The Carter & Clinton Subprime Crisis!

HOW IT HAPPENED & WHAT

WE NEED TO DO ABOUT IT!

America and many Americans are now paying (literally) a heavy price because Jimmy Carter, Bill Clinton and many inept congressmen and women injected a mega dose of socialism into what was suppose to be a capitalistic society.

It used to be that if a couple or an individual wanted to purchase a home, it would require saving up for a down payment and building a worthy credit history. Buying a house was a major event that demanded forethought, planning and commitment. These requirements for personal discipline and personal responsibility were part of the cultural fabric that defined who we were as a society.

For many years however, until Lyndon Johnson became president, legalized discrimination was a real barrier for many qualified minorities who were ready, willing and able to qualify for a mortgage. Fortunately, that wrong was “righted.” Since the 1960’s, equal opportunity was available to all that were willing to do all of the things that were required to borrow large sums of money. Common sense was still a factor in our political and business affairs. President Johnson, who is reviled by many because of a tainted revisionist history that portrays him as the father of the welfare society, was actually a fiscal conservative. He proclaimed that we should turn millions of marginalized minority citizens “into taxpayers instead of taxeaters.”

The beginning of this current economic “subprime” financial debacle began with Jimmy Carter. He felt that personal responsibility, normal down payments and a worthy credit report were no longer necessary, and neither did his Democratic congressmen who enjoyed an overwhelming majority in both the House and the Senate. The 1977 Community Reinvestment Act required banks to make loans to people who by normal standards would not have met the test of being a qualified buyer. “Equal outcomes” not “equal opportunities” became the new paradigm for the Democratic Party. This is the same notorious group of congressmen that voted to defeat a comprehensive national energy policy. These were perhaps the two most damaging congressional actions in the past 50 years. The solid foundation of our financial markets was now being seriously undermined and our historic opportunity to shed our dependence on foreign oil was also lost.

Both problems continued to fester and continued to become even larger problems. Unfortunately, the Clinton administration decided to throw gas on a raging fire that was already growing out of control. Fannie Mae and Freddie Mac are quasi-governmental agencies that buy packages of mortgages from lenders (and guarantee payment of those mortgages by the federal government – “we the taxpayers”). Expanding on Carter’s cultural philosophy of no personal responsibilities, the Clinton administration took it up a notch. Former Fannie Mae Chairman, Franklin Raines said that he was “under increasing pressure from the Clinton administration to expand mortgage loans among low and moderate-income people.” Thousands and thousands of “subprime loans” made to formerly unqualified borrowers were now becoming an ever increasing percentage of the national pool of mortgages.

With no down payment, no credit, and sometimes not even a job, millions of unqualified home buyers were obtaining hundreds of billions of dollars of mortgages (guaranteed by the federal government) that would eventually undermine the framework of our nation’s financial institutions. When the prices of homes began to pull back two years ago, these people who had none of their own money in the deal, and who were struggling to make payments on a house that they could not afford to begin with began to simply walk away. Millions of these houses, whose mortgages were now larger than the actual value of the house itself, went into default. The house of cards was collapsing. Jimmy Carter and Bill Clinton are now looking the other way, Barrack Obama says that it was George Bushes fault, and John McCain keeps looking for a bigger box of band aids to “fix” the problem. Last night the Federal Reserve announced that it will begin lending money directly to corporations AND of course require that “We the taxpapyers” guarantee the loans. Stop gap measures will only make the problem worse and delay the implementation of permanent solutions.

Our video blog http://www.youtube.com/watch?v=SufDCJtsckg offers a realistic solution to this debacle. The two criteria that must be met are: Does the plan provide adequate liquidity to grease the wheels of our financial institutions, AND are the American taxpayers protected? If both of those lights do not blink, it is not a workable plan. Our plan would work. If you have a better plan or know a way to improve our suggestion, SHARE IT NOW! Our country needs your ideas. Please use our blog to participate in this crucial national discussion.