Monthly Archives: September 2008

Housing and Finance Debacle

For the last two weeks the nation has been going through a roller coaster. First a bailout of Fannie Mae, and Freddie Mac. Then the Collapse of Lehman Brothers investment banking house , Merrill Lynch being bought out by Bank of America ; Followed by the seizing on Thursday , September 25, of Washington Mutual by the Federal Deposit Insurance Corporation (119 years to the day of WaMu founding was the day it died so to speak.) and then promptly sold by the feds to JP Morgan Chase to become the largest bank. That the bank my parents use(YIKES!!!!!). Cause by the mortgage backed securities when home prices fell and the credit markets seized up last summer.

Banks around the world got caught up in the financial debacle. Banks in the US , the UK and continental Europe began to fail and fall. Names like Countrywide Finanical, Quick Loan Funding, were first, follow by Hedge Funds, then banks both investment houses such as Bear Stearns (now with JP Morgan Chase) Lehman Brothers bankrupted and broken up for sale to Barclay’s in the UK and Noumra Holding in Japan, Morgan Stanley , Goldman Sachs are now commercial banks , Merrill Lynch now with Bank of America. Fortis Bank in Brussels  Belgium & Utrecht Netherlands which was “nationalized” by Belgium,Netherlands and Luxembourg by buying 49% each in Fortis divisions in these country. Bradford and Bingley a bank and mortgage lender in United Kingdom  taken over by the British Government then promptly sold to Banco Santander of Spain which becomes the one of the largest banks in the UK. Santander will placed Bradford and Bingley under itts UK banking division Abbey Bank( This came on the  heels of the Nationalization of Northern Rock  in the UK and Scotland earlier this year ); Hypo Real Estate a Real Estate finance Bank in Germany  got cash infusions from banks throughout Europe. Then Wacovia Bank as 200 + year old bank in Charlotte,NC  was bought September 29 by Citigroup in a bidding war with Wells Fargo and Banco Santander.

Next The failure of passage today of the $700 Billion (thats billion folks)bailout bill to financials to keep wall street from collapse. Members US House Representative both Republican and Democrats defeated the legistlation. by a 228 to 205.   The bill created by Secretary of the Treasury Heny Paulson , Federal Reserve Bank Chairman Benjamin Bernanke; This bill was to help open credit markets and keep a recession at bay. Made this worse.

Housing Crisis: how we got here

But the truth of the problem began in 1999 when Fannie Mae and Freddie Mac loosened the regulations to allow people with bad credit to buy homes ( homes that they could not afford by traditional means, 30 year fixed loans. )

Minorities African-American and Latin-American( full disclosure: I am African American / Latino; Dad, is African-American and Mom is Afro-Panamanian [ now naturalized American ])leaders in congress demanded policy to be change to increase minority home ownership(the same leaders who got sweetheart deals from companies Fannie Mae and Freddie Mac in the way of donations including Democratic presidential nominee US Senator Barack Obama). Many minorities felt they were discriminated against by banks by was redlining of minorities neighborhoods. Blacks and Latino were paying higher interest rates or denied of financing because of bad credit.

Congress forced through Fannie Mae and Freddie Mac provisions to lower standards and allowed people with bad credit to buy homes with no income verification, no money down zero percent financing to by the dwellings ( taking a page from the Auto industry.) If the bank didn’t comply the could by punished by disallowing merger and acquisitions, tax and other benefits from the Federal Government.

Democrat senators Christopher Dodd of Connecticut and Kent Conrad of North Dakota got sweetheart deals ( from being top leader in bank committees in congress)from Countrywide Corp the former number 1 home mortgage company which was bought by Bank or America late last year.) Democrats and Republicans got money from Fannie and Freddie, including Arizona Senator John McCain Republican Nominee for President got a paltry some from Fannie and Freddie.

Greed by the mortgage industry, hedge funds and banks happened because they got involved they thought the mortgage backed securities would continued rise as well as housing prices continue to rise. (every one forgets the axiom of physics what goes up, must come down. )Housing prices fell the mortgage securities began to disintegrate hedge fund bets were being called in and credit began to tighten. Companies like mortgage companies started to go out of business and being investigated by the FBI and other state and federal agencies to find out wrong doing by the industry.

A New York Times article with an interview with researchers form the American Enterprise Institute warned not to do this but this admonishment was not heeded by our leaders. Read this Which cause the collapse.

A second report by Columnist Roger Kimball  who wrote on his blog Roger’s Rules describe the law which was used to provide the loans to low and moderate also minorities to revitalize these communities.

”The Community Reinvestment Act” (see here for more).

* The original Community Reinvestment Act was signed into law in 1977 by Jimmy Carter. Its purpose, in a nutshell, was to require banks to provide credit to “under-served populations,” i.e., those with poor credit.

* In 1995, Bill Clinton’s administration made various changes to the CRA, increasing “access to mortgage credit for inner city and distressed rural communities,” i.e., it provided for the securitization, i.e. public underwriting, of what everyone now calls “sub-prime mortgages.” (Hat tip to Glenn Reynolds )

While this in my opinion was worth while at first give hope and opportunity to minorities to have own the home ( full disclosure I am Black) saw this as way improve the outlook of the communities but I knew that that I could not buy a house without a good paying job and very good credit.  I wish to buy a house but until get rid of debt, save money for a down payment and as well have a good pay job I would be only a renter for some time; Its not racisim it’s common sense.

But is was easier to blame white folks because minorities had these issues and it seemed that whites got their way because their race. Many African-Americans and Latinos struggle versus white and Asians. Studies as well as anecdotal evidence show that Blacks and Latinos were red lined.  Minority pols hearing of this try to change the system make it easier. But it wasn’t successful until the passage CRA and the 1995 update to the CRA  plus the changes of the rules at Fannie Mae and Freddie Mac brought us here.

This video From Fox News via You Tube shows the GOP trying to prevent the Fannie Mae and Freddie Mac nightmere and Democrats blocked reformes

Now  the leaders of the Black and Hispanic  communities blame Republicans for this but the truth my frormer party Democrats did this and refuse to to take ownership of this. And  by the way American people are trusting the Democrats to get us out of this when they created this mess.  Unbeliveable!!! Freaking Unbeliveable!!!!! As the late George Putnam states “We are  living in the age of insanity” and he was right. God Help us all!!!!!!!

Ban the GOP

On Friday, the Wilson sister founders of the grammy award winning rock group Heart  sent a cease and desist order through their attorneys to the Republican National Committee not  to use any of their music because the the party doesn’t not represent the views and values of the Heart. The RNC used Heart’s gold record hit song “Barracuda”. “Barracuda” was the nick name of Republican Vice President  Nominee Governor Sarah Palin of Alaska.

It seems  when the Republican’s use popular music; Musician are offended and put out about its. Like Bobby McFerrin back in 1988 When then Vice President George HW Bush used McFerrin’ grammy award winning hit “Don’t Worry Be Happy” used it for Presidential campaign; Bruce Hornsby and the Range , whose hit “That Just the way It Is”, and others who insulted when conservatives us their works. Well I got a suggestion why don’t  music industry ban all music from the GOP. That way the artist’s work is not compromised. They don’t worry about becoming Republican, conservative or right-wing. The industry will send cease and descist letters to National Republican Committee, then send a copy to all 50 state GOP offices, as well to county and local GOP offices. Attorneys for ASCAP, BMI  et al, would  threaten the Republicans with lawsuits using the artist works.  That way rockers, rappers and singers will rest easy knowing  The GOP will never ever corrupt any artwork ever again.

If the music industry is successful, the Republicans can be banned from museums, art galleries, library, music stores; book stores etc .  Why not the GOP is anti-everything women, gays, minorities, arts, music, literature. We can create culture cops,  carding people  to prevent conservatives access cultural products, events. Let them suffers what Democrats, Liberals, progressives, left-wingers, feminists under their regimes hatred and oppression.  And send them re-education camps and prisons for those who violate the laws routinely.  George Orwell would be proud!

Pray for the Gulf Coast!!!!!!!!!

Three years after Hurricane Katrina, New Orleans will be smashed by Gustov a catagore 3 storm. Hurricane Gustov  which is the same as Katrina  and may have the same devistating impact she had. Keep the folks of the Gulf Coast in your prayers. By the way Florida, Georgia and South Carolina are in the path of Tropical Storm Hanna which is going through the Bahamas Islands area. Do what ever you can for the people of the Southeast US. If you don’t have money, food, clothing to give  give something even prayer; prayer will  Help.

Here are some links

News:  News Channel6 (NBC)  Eyewitness News 4 (CBS) ABC26 News (ABC)  FOX 8 News (FOX) New Orleans Times-Picayune  WWL AM 870 and FM 105.3

Charity United Way American Red Cross   Salvation Army of America

History will be Made

Congratulations  are in order to U. S. Barrack H. Obama of Illnois in receiving the nomination of the Democratic Party in Denver,Colorado on Thursday August 28, bringing the first African-American in United States history. FOr many African Americans,  Including myself it a dream come true.

Meanwhile, Congratulation to Govenor Sarah Palin Republican of Alaska, ( yes, Alaska and Sarah who?) select to be the running mate of Senator  John McCain of Arizona  for Vice President of the US on August 29,2008

No matter who wins  on Tuesday November 4th  Election Day History will be made and America will be better for it.  America people wins and thats the main thing.