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Formerly high-flying primary lenders such as Countrywide, New Century, Ameriquest and IndyMac, often predisposed toward boiler-room business practices, now either have collapsed or have been sold at fire-sale prices. Full-service investment firms such as Merrill Lynch (with over $46 billion in mortgage asset write-downs since June 2007) and UBS (now facing civil fraud charges in New York State) also have been burned badly.
Such is the result of promoting “affordable housing” at any cost, with Fannie Mae and Freddie Mac acting as middlemen and the federal government, aided by nonprofit activists, prodding them.
THAT PROD HAS gotten stronger over time.
In 1992 Congress mandated the creation of a regulatory agency that would operate under the roof of U.S. Department of Housing and Urban Development (HUD). Known as the Office of Federal Housing Enterprise Oversight (OFHEO), this agency has ridden herd on Fannie Mae and Freddie Mac to reach out to “underserved” populations.
The Clinton administration’s initial quota of targeting underserved areas (i.e., low-to-middle-income Census tracts with high nonwhite populations) was 21 percent; the Bush administration, obsessed with promoting an “ownership society,” has upped this floor to 39 percent.
Why did Congress create the oversight agency? Because lawmakers believed the line that Fannie Mae and Freddie Mac had been “neglecting” their commitment to promote affordable housing. It was radical nonprofit activist groups who sold that line, with ample help of homebuilders, banks, realtors, and most of all, Fannie Mae and Freddie Mac. Captors and captives have bonded!
And political influence ensures more of the same. Nobody has mastered the art form quite like the two GSEs, having contributed a combined roughly $200 million in lobbying and campaign contributions over the past decade.
That’s bought them immunization from public accountability. Democrats in Congress in particular are adamant about keeping things this way.
During debate over the housing legislation, Senate Majority Leader Harry Reid, D-Nev., refused to allow a vote on an amendment sponsored by Jim DeMint, R-S.C., to bar political donations and lobbying by Fannie Mae and Freddie Mac.
For nonprofit radicals such as ACORN and NACA, this is good news. The last thing they want to see are these corporations competing on an even footing with other firms.
BECAUSE FANNIE MAE and Freddie Mac are politically driven organizations, they tend to draw their executive talent from the left side of the political spectrum. To run a Government-Sponsored Enterprise, one already has to be comfortable with the idea of large-scale government intervention.
Experience, if not necessarily integrity, counts for a lot. Franklin Raines, Fannie Mae’s CEO for most of the six years that the company cooked its books to the tune of $10.6 billion, previously had been Clinton White House budget director. Raines pulled in $52.8 million in bonuses during his 1999-2004 stay at the company, a fact not unrelated to the suspect accounting.
This past April, in an out-of-court settlement with the government, he agreed to give back $24.7 million of that money and forego another $15.6 in stock options.
In addition to paying off their nonprofit tormentors, the GSEs may hire them. Barry Zigas, for example, for several years had headed the National Low Income Housing Coalition. Then, in 1993 Fannie Mae brought him aboard as its senior vice president for corporate and regulatory housing goals, the same year — small coincidence — that OFHEO went into operation. He, like many others, left a couple years ago, and is now a private consultant.
The GSEs and its nonprofit “adversaries” share a pair of root assumptions: 1) everyone in America has the right to be a homeowner; and 2) nonwhite minorities and/or low-income households have been denied this right.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?
H/T to National Review Online