House and the Senate. But remember that the economy went from outstanding to collapsed during the two years (2006-2008) that the Congress was under Nancy Pelosi and Harry Reid. The unemployment rate was 4.4% when Republicans last ran Congress. What is it now, three years of Nancy Pelosi and Harry Reid later?
Few people understand how huge Fannie and Freddie are, or how deeply burrowed they are in the mortgage industry. But let me put it to you this way: the federal government now underwrites 9 out of 10 residential mortgages.
I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
But he was ignored.
When George Bush first tried to regulate an already out-of-control liberal bastion of Fannie and Freddie, Barney Frank led the united Democrat opposition and said:
”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
And just before Fannie and Freddie collapsed and brought down the entire housing mortgage industry with it creating the economic meltdown, Barney Frank – continuing to stop any regulation of Fannie and Freddie – said this:
REP. BARNEY FRANK, D-MASS.: I think this is a case where Fannie and Freddie are fundamentally sound, that they are not in danger of going under. They’re not the best investments these days from the long-term standpoint going back. I think they are in good shape going forward.
Fannie Mae and Freddie Mac went completely bankrupt, and had to be bailed out by the government. It had been Fannie and Freddie which had the sole authority to buy mortgages, bundle them into the mortgage-backed securities which ultimately exploded, and sell those securities to private companies (as I have already shown). Just as it was Fannie and Freddie which had been the seller of subprime loans.
Democrats demonized and demagogued Republicans by blaming them for a mess that DEMOCRATS created. And Republicans were to blame primarily because they didn’t do enough to stand up and courageously oppose the disaster that Democrats had created
A couple weeks ago the New York Times reported that Fannie and Freddie would get a whopping $800 billion to cover losses incurred under the Obama administration (and see another article on this $800 billion fiasco here):
Fannie Mae and Freddie Mac, which buy and resell mortgages, have used $112 billion — including $15 billion for Fannie in November — of a total $400 billion pledge from the Treasury. Now, according to people close to the talks, officials are discussing the possibility of increasing that commitment, possibly to $400 billion for each company, by year-end, after which the Treasury would need Congressional approval to extend it. Company and government officials declined to comment.
But it turned out that that was wrong. Fannie Mae and Freddie Mac weren’t going to get $800 billion. That won’t be nearly enough. They are going to get an unlimited amount of funding (potentially in the trillions):
A Newsbuster article, entitled, “Relief Without Limits,” provides an excellent resource of facts and commentary on this incredible and terrifying development.
Remember the righteous outrage of Democrats and the Obama administration over the compensation of CEOs of private banks? The Democrats don’t seem to mind when Fannie and Freddie execs get huge compensation packages.
The monster rises yet again, and larger and uglier and more dangerous than it has ever been before. And just like the first time it collapsed, Democrats are in total control of it. Fannie and Freddie stock went up significantly as the news was announced. Watch it dwindle back to zero by the end of 2010.
And even uber-liberal sources like the Huffington Post are acknowledging that Obama’s policies have utterly failed:
Anatomy of a Failed Foreclosure Program (dated 12-07-09)
Just how badly is President Obama’s $75 billion foreclosure program working out? Consider these newly-released numbers: Out of every 100 homeowners who came to JPMorgan Chase for help under the program, just 15 have or will likely receive a permanent payment reduction.
What happened to the other 85? For every 100 trial plans initiated from April through September 2009 under the Home Affordable Modification Program:
- 29 borrowers did not make all required payments under their trial plan;
- 20 borrowers did not submit all documents required for underwriting;
- 31 borrowers submitted all required documents but the documents did not meet HAMP underwriting standards, due to such things as missing signatures or nonstandard formats;
- 4 borrowers were or are likely to be rejected for undisclosed reasons;
- 1 borrower will not or is not likely to get their payment lowered.
The data comes from the prepared remarks bank officials plan to make Tuesday before the House Financial Services Committee. The testimony was posted Monday on the committee’s website.
It adds up to a brutal illustration of just how the HAMP program, which is supposed to reduce troubled homeowners’ monthly payments to 31 percent of their income, is failing.
Failing. As in “failing grade.” As in failed Obama presidency.
You still don’t know the half of it. Obama’s $75 billion mortgage modification bailout is costing taxpayers an average of $870,967 PER HOUSE when the average house is worth only $177,900.
Famed analyst Meredith Whitney predicted that unemployment would rise to 13% or higher primarily due to the failure to contain the failure to deal with the mortgage industry:
Unemployment is likely to rise to 13 percent or higher and will weigh on the economy for several years, countering government efforts to stabilize the banking industry, analyst Meredith Whitney told CNBC. […]
“We underestimate how much the whole economy is dependent on the mortgage industry, and that has to change,” Whitney said. “This is what happens when you delay the inevitable. We’re buying time here, but we’re not restructuring the economy.”
Under the radar, and against the objections of Republicans that was primarily covered only by C-SPAN, Democrats implemented and then fiercely protected policies that were almost guaranteed to doom our economy. When the meltdown finally occurred, the same Democrats who created the black hole in the first place flooded the airwaves and blamed George Bush – whom they had already vilified and brought down through unrelenting attacks using the Iraq War as their main foil.
The propaganda worked, and Barack Hussein Obama – a politician who is more beholden to corrupt and frankly un-American entities like Fannie Mae and Freddie Mac, ACORN, and the SEIU than any president in history.
And now we’re truly paying for our stupidity.
Obama is taking the same policies that imploded our economy, and multiplied them by a factor of ten. It’s only a matter of time before his policies create a rotten floor for our economy to plunge through all over again — only this time far, far worse than before.
Someone might say, “But look, Obama is rebuilding the economy. He’s brought back the stock market, and things are getting better.”
First of all, they really aren’t getting better, and the Dow can drop a lot faster than it can rise (history lesson: there were several rises and crashes of the stock market during the Great Depression). And second of all, if you loan me a few billion dollars to spread around, I can temporarily bring up the production of my local economy, too.
Just don’t expect either me or Barack Hussein to repay the loan when it comes due.
Obama has been compared – and has compared himself – to FDR. We now know that for all of FDR’s popularity, his “reforms” during the Great Depression were massive failures which actually kept the United States in depression for seven years longer than if he’d done nothing at all.
Henry Morganthau, FDR’s Treasury Secretary, said in May 1939, after nearly seven years in office:
“We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong… somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises… I say after eight years of this Administration we have just as much unemployment as when we started… And an enormous debt to boot!”
In believing the propaganda and lies of the Democrats and Barack Obama, Americans may have well placed the nation in a hole that it very may well not be able to climb out of.