Actually, Tom, I would fully trust you to do our microdermabrasion! It's just detailing skin with a super fine diamond tip abrasive wheel.
If memory serves, 3 folks have now complained about how stupid banks have been to offer them too big of loans. With less than 30 days before the most important election in my lifetime, I've got to say that we all need to understand
WHY. Trust me (as well as the older folks on this board), prior to the 70s the crazy lending didn't happen. Quite to the contrary, folks complained that only the rich could get loans, and that they didn't need them. It was the opposite problem.
So for anyone who wants to understand
WHY the banks make crazy loans today, I'm going to summarize enough pieces of the puzzle that I expect most will be able to follow:
* Carter started the ball rolling with his 1977 Community Redevelopment Act. Quoting Wikepdia, the law was designed "
to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low and moderate-income neighborhoods". And for those who remember Carter, his early socialist steps worked about as well as Obama's have.
* Then Clinton starting playing with the Community Redevelopment Act. In 1993, and I'm quoting Wiki again, President Bill Clinton asked regulators to reform the CRA in order to reduce cost and compliance burden. Robert Rubin, the Assistant to the President for Economic Policy, under President Clinton, explained that this was in line with President Clinton's strategy to "deal with the problems of the inner city and distressed rural communities". So the socialist bubble got more air pumped in while most of us sat silent, fat, dumb, and happy.
* Then in 1999, Clinton REALLY started playing with the banking system, repealing the Glass Steagal Act that had been in place since 1933, and replacing it with the "Gramm-Leach-Bliley Act", with two key changes being that smaller banks would be reviewed less frequently (Small Bank Regulatory Relief) and more importantly that commercial banks and investment banks could consolidate. Banks immediately began trading and underwriting mortgage backed securities and all of the toxic loans that are coming home to roost today. The act passed after a $200 million lobbying effort by Democrat lobbyists to pass the act in opposition to the Congressional Research Service’s own report. Quoting Clinton upon signing the "Gramm-Leach-Bliley Act", it "establishes the principles that, as we expand the powers of banks, we will expand the reach of the Community Reinvestment Act".
* Another consequence of the Gramm-Leach-Bliley Act was that it, and Im quoting wiki again, "put pressure on Fannie Mae and to expand mortgage loans to low and moderate income borrowers by increasing the ratios of their loan portfolios in distressed inner city areas designated in the CRA of 1977. Because of the increased ratio requirements, 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".
* And if you wonder who was running Fannie Mae, at the time and milking millions off the subprime loans... yep, Clinton cronies. During Clinton's Presidency Fannie Mae began hiring Democratic operatives as CEO’s and upper management. At the same time, Fannie Mae began making huge contributors to congress, spending millions to influence votes. While some republicans received financial contributions from the two institutions, the vast majority of the money went to democrats. Top recipients of those campaign contributions were Barney Frank and Chris Dodd, the very chairmen of committes that should have been providing oversite of Fanny Mae. With time-tested lending practices out the window, Fanny Mae and it's cousin institution Freddie Mac ended up controlling a whopping 90% of the secondary market for mortgages.
* Fast forward to 2005, and the Bush administration actually voiced concern that lending under the CRA had grown far too loose. Again, quoting wiki, "a contingent of Democratic Congressmen issued a letter protesting these changes, saying they undercut the ability of the CRA to "meet the needs of low and moderate-income persons and communities". The changes were also opposed by "community organizations" concerned that it would weaken the CRA.
* Even as the bubble burst in 2008, Barney Frank was saying thins like, "No problem here!" as related to Fanny Mae, and then once he could lie no more, he went as far as to say that the burst bubble was worth it as it had helped the poor. Yeah... right... now that we have lost 13 million jobs and have a record 42 million using food stamps ...
Well, folks, like Margaret Thatcher once said, "The trouble with socialism is that eventