Investigate This!

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Fannie was pressuring banks to write mortgages with no money down and no proof of income. What could go wrong?

In 2004, Bush’s White House Chief Economist Gregory Mankiw warned that Fannie was creating “systemic risk for our financial system.” In response, Barney Frank went to a champagne brunch with his partner “just because.”

Democrats saw nothing of concern in the Fannie debacle. Bad mortgages don’t contain sodium, do they? They don’t engage in “hate speech.” And they don’t emit carbon dioxide. There was nothing to catch a Democrat’s eye.

In 2005, when the housing bubble burst, Sen. Chuck Schumer, D-N.Y., introduced a bill allowing Fannie Mae to buy up even more schlock mortgages, apparently reasoning that if owning some toxic mortgages is bad, owning lots of them must be better!

He accused Republican opponents of his suicidal bill of being against affordable housing. (And that is a specific example of how liberals love the poor so much, they promoted policies to create millions more of them.)

As late as 2008, Sen. Chris Dodd, D-Conn., who had received more than $133,000 in political contributions from Fannie Mae, called Fannie “fundamentally strong” and “in good shape” — which is the kind of thing the Politburo used to say about Yuri Andropov right after he died.

(Amazingly, Dodd was only the second most embarrassing Democrat to run for president in 2008, but only because John Edwards was also running that year.)

As the titanic losses were racking up, Fannie Mae’s operators, Franklin Raines and Jamie Gorelick, disguised the catastrophe by orchestrating a $5 billion accounting fraud — all the while continuing to pressure banks to make absurd, politically correct loans and denouncing Republicans as enemies of the poor.

In Gorelick’s defense, at least when she was wrecking the economy, she wasn’t able to wreck national security by building any more walls between the FBI and the CIA.

Have you ever noticed that whenever there’s a major calamity in this country, the name “Jamie Gorelick” always pops up? I think I’ll pull some articles about the Great Chicago Fire from Nexis to see if there was a “Gorelick” living on Catherine O’Leary’s block.

As Peter Schweizer points out in his magnificent book “Architects of Ruin,” which everyone should read, Enron’s accounting fraud was a paltry $567 million — and it didn’t bring down the entire financial system. Those involved in the Enron manipulations went to prison. Raines and Gorelick not only didn’t go to jail, they walked away with multimillion-dollar payouts, courtesy of the taxpayer.

(Here’s more fascinating Jamie Gorelick trivia: That giant wall she built between the FBI and the CIA, making 9/11 possible? It was financed with a risky loan from Fannie Mae.)

Under the Democrats’ 2010 “Financial Reform” bill (written by Chris Dodd, Barney Frank and Goldman Sachs), Raines keeps his $90 million, Jamie Gorelick keeps her $26.4 million, and Goldman keeps its $12 billion from the AIG bailout.

Let’s get it back. Twelve billion, one hundred and sixteen point four million dollars might not sound like a lot to you, but it starts to add up.

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  • Chezwick_Mac

    Ann is dead-on about a lot of this, but the idea that it was solely the Dems "who used taxpayer money to bail out their friends on Wall Street" is a fallacy. It was the Bush Administration that put together the Wall Street bail-out…supported wholeheartedly by then-Republican Presidential candidate John McCain.

    Ann is an outspoken polemicist and an interesting person, but like so many pundits on both sides of the isle, she is prone to selective memory, demagoguery, and hypocrisy. Quite obviously, we want to win the political battles we're engaged in against our liberal opponents, but let's not sacrifice fidelity to the truth and fair-mindedness in the process.

    • alan g

      Hey chez, As much as everyone hated tarp, as we all did, it was pretty much a success. I don’t think Coulter was wrong at all. I don’t believe even she agreed with the bail-out. So, don’t sell coulter short.

    • John Brown

      Nice trice Chezwic. But it only happened because the new Obama people were brought into the process in the last months of Bush admin. – they drove this stake into our hearts. Not Bush. Ann Coulter tells the truth. Bush people tried to fight the coming tsunami – Liberals blocked him every turn. Liberals lie and deceive. Just like when they claim 'death panels' were allowed under the Bush admin – but Bush actually vetoed the bill allowing the panels. His veto was overiden by the liberals. Yet tricksters like you would tell us they were allowed under Bush. Just like the bailouts.

