Private sector loans, not Fannie or Freddie, triggered crisis

Private sector loans, not Fannie or Freddie, triggered crisis
As the economy worsens and Election Day approaches, a conservative campaign that blames the global financial crisis on a government push to make housing more affordable to lower-class Americans has taken off on talk radio and e-mail.

Commentators say that’s what triggered the stock market meltdown and the freeze on credit. They’ve specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie’s and Freddie’s financial problems.

Federal housing data reveal that the charges aren’t true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height vrom 2004 to 2006.

Federal Reserve Board data show that:

_ More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

_ Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

_ Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that’s being lambasted by conservative critics.

The “turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007,” the President’s Working Group on Financial Markets reported Friday.

Conservative critics claim that the Clinton administration pushed Fannie Mae and Freddie Mac to make home ownership more available to riskier borrowers with little concern for their ability to pay the mortgages.

“I don’t remember a clarion call that said Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster,” said Neil Cavuto of Fox News.

Fannie, the Federal National Mortgage Association, and Freddie, the Federal Home Loan Mortgage Corp., don’t lend money, to minorities or anyone else, however. They purchase loans from the private lenders who actually underwrite the loans.

It’s a process called securitization, and by passing on the loans, banks have more capital on hand so they can lend even more.

This much is true. In an effort to promote affordable home ownership for minorities and rural whites, the Department of Housing and Urban Development set targets for Fannie and Freddie in 1992 to purchase low-income loans for sale into the secondary market that eventually reached this number: 52 percent of loans given to low-to moderate-income families.

To be sure, encouraging lower-income Americans to become homeowners gave unsophisticated borrowers and unscrupulous lenders and mortgage brokers more chances to turn dreams of homeownership in nightmares.

But these loans, and those to low- and moderate-income families represent a small portion of overall lending. And at the height of the housing boom in 2005 and 2006, Republicans and their party’s standard bearer, President Bush, didn’t criticize any sort of lending, frequently boasting that they were presiding over the highest-ever rates of U.S. homeownership.

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

"More and more people own their homes in America today. Two-thirds of all Americans own their homes, yet we have a problem here in America because few than half of the Hispanics and half the African Americans own the home. That's a home ownership gap. It's a -- it's a gap that we've got to work together to close for the good of our country, for the sake of a more hopeful future. We've got to work to knock down the barriers that have created a home ownership gap.

I set an ambitious goal. It's one that I believe we can achieve. It's a clear goal, that by the end of this decade we'll increase the number of minority homeowners by at least 5.5 million families . . .

Home ownership is also an important part of our economic vitality. If -- when we meet this project, this goal, according to our Secretary of Housing and Urban Development, we will have added an additional $256 billion to the economy by encouraging 5.5 million new home owners in America; the activity -- the economic activity stimulated with the additional purchasers, the additional buyers, the additional demand will be upwards of $256 billion. And that's important because it will help people find work."

- George W. Bush, U.S. President, October 15, 2002 1:55 P.M.

The media's pro-McCain double standard

The media's enduring pro-McCain double standard
Let's start with Bill Ayers, since the news media have spent much of the week obliging McCain's efforts to make him the focus of the campaign. As an activist in the 1960s -- when Barack Obama was a young child -- Bill Ayers was a member of the Weathermen, a group of radical activists who launched a series of violent demonstrations and bombings in protest of the Vietnam War. Ayers is now a professor at the University of Illinois in Chicago and a school reform advocate. During Obama's first campaign, Ayers hosted a coffee for him, and the two men have served together on the board of a school reform effort funded by a foundation chaired by Leonore Annenberg, who has endorsed John McCain. The New York Times concluded that Obama and Ayers "do not appear to have been close," and Obama has denounced Ayers' actions as a member of the Weathermen.

A search* of the Nexis database found that more than 4,500 news reports so far this year have mentioned Obama and Ayers -- more than 1,800 this week alone.

Now: G. Gordon Liddy. Liddy served four and a half years in prison for his role in the break-ins at the Watergate and at Daniel Ellsberg's psychologist's office. He has acknowledged preparing to kill someone during the Ellsberg break-in "if necessary." He plotted to kill journalist Jack Anderson. He plotted with a "gangland figure" to murder Howard Hunt in order to thwart an investigation. He plotted to firebomb the Brookings Institution. He used Nazi terminology to outline a plan to kidnap "leftist guerillas" at the 1972 GOP convention. And Liddy's bad acts were not confined to the early 1970s. In the 1990s, he instructed his radio audience on how to shoot Bureau of Alcohol, Tobacco, and Firearms agents ("Go for a head shot; they're going to be wearing bulletproof vests." In case anyone missed the subtlety of his point, Liddy also insisted: "Kill the sons of bitches.") During Bill Clinton's presidency, Liddy boasted that he named his shooting targets after the Clintons.

