Obama and the Economy:
What the Democrats
Don't Want You to Know

Barack Obama's Role in the Mortgage Meltdown

The Democrats have been touting Obama and the economy, and claiming the massive mortgage meltdown and economic crisis is the result of eight years of "failed Bush economic policy."

(Don't you love the way the Democrats talk in "sound bites"? Like, "more of the same." They're hoping that if they're repeated often enough, those sound bites will stick in your head, so that's what will be on your mind when you mark your ballot.)

They say you should elect a Democrat President next month because, of course, the Republicans caused this economic mess, and, they say, McCain is part of the problem.

Whoa, Nellie! Let's take a look at where this "mortgage meltdown" originated. It's been coming for a very long time, and there have been many warnings. In fact, it's the Democrats who have continually stood in the way of any corrective or preventive action to keep us from being in the mess we're in right now.

Let's face it, it's a matter of common sense:

If you sell someone a home they can't afford, with mortgage payments they can just barely make, and an adjustable rate loan, what do you think is going to happen when that mortgage rate adjusts upwards? Well, if they could "just barely" make the payments before, and now they're going to have even larger payments, what does common sense tell you?

The title of a Dianne Keaton - Jack Nicholson movie comes to mind: "Something's Gotta Give!"

The only way they can hope to make higher payments is to have a higher income. Do they? Maybe, but maybe not. Or, if they do have a higher income, they've also got more debt, with more monthly payments, because that's just the nature of the current American middle class financial mindset:

"We're making more, so let's spend more. OOPS! Forgot about that adjusting mortgage payment thingie. Yeah, we knew it was gonna go up, but we just didn't realize it was going up NOW."

So, more and more people began defaulting on mortgages. They just couldn't keep up with the rising payments. And since they got into the house with no or little money down, they have basically nothing to lose by just walking away (except their credit rating, but that's another article).

Just in case you were wondering, the reason banks used to insist that you make at LEAST a 10% down payment when you bought a home is so that you had a "stake" in that home, some "skin in the game." It gave them a comfort level that you'd make the mortgage payments because you didn't want to lose that $10,000 you put into the down payment.

America has seen record numbers of foreclosures in the past couple of years, and it doesn't look like it's going to end soon.

So, how did we get to this point? Was it the result of 8 years of "failed Bush economic policy" as the Democrats wish you'd believe? Don't forget, the Democrats have controlled Congress for the past two years. Sometimes I wonder how Nancy Pelosi and the rest of those Democrats foaming at the mouth with Bush Derangement Syndrome and non-existent memories manage to sleep at night.

Just like they (and the members of the mainstream media) seem to ignore the well-documented events that led to the US invasion of Iraq and to tell a much-different version today (it's called revisionist history), they want you to believe it's the White House, "McSame," and the Republicans that are responsible for the current financial crisis. Not so.

Yes, the Democrats are telling you to elect Obama, and they (the Democrats) will clean up this mess that the Republicans have created. "Obama and the Economy." That's where you should cast your vote. McCain is weak on the economy, they say.

Well, let's take a closer look at "Obama and the Economy" and what we could expect the Democrats to do to "clean this up." Because the Democrats seem to be largely responsible for starting the snowball rolling that ended up this week with the necessity of a $700 billion dollar bailout to "stabilize" the economy, and free up the credit market which froze while waiting for the vote on the bailout.

To find the start of this mortgage meltdown, we need to go all the way back to the 1977 Community Reinvestment Act enacted by a Democrat-controlled Congress and signed into law by President Jimmy Carter. That Act required banks and other lenders to make loans to lower-income wage earners in the communities served by the bank.

According to columnist Noel Sheppard of Investor's Business Daily, "The Carter-era Community Reinvestment Act forced banks to lend to uncreditworthy borrowers, mostly in minority areas."

He went on to quote another IBD editorial by Terry Jones:

"Age-old standards of banking prudence got thrown out the window. In their place came harsh new regulations requiring banks not only to lend to uncreditworthy borrowers, but to do so on the basis of race.

These well-intended rules were supercharged in the early 1990s by President Clinton.

Despite warnings from
GOP members of Congress in 1992,
Clinton pushed extensive changes to the rules
requiring lenders to make questionable loans.


Failure to comply meant your bank might not be allowed to expand lending, add new branches or merge with other companies. Banks were given a so-called "CRA rating" that graded how diverse their lending portfolio was.


In the name of diversity, banks began making huge numbers of loans that they previously would not have. They opened branches in poor areas to lift their CRA ratings.

Meanwhile, Congress gave Fannie and Freddie the go-ahead to finance it all by buying loans from banks, then repackaging and securitizing them for resale on the open market.

That's how the contagion began.

With those changes, the subprime market took off. From a mere $35 billion in loans in 1994, it soared to $1 trillion by 2008."

Wait just a doggone minute here! The law that started this subprime mortgage snowball was passed by a Democrat-controlled Congress, and signed into law by Democrat President Jimmy Carter? Yep.

And extended by Democrat President Bill Clinton? Yep again.

So, now how do you feel about electing a Democrat to "clean it up?"

But wait, there's more!

"But the fact is, President Bush in 2003 tried desperately to stop Fannie Mae and Freddie Mac from metastasizing into the problem they have since become.

Here's the lead of a New York Times story on Sept. 11, 2003: "The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago."

Bush tried to act. Who stopped him? Congress, especially Democrats with their deep financial and patronage ties to the two government-sponsored enterprises, Fannie and Freddie.

"These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis," said Rep. Barney Frank, then ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

It's pretty clear who was on the right side of that debate.

As for presidential contender John McCain, just two years after Bush's plan, McCain also called for badly needed reforms to prevent a crisis like the one we're now in.

"If Congress does not act," McCain said in 2005, "American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole."

Sounds like McCain was spot on.

But his warnings, too, were ignored by Congress."

What about Barack Obama and the Economy?

But wait -- Barack Obama's a relative newcomer to the political realm. What involvement could he possibly have in this? I'm so glad you asked!

"As they grew,

Fannie and Freddie grew
heavily involved in "community development,"
giving money to local housing rights groups
and "empowering" the groups, such as ACORN,
for whom Barack Obama once worked in Chicago.

Warning signals were everywhere. Yet at every turn, Democrats in Congress halted attempts to stop the madness. It happened in 1992, again in 2000, in 2003 and in 2005. It may happen this year, too.

Since 1989, Fannie and Freddie have spent
an estimated $140 million on lobbying Washington.

They contributed millions to
politicians, mostly Democrats,
including Senator Chris Dodd (No. 1 recipient)
Barack Obama (No. 3 recipient,

despite only three years in office).

The Clinton White House used Fannie and Freddie as a patronage job bank. Former executives and board members read like a who's who of the Clinton-era Democratic Party, including Franklin Raines, Jamie Gorelick, Jim Johnson and current Rep. Rahm Emanuel.

Collectively, they and others made well more than $100 million from Fannie and Freddie, whose books were cooked Enron-style during the late 1990s and early 2000s to ensure executives got their massive bonuses.

They got the bonuses. You get the bill."

So, while you watch those TV clips of Nancy Pelosi, Barney Franks, and Barack Obama blaming the Republicans for the Fannie Mae - Freddie Mac debacle, just remember that they pocketed nearly $175,000 in campaign contributions from Fannie and Freddie.

And remember that every time the Republicans tried to reign in Fannie and Freddie, it was a Democrat-controlled Congress that stopped them. For the past two years, while the country has experienced the largest foreclosure crisis in its history, we've had . . . yes, you guessed it . . . a Democrat-controlled Congress.

It's time to throw the bums out! Each and every one of them. We don't need more of the same from the Democrats. That's what created this mess. That's not change we can believe in!

It's time for some Straight Talk, and some real Washington reform.

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