The Blog @ Spolitics

Nancy Pelosi: Shameless Demagogue

House Speaker Pelosi proved herself to be a petty partisan yesterday when the nation — or at least Congress — needed a statesman. Before the House voted on the $700 billion Paulson plan to help stabilize the markets, she took the occasion to blame Bush for the mess by turning a surplus into a deficit in “just two years.” As if 9-11 had nothing to do with that.

She then blamed Republicans for their “anything goes” economic policy which is a disgusting distortion. For starters, in 2002 Congress passed Sarbanes-Oxley — regulatory reform so complex and burdensome it’s credited with scaring companies from going public and joining Wall Street.

In addition, the Bush administration and Congress tried to pass regulatory reform for Fannie Mae and Freddie Mac and create a new regulator to keep an eye on the GSE’s. If there was “no supervision” as Pelosi claims it was her party that insured it. The Democrats were the ones who blocked tighter regulation of Fannie and Freddie and it was a lack of regulation of the GSE’s and Congress’s role in pushing bad loans that’s led to the problem we’re in today.

We’ve said it before, but the point needs repeating. This isn’t a market failure, it’s a failure caused by big government interfering with the markets and trying to force banks to make unsafe loans. And now Washington is balking about bailing out the banks they pushed to act irresponsibly.

Pelosi knows Congress helped created this problem by pushing bad loans and Americans should be concerned about the fact that she refuses to acknowledge it. It means she’s not interested in solving the problem, she just wants to gain political capital from it. Even scarier, Democrats wanted 20% of any earnings from the Paulson plan to go to groups like ACORN to help spur more affordable housing — the exact thing that got us into this mess in the first place. It’s clear the Democrat leadership in Congress is more concerned with their select group of political allies — and their own power — than with the American people.

A Trip to the Memory Hole: What Once Was Good Is Bad In Lending

Courtesy Hot Air, this trip to the memory hole revisits all the great things the Clinton administration was doing to help extend home ownership to people who couldn’t really afford it in order to boost the number of minority home owners. This included forcing banks to make riskier loans and forcing Fannie and Freddie to buy those loans. Here are you money quotes.

In 1992, Congress mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains. It has aimed extensive advertising campaigns at minorities that explain how to buy a home and opened three dozen local offices to encourage lenders to serve these markets. Most importantly, Fannie Mae has agreed to buy more loans with very low down payments–or with mortgage payments that represent an unusually high percentage of a buyer’s income. That’s made banks willing to lend to lower-income families they once might have rejected.

See, back then this was considered good; anything less would have been racist. Now, we regard this as “predatory lending.” As a result, congress wants to punish the banks for the very activity they mandated. Even Fannie and Freddie worried they were going to far.

The top priority may be to ask more of Fannie Mae and Freddie Mac. The two companies are now required to devote 42% of their portfolios to loans for low- and moderate-income borrowers; HUD, which has the authority to set the targets, is poised to propose an increase this summer. Although Fannie Mae actually has exceeded its target since 1994, it is resisting any hike. It argues that a higher target would only produce more loan defaults by pressuring banks to accept unsafe borrowers. HUD says Fannie Mae is resisting more low-income loans because they are less profitable.

Less profitable? It makes you wonder why they ever got into the predatory lending business.

Democrat Jamie Gorelick Was a Friend of Angelo, Too

Dirty deeds done dirt cheap. According to the Wall Street Journal:

One of Countrywide’s previously undisclosed customers at Fannie was Jamie Gorelick, an influential Democratic Party figure whose $960,000 mortgage refinancing in 2003 was handled through a program reserved for influential figures and friends of Countrywide’s chief executive at the time, Angelo Mozilo. Ms. Gorelick was Fannie Mae’s vice chairman at the time.

With all these stories about Democrats receiving sweetheart deals from Countrywide, Barack Obama has been awfully quiet on the subject.

The scary thing is, the Democrats have their fingerprints all over the current financial mess and yet many Americans, desperate for “change,” are planning to vote them into absolute power.