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| 7/12 |
| 2008/9/25-30 [Politics/Domestic/President/Clinton, Finance/Banking] UID:51291 Activity:kinda low |
9/25 In 1999 the Clinton administration pressured Fannie Mae "to expand
mortgage loans among low and moderate income people." The NYTimes
warned "But the government-subsidized corporation may run into trouble
in an economic downturn, prompting a government rescue similar to that
of the savings and loan industry in the 1980's."
http://tinyurl.com/4ulb87
\_ CLINTON AND BROWN PEOPLES FAULT!
\_ This American Life has already found the culprits:
http://www.thislife.org/Radio_Episode.aspx?sched=1242
\_ And in the same year, the LA times talked about how great it was
http://articles.latimes.com/1999/may/31/news/mn-42807
\_ http://www.whitehouse.gov/news/releases/2004/08/20040809-9.html
\_ Most non insane economists believe this month's troubles
are from the crazy securitization of home mortgages, not the actual
defaulted mortgages themselves. I am not quite smart enough to tell
if they are right.
Here in NYC Michelle Malkin keeps ranting in the NY Daily News
that its all the fault of illegal immigrants getting mortgages.
\_ McCain should have picked Malkin as his Veep, at least she
is articulate and no less batshit insane than Palin. |
| 7/12 |
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| tinyurl.com/4ulb87 -> query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=all Save By STEVEN A HOLMES Published: September 30, 1999 In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders. The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring. Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market. In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped. Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings. Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites. Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings. In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups. The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants. |
| www.thislife.org/Radio_Episode.aspx?sched=1242 A special program about the housing crisis produced in a special collaboration with NPR News. What does the housing crisis have to do with the turmoil on Wall Street? Why did banks make half-million dollar loans to people without jobs or income? companion version of this story appeared on NPR's All Things Considered. Host Ira Glass talks with an NPR business and economics correspondent about two gatherings he attended--one at the Ritz Carlton and one at a community college in Brooklyn. The first was an awards dinner for finance professionals who created the mortgage-based financial instruments that nearly brought down the global economic system. The other was a non-profit conference for people facing foreclosure. Ira explains that today's show lays out how the finance guys and the people facing foreclosure are connected by a chain of middlemen, and that together, they all brought about the current housing and credit crisis. This American Life producer Alex Blumberg teams up with NPR's Adam Davidson for the entire hour to tell the story--the surprisingly entertaining story--of how the US got itself into a housing crisis. They talk to people who were actually working in the housing, banking, finance and mortgage industries, about what they thought during the boom times, and why the bust happened. And they explain that a lot of it has to do with the giant global pool of money. |
| articles.latimes.com/1999/may/31/news/mn-42807 May 31, 1999 in print edition A-5 It's one of the hidden success stories of the Clinton era. In the great housing boom of the 1990s, black and Latino homeownership has surged to the highest level ever recorded. The number of African Americans owning their own home is now increasing nearly three times as fast as the number of whites; the number of Latino homeowners is growing nearly five times as fast as that of whites. These numbers are dramatic enough to deserve more detail. When President Clinton took office in 1993, 42% of African Americans and 39% of Latinos owned their own home. Since 1994, when the numbers really took off, the number of black and Latino homeowners has increased by 2 million. In all, the minority homeownership rate is on track to increase more in the 1990s than in any decade this century except the 1940s, when minorities joined in the wartime surge out of the Depression. Homeownership stabilizes neighborhoods and even families. Housing scholar William C Apgar, now an assistant secretary of Housing and Urban Development, says that research shows homeowners are more likely than renters to participate in their community. The children of homeowners even tend to perform better in school. Most significantly, increased homeownership allows minority families, who have accumulated far less wealth than whites, to amass assets and transmit them to future generations. Historically low rates of minority unemployment have created a larger pool of qualified buyers. And the lowest interest rates in years have made homes more affordable for white and minority buyers alike. As HUD Secretary Andrew Cuomo says: "There have been points in the past when the economy has done well but minority homeownership has not increased proportionally." Case in point: Despite generally good times in the 1980s, homeownership among blacks and Latinos actually declined slightly, while rising slightly among whites. All of this suggests that Clinton's efforts to increase minority access