Administration Memo Shows Again That Housing Crisis Was Caused By Government
Posted 07:02 PM ET
Housing Crisis:
The left has long maintained the financial meltdown was a result of
greedy bankers fraudulently pushing bad loans on ignorant borrowers.
Now, quietly, the administration has admitted that this isn't true.
The story goes this way: Back in the mid-2000s, greedy, evil bankers around the country and on Wall Street wanted to squeeze even more profits from customers, so they created a raft of newfangled, confusing mortgage loans that took advantage of naive borrowers with high interest rates and hard-to-read loan agreements.
Then, when dangerously overburdened borrowers couldn't pay, the heartless bankers foreclosed on them.
During last year's campaign, the White House made much of this, announcing a major mortgage fraud crackdown to punish those who were responsible.
The so-called Distressed Homeowner Initiative fit perfectly with administration rhetoric that accused Wall Street of complicity in, and indeed responsibility for, the financial meltdown and economic stagnation that followed.
In October 2012, just a month before the election, Attorney General Eric Holder used a press conference to claim the administration had charged 530 defendants for causing $1 billion in losses to 73,000 borrowers.
Powerful stuff. Only it wasn't true.
A memo that the Justice Department, without fanfare, placed on its official government Website admits the real fraud was the administration's claim in the heat of the presidential campaign.
Sorry, the memo says, but we charged 107 people, not 530; victims numbered 17,185, not 73,000; and the amount lost was $95 million — about the cost of President Obama's African vacation in June — not $1 billion.
In short, it was as close to a fabrication as one could get. The whole anti-fraud effort netted just a few culprits, and a minuscule number of victims.
This shocking admission underscores the Big Lie that undergirds the left's anti-Wall Street and anti-bank rhetoric, a staple of the Occupy Wall Street movement that used it to whip up support for Obama in 2012.
The truth is — as we've noted here literally dozens of times — the government, not greedy bankers, was behind both the financial meltdown and the ongoing foreclosure crisis.
But last year, to maintain the fiction of it being the bankers' fault and to deflect blame from failed Democratic policies, the Obama administration embarked on a massive mortgage-fraud witch hunt.
In fact, 74% of all subprime and other bad mortgages were on the books of Fannie Mae, Freddie Mac and a handful of other government lending agencies in 2007, the year the financial meltdown began.
The crisis was triggered not by private bank fraud, but by thousands of unqualified borrowers defaulting on government-backed loans.
This sordid outcome was solely due to a Clinton-era policy of forcing banks to make loans to low-income, unqualified borrowers. The banks wrote the bad mortgages with the understanding they would be securitized and repurchased by Fannie, Freddie and a host of private-sector investors.
From this, the banks got profits, investors got triple-A rated investments, and Fannie and Freddie, the epitome of too big to fail, funded it all. Banks that didn't go along could have requests for new branches refused or even planned mergers rejected. They did what they were told, as good bankers do.
History is clear. This is what happened.
And yet, as recently noted by Peter Wallison, American Enterprise fellow who also served on the Financial Crisis Inquiry Commission, "in the fever swamps of the left there can't be any dissent from their view that the banks and the private sector caused the financial crisis." It helped get Obama elected, after all.
Now, by the government's own admission, the rampant fraud in the mortgage market they screeched about in 2012 didn't exist.
The story goes this way: Back in the mid-2000s, greedy, evil bankers around the country and on Wall Street wanted to squeeze even more profits from customers, so they created a raft of newfangled, confusing mortgage loans that took advantage of naive borrowers with high interest rates and hard-to-read loan agreements.
Then, when dangerously overburdened borrowers couldn't pay, the heartless bankers foreclosed on them.
During last year's campaign, the White House made much of this, announcing a major mortgage fraud crackdown to punish those who were responsible.
The so-called Distressed Homeowner Initiative fit perfectly with administration rhetoric that accused Wall Street of complicity in, and indeed responsibility for, the financial meltdown and economic stagnation that followed.
In October 2012, just a month before the election, Attorney General Eric Holder used a press conference to claim the administration had charged 530 defendants for causing $1 billion in losses to 73,000 borrowers.
Powerful stuff. Only it wasn't true.
A memo that the Justice Department, without fanfare, placed on its official government Website admits the real fraud was the administration's claim in the heat of the presidential campaign.
Sorry, the memo says, but we charged 107 people, not 530; victims numbered 17,185, not 73,000; and the amount lost was $95 million — about the cost of President Obama's African vacation in June — not $1 billion.
In short, it was as close to a fabrication as one could get. The whole anti-fraud effort netted just a few culprits, and a minuscule number of victims.
This shocking admission underscores the Big Lie that undergirds the left's anti-Wall Street and anti-bank rhetoric, a staple of the Occupy Wall Street movement that used it to whip up support for Obama in 2012.
The truth is — as we've noted here literally dozens of times — the government, not greedy bankers, was behind both the financial meltdown and the ongoing foreclosure crisis.
But last year, to maintain the fiction of it being the bankers' fault and to deflect blame from failed Democratic policies, the Obama administration embarked on a massive mortgage-fraud witch hunt.
