Archive for September 28th, 2008

September 28, 2008

Bailout deal reached

UPDATED & BUMPED: The text of the “discussion draft” is now online. After an initial read, Michelle Malkin is still against it.

UPDATE: Both Obama and McCain say they’ll support the bill, despite widespread public opposition. Mike Pence is still opposed.

PREVIOUSLY: I’m still against it, but Republicans reportedly succeeded in improving the bill by stripping out the funding for ACORN and other left-wing groups. It’s still a bad deal:

Congressional leaders and the Bush administration reached a tentative agreement early Sunday on what may become the largest financial bailout in American history, authorizing the Treasury to purchase $700 billion in troubled debt from ailing firms in an extraordinary intervention to prevent widespread economic collapse. . . .
The bill includes pay limits for some executives whose firms seek help, aides said. And it requires the government to use its new role as owner of distressed mortgage-backed securities to make more aggressive efforts to prevent home foreclosures. (Emphasis added.)

Look, the $700 billion taxpayer bailout is required because the “owners” of these homes have not made their payments. Getting a mortgage and not making the payments is like shoplifting a house. If the “owners” — many of whom secured mortgages based on fraudulent presentations of income they didn’t have and debts they didn’t disclose — are in default, then those houses are the rightful property of the mortgage holders, and the “owners” are practically thieves.

The only way the investment can be recovered is by repossessing the houses and selling them to people who can pay. So “efforts to prevent home foreclosures” translates to “efforts to prevent recovering the investment from perpetrators of fraud.” At some point, there must be accountability.

UPDATE: Michelle Malkin:

I’d refer you to a copy of the bill, but…there is none.
And there won’t be one for taxpayers to read and analyze for themselves before the bailout mob rushes to pass this unprecedented “rescue” of private industry on onday.

The Bipartisan Bailout Boondoggle of 2008. Y’know, it’s not often that libertarians and “populists” are on the same side of an issue.

PREVIOUSLY:
9/27: Is Neil Cavuto racist?
9/26: Arnold Kling on the bailout
9/26: Ace going soft on Paulson plan?
9/26: ACORN bailout?
9/26: What caused the crisis?
9/26: No bailout, no debate?
9/25: Porking up the bailout bill
9/18: How Clinton caused the current crisis
9/17: Feeling the pain he helped cause
9/16: Jamie Gorelick & Fannie Mae

September 28, 2008

ROLL TIDE ROLL!

Alabama defeated No. 3-ranked Georgia 41-30, and it shouldn’t have been that close.

The Crimson Tide ran up a 31-0 halftime lead, but Georgia apparently made some adjustments at halftime, shutting down Alabama’s running game and uncorking a strong passing game with quarterback Matthew Stafford.

Alabama’s future opponents will study video of this game and try to emulate what the Bulldogs did in the second half. Georgia’s defeat at home in Sanford Stadium — combined with Ole Miss beating No. 4-ranked Florida 31-30 — showed why there’s never really an off-week in SEC football.

The Crimson Tide, ranked No. 8 going into tonight’s game, will now move up in the rankings and may rate as high as No. 5 going into next week’s home game against undefeated Kentucky. Let’s hope Alabama doesn’t take this one for granted.

September 28, 2008

Is Neil Cavuto racist?

The Left is accusing Neil Cavuto of racism for asserting that “pushing for more minority lending” contributed to the mortgage meltdown. Here’s the clip from Sept. 18:

Isaiah Poole at Firedoglake:

The assertion that a $700 billion Wall Street bailout became necessary, even in part, because financial institutions were catering to black people is deeply offensive and profoundly false. Yet it is not just the blather of an insensitive, right-wing cable talk host. It is part of a systematic campaign on the part of the right and the financial services industry to get out from under one of the few laws on the books that addresses discrimination in lending.