What does Liddy have to do with the presidential election? As Media Matters has noted:

Liddy has donated $5,000 to McCain's campaigns since 1998, including $1,000 in February 2008. In addition, McCain has appeared on Liddy's radio show during the presidential campaign, including as recently as May. An online video labeled, "John McCain On The G. Gordon Liddy Show 11/8/07," includes a discussion between Liddy and McCain, whom Liddy described as an "old friend." During the segment, McCain praised Liddy's "adherence to the principles and philosophies that keep our nation great," said he was "proud" of Liddy, and said that "it's always a pleasure for me to come on your program."

New Evidence Shows Bush Had No Plan to Catch bin Laden After 9/11

New Evidence Shows Bush Had No Plan to Catch bin Laden After 9/11
New evidence from former U.S. officials reveals that the George W. Bush administration failed to adopt any plan to block the retreat of Osama bin Laden and other al Qaeda leaders from Afghanistan to Pakistan in the first weeks after 9/11.

That failure was directly related to the fact that top administration officials gave priority to planning for war with Iraq over military action against al Qaeda in Afghanistan.

As a result, the United States had far too few troops and strategic airlift capacity in the area to cover the large number of possible exit routes through the border area when bin Laden escaped in late 2001.

Because it had not been directed to plan for that contingency, the U.S. military had to turn down an offer by Pakistani President Pervez Musharraf in late November 2001 to send 60,000 troops to the border passes to intercept him, according to accounts provided by former U.S. officials involved in the issue.

On Nov. 12, 2001, as Northern Alliance troops were marching on Kabul with little resistance, the CIA had intelligence that bin Laden was headed for a cave complex in the Tora Bora mountains close to the Pakistani border.

The war had ended much more quickly than expected only days earlier. CENTCOM commander Tommy Franks, who was responsible for the war in Afghanistan, had no forces in position to block bin Laden's exit.

Franks asked Lt. Gen. Paul T. Mikolashek, commander of Army Central Command (ARCENT), whether his command could provide a blocking force between al Qaeda and the Pakistani border, according to David W. Lamm, who was then commander of ARCENT Kuwait.

Lamm, a retired Army colonel, recalled in an interview that there was no way to fulfill the CENTCOM commander's request, because ARCENT had neither the troops nor the strategic lift in Kuwait required to put such a force in place. "You looked at that request, and you just shook your head," recalled Lamm, now chief of staff of the Near East South Asia Center for Strategic Studies at the National Defense University.

Franks apparently already realized that he would need Pakistani help in blocking the al Qaeda exit from Tora Bora. Secretary of Defense Donald Rumsfeld told a National Security Council meeting that Franks "wants the (Pakistanis) to close the transit points between Afghanistan and Pakistan to seal what's going in and out," according to the National Security Council meeting transcript in Bob Woodward's book Bush at War.

Bush responded that they would need to "press Musharraf to do that."

A few days later, Franks made an unannounced trip to Islamabad to ask Musharraf to deploy troops along the Pakistan-Afghan border near Tora Bora.

A deputy to Franks, Lt. Gen. Mike DeLong, later claimed that Musharraf had refused Franks' request for regular Pakistani troops to be repositioned from the north to the border near the Tora Bora area. DeLong wrote in his 2004 book Inside Centcom that Musharraf had said he "couldn't do that" because it would spark a "civil war" with a hostile tribal population.

But U.S. Ambassador Wendy Chamberlin, who accompanied Franks to the meeting with Musharraf, provided an account of the meeting to this writer that contradicts DeLong's claim.

Chamberlin, now president of the Middle East Institute in Washington, recalled that the Pakistani president told Franks that CENTCOM had vastly underestimated what was required to block bin Laden's exit from Afghanistan. Musharraf said, "Look, you are missing the point: There are 150 valleys through which al Qaeda are going to stream into Pakistan," according to Chamberlin.

Although Musharraf admitted that the Pakistani government had never exercised control over the border area, the former diplomat recalled, he said this was "a good time to begin." The Pakistani president offered to redeploy 60,000 troops to the area from the border with India but said his army would need airlift assistance from the United States to carry out the redeployment.

But the Pakistani redeployment never happened, according to Lamm, because it wasn't logistically feasible. Lamm recalled that it would have required an entire aviation brigade, including hundreds of helicopters, and hundreds of support troops to deliver that many combat troops to the border region -- far more than were available.

Palin and McCain Purveyors of Modern Fascism

Palin and McCain Purveyors of Modern Fascism

Listening to a Sarah Palin rally is like visiting a museum exhibit of every empty, trite, manipulative right-wing political slogan from the last three decades. Today, an anti-war heckler interrupted her speech in Florida and this is how she responded, to cheers from right-wing throngs both at the rally and around the nation:

Bless your heart sir, my son is in Iraq fighting for your right to protest.

Right, because if Saddam Hussein had remained in power in Iraq -- or if we were no longer occupying the country -- then the U.S. would have been invaded by the Iraqi Army by now and we'd be living under the tyrannical rule of Ace of Clubs Qusay and Ace of Hearts Uday (and Five of Hearts Dr. Germ and cardless Mrs. Anthrax) and they would have abolished our First Amendment rights of speech and assembly. So that's exactly what the U.S. military is doing in Iraq: "fighting for our right to protest." And those who oppose that war, therefore, are unwilling to Fight for Our Freedoms. And Freedom is on the March.

That may be the motive driving many, perhaps most, citizens who join the military. But even under the most romanticized vision, whatever it is that we're doing in Iraq, fighting for our "right to protest" quite plainly isn't it.

And then there is the painfully immature sanctimony over Obama's argument last year that we need more ground troops in Afghanistan "so that we're not just air-raiding villages and killing civilians, which is causing enormous pressure over there." A new McCain/Palin ad all but calls Obama a traitor for that statement ("dishonorable"), and Palin has been sneeringly implying in every speech that this shows that Obama hates both the military and America.

For one thing, Obama's statement happens to be true. We have killed large numbers of civilians with air raids and that has -- rather unsurprisingly -- made both the Afghan population and the Afghan government increasingly angry with the U.S. (that tends to happen when you bomb countries and kill innocent people). It's for that reason that the British Ambassador to Afghanistan said just this week that "the presence -- especially the military presence -- of the coalition is part of the problem, not the solution." To demand -- based on some warped appeal to patriotism -- that this reality be ignored is just imbecilic, and is precisely the sort of see-no-evil mentality that led the Bush administration to spend all of 2003, 2004, 2005 and 2006 telling everyone how great things were going in Iraq and depicting anyone who suggested otherwise as being a Friend of the Terrorist.

And then there's the fact that John McCain, with regard to the war in Kosovo, made the same argument that Sarah Palin is currently depicting as anti-military and anti-American: namely, that reliance on an air campaign rather than ground forces is resulting in the immoral and unnecessary deaths of civilians:

John McCain in 2000 said because of tactical decisions U.S. troops were put in the position of killing civilians in Kosovo -- something awfully similar to the comments he's now attacking Barack Obama for.

During a Republican primary debate in 2000 McCain called the Clinton strategy in Kosovo "obscene" because it forced troops into using tactics that meant civilians were going to get killed.

"In the most obscene chapter in recent American history is the conduct of the Kosovo conflict when the president of the United States refused to prepare for ground operations, refused to have air power used effectively because he wanted them flying -- he had them flying at 15,000 feet where they killed innocent civilians because they were dropping bombs from such -- in high altitude."

McCain was right about that, and Obama is right about what's happening in Afghanistan. The fact that McCain is producing ads and sending out Palin to accuse Obama of being a treasonous America-hater and military-hater for making comments identical to McCain's remarks about Kosovo tell you all you need to know about McCain.

Identically, the fact that Sarah Palin's husband -- for years -- belonged to, and Palin herself praised and embraced, an explicitly anti-American political party whose leader swore his hatred for the U.S. Government -- all the while she attacks Obama on a daily basis for supposedly "anti-American associations" -- tells you all you need to know about her and our press corps for allowing her to get away with that:



As Salon's David Talbot writes in his very well-reported piece today on the relationship between the Palins and this secessionist party:

Imagine the uproar if Michelle Obama was revealed to have joined a black nationalist party whose founder preached armed secession from the United States and who enlisted the government of Iran in his cause? The Obama campaign would probably not have survived such an explosive revelation. Particularly if Barack Obama himself was videotaped giving the anti-American secessionists his wholehearted support just months ago.

The face that the McCain/Palin campaign is showing now has one significant benefit: it's a vivid reminder of who has left the country in the state it's in, the way they've done that, and why it is so urgent that, in four weeks, they not just be defeated, but crushed and rendered powerless for a long time.

* * * * *


UPDATE: Enjoy the bittersweet odor of irrational panic and desperation:

John McCain faces the "crisis of his career," says former House Speak Newt Gingrich, who predicted the Republican nominee will lose the election unless he makes a public break from the economic bailout proposal.

In a column posted on the Web site of the conservative Human Events Tuesday, Gingrich says it is impossible for McCain to catch up in the national or state polls unless he taps into the anger many Americans feel toward the $700 billion bailout of Wall Street investment banks.

"If Senator McCain is not prepared to separate himself from the Bush-Paulson economic program, he has no opportunity to win," Gingrich writes. . . .

Gingrich is the latest prominent conservative to criticize McCain for supporting the bill, which Congress passed last week. Speaking on CNN last week, radio host Glenn Beck said the Arizona senator will lose the election over the vote: I think he lost the election — there was a moment here for somebody here to rise up as a leader," Beck said.

What Gingrich said might literally be the worst advice ever. Just two weeks ago, McCain created that whole melodrama of how he was suspending his campaign and skipping the debate in order to make the bailout happen. Then he voted in favor of the bailout. Now, a week later, he's supposed to base his whole campaign on railing against the evils of the bailout? Doing that would more likely result in McCain's being institutionalized than elected. But that's what desperation and panic create -- that, and the type of venom Sarah Palin is spewing to Munich beer hall crowds.

McCain Lobbyist Has Terrorist Ties

McCain Lobbyist Has Terrorist Ties
McCain campaign chairman Charlie Black has lobbied for corrupt dictators, despots, and corporations accused of mass murder over the course of a lobbying career that has spanned more than 30 years and seen Black pass through K St.’s revolving door to Republican presidential campaigns seven times. Black lobbied for US aid on behalf of foreign regimes notorious for human rights abuses, including Philippine President Ferdinand Marcos, Nigeria General Ibrahim Babangida, Somali President Mohamed Siad Barre, and Mobutu Sese Seko of Zaire, whose government was cited in a congressional report as guilty of numerous “incidents of banishment, torture and detention without charge or trial.” Black earned more than $1.8 million lobbying for Occidental Petroleum, accused of complicity in mass murder in Colombia. Not only has Black assisted regimes and corporations that commit crimes against citizens of other nations, Black has lobbied for foreign companies linked to Iran, putting business interests ahead of America’s security.

McCain health plan 'radical'

McCain health plan 'radical'
“What John McCain doesn’t tell you is that his plan calls for massive deregulation of the insurance industry that would leave families without the basic protections you rely on,” Obama says.

“So here’s John McCain’s radical plan in a nutshell: He taxes health care benefits for the first time in history; millions lose the health care they have; millions pay more for the health care they get; drug and insurance companies continue to profit; and middle-class families watch the system they rely on begin to unravel before their eyes.”

How Palin Brings in the Christian Cash

How Palin Brings in the Christian Cash
t hasn't been all smooth sailing for these revived Swift Boaters. The Real Truth About Obama, Inc., a 527 formed in July by veteran anti-abortion attorneys James Bopp and Barry Bostrom, went after Obama with a pair of outrageous ads attacking the Illinois Senator on his abortion stance. The ads asserted that Obama would make taxpayers pay for all abortions, keep minors' abortions a secret from their parents and make "partial birth" abortions legal, and Real Truth sought to have the ads placed on Rush Limbaugh's and Sean Hannity's radio shows in September. When objections were raised by the Obama camp and PAC watchdogs, Bopp filed for an injunction against FEC spending and disclosure rules that prohibit 527s advocating against a candidate -- rules created in the wake of the Swift Boat Veterans actions in 2004. But a federal judge in Virginia ruled against Real Truth, upholding the FEC regulations, and the radio spots have yet to air.

That may be a minor setback for these forces, though.

In the Age of Palin, the traditional Christian right political powerhouses -- Focus on the Family and its affiliated Family Research Council Action -- are back in the game as well. As recently as February, Focus on the Family's James Dobson was threatening to sit out the November elections if McCain became the candidate, issuing a statement that said, "I am convinced Sen. McCain is not a conservative and, in fact, has gone out of his way to stick his thumb in the eyes of those who are. He has at times sounded more like a member of the other party." But then along came Sarah, and in the first two weeks of September Dobson's political action arm -- Focus on the Family Action -- dumped $104,000 on radio spots and mailings taking on Obama and endorsing McCain. The political action arm of the Family Research Council also held off until Palin entered the picture, registering with the FEC in support of McCain just a week after the Republican convention.

And if any questions remain about how galvanized the Christian right GOP base is these days, that pit bull of culture warriors, Pat Buchanan, put paid to that the day after Palin's performance in Minneapolis. "The American Right has just died and gone to heaven," Buchanan crowed in the lede of his September 5 column, following up on a Palin rhapsody from two days before in which he wrote, "should this ticket win, Palin will eclipse every other Republican as heir apparent to the presidency and will have her own power base among Lifers, Evangelicals, gun folks and conservatives -- wholly independent of President McCain ... Palin has become, overnight, the most priceless political asset the movement has."

Well, given the millions flowing into the religious right machine in the days since her arrival on the scene, not exactly priceless. The Swift Boaters and the Christian right knew Palin's price tag was high -- and they're proving themselves ready to pay up.