Obama Lays Groundwork for Another Housing Collapse
TIMOTHY Birdnow
The economic crash of 2008 stemmed from subprime mortgages. Those mortgages were worthless paper given to people who were not credit-worthy, backed with an implicit promise by the Federal Government to protect the lenders. They were securitized by Wall Street as a way to obtain the funding to make them, and bundled to provide some sort of protection for the investors.
Ultimately, it was Federal policy that caused the economic collapse. Redlining laws demanded that these mortgages be made. The Community Reinvestment Act update, signed into law by Bill Clinton, started the housing boom by relaxing mortgage standards. I remember reading back then about plans by HUD to extend Section 8 to mortgages; they said that, since many property owners would not rent to section 8 clients they would try to get these people mortgages instead!
Obama has pledged to offer refinancing to those who are not currently paying their mortgages.
http://www.linkedin.com/news?actionBar=&articleID=759829308&ids=0NdzsUejcVdjsIdzcMd3cTe3kTb3wMcPAOe3ARdOMPd3cOc3wVdjsIdjAUd30SejkT&aag=true&freq=weekly&trk=eml-tod-b-ttle-44&ut=2iaBx7sswLBQU1
This guarantees a double dip on the recession, but shores up the President's short-term political fortunes. I am sorry, but this man is despicable.
According to the article:
"CBO concluded that the specific program analyzed is estimated to lead to an additional 2.9 million mortgage refinancings, resulting in 111,000 fewer defaults on those loans and estimated savings for the GSEs and FHA of $3.9 billion on their credit guarantee exposure.
Offsetting those savings, however, CBO says federal investors in the mortgage-backed securities holding those loans – including the Federal Reserve, Treasury, and GSEs – would experience an estimated fair-value loss of $4.5 billion.
Based on these figures, CBO says the estimated cost to the federal government for a refi program of this magnitude would be $600 million.
For private investors, the costs run significantly higher. CBO says they would experience an estimated fair-value loss of $13 to $15 billion. Most of that wealth would be transferred to borrowers, the report notes.
CBO concludes that the benefits of a 4-percent-rate, government-led refi boom would be “small” relative to the size of the housing market, the mortgage market, and the overall economy."
End excerpt.
So, Obama is going to make banks eat another excrement sandwhich. The crash happened because of this very thing; mortgage lenders took a huge hit as defaults (a predictable thing, given the no-money-down policies and minimal credit checks forced upon them by the Feds) robbed them of their assets. Remember, the banks lent in good faith, expecting to at least get their money back. They were robbed, and Obama is proposing robbing them yet again.
Richard Cloward and Frances Fox Piven attended the signing ceremony of the Community Reinvestment Act update. These were the people who created the tactic of "overwhelming the system", of overloading whatever traditional parameters that were in place so as to destroy them, then replacing them with their own. Those would be socialist systems, as C and P are committed socialists. It worked with the CRA, and Obama is laying the groundwork for another crash.
And he knows it; this is a form of security for the Democrats. He wants there to be a crash should Republicans take over, to "prove" that supply-side economics doesn't work. It is the dirtiest of dirty tricks.
But then, the Obama Presidency was nothing but a dirty trick from the beginning.
The economic crash of 2008 stemmed from subprime mortgages. Those mortgages were worthless paper given to people who were not credit-worthy, backed with an implicit promise by the Federal Government to protect the lenders. They were securitized by Wall Street as a way to obtain the funding to make them, and bundled to provide some sort of protection for the investors.
Ultimately, it was Federal policy that caused the economic collapse. Redlining laws demanded that these mortgages be made. The Community Reinvestment Act update, signed into law by Bill Clinton, started the housing boom by relaxing mortgage standards. I remember reading back then about plans by HUD to extend Section 8 to mortgages; they said that, since many property owners would not rent to section 8 clients they would try to get these people mortgages instead!
Obama has pledged to offer refinancing to those who are not currently paying their mortgages.
http://www.linkedin.com/news?actionBar=&articleID=759829308&ids=0NdzsUejcVdjsIdzcMd3cTe3kTb3wMcPAOe3ARdOMPd3cOc3wVdjsIdjAUd30SejkT&aag=true&freq=weekly&trk=eml-tod-b-ttle-44&ut=2iaBx7sswLBQU1
This guarantees a double dip on the recession, but shores up the President's short-term political fortunes. I am sorry, but this man is despicable.
According to the article:
"CBO concluded that the specific program analyzed is estimated to lead to an additional 2.9 million mortgage refinancings, resulting in 111,000 fewer defaults on those loans and estimated savings for the GSEs and FHA of $3.9 billion on their credit guarantee exposure.
Offsetting those savings, however, CBO says federal investors in the mortgage-backed securities holding those loans – including the Federal Reserve, Treasury, and GSEs – would experience an estimated fair-value loss of $4.5 billion.
Based on these figures, CBO says the estimated cost to the federal government for a refi program of this magnitude would be $600 million.
For private investors, the costs run significantly higher. CBO says they would experience an estimated fair-value loss of $13 to $15 billion. Most of that wealth would be transferred to borrowers, the report notes.
CBO concludes that the benefits of a 4-percent-rate, government-led refi boom would be “small” relative to the size of the housing market, the mortgage market, and the overall economy."
End excerpt.
So, Obama is going to make banks eat another excrement sandwhich. The crash happened because of this very thing; mortgage lenders took a huge hit as defaults (a predictable thing, given the no-money-down policies and minimal credit checks forced upon them by the Feds) robbed them of their assets. Remember, the banks lent in good faith, expecting to at least get their money back. They were robbed, and Obama is proposing robbing them yet again.
Richard Cloward and Frances Fox Piven attended the signing ceremony of the Community Reinvestment Act update. These were the people who created the tactic of "overwhelming the system", of overloading whatever traditional parameters that were in place so as to destroy them, then replacing them with their own. Those would be socialist systems, as C and P are committed socialists. It worked with the CRA, and Obama is laying the groundwork for another crash.
And he knows it; this is a form of security for the Democrats. He wants there to be a crash should Republicans take over, to "prove" that supply-side economics doesn't work. It is the dirtiest of dirty tricks.
But then, the Obama Presidency was nothing but a dirty trick from the beginning.
posted by Timothy Birdnow | 7:22 AM
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