Look, there is no question at all — none whatsoever — that the current crisis was caused by subprime lending. What is “subprime lending”? Loans to people rated as higher credit risks. (People with good credit are rated “prime,” thus “subprime” to denote loans to riskier clients.)

The 1977 Community Reinvestment Act, whose purpose was to abolish “redlining” and thereby to make credit more available to minorities, was hijacked by the Clinton administration, which pressured banks to increase their share of loans to minorities without regard to credit risk. That is to say, the feds didn’t care what the default rates were, so long as the banks were making more loans to minorities. Economist Jim Haughey wrote in February:

To generate more mortgage paper and hence more commissions, mortgage brokers and banks progressively lowered underwriting standards with the tacit approval of CRA auditors and community groups. This spawned no downpayment and no income documentation loans. It was sufficient that an applicant with a poor credit record and income too low or too insecure was taking a credit counseling course.

Stephen Schwarzman explained last week how the policy that began under Clinton actually expanded under the Bush administration:

It started with Congress encouraging lending to lower-income people. You went from subprime loans being 2% of total loans in 2002 to 30% of total loans in 2006. That kind of enormous increase swept into the net people who shouldn’t have been borrowing.

This is not some recent, radical, racist accusation. This has been explained by Investors Business Daily. As early as 2000, Howard Husock warned about the potential problems in City Journal.

Contrary to Isaiah Poole’s assertion that this was entirely about “financial institutions catering to black people,” in fact many areas with the highest mortage default rates are in areas with large Hispanic populations.

Why does this matter? Why even discuss it? Because the Left wants to blame the crisis on greedy capitalists and evil Republicans, and to ensure the continuation of the same policies that caused the this crisis. But the lending market can’t recover if lenders aren’t required to judge credit-worthiness by neutral, objective financial standards. It was the abandonment of those standards due to CRA that is at the root of this problem, and accusing Neil Cavuto of racism won’t solve the problem.

UPDATE: Guess the Left can go ahead and add House Minority Leader John Boehner to their list of racists:

[T]he American people are taking note of a left-wing giveaway Democrats are pushing to force taxpayers to bankroll a slush fund for a discredited ally of the Democratic Party. . . . Democrats want to first reward their radical allies at ACORN for their help – often illegal help – in getting Democrats elected to office.

If you oppose giving money to ACORN so they can commit more vote fraud for Democrats, you’re a racist.

UPDATE II: Let me address an argument by our friendly liberal commenter Young 4-Eyes, who says that Cavuto has branded all minorities high credit risks. Cavuto is a TV host, trying to address in abbreviated form what is admittedly a complex problem.

People with good credit ratings didn’t need any special programs or policies to qualify for home loans, and these people — whether white, black, Hispanic, Asian or whatever — were not subprime borrowers targeted by the CRA-on-steroids policies aimed at increasing minority homeownership.

Homeowners who continue to make their mortgage payments are not the problem, whatever their ethnicity. But in an eagerness increase minority homeownership, federal policies encouraged or allowed lending institutions to overlook bad credit ratings of minority mortgage applicants, creating a distinct class of minority homeowners whose subprime mortgages went into default. Since they were supposedly backed by the quasi-government agencies Freddie Mac and Fannie Mae, these bad mortgages were re-sold to financial institutions as AAA-rated securities.

For Cavuto to shorthand this is natural to the TV medium, which is not suited for complex essays. But no one is asserting, or could assert, that all minority borrowers are bad credit risks. What is asserted is that federal policy promoted lending to minorities (and whites, for that matter) with bad credit histories, and that the predictable default of these loans is at the root of the current crisis.

PREVIOUSLY:
9/26: Arnold Kling on the bailout
9/26: Ace going soft on Paulson plan?
9/26: ACORN bailout?
9/26: What caused the crisis?
9/26: No bailout, no debate?
9/25: Porking up the bailout bill
9/18: How Clinton caused the current crisis
9/17: Feeling the pain he helped cause
9/16: Jamie Gorelick & Fannie Mae