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Thursday, October 02, 2008
Diana West :: Townhall.com Columnist
Social Engineering Derailed Our Economy
by Diana West
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Will the Dems' health care Christmas Present to America be an improvement or detriment to our health care system?


Kurtz went on to detail the nature of that training and funding in concert with ACORN (the Association of Community Organizers for Reform Now), an essential component in the drive to force banks "kicking and screaming" as Madeline Talbott, one of Obama's close ACORN associates put it, into the risky loan business. At one point, Kurtz reported, "Obama was training the army of ACORN organizers who participated in Madeline Talbott's drive against Chicago's banks."

Will America elect someone this far left wing to take charge of the Federal Reserve Bank? Terrifying thought. To be sure, it wasn't just community shakedown artists who brought our current crisis about. They had massive help along the way, as "affirmative action lending" practices were foisted on the banking industry at the national level, particularly during the presidencies of Carter, Clinton and, yes, George W. Bush. These lending practices were further institutionalized once government-sponsored Fannie Mae and Freddie Mac, under the astronomically well-paid leadership of Fannie CEO James A. Johnson, began snapping up high-risk loans and repackaging them for sale on the world market. Johnson, whom Obama, of course, chose to lead his vice-presidential selection committee (until financial shenanigans over a sweetheart housing loan forced him out) even set a goal for Fannie Mae to buy up $1 trillion in low-income loans to ensure that, as CNSNews.com quoted him as saying, "ev!

ery American who wants to get a mortgage will have their loan approved."

Well, they did. And it didn't work out so well, did it? Such is the human cost of social engineering, whether on Wall Street, Main Street or Red Square. No wonder Obama doesn't seem to want to discuss the pesky details. "The main thing is to just move away from this hyper-political environment and recognize the house is on fire," he recently said.

That's the main thing? "Let's put out the fire first," he added, "and we can figure out what caused it."

Later, he means. A lot later. Like after Election Day when it's too late to vote for the other guy. Because what voters in their right minds would expect the man who likes to set the fires to put them out?

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About The Author
Diana West is a contributing columnist for Townhall.com and author of the new book, The Death of the Grown-up: How America's Arrested Development Is Bringing Down Western Civilization.
 
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This would make sense except for...
the fact that 4/5 of all subprime loans were not made subject to CRA regulations which is what Diane is talking about without actually saying what she was talking about.

For a nice review, checkout this business week (no liberal rag)
http://www.businessweek.com/investing/insights/blog/archive s/2008/09/community_reinv.html

Continuing to derail our economy
Currently I am an unemployed banker. Previously I spent about 20 years as a bank portfolio manager. I managed about 450 million dollars much of which were invested in mortgage backed securities. Having dealt with these issues through the time period in question gives me a great overview of the financial mess before us.

To make a long story short I wanted you to know that you are right on track when you say that the root cause of our banking problems is that we made loans to people who should not have gotten them. The heads of Fannie Mae and Freddie Mac came right out of the Clinton administration and were pushing lending practices to many that would not otherwise qualify. Few people understand that the computer program driving the real estate loan application process was developed by Fannie Mae and Freddie Mac and told the real estate loan officers whether or not their loan candidate was approved or not.

These loan programs were used as a base for all the major investment banking houses to develop their mortgage loan programs. As you know Fannie Mae and Freddie Mac were government sponsored entities (GSE's) and are now virtually part of HUD as a part of our national government. The real damage was done by the programs run outside of the GSE domain using many of the rules that were adopted by good ole Fannie and Freddie.

It is clear that much of the meltdown will be with the old GSE domain. Of course Freddie and Fannie will get their share of defaulting mortgage loans. But it is hard to know the number of mortgage loans done in the private label domain by the other lenders that will also be included in the rescue program we now have before us.

Keep up the good work. I believe you are one of our few chances that the real story will be told to the public.
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