      • Chezwick_Mac

        Don't know what planet you live on, but TARP (the Wall Street bailout) was a Bush Administration initiative. This is a fact. Your postulation that Bush was – in his final months – somehow under obligation to Obama is absurd. Right up until the final day of his presidency, Bush could have resisted any bail-out of Wall Street if he had actually wanted to.

        A case could readily be made that Bush acted responsibly, that stabilizing the financial institutions was in the national interest. But whether TARP was necessary or not, it is a flight from reality for you and Colter to attribute it to Obama.

        Obama needs no additional assignation for ruining our economic prospects. His "stimulus package" that stimulated nothing but added a trillion dollars to our debt and of course his so-called healthcare "reform" that threatens small businesses, vastly expands government and violates the Constitution….these are sufficient grounds for the most strenuous condemnation and repudiation.

        How unfortunate when conservatives start emulating liberals and blame EVERYTHING on the other side, facts be damned!

      • jtbaumgart

        Wrong John Brown. ACORN, you know the community organizers that Barrack Hussein Obama was aligned with, went into banks demanding loans for people who could not afford the homes, then when the banks originally refused the loans, they picketed outside and hollered that the loan officers were racists. Get your facts straight.

      • trickyblain

        "Just like when they claim 'death panels' were allowed under the Bush admin – but Bush actually vetoed the bill allowing the panels. His veto was overiden by the liberals."

        Um, what?

        Do you have a bill number and a date of veto?

    • Seek

      Nice try, John Brown.

      President Bush made clear as early as 2002, in a very detailed speech, that he wanted to radically boost Hispanic and black homeownership rates. He and Karl Rove explicitly believed this to be sound economic policy and a winning political strategy for getting more minority votes. Steve Sailer's lengthy articles in on this issue make this indisputable. Lenders, builders and realtors went along with this charade because it was good for business. The late Jack Kemp, another growth-at-any-cost Republican, was absolutely evangelical about the need for more minority homeownership.

      Yes, Democrats have a lot to answer for. But so do Republicans. A plague on both their houses.

  • aspacia

    I am sick and tired of Coulter and many other conservatives taking cheap shots at teachers. Sure many teachers to shovel liberal BS, and buy into this pedagogy, self-esteem crap, but a huge number do not.


    • "John Brown"

      In such an educational environment, you cannot pass a teacher by saying they are merely following orders. Yes, it appears more and more that liberal bureaucrats act as unelected commisars to push their academically inspired agenda – most times from the dark and we never know until it becomes 'normal'. But a tree is known by it's fruit. If a true teacher is forced to feed a child rotten fruit. They should refuse to do so. They should fight fire with fire and resist the liberal establishment. Or resign.

  • FBastiat

    “The Myth that Laissez Faire Is Responsible for Our Present Crisis”:

    • proxywar

      That's a much better article. All forntpage cares about is defending republicans. They don't care about captialism.

  • Wesley69

    Hopefully, Committee Investigations will get the facts about the economic collapse and lay the blame where it should be. (at the Democrats doorstep rather than solely on the Bush administration) Correcting the damage will take longer.

    The Democrats over the years have been using the strategy of Cloward & Piven, slowly overloading the system forcing banks to make risky loans. These repackaged loans were sold abroad, allowing the economic collapse to spread worldwide.

    Part of the Cloward & Piven theory was that when the system failed, the people would rise up. You are seeing it happen in Greece, in France, Italy, the Irish Republic and Latvia, as government's try to adopt austerity programs. It hasn't happened here, yet. Then again, the Democrats did not take into account the rise of the Tea Party.

    The rise of the Tea Party is America at its best. Not so, to Democrats and their Media minions. They labeled it racists, red necks, homophobes using every name in the book to smear the Tea Party, not only to discredit it, but to destroy it. In November, 2010, WE THE PEOPLE spoke and handed Democrats, in record numbers, their pink slips. Now, starts the job of correcting the damage, but Republicans still need to find out conclusively and transparently, what happened to cause this economic disaster.

