In the most callous but honest of terms, the current economic crisis is the fault of:
- The people — mostly poor and mostly minority — who purchased homes that they could not afford with loans that the government forced the mortgage lenders to give them.
- And then those bad credit risk borrowers — wow who could have seen this coming — didn’t make the payments that they promised to make and in many cases, simply walked away from the mortgages that they never had a real stake in to begin with.
That’s it in a nutshell. And it’s the most politically incorrect thing to suggest, but I just did. The irresponsible people who took out loans that they couldn’t or wouldn’t pay back are the most responsible for this crisis.
This story from the New York Post spells it out a little more substantially. And it goes into detail about how it was corrupt groups like ACORN (and other “community organizers”) that used thug tactics to “to extract hundreds of millions of dollars in loans and contributions from America’s financial institutions.”
Government trying to controlfree markest with regulations (not the lack of regulations, which some people think the market needs more of). The goverment — especially democrats — forced the mortgage industry to give out mortgages to people who were not good credit risks. Mostly poor and minority borrowers.
I am opposed to this bailout. But my sympathies lie more with mortgage banks who were forced into bad business practices by our government than they do with borrowers who were knowingly bought homes they couldn’t afford because they thought they were owed something.
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From the article:
CRA [Community Reinvestment Act of 1977] was meant to encourage banks to make loans to high-risk borrowers, often minorities living in unstable neighborhoods. That has provided an opening to radical groups like ACORN (the Association of Community Organizations for Reform Now) to abuse the law by forcing banks to make hundreds of millions of dollars in “subprime” loans to often uncreditworthy poor and minority customers.
[snip]
Fannie and Freddie acted in response to Clinton administration pressure to boost homeownership rates among minorities and the poor. However compassionate the motive, the result of this systematic disregard for normal credit standards has been financial disaster.
ONE key pioneer of ACORN’s subprime-loan shakedown racket was Madeline Talbott - an activist with extensive ties to Barack Obama. She was also in on the ground floor of the disastrous turn in Fannie Mae’s mortgage policies.
What we needed was less regulation of the free markets. Not more. Which is what we’re going to get now. The very people who caused this meltdown — Congress — are the ones who now want us to trust them to fix. And how are they going to do it? With my tax dollars and with an even bigger government power grab.
What could possibly go wrong?
IN short, to understand the roots of the subprime-mort gage crisis, look to ACORN’s Madeline Talbott. And to see how Talbott was able to work her mischief, look to Barack Obama.
Then you’ll truly know what community organizers do.
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Betsy reminds us that the Republicans are not without culpability in this, too:
Of course, the Republicans have also pushed for extending home ownership and, until this crisis, President Bush was proud of the many people who were buying homes under his watch. But it is time to acknowledge that not every family can afford to buy a home and we do them or our economy no favor by pushing banks to loan them money to get them into their own homes if they can’t afford the payments.
On this we agree. People need to take responsibility for their own actions. You enter into a financial contract, you’d better make sure you can keep up the payments.
Those who blame the government or mortgage lenders are the same people that look to them as a means of welfare handouts.
I personally do not know one person that is suffering from this mortgage crisis. Why? Because the people I associate with are educated enough to take responsibility for their decisions.
In the same breath, I have no sympathy for mortgage lenders and I don’t feel the government ‘forced’ any practices on these companies. If anything, the government simply allowed a ridiculous business model to shape within these fat, greedy banks.
You should read about Adam Applegate and the nationalisation of Northern Rock. Your sympathy for these rogue traders will soon dry up.
Jonny
Left by Jonny on September 29th, 2008 at 11:00 am