Monday, June 1, 2009

unregulated boom creates vaccume

Before anyone quotes this as Gospel, note the quote came from wikipedia. You want to check your facts before you quote this however I believe it is common knowledge that the "everyone is entitled to own a home" idea came out of the Clinton administration. That created opportunities for other companies to offer loans to subprime borrows. With a large market being lost and shareholder pressure to increase profits, Fannie Mae started dipping into some of the more risky markets. Enter houising crisis.

In 1999, Fannie Mae came under pressure from the Clinton administration to expand mortgage loans to low and moderate income borrowers. At the same time, institutions in the primary mortgage market pressed Fannie Mae to ease credit requirements on the mortgages it was willing to purchase, enabling them to make loans to subprime borrowers at interest rates higher than conventional loans. Shareholders also pressured Fannie Mae to maintain its record profits.

On September 11, 2003, the Bush Administration recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis. Under the plan, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae. The new agency would have the authority, which now rests with Congress, to set capital-reserve requirements for the company and to determine whether the company is adequately managing the risks of its ballooning portfolios. The New York Times reported that the plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac is broken. The Times also reported Democratic opposition to Bush's plan: "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the 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."

Here is where Bush had to adopt the big government mentality to fix the problems that came up because of the big government policies of the previous administration. Looking at the last 3 years of Bush's administration, I haven't seen any difference between the policies he has created and that of Obama's policies. Every criticism Bush received for the decisions he's made have been duplicated by Obama. The main difference I see is Obama has removed a lot of the restrictions on things such as abortion (partial birth & gov funding) and censorship (anti free speech).

Please do not make the same mistake and support other "entitlement" programs such as free health care and the like. The government does not create money when ever they need to spend something. Thirty percent or more comes out of every dollar that you earn. If we continue to support these doctorines, we're looking at half of our paycheck or more being taken to fund these programs. Let me put it in perspective. If your employer writes $1,000 check, you would send $500 to Uncle Sam. Do we want that? I'd rather keep giving him $300 and keep the $200 that I worked for.

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