Remember all the noise at the beginning of the collapse of the financial and housing markets? It was all about how President Bush and his cronies forced through deregulation of the nations lending laws. That well could have been a part of the greed-enhanced collapse of those markets. There was, however, an equal or greater influence involved that almost no one wants to talk about even if they do recognize it.
That influence was the loosening of credit standards by a Congress composed, at that time, of a moderate to liberal Republican majority and a very liberal Democrat minority. They are the ones that really started the meltdown of the mortgage industry. It was 1999. It was at the behest of that Congress and the Clinton administration that credit card companies and other consumer lenders reduced the criteria for granting credit. They were asked to do so to make more credit available to more people. Fannie Mae and Freddie Mac also began backing more of these loans for lower income individuals and families. Stable job history and expected continued employment were no longer considered and previous credit histories were all but ignored.
A major player in the changes for the credit industry was Barney Frank.
It was the 107th and 108th Congresses that truly undermined the foundation of the credit industry that had been a stable force of the nation since the 1950s. They are the ones, along with the signature of a weak kneed President Bush that reduced the standards for the mortgage industry and hammered Fannie and Freddie into backing loans that should never have been made to people who could obviously not repay them.
Because it was an opportunity for every mortgage broker and lender to make a double handful of bucks producing those loans, there was little objection from them. They would bundle the questionable loans with some viable loans and sell them to investors on Wall Street. The packages contained “the good, the bad and the ugly”. They were treated not unlike mutual funds. Many of the loans were known, or at least expected to perform well, some were a bit less assuring (carrying greater interest rates and also had greater potential profit) and some were down right recognized to become foreclosures (but these also had the highest interest rates to offset the increased liability).
This, too, was championed and loudly advocated by none other than Barney Frank. This time it was also weightily backed by his good buddy, Chris Dodd.
The housing market boomed, and due to the newest cache of borrowers, the law of supply and demand brought fantasy values to both new and existing housing prices.
A job lost here, a divorce there, too much credit card and unsecured debt and the next thing we knew people could no longer afford to make all their payments. The easiest thing to do was to pack the family pickup or SUV and move away from the house that was now worth less than the existing loan(s).
And then, when it all crumbled, it was Bush’s fault!
Now we have our favorite finger pointer, Congressman and Chairman of the House Financial Services Committee, Barney Frank, asking Freddie and Fannie to roll back those nasty lending guidelines on condos because the rules, quote, “may be too onerous.”
If this passes, we will have round three of the Barney Frank Financial Disaster Comedy Tour. The only problems are:
(a) it’s not funny
(b) Bush will somehow be blamed again because Obama is above it all.
And this happened while the dolts of America spent endless hours glued to the idiot box watching ABC, CBS, NBC, MSNBC and CNN honor a man who in many minds was little more than a child molesting pervert (though he was never convicted in a court of law).
Pay attention and vote wisely!