to loans and capital also have spurred this decade's gains. Under Clinton, bank regulators have breathed the first real life into enforcement of the Community Reinvestment Act, a 20-year-old statute meant to combat "redlining" by requiring banks to serve their low-income communities. The administration also has sent a clear message by stiffening enforcement of the fair housing and fair lending laws. The bottom line: Between 1993 and 1997, home loans grew by 72% to blacks and by 45% to Latinos, far faster than the total growth rate. Lenders also have opened the door wider to minorities because of new initiatives at Fannie Mae and Freddie Mac-the giant federally chartered corporations that play critical, if obscure, roles in the home finance system. Fannie Mae and Freddie Mac buy mortgages from lenders and bundle them into securities; In 1992, Congress mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains. It has aimed extensive advertising campaigns at minorities that explain how to buy a home and opened three dozen local offices to encourage lenders to serve these markets. Most importantly, Fannie Mae has agreed to buy more loans with very low down payments-or with mortgage payments that represent an unusually high percentage of a buyer's income. That's made banks willing to lend to lower-income families they once might have rejected. But for all that progress, the black and Latino homeownership rates, at about 46%, still significantly trail the white rate, which is nearing 73%. Much of that difference represents structural social disparities-in education levels, wealth and the percentage of single-parent families-that will only change slowly. Still, Apgar says, HUD's analysis suggests there are enough qualified buyers to move the minority homeownership rate into the mid-50% range. The market itself will probably produce some of that progress. For many builders and lenders, serving minority buyers is now less a social obligation than a business opportunity. Because blacks and Latinos, as groups, are younger than whites, many experts believe they will continue to lead the housing market for years. But with discrimination in the banking system not yet eradicated, maintaining the momentum of the 1990s will also require a continuing nudge from Washington. One key is to defend the Community Reinvestment Act, which the Senate shortsightedly voted to retrench recently. The top priority may be to ask more of Fannie Mae and Freddie Mac The two companies are now required to devote 42% of their portfolios to loans for low- and moderate-income borrowers; HUD, which has the authority to set the targets, is poised to propose an increase this summer. Although Fannie Mae actually has exceeded its target since 1994, it is resisting any hike. It argues that a higher target would only produce more loan defaults by pressuring banks to accept unsafe borrowers. HUD says Fannie Mae is resisting more low-income loans because they are less profitable. All signs point toward a high-velocity collision this summer between two strong-willed protagonists: HUD's Cuomo and Fannie Mae CEO Franklin D Raines, the first African American to hold the post. Better they reach a reasonable agreement that provides more fuel for the extraordinary boom transforming millions of minority families from renters into owners. |
| www.whitehouse.gov/news/releases/2004/08/20040809-9.html if you own something, you have a vital stake in the future of our country. The more ownership there is in America, the more vitality there is in America, and the more people have a vital stake in the future of this country." American families should have choices and access they need to affordable health care and homeownership; Americans should have the option of managing their own retirement; and small businesses, which employ over half of all workers, need lower taxes and fewer government mandates so they can grow. President Bush's Policies Promoting the Ownership Society * More Access and More Choices in Health Care. The President's goal is to ensure that Americans can choose and afford private health care coverage that best fits their individual needs. The US health care system can provide the best care in the world, but rising costs and loss of control to government and health plan bureaucrats threaten to keep patients from getting state-of-the-art care. The President's agenda includes: * Health Savings Accounts (HSAs), which combine low-cost, high-deductible health insurance with tax-free savings accounts to pay for health care expenses. The President has also proposed to make insurance premiums associated with HSAs tax deductible. By allowing small businesses to band together and negotiate on behalf of their employees and their families, AHPs would help small businesses and employees obtain health insurance at an affordable price, much like large employers and unions. President Bush signed legislation in 2003 to establish a prescription drug benefit under Medicare. Under this plan, private health plans will compete for seniors' business by providing better coverage at affordable prices--helping to control the costs of Medicare by using market-place competition, not government price-setting. And seniors will be able to choose the health care plan that best fits their needs--instead of having that choice made by the government. The President believes that homeownership is the cornerstone of America's vibrant communities and benefits individual families by building stability and long-term financial security. In