    To correct the damage, both Fannie Mae and Freddie Mac need to be privatized. No more bailouts to either of these. Loan requirements need to be strengthened. Not just anyone should be able to get a home loan unless they can prove they have the income to repay it. When loans are sold and packaged, there needs to be total transparency so that the buyer knows exactly what he/she is paying for. There needs to be prosecutions and trials for those who corrupted the system. It will most likely not happen for two years, but in a new administration, it should be pursued.

  • jacob

    With all due respect, I fail to see any connection between what ANN COULTER says and what ASPACIA above does…

    Unfortunately, it is our school "system" which allows the sad situation he/her refers

    Classroom authority as I remember it 60 years ago has, for all intent and purpose,
    been taken away from teachers and given to the students.

    And as to what ANNE COULTER was saying about FANNIE and FREDDIE, allow
    me to say that our condominium Board had to come up with a bylaw rejecting the
    acceptance of fivepercent down unit buyers, as they were almost immediately
    unable to pay the monthly maintenence fee….

    May I remind those who voted for OBAMA that HE was fiercely opposed to Mc
    Cain's law proposal to rein in FANNIE and FREDDIE's abuses ???


    • aspacia

      jacob, you are correct regarding Coulter's claim. I was responding to: "Forget “stimulus” bills and “shovel-ready” bailouts (for public school teachers, who need shovels for what they’re teaching), the current financial crisis, which is the second Great Depression, was created slowly and methodically by Democrat hacks running Fannie Mae and Freddie Mac over the past 18 years."

      BTW, to John Brown, and Coulter, I do not shove bs to my students. I said I am forced to pass them through the system.

  • Sprinklerman

    aspacia,_I'm not a teacher. Never have been and I don't ever want to be one. Most of the teachers that I have had in the past were very good and did the best that they could with the resources allocated to them. But then I had some really bad ones too. Most at the college level.__Many of my relatives are teachers. It's a choice they have made as we all do when we choose a profession. My daughter is presently engaged to a high school teacher. He is Conservative. In a school with about 100 teachers he is one of three. His mother is also a high school teacher and is also a Conservative. She is part of a very small minority in a sea of Liberals and Progressives. Many of their collegues routinely use their classrooms for something other than teaching their assigned subject.__

  • Sprinklerman

    aspacia, (part 2)
    The point is, that a large sum of the stimulus money went to fund teachers and more teaching positions in our public schools. One comment and you go off the deep end. Me thinks that you protest too much. And despite what you feel the vast majority of those in the teaching profession (and administrators as well, since they routinely come from the ranks of teachers) are liberals and progressives. They use their position as a means to indoctrinate the students to their world view and that is not what they are paid to do.__This article is about the financial collapse of this nations banks. As much as the Dems wish to make it go away a lot of what Ann mentioned in this article is on youtube for all to see. Frankn'Dodd, are prime reasons why we got into this mess in the first place. Had the Community Re-Investment Act never been passed, we very well may have avoided this mess. Had Congress acted when Bush and McCain raised the red flag on Fanny Mae and Freddie Mac, we might have also avoided this mess. Am I happy that Bush bailed them out? HELL NO! But that's in the past. How do we move forward from here? Stop electing liberals and RINOs.__

  • jaythehistorian

    Ann Coulter hit the nail on the head. The financial crisis was caused by the racist Community reinvestment act which robbed whites and Asians to pay for housing ownership which blacks and hispanics can not afford. There is absolute proof. Housing prices crashed in October 2008 (conveniently just in time to help the jihadist moron Obama).This was the catalyst for the depression the US economy is currently suffering .In Oct 2008 I lived near the Canadian border . On the Canadian national news , they interviewed a prominent Canadian banker about the US financial situation. Canada at the time was not affected at all. Why? The banker said ,unlike the US , Canadian banks gave loans to purchase houses ONLY TO QUALIFIED BORROWERS. Canada's banks didn't have a gun at their heads forcing them to lend by racial quota as the Community Reinvestment act required. After the housing market went bust, the rest of the economy collapsed like dominoes.