In fact, 74% of all subprime and other bad mortgages were on the books of Fannie Mae, Freddie Mac and a handful of other government lending agencies in 2007, the year the financial meltdown began.
The crisis was triggered not by private bank fraud, but by thousands of unqualified borrowers defaulting on government-backed loans.
This sordid outcome was solely due to a Clinton-era policy of forcing banks to make loans to low-income, unqualified borrowers. The banks wrote the bad mortgages with the understanding they would be securitized and repurchased by Fannie, Freddie and a host of private-sector investors.
From this, the banks got profits, investors got triple-A rated investments, and Fannie and Freddie, the epitome of too big to fail, funded it all. Banks that didn't go along could have requests for new branches refused or even planned mergers rejected. They did what they were told, as good bankers do.
History is clear. This is what happened.
And yet, as recently noted by Peter Wallison, American Enterprise fellow who also served on the Financial Crisis Inquiry Commission, "in the fever swamps of the left there can't be any dissent from their view that the banks and the private sector caused the financial crisis." It helped get Obama elected, after all.
Now, by the government's own admission, the rampant fraud in the mortgage market they screeched about in 2012 didn't exist.
Unemployment Rate Much Worse Without Fossil Fuel Jobs
Posted 06:51 PM ET
Jobs:
Unemployment remains a sorry 7.4%, but it would be much worse if not for
one industry. And that industry happens to be the one that drives the
president, his party and their constituency to hysterics.
President Obama doesn't like the oil and gas industry. Democratic lawmakers are openly hostile to the producers of conventional fuels. Democratic voters tend to think of oil companies in the same way a conquered people view their occupying force.
But without Big Oil, the flaccid recovery — the weakest since World War II — would be sicklier and the wretched jobs picture would be truly miserable.
On more than one occasion, Obama has promised to "pivot" his attention toward jobs, to give them his "laser-like focus." Yet private-sector job growth has been negative; 0.9% fewer private sector jobs exist today than in January 2007.
As Mark Perry has pointed out in his Carpe Diem blog, the U.S. fell from 115.7 million jobs in January 2008 to 106.8 million jobs in February 2010, a 7% drop. Employers have added 7 million jobs since then, but that's not enough to make up the loss.
Hence, we're still 0.9% off the January 2007 high.
All that has kept those numbers from being uglier is the detested oil and gas industry. Since January 2007, employment there has grown 50%. Much of the progress is due to a sharp increase in the use of fracking to release oil and natural gas trapped in shale.
"Over the last two years, U.S. oil and gas companies have hired an average of 155 new employees every business day for extraction operations (oil and gas exploration and all production work up to the point of shipment) and support activities (excavation, well surveying, casing work and well construction), which is about one new job every three minutes," Perry recently wrote in his blog.
And they tend to be good jobs. Bright Labs, a San Francisco-based venture that sifts through employment data, said each job created last year by the shale boom started with an annual salary of $150,000.
While Big Oil has added jobs at no cost — and great benefit — to taxpayers and consumers, Obama's green energy effort has lurched, stumbled and crashed. It's been a vehicle for government corruption and waste.
According to a Bloomberg News analysis, the Energy Department managed to create fewer than 29,000 green jobs by last fall — at a cost of $21 billion, or $728,000 per job.
Yes, a political agenda can be a destructive and costly thing.
President Obama doesn't like the oil and gas industry. Democratic lawmakers are openly hostile to the producers of conventional fuels. Democratic voters tend to think of oil companies in the same way a conquered people view their occupying force.
But without Big Oil, the flaccid recovery — the weakest since World War II — would be sicklier and the wretched jobs picture would be truly miserable.
On more than one occasion, Obama has promised to "pivot" his attention toward jobs, to give them his "laser-like focus." Yet private-sector job growth has been negative; 0.9% fewer private sector jobs exist today than in January 2007.
As Mark Perry has pointed out in his Carpe Diem blog, the U.S. fell from 115.7 million jobs in January 2008 to 106.8 million jobs in February 2010, a 7% drop. Employers have added 7 million jobs since then, but that's not enough to make up the loss.
Hence, we're still 0.9% off the January 2007 high.
All that has kept those numbers from being uglier is the detested oil and gas industry. Since January 2007, employment there has grown 50%. Much of the progress is due to a sharp increase in the use of fracking to release oil and natural gas trapped in shale.
"Over the last two years, U.S. oil and gas companies have hired an average of 155 new employees every business day for extraction operations (oil and gas exploration and all production work up to the point of shipment) and support activities (excavation, well surveying, casing work and well construction), which is about one new job every three minutes," Perry recently wrote in his blog.
And they tend to be good jobs. Bright Labs, a San Francisco-based venture that sifts through employment data, said each job created last year by the shale boom started with an annual salary of $150,000.
While Big Oil has added jobs at no cost — and great benefit — to taxpayers and consumers, Obama's green energy effort has lurched, stumbled and crashed. It's been a vehicle for government corruption and waste.
According to a Bloomberg News analysis, the Energy Department managed to create fewer than 29,000 green jobs by last fall — at a cost of $21 billion, or $728,000 per job.
Yes, a political agenda can be a destructive and costly thing.
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