THE TOTAL PACKAGE™Here’s the simple, frank truth about this crisis
the mainstream media will never tell you …
Here’s a quick timeline — all easily checkable online:
Gee, thanks, Mr. Carter …
1977: Jimmy Carter rams the Community Reinvestment Act through Congress. It all began 31 years ago when Billy Carter’s brother Jimmy heard that some lenders were “discriminating” against low-income borrowers …
Now, nobody I know has ever accused Mr. Carter of being the sharpest crayon in the box … But he did know one thing: He was by-god incensed — incensed, I tell you — at discrimination of any kind!
Make no mistake here: Oprah was NOT having problems getting loans; nor were most of the millions of other hard-working, responsible minority wage-earners in America.
And it’s not like credit was available to low-income white people with no savings, no down payment and lousy credit histories.
But the facts, of course, didn’t matter to Carter. All that mattered was that someone had used the “D” word, so something had to be done. Political correctness demanded it.
And so, unfazed by the fact that lenders are supposed to be discriminating when deciding who’s a good credit risk — and blissfully unburdened by even the glimmer of an understanding of the catastrophic long-term impact of his actions — Mr. Carter sprang into action.
And in no time flat, Jimmy’s Community Reinvestment Act – “CRA” for short – had sailed through the Democratic Congress.
Suddenly, any lender caught denying mortgages and other loans to low-income people faced serious penalties — including denial of applications to open new branches, to do mergers and acquisitions and other draconian measures.
1992: The Fed drops a bombshell. In what was then heralded as a "landmark study,” the Boston branch of the U.S. Federal Reserve announced that, despite the many pounds of flesh the CRA exacted from lenders who turned down low-income loan applicants, mortgage discrimination was still pandemic in the financial system.
So in a matter of days, the Boston Fed produced a manual for mortgage lenders nation-wide stating, "Discrimination may be observed when a lender’s underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants."
“Hey buddy – forget the beer.
You want a HOUSE?”
So what were these "arbitrary” and “outdated" criteria?
“Oh, little things,” said the Fed. “Like the size of the mortgage payment relative to income. And the prospective borrower’s savings or credit history.
“And don’t even bother checking to see if the borrower has any income at all,” said the Fed. “If you do … and he doesn’t … and you deny the loan … you’re a dirty, no good discriminator!”
“In fact, come to think of it,” the Fed mused, “if the applicant has participated in a credit-counseling program, that means he’s now a responsible borrower. Better grant him the loan or you’re toast!”
“Oh. And also? Welfare payments and unemployment benefits are valid income so you’d better include them when qualifying loan applicants.”
And so lenders did what they were told under penalty of law and the surge of bad loans accelerated.
1995: Bill Clinton cranks it up a notch. Thirty-six months later, still alarmed at the “discrimination” the Fed had uncovered and eager to reward low-income voters for sending Bubba to the White House, Andrew Cuomo — Clinton’s secretary of Housing and Urban Development — investigated Fannie Mae for racial discrimination.
He “found” it of course — and quickly proposed that fully HALF of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low-income borrowers by the year 2001.
Next, Clinton introduced significant revisions to the Community Reinvestment Act. In testimony prior to the new bill’s passage, Gene Ludwig — Clinton’s Comptroller of the Currency — explained why reform was so desperately needed:
“Fifteen years ago,” said Ludwig, “Congress passed the Community Reinvestment Act. But the CRA has never achieved its full promise.
“The proposed reform package will channel billions of dollars a year in new credit into America’s distressed communities.”
PLAIN ENGLISH TRANSLATION: Hey, lenders! You’re still not giving enough money to people who can’t — or won’t — pay it back. This law ensures that you will!
“Don’t want to give loans to lousy credit risks?
“I’ll fix you!”
Staggeringly idiotic. Right? But wait — the Clinton administration was only getting warmed up.
According to the Los Angeles Times, the president and his Democratic majority in 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."
Then, the Clinton administration added the final kicker: Fannie, Freddie and the nation’s lenders would be allowed to turn these subprime loans into securities and sell them to financial institutions and investors world-wide!
Given the fact that Clinton enjoyed a Democratic majority in Congress at the time, it should come no surprise that the revisions sailed through Congress in no time flat.
1999: It’s working! Four years later, with low-income borrowing skyrocketing, an enthusiastic Fannie Mae could be heard publicly bragging about “the end of discriminatory lending in America.”
It even singled out its most shining example: A lender, it said, that worked with community organizers and followed "the most flexible underwriting criteria permitted."
Previously, this lender had made only $1 billion in low-income loans. By 1992, under the provisions of the Community Reinvestment Act, it had loaned $80 billion to low-income borrowers. And thanks to Clinton’s “refinements,” that firm’s loans to low-income borrowers were well on their way to surging to over $600 billion.
“We just did what Congress told us to do. ”
– Angelo Mozilo, CEO Countrywide Financial
So, one might ask, “Who was this virtuous lender that had increased its loans to low-income people a whopping 59,900% in just over one decade?”
You guessed it: It was the very lender whose demise in 2007 turned out to be the first domino to fall in the subprime lending mess: Countrywide Financial.
2001: Bush administration warns of impending doom. In Bush’s first year in office, the White House’s chief economist, N. Gregory Mankiw, warned Fannie and Freddie’s loans to unqualified borrowers and other complications at the two institutions were creating a huge risk for the entire financial system.
Representative Barney Frank (D-MA) denounced Mankiw, accusing him of having no "concern about housing."
The New York Times fell into lockstep with its Democratic masters in Congress, reporting that Fannie Mae and Freddie Mac were "under heavy assault by the Republicans," but that it was O.K. — because these entities still had "important political allies" in the Democrats.
Congressional Democrats dug in their heels and made absolutely sure nothing was done to address the impending crisis.
2003: The Bush administration tries to avert catastrophe a second time. Alarmed by fraud and abuses that had been discovered at Fannie and Freddie, President Bush repeatedly urged Congress to pass a bill increasing oversight on the two companies.
The Bush administration had every reason to be worried: A report by outside investigators had concluded that Freddie Mac manipulated its accounting to mislead investors. Experts were warning that Fannie Mae was not adequately hedging against rising interest rates.
“These two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis.” Representative Barney Frank (D-MA)
Arguing against Republican attempts to reform the two corrupt mortgage lenders in 2003.
Bush’s Treasury Secretary, John Snow, told the House Financial Services Committee, ”There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises.”
After the hearing, two Republican congressmen — Representative Michael G. Oxley of Ohio, chairman of the Financial Services Committee, and Senator Richard Shelby of Alabama, chairman of the Senate Banking Committee — announced their intention to draft legislation based on the administration’s proposal.
”We have seen in recent months that mismanagement and questionable accounting practices went largely unnoticed” by the independent agency that regulated Fannie and Freddie, said Oxley.
But once again, congressional Democrats and their lackeys in the media scoffed at the Bush plan to save Fannie and Freddie. Some went so far as to point at the plan as proof that Republicans hate minorities and poor people.
And Barney Frank (D-MA) now the Chairman of the powerful House Financial Services Committee — the sack of excrement in a suit you see grandstanding on TV as Congress mulls this newest bail-out — denied there was any crisis at all.
“These two entities — Fannie Mae and Freddie Mac,” declared Frank, “are not facing any kind of financial crisis.”
And so, yet another opportunity to avert the crisis that now is — according to Treasury Secretary Hank Paulson — threatening to “completely destroy the entire U.S. financial system” was lost.
The simple truth
Despite everything the Democrats in Congress are telling you now …
Despite all the mindless spin the mainstream media is trying to shove down your throat on the six-o’clock news …
Despite all the talk about how “greedy lenders and incompetent CEOs and lax government regulation” caused this crisis …
Despite the ridiculous claims that only increased government regulation and intensified congressional oversight can end the crisis (regardless of the fact that political regulation and oversight caused it) …
“The Government Did It”
“Through the stick of the CRA and the carrot of Fannie Mae and Freddie Mac, the Fed created the mortgage market debacle.”
– Economist Yaron Brook
And despite the lies congressional Democrats and their presidential candidate are telling in an unbelievably hypocritical attempt to hang this crisis on the Bush administration (and by extension, on John McCain) …
The simple truth is, this crisis was engineered and implemented almost entirely by Democrats.
The more frightening truth is, they once again control Congress — just like they did when the laws were passed that created this crisis.
And the terrifying truth to anyone who cares about his family’s financial security is that they will probably also control the White House, come next January. The CRA — the idiotic law that created this crisis — also made Obama who he is today. “Why is that so terrifying?” you ask …
Consider this: According to his autobiography, Obama spent his years after college and before he ran for the Illinois Senate becoming an expert in real estate law and fair housing while working as a “community organizer.”
What he was really doing was blackmailing Chicago lenders into throwing money at his low-income constituents. And the club Obama used to bludgeon banks into submission — into granting loans to people with no down payment, no job, no income and lousy credit histories — was called … you guessed it … “The Community Reinvestment Act of 1977.”
Now, to anyone who has even the glimmer of an understanding of how Washington works, it should come as no surprise that Mr. Obama was well-rewarded for his untiring efforts to force banks to throw money at unqualified borrowers — and it should also come as no surprise that those rewards flowed from the two quasi-private companies that benefited most from the explosion in subprime mortgages: Fannie and Freddie.
Recently, we learned that of the hundreds of political contributions made by Fannie Mae over the last couple of years, Obama received the second highest amount — second only to the Chairman of the Senate Banking Committee, Christopher Dodd (D-CT).
Other Democrats were also well-rewarded for this catastrophic explosion in subprime lending with lucrative jobs at Fannie and Freddie. And four of these former Fannie and Freddie big shots — former CEOs and a board member of these corrupt institutions — have been on the Obama bandwagon since Day One:
1. Franklin Raines, former Clinton administration budget director who earned $90 million in his five years as Fannie Mae CEO, from 1999 to 2004 — has been called by the Obama campaign several times for advice on (believe it or not) housing and the economy according to The Washington Post …
2. James Johnson, former aide to Democratic Vice President Walter Mondale, who earned $21 million in his last year alone serving as Fannie Mae CEO from 1991 to 1998 — was appointed to head Obama’s vice presidential selection committee …
3. Jamie Gorelick, former Clinton administration deputy attorney general, who earned $26 million as vice chair of Fannie Mae from 1998 to 2003 — has been mentioned as a prime candidate for a possible cabinet position in an Obama administration by insiders, and …
4. Rahm Emanuel, former Senior Advisor in the Clinton White House served on the Board of Directors for Freddie Mac where he is said to have opposed every reform proposed by the Bush Administration. Emanuel is credited with being the one man responsible for rallying support for Obama early on among Congressional Democrats.
Take a good, long look at those names and faces: These, along with the aforementioned Jimmy Carter, Bill Clinton, Barney Frank and Christopher Dodd, are the eight people who created this crisis and who profited the most from it — both politically and financially.
Now, their abysmal economic ignorance, political ambition and mindless greed are killing great American companies … robbing millions of their home equity and their paychecks … driving the federal deficit through the roof … and pushing us to the brink of the greatest financial catastrophe in U.S. history.
Plenty more blame to go around
Now, I make it no secret that I’m no fan of either one of the major political parties.
Like Reagan, I believe that government isn’t the solution; it’s the problem. And by studying history, I’ve learned that whenever Washington attempts to solve any problem, it’s a slam-dunk it will only wind up creating two, three or even more far more serious ones.
Even the most casual observer would conclude that as a class, politicians in both parties are notorious for their inability to locate their own arses — even if allowed to use both hands. Until now, we have tolerated them because they — and the massive, bloated, abusive, oppressive government they have created — have been merely a dead weight on us.
Not now. Now, there’s a very real risk that their lust for power, political ambition, corruption and cowardice will cost you your job, your home, and any prospects for a prosperous life.
The ONLY way to limit the damage they do to you, to me and to every other American is to keep Washington on a short leash … prohibit them from dabbling in matters they have no business fooling with … and to strictly limit the size and scope of the government.
“A pox on both their houses,” is my studied philosophy.
So I don’t mind telling you that plenty of Republicans bear guilt for this crisis as well.
Many are guilty of not having the guts to scream bloody murder while these mindless laws were being passed …
Of not taking a stand when Bush tried not once but twice to head off this crisis at the pass …
Or worse; voting with the Democratic majority for laws that elevated populism and political correctness above financial prudence.
And sure: Many CEOs at our distressed or defunct financial institutions are guilty of the same things.
And of extending the same courtesies the government demanded for low-income borrowers to the middle class; luring millions of others into more house than they could afford with no-down-payment loans and adjustable rate mortgages with irresistibly low interest rates.
Plus, the way I see it, there’s no reason why anyone with an IQ larger than my shoe size (11) would invest a penny in mortgages signed by people who had no means or no intent of repaying them.
And of course, millions of Americans are also complicit for allowing themselves to be seduced into taking on more debt than they could ever repay.
But make no mistake: It took two Democratic presidents working with Democratic majorities in Congress to engineer this crisis. Without the disastrous “fair housing” legislation imposed on this country by Carter, Clinton, Frank, Dodd and other Democratic lawmakers, this crisis would never have happened.
And never forget; it was the Democratic Party that killed not one but two attempts by the Bush administration to stop this credit catastrophe before the first subprime lender bit the dust.
This is what happens when hysterical race-baiting and populist politics are allowed to subvert prudent business practices.
This is what happens when despicable politicians are allowed to buy votes from low-income people with laws that endanger your financial survival.
This is what happens when imbeciles — most of whom have never held a real job or have had to make payroll in a company of their own — are allowed to tamper with the economy.
And now, these same clowns
are about to make matters worse
… AGAIN!
Unbelievably, these same drooling morons — the very people who caused this mess in the first place — are now charged with saving our economic system from certain destruction.
Because they are the majority party in Congress, the very Democrats who engineered this crisis — most notably Senate Banking Committee Chairman Christopher Dodd (Fannie Mae’s fair-haired boy and #1 beneficiary of its political contributions) and House Financial Services Committee Chairman Barney Frank (who blocked every early attempt to avoid this crisis) — are running the show.
And if the current state of the presidential polls are any indication, our next vice president — Obama’s running mate, Joe Biden, a loyal Democrat while this disaster was being created in Congress — will be available to break any ties on future Senate votes.
And of course, Obama himself — the self-proclaimed “Candidate of Change” — who has never attempted to change or reform one, blessed thing in his entire life …
Who, much to the contrary, shamelessly exploited Chicago’s notoriously corrupt “pay-to-play” political system for all it’s worth and also built his entire political base on the very law that created this crisis …
… Will soon be lighting up his beloved Marlboros in the Oval Office.
So …
The next time you hear that your home equity has vanished into thin air and that your house is now worth less than you paid for it; maybe even less than you OWE on it …
Or find that your credit limit has just been slashed or you get rejected when you apply for a loan …
Or check your stock portfolio or retirement plan only to find that it’s a mere shadow of what it once was …
Or discover to your horror that our massive federal deficit has gutted your buying power and driven the price you pay at the supermarket or gas station sky high …
The next time you hear that a friend or family member has been laid-off, is teetering on the brink of bankruptcy and in danger of losing everything he or she has ever worked for …
The next time you want to kick the dog because your newly nationalized mortgage or insurance company is suddenly exhibiting all the competence of the U.S. Post Office and the sensitivity of an IRS collection agent …
And the next time Barney Frank or Charlie Rangel or Joe Biden or any other one of these unrepentant, hypocritical scoundrels tells you he’s raising your taxes because you’re not shouldering “your fair share” of the $1 trillion burden his blundering has saddled you with …
You know who to thank.
The moral of the story:
If you trust Washington to save you; you’re screwed.
If this crisis proves anything, it’s that these people don’t give a good goldarn about you. You’re not rich enough to bail out or poor enough to be given a hand-out.
So you, my friend, are on your own.
There are certain things you can do to protect yourself, though. And with this crisis unraveling at a breakneck pace, there’s no time to waste.
Here’s a checklist I hope will come in handy …
1. Rake in every dollar you can. First and foremost, it is absolutely critical that you do everything in your power to increase your income while you still can. Pull out all the stops in your business. If you work for someone else, work overtime or even multiple jobs if you have to. Sell stuff you don’t need or don’t use. Scrape together all the dollars you can.
2. Save every dollar you can. Guard every one of them like a junkyard dog. You’re going to need them. Go through your family budget with a fine-toothed comb and ruthlessly, unapologetically slash every unnecessary expense. The more you save now, the more you’ll have to see you through when the ca-ca hits the air conditioner.
You might also want to check with a financial advisor to explore ways to cut every payment you have to the bone. Because when the trillions of counterfeit paper dollars Washington’s now creating out of thin air begin working their way through the economy, you’ll probably be able to repay every debt you owe with dollars that are worth a fraction of what they’re worth today.
Also — whether you realize it or not, your single largest monthly expense is NOT your mortgage or your car or your health insurance or anything else. Your largest financial burden by far is the government — the federal, state and local taxes you pay dwarf every other expense you have.
So seeing a qualified tax advisor about ways to make absolutely sure you’re paying the absolute minimum required by law would be a stellar idea. Be sure not to forget your property taxes. If your home is declining in value, you may be able to appeal for a downward adjustment that could save you thousands.
3. Watch your bank accounts like a hawk. Whatever you do, do NOT assume that your bank is safe just because this most recent bail-out proposal is likely to become law.
Most banks have already suffered massive losses. Many are wounded; bleeding; struggling to survive. And many still have huge amounts of toxic loans in their portfolios that are steadily eroding their asset bases even further.
The bail-out is NOT going to replace the money they originally paid to buy those investments — and that means they’ll be booking even more losses as they dump those investments into the U.S. Treasury in the months ahead.
If you have more than $100,000 in a bank, make absolutely sure that no single account at any one bank contains even a single dollar more than the limit that’s insured by the FDIC. If you’re not clear on the rules, check out the FDIC website at WWW.FDIC.GOV
4. Program your business for success in this tough environment. If you are starting a business or are considering expanding your business’ product line, carefully consider this new economic environment when setting your strategy.
Think especially hard about recession-proof products and services — the things people can’t live without. Seriously consider products and services that cater to the very wealthy who are likely to be least affected as this crisis unfolds. Also consider things that might help beleaguered wage-earners, consumers, taxpayers, and other business owners get through this alive.
5. Expect stocks and mutual funds to plunge. If you own stocks — either directly, in a mutual fund or ETF or through a retirement or pension plan — you should seriously consider the risk you’re taking with that money.
Some analysts, including the ones who have been the most accurate in their warnings about this crisis from the get-go, are warning that, with the economy and stock market now as nervous as a hooker at a snake-handler convention, the next chunk of bad news that hits the wires could be the straw that breaks the market’s back.
And please — for all our sakes:
HELP US GET THE WORD OUT!
Send this article — in its entirety — to everyone you know. Post it or link to it on every blog, every forum you can think of. Send more links to everyone on your Contacts List and to reporters at the newspapers you read and the TV networks you watch.
Write letters to both of your Senators and Congressperson and urge everyone you know to do the same.
Demand that they repeal the Community Reinvestment Act that caused this crisis (yes, it’s still on the books and still being enforced!).
Tell them you know what they did to cause this crisis.
Demand that criminals in Congress who actually DID cause this crisis suffer at least as distressing a fate as the corporate CEOs they’re scapegoating.
The sooner Washington gets the message that we’re on to them and that we’re not going to take it any more, the sooner things can begin to change.
This is YOUR financial future we’re talking about here. If Washington’s power brokers have proven anything, it’s that they can NOT be trusted to do the right thing until millions of us rise as one and shout “Enough!”
Yours for Bigger Winners, More Often,
Clayton Makepeace
Publisher & Editor
THE TOTAL PACKAGE™
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