  • Greg

    Dodd, Frank, Gorlick Raines should all be in prison. They will be responsible for the civil war that they started by ruining everyone's security.Greg

  • Gideon

    I remember a Canadian government official asked in the Wall Street Journal how his country avoided our disaster. He said that in Canada, the people who made the loans also took the risk of the loans. In this country, bad loans were packaged, given a triple-A rating, and then sold.
    Its interesting to read liberals' explanations for the housing meltdown. Robert Scheer just wrote a new and popular book that says the problem was not the government pushing bad loans. He does lam into people in both the Bush and Obama administrations. I think there are several pieces to the puzzle, and Anne has identified a big one in this article, but I'm not sure its the whole explanation.

  • ajnn

    1. "The rise of the Tea Party is America at its best. " Yes. The United States is a remarkable country with a unique aqnd wonderful culture. I hope we can maintain and expand on it.

    2. "Its interesting to read liberals' explanations for the housing meltdown. " This is quite a problem. The most silly and nonsensical fantasies (always blaming the free market) are given real credibility.

  • popseal

    Every politician that had anything to do with inflicting affirmative action onto the mortgage loan industry ought to be brought up on the charge of defrauding the American people that were overly anxious to own a home.

  • 080

    I don't think that we're in a second Great Depression. The fundamental ingredient of the 1929-39 bust was the collapse of world trade. We aren't there yet but it's not out of the question. Depending on what moves the government makes we will probably enter a period of stagflation. However, if world trade goes all bets are off.

  • Canuck

    Politicians of all stripes voted for laws, regulations and policies which encouraged massive investment in real estate rather than in productive uses. These laws are still largely in place. When will the public learn that politicians are simply bribing us with our own money, and that there is no such thing as a free lunch. Centally planned economies always fail.

  • Guest

    "The fundamental ingredient of the 1929-39 bust was the collapse of world trade."

    And what caused the collapse of world trade?

  • proxywar

    I'm sorry, but if you are going to act like the republicans did nothing wrong in this your just being dishonest.

  • RiverFred

    Lets start at the beginning- NAFTA, then there is outsourcing, qualifying those who do not qualify for home loans so the poor can own a home because the lending institutions are racist, yeah sure (only a liberal would think that way.) How about unfair foreign trade practices costing the U.S. a trade deficit of 20 billion per month. What about allowing one million legal foreign workers into the U.S. each year. There is no end to the stupidity of our politicians.

  • Canuck

    RiverFred: Free trade is good for consumers. It doesn’t matter what other jurisdictions do. Why should politicians interfere with our purchasing decisions? Trade barries are used by politicians to pay off politically connect businesses and labor unions, among others. Why do you think that trade deficits matter? You should be more worried about massive government budget deficits and public debt (on the books and off).

  • SandezRey

    From the moment "Affordable Housing" became a political issue, disaster loomed. Banks are perfectly capable of protecting themselves from 'bad risks'. Left to thier own devices banks would lose little in defaulted loans because of their basic desire to get their money back. But the moment political pressure is applied to write more loans, the downward spiral begins. The bank is cautious with it's money for a reason, but the politicion who writes the law and the pressure group that pushes for the law has no reason to be careful with someone elses money.
    The obvious lesson to be learned is; A marketplace cannot be controled from the top down. For this reason, the federal government should stay as uninvolved in the housing market as possible. All the pious reasoning for government intervention in the housing market to "Help the Poor", should in a logical world be permanently discredited by the actual DAMAGE done to millions of poor and working class people by this end result. Will it? One can only hope.

  • steven L

    Why don't we have stiffer penalties against white collar criminals and dishonest politicians?
    Probably there are too few of them?

  • TruthSetsYouFree

    I would hope that those bantering back and forth above about whether it is the Democrats or Republicans who are at fault (Coulter included) would please reread all the posts above (including their own). Then, perhaps a light bulb goes off, and they will be able to see that there are some truths and some fault for those on both sides of the aisle. Then it is my fervent prayer, that they would realize it is not the Republicans or the Democrats but rather it is both. As both parties have those disassociated from reality by wealth and power, elitists, globalists, from both side of the aisle that have been/are/and will be selling our way of life down the river unless we realize that, come together and make some real change that works for the God fearing, honest, and rule of law abiding citizens of this country. Folks as long as they have us separated-we have already lost.