June 2002, President Bush issued America's Homeownership Challenge to the real estate and mortgage finance industries to encourage them to join the effort to close the gap that exists between the homeownership rates of minorities and non-minorities. The President also announced the goal of increasing the number of minority homeowners by at least 55 million families before the end of the decade. Minority homeownership set a new record of 51 percent in the second quarter, up 02 percentage point from the first quarter and up 21 percentage points from a year ago. President Bush's initiative to dismantle the barriers to homeownership includes: * American Dream Downpayment Initiative, which provides down payment assistance to approximately 40,000 low-income families; The President has proposed the Single-Family Affordable Housing Tax Credit, which would increase the supply of affordable homes; The President has proposed increasing support for the Self-Help Homeownership Opportunities Program; The President and HUD want to empower homebuyers by simplifying the home buying process so consumers can better understand and benefit from cost savings. The President also wants to expand financial education efforts so that families can understand what they need to do to become homeowners. The Entrepreneurial Spirit of America: Providing Tax Relief to American Families and Small Businesses. President Bush acted promptly to help America's workers by providing tax relief to put more money in families' pockets and encourage businesses to grow and invest. Tax relief brought substantial savings to families and helped fight back the effects of the recession. America's families and small businesses have more money to spend, save, and invest because of the President's 2001 and 2003 tax cuts. This year, 111 million taxpayers will receive, on average, a tax cut of $1,586 and 25 million small business owners will receive $75 billion in total tax relief. President Bush has called on Congress to extend his tax relief plan set to expire next year. If Congress does not act, American families and businesses would see a tax increase starting next year, thereby hurting economic recovery and future job creation. Unless Congress takes action: * In 2006, the small business expensing limit will shrink from $100,000 to just $25,000, increasing the cost of capital investments for America's small businesses; Securing America's Retirement Future and Strengthening Social Security: President Bush is committed to ensuring that Social Security benefits are protected for all seniors, and allowing younger workers the option of investing in safe personal retirement accounts. Americans can also help secure their own future by saving, and President Bush has acted on policies that promote and protect saving. Strengthening Social Security: Social Security has to be fixed for our children and grandchildren. Fifty years ago there were fifty workers paying into Social Security for every one person receiving benefits. Today there are 33 workers supporting each person on Social Security. By the time today's young workers retire, there will be only two. Young workers need the option to invest in retirement accounts that they will own and control. The President's plan to strengthen retirement security includes: * The President has proposed voluntary personal accounts for younger workers that would allow them to build a nest egg for retirement that they would own and control, and could pass on to their families. The President's vision for Social Security includes a permanently strengthened Social Security system, without changing benefits for those now in or near retirement, and without raising payroll taxes on workers. Inheritance rights in personal accounts would especially help widows who depend on Social Security. Since the report of the President's Commission, six fully detailed proposals have been introduced in Congress to permanently fix Social Security, many of which adapt elements of the Commission recommendations. The President wants to work with Congress to build a consensus on the best elements of the many proposals that have been put forward. This will require leadership, bipartisanship, and public education. Expanding Ownership of Retirement Assets: The tax relief legislation signed into law by the President provided almost $50 billion dollars of tax relief over the next ten years to strengthen retirement security. This landmark legislation raised the contribution limits for IRA and 401 accounts, allowed for additional "catch up" contributions for workers aged 50 and over, and speeded up the vesting process for employer contributions to 401 accounts. New Savings Opportunities: The President has proposed to expand savings opportunities through the creation of Retirement Savings Accounts (RSAs) and Lifetime Savings Accounts (LSAs). RSAs would provide all Americans with an easy, tax-preferred way to prepare for retirement. LSAs would give all Americans the opportunity to save tax free to pay for job training, college tuition, the down-payment on a first home, a car to drive to work, or their retirement. Ensuring Freedom of Choice: The President's proposal would ensure that workers who have participated in 401 plans for three years are given the freedom to choose where to invest their retirement savings. The President has also proposed that choice be a feature of Social Security itself, allowing individuals to voluntarily invest a portion of their Social Security taxes in personal retirement accounts. |