The Democrats blamed Bush for the subprime mortgage crisis and the ensuing economic collapse while they exonerated themselves. They blamed the banks, ignoring the fact that they forced banks to give mortgages to people who could ill afford them.
Well, here we go again because – for the Democrats – once wasn’t enough.
Banks, the government and left-wing organizations are again joining forces to set up what has proven to be a risky situation for the U.S. economy.
Yesterday, the Wall Street Journal wrote this: “Citigroup Inc. C +0.11% and Bank of America Corp. BAC -0.03% will provide mortgages at discounted interest rates as part of their efforts to help borrowers with low incomes or subprime-credit histories.”
These are 15-year mortgages and borrowers pay points up front to secure the discounted interest rates. However, what is important to note is that the loans are being “originated” and “distributed” by the “Neighborhood Assistance Corp. of America” (NACA) which works almost exclusively with low-to moderate-income borrowers, including those with “subprime credit”. People with poor credit histories and living off government benefits will not be eliminated based on either.
There are reports that NACA doesn’t require down payments, doesn’t check borrowers’ credit scores and approves borrowers for mortgages as soon as 12 months after a default on a loan or other adverse credit event. Borrowers allegedly don’t have to pay closing costs.
NACA claims they do a careful review of credit histories and check assets.
NACA is known for bullying banks into providing deals. The bank’s director calls himself a “bank terrorist.”
The banks need to accumulate the subprime credits per the infamous Community Reinvestment Act of 1977 which mandates banks lend in neighborhoods where they receive deposits. It’s a one-size-fits-all social justice approach to home ownership and it’s often taken too far.
NACA works hand-in-hand with HUD, the government organization currently mapping every neighborhood in the country with the intent of redistributing neighborhood resources.
We know that NACA, a heavily subsidized organization, makes up three months of mortgage payments when borrowers get into trouble.
The new loan plan coincidentally follows payoffs to the government by Bank of America and Citigroup for selling shoddy mortgage securities prior to the housing crisis.
The banks have become ATM machines for the administration who extort money from them regularly. The bank settlements direct few funds back to the victims of the crisis but rather to the government coffers and left-wing organizations. Part of the settlement requires banks to atone by forgiving mortgage payments for some people with underwater mortgages and to lend to low-income borrowers or those who were foreclosed on as if people taking out a mortgage they couldn’t afford was an innocent bystander in the process. Investors who lost money in the crisis are left out.
The recent settlement with Bank of America requires them to provide legal aid for the poor and left-wing causes, some of which are used to attack banks and Capitalism. The organizations include radical shakedown leftists. ACORN is one of the recipients. Others are IOLTA, Operation Hope, Neighborhood Assistance Corporation of America, and National Community Reinvestment Coalition, among many others. These people also spend some of their riches to indirectly buy votes and the Democratic Party.
Let’s take a trip back in time because we can’t seem to learn from our errors:
Reason magazine wrote that the subprime mortgage crisis is Bill Clinton’s legacy. He helped “inflate the housing bubble” which was integral in causing the 2007 economic collapse, they assert.
He teamed up with then-Secretary of Housing and Urban Development (HUD), Andrew Cuomo, now Governor of New York, to accelerate “easy-housing policies” which in turn “inflated the housing bubble.”
The stage was set.
Low interest rates set by the Federal Reserve and easy housing orchestrated by various government agencies and policies caused the meltdown.
The agencies involved were HUD, and Fannie Mae and Freddie Mac (the GSE’s). In addition, laws like the Community Reinvestment Act fortified by Bill Clinton, “required banks to make loans to people with poor and nonexistent credit histories.”
This led to a “home-buying frenzy and an explosion of subprime and other non-prime mortgages, which banks and GSEs bundled into dubious securities and peddled to investors worldwide. Hovering in the background was the knowledge that the federal government would bail out troubled ‘too-big-to-fail’ financial corporations, including Fannie and Freddie.”
Listen to Bill Clinton:
If Hillary Clinton gets into the presidency, expect more of this pie-in-the-sky statism: