Sunday, February 12, 2012

Listen to Ralph, Listen to Ralph, Please Listen to…

Ralph “Get 'Em While They’re Hot” Nader

Even before Ralph Nader’s huge ego impacted his brain in 2000 and told him to run an independent presidential race as the “Green Party” candidate, which likely cost Democrat Al Gore a victory in 2000 and brought the nation 8 years of George W. Bush--with his unwanted wars and extreme deficits--I had little use for Ralph who despite all of his anti-establishment bravado quietly became a millionaire.

Ralph may resurrect himself in my eyes, if he can convince Newt Gingrich, who likely is angry enough to listen, to run as a third party candidate (as Ralph now has done five times).

Nader never will admit and indeed continues to brag about his role in dragging votes away from Gore, but no amount of car safety issues or consumer protection benefits, will balance his perfidious delivery of the White House to George W. Bush, twelve years ago.

Every time I think of “Florida” or “Chad,” I think of Ralph Nader.

Nader’s advice to Newt is in the following link.

GOP Fingerprints on GSE Low Income Lending

Let me be truth teller, again.

I’ve familiar with all of the right wing attacks on Fannie (and Freddie) and the GSEs affordable housing efforts.

It’s perfectly acceptable to assail Fannie and Freddie for their unwarranted subprime purchases in the past decade; I have done so often myself.

What upsets me is that today’s attacks are shotgun assaults aimed, not just at the ill-advised and flawed subprime buys of 2004 and forward, but at the Fannie (and Freddie) of 20 years ago, when the companies worked under fresh federal statute to provide homeownership opportunities to a broad range of low and moderate income families, including minorities and those living in central cities and other underserved areas.

Draw Distinctions
The eras easily can and should be divided by serious reviewers—hint: pre-subprime Fannie, good; post subprime Fannie, bad--especially those divining some type of successor national mortgage investors, to insure fairness, standardization, and 30 year financing for future borrowers.

GOP critics also need reminding that the 1992 seminal housing goals legislation, signed into law by President George H. W. Bush, was a bipartisan effort—again with Republicans in the White House and congressional Democrats—designed to insure that all banks, mortgage banks, and savings institutions, which were Fannie and Freddie customers, would originate loans to those desired demographic groups, if the lenders wanted to do business in the burgeoning secondary mortgage market.

Senior Bush Made It Law, “W” Jacked Up the Goals

With the DNA of both parties on the provision, the bipartisan statute used Fannie and Freddie as both measurement tools and engines to shape the primary mortgage market--which dealt directly with consumers—to do a job which it had been reluctant to perform.

Before 1992, both GSEs had their own regulatory affordable housing standards, implemented by the Department of Housing and Urban Development, which both Fannie and Freddie met.

The new law hardwired the goals into statute and allowed them to be increased by the Administration in power (first Bill Clinton and later George W. Bush).

In permitting escalation of housing goals, the Congress and White House used Fannie and Freddie as the hammer and the goals as the anvil to produce both more mortgage financing as well as a fairer system relative to low income borrowers.

When Republicans bleat about “housing goals” and the former GSEs actions, I hope they will pause and remember the pivotal role that President H.W Bush, played as well as that of his son George W, who leaned on the former GSEs to meet robust low-mod goals of over 50% of their annual business.

Different Church, Same Pinto

Ed Pinto once worked at Fannie Mae, as he proudly will proclaim.

What he seldom notes is that, after a short stint, the company suggested that he get on with his life’s work…somewhere else.

Ed emerged on the Washington political scene a few years ago, working for the American Enterprise Institute (AEI) as a staunch critic of Fannie Mae and Freddie Mac.

He debuted after both GSEs had ruined much of their stellar reputations after buying billions of Alt A and private label subprime mortgage securities, which produced so much red ink that the Bush Administration chose to put both Fannie and Freddie into conservatorship.

Pinto Started With a Distortion

Ed’s maiden performance, thanks to the AEI’s press operation and the Right Wing’s hunger for anti-Fannie/Freddie raw meat, was his claim—based on his own research-- that in the 1990’s Fannie Mae acquired untold billion of dollars in shoddy loans, which he labeled subprime.

His opinions were celebrated, especially by his AEI colleague Peter Wallison, congressional Republicans and other conservatives.

But, the response hardly was universal.

Ed and his report met solid opposition, was called inaccurate, and rejected by prominent sources including Nobel prize winners, national columnists (Joseph Stiglitz, Joe Nocera), the Federal Reserve Board and the President’s Financial Crisis Commission.

But, Ed kept flogging his shaky thesis, because the Right gave him regular applause.

Just last week, Ed was pipe dreaming, again.

“Horatio at the…,” I Mean “Ed at the Bridge”

In an email to his peeps, Ed claims that as early as 1986 he positioned himself against the formidable National People’s Action (NPA) low income advocacy group---headed by Chicagoan Gale Cincotta--which was demanding that Fannie Mae and Freddie Mac lower their underwriting standards to make it easier for lower income families to qualify for GSE financing.

Ed quotes himself warning the group it would be a financial disaster for the poor and the nation if Nap’s efforts succeeded and notes ruefully that the NPA and others stated that same position before the Congress in 1991.

If NPA and other congressional witnesses--in 1991--asked Congress to make it easier for those with lesser incomes to get financing, it had little to do with the F&F private label subprime purchases a decade and a half into the future, a nexus Ed tries to draw.

That demanding crowd wanted action then and in a sense succeeded, when Fannie and Freddie made underwriting adjustment to accommodate more low income lending, as they contemplated the 1992 goals legislation noted previously.

But those 1990’s loans the GSEs made were neither shoddy nor a precursor to F&F’s PLS subprime purchases fifteen years later.

And His Distortion Was Blown Up With Facts

The most damming unalterable fact for the AEI/Pinto/Wallison arguments is that the loans Fannie bought and securitized through the all of the 1990’s, and into the following decade, did not go bad.

More than a dozen years of corporate records filed with HUD, the GSEs new safety and soundness regular OFHEO (now FHFA) and the SEC—as well as reported in the national and financial media--show superb loan performance (no defaults) and few losses.

Ed, claiming the mortgage loans were faulty doesn’t make them bad, just the opposite when there is no evidence of failure or poor underwriting.

I don’t know how I –and others--can be more clear refuting Ed’s very shaky premise or how the GOP forces can continue to support the Pinto/AEI/Wallison thesis.

Speaking of Church….

This is a Washington Post reader’s Internet comment on the Catholic Bishops opposing President Obama making birth control services/devices available to women.

“We are fighting a war in Afghanistan; Middle East on verge of melt-down; hunger, drought and famine in Africa; Greece and Portugal heading towards bankruptcy; millions of Americans still out of work; millions of homeowners underwater facing foreclosures; Moe, Larry, Curly and Shemp running for Republican nomination; and the most important thing on the minds of the Catholic Church and its autocratic Bishops is whether or not the American woman has access to contraception. Are you kidding me?”

Last Week’s Mortgage Deal With the Lenders

I think the big mortgage lenders got off cheap at @$25 billion, given the much larger mess which still exists. I hope the state AG’s push the banks to restructure far more loans than those possible, given the funds mentioned.

Maloni, 2-12-2012

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