EDITOR’S NOTE: This was run earlier but didn’t have the byline or author’s bio. We are redating it and putting it on top of TMV. Newer posts are underneath it so after reading it, please keep scrolling.
strong>Clinton Administration and Republican Congress, Unindicted Co-Conspirators
by Douglas Wolf
9 years ago the New York Times reported the changing of the rules regarding mortgage qualifying by FHMA (Fannie Mae). The evidence is clear that the Clinton administration, with the acquiescence of a Republican Congress, decide to offer mortgages to “traditionally under-served communities.”
Now, that used to be code for minorities who had been shut out of home ownership simply because of skin color. No politician wanted to be seen as a racist, so away went responsible underwriting standards. And more minorities did become home owners.
Funny thing is, it worked so well during the housing boom that the rules got looser and looser until breathing was the main requirement for qualifying for a mortgage. But the only “minorities” in this mess were people who had never paid their bills on time, did not manage their money and could not hold on to a job.
Wall Street, never known for missing a money train, got on board and sold these mortgages as bundled bonds with AAA ratings thanks to the corruption of the rating agencies.
But like all cycles, even with the government trying to do something to stop it, the party ends and the reverse leverage caused by the housing depression is upon us all. The only solution is to allow the foreclosures to go forward and the sooner the better. Obama is making a huge mistake in trying to rescue those who should have never been allowed to borrow in the first place.
Inevitable, painful, but like surgery for gangrene, necessary.
Douglas Wolf is a nationally known consultant for the ACT database software program and is the author of a host of 24 books. He writes for several software-specific programs. He has contributed extensively to various websites on a variety of issues and is based in Washington state. He has also been a radio talk show host.