"It was not the banks that created the mortgage crisis," the mayor said. "It was, plain and simple, Congress, who forced everybody to go and give mortgages to people who were on the cusp. ... But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody."
It was Bloomberg's misfortune to blurt those remarks a day before the U.S. attorney in Manhattan, whose offices are only blocks away from City Hall, announced that the Justice Department is suing Allied Home Mortgage Corp. for perpetrating a gigantic, decade-long fraud, in violation of federal regulations and statutes, that cost the government at least a billion dollars and forced thousands of American families out of their homes.
Indeed, if the mayor only read the fine news service that carries his name, he would know that such massive frauds in the private sector were behind the financial crisis, and that his friends on Wall Street made billions by "securitizing" those bad loans—and then brought down the world economy when their game could no longer be sustained.
Nobody in Congress and nobody at Fannie or Freddie forced them to do that.
Fannie and Freddie Didn't Cause Mortgage Crisis
The most authoritative studies—notably the final report of the Financial Crisis Inquiry Commission, which examined many other academic and think-tank works—have demonstrated that whatever their other problems, Fannie and Freddie were not the most significant contributors to the subprime disaster. More than 84% of the subprime mortgages in 2006, for instance, were issued by private lending institutions, including 82% of the subprime loans to low- and moderate-income borrowers.
Nor were Fan and Fred—or Congress, for that matter—culpable in the enormous crime wave of mortgage fraud that engulfed states like Florida, Arizona and California, which would keep a special prosecutor busy for the next five years if only somebody appointed one.
Bloomberg may also have meant to allude to the Community Reinvestment Act (CRA), an even more favored target of Republicans (since many of them have partaken of Fannie and Freddie's largesse, just like their Democratic brethren in Washington). But again, there is simply no evidence that CRA played a major role in the mortgage meltdown—or the slicing and dicing of mortgage derivatives that spread the contagion to every major bank here and many across the world.
Nothing in the act, designed to encourage lending in poor communities, required the excessively leveraged, insufficiently overseen "creative financing" that caused the crisis. The institutions that originated the great majority of the riskiest mortgages, as economist Robert Gordon showed conclusively, weren't even covered by CRA.
So much for the mayor's cheap shot against the "Occupy" protesters, whose encampment in lower Manhattan he considers inconvenient. He may want them to leave; he may eventually force them to leave. But their message—that Wall Street's perpetrators of the crisis have escaped accountability and profited obscenely, instead—is undeniable no matter what he says or does.
© 2011 Creators.com
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Pr. 17:5 Whoso mocketh the poor reproacheth his Maker; And he that is glad at calamity shall not be unpunished. Be careful, last time I checked there still is a God.
This is what I love about you silly republicans- If a person doesn't have a job its their own fault, but it's also Obama's fault that the economy is in the gutter and people can't get jobs. Pick a side and stick to it. Your arguments are contradictary (not a surprise).
Also- I'd love to see the stats on how many people graduate from college w/o having any student loans. I bet it's less than 15%. And just because someone goes to school for a degree that would lead to a good paying job doesn't mean it happens that way. Ever hear of law school?..
So...I have to pay their student loans for them with my tax dollars? Where do you think the difference between what they should pay and what Obama says they CAN pay will come from?
Forgiving student loan debt rewards failure- the less you make, the less you have to pay on the loans YOU agreed to pay back while getting your basket-weaving degree. Just because you like basket-weaving doesn't mean that I should pay for you to study it and then tap coffee at Starbucks. If you earned a law degree and you can't get a job that will pay the loans, I have absolutely no sympathy for you. You should be tarred and feathered just for WANTING to be a lawyer.
It is Obama's fault (to some degree) that he is making it easier for the slackers and welfare pimps to continue their entitled ways. The stimulus came from a Democratic congress- can't put all of the blame on Obama, as he was just the spokeshole for the failed program.
In many cases, not having a job is the result of poor life choices- education, fashion, activities, etc. It is not the responsbility of those who work hard every day to subsidize those poor life choices.
First there is nothig wrong with the economy so I have no blame for Obama. I know how to make lots of money either in a good economy or a bad economy. As far as I'm concerned, its always good economy and I don't care if a Democrat or Republican is in office. Just as long as its not a communist.
PoliticalPygmali - I love you. Couldn't have said it better. Except I don't put as much blame on Obama. He kept my tax rate at 15% for my income so no complaints.
But yes, if you dont have a job its because you are stupid and lazy. The natural gas fields in PA, Dakotas, TX, and LA are hiring. Construction jobs in New Orleans, agriculture jobs all over the USA, off shore drilling in the Gulf. Go down to the Louisiana bayous and look at all the bus loads of immigrant workers being driven to helicopter pads to be flown offshore. Come on boy, wake up, get snappy, chop chop - take that job and work! Stop eating those Hostess cupcakes you got with food stamps, pull your pants up, brush your teeth and at least look busy.
Know how to tell if a college student has loans? He's sitting in Starbuck's listening to music. While the student without the loans is pulling a second shift down at the slaughter house. Its not fair to forgive loans when there were brave people out there working to get through school while some coward got a loan and just sucked on flapachinos and majored in philosophy.