Posted by
Bill Crawford on Sunday, May 02, 2010 9:48:50 PM
Hillary Clinton used to say, "If you want to sell a policy, you need to tell a story. And every story has to have a villian". Actually, that is something she pulled from Saul Alinsky and his newly topical "Rules For Radicals".
Well, this administration lives and breathes Alinsky. Obama went to the heart of the beast last week, to take Wall Street to task for their evil derivatives. As if the economy shafted two years ago because all the people out there with Series 7 licenses conjured up some new ways to take down the system. I could argue the inanity of this, conjuring up other financial inventions going back to Mike Milliken, but Obama isn't about history. He wants to sell his new regulation reform, and it helps to point out who he thinks Ol' Yeller is before Washington takes it out back to shoot it.
Obama should know, because, in his short life as a national figure, he was more than a marginal player in the downturn.
The only media figures to get the forensics of that right are the SNL people, who pegged the key players straight on, even to the point of having a George Bush character spouting apologies from the side.
The percentage of homeowners in America was a relatively constant 62% from soon after WWII to the early part of the last decade. That jumped to 69% by 2007. Where did that extra 7% come from? It isn't hard to follow the disaster trail.
The Senate and House, led by Chris Dodd and Barney Frank, used the Community Reinvestment Act of 1978 to horsewhip banks into providing home loans in redlined areas (too poor to qualify). They used CRI "points" to rate banks, and made it ammo to foster or shoot down policy or merger requests from the financial industry. Those banks that thought this game was stupid were met with ground troops trained in part by Obama, the now infamous ACORN activists.
Fannie Mae and Freddie Mac were, by the middle of the decade, watering down the requirements of home mortgage approvals to the point where Ninja loans (no income, no job, no assets) were possible.
None of this would have led to anything. Countrywide would never independently issue such a loan, because they would own the problem afterward. No, the last magic key came when Fannie and Freddie offered to buy up the risky paper from the private mortgage brokers.
So the banks could get poor folks in their own home, add the assets to their books for the quarterly reports, pick up the commissions, get their CRI points and then dump the compost on a willing government agency. Everybody is happy.
It gets better. Homeowners either get to sell their homes in 2005 for twice the price they paid for it in 1990, or refinance and pick up a six figure credit line.
Eventually, it had to end. And now I get to watch the esteemed Senator from Connecticut lecture Wall Street minions from his Chairman's gavel. Nobody seems to find any puerility in this?
I'm not even going to get into the stream of how much of this new regulation is about federal control of the financial industry. We're too far gone here to contemplate Bill Buckley's notion (raised every few years) that "The problem with Socialism is Socialism. The problem with Capitalism is Capitalists." In other words, our financial system is not doomed to failure by definition, but it gets plagued by rogues who game the system in reprehensible ways.
So find the problem and deal with it. I've found the source here, and the problem is in our government. Any ideas, folks?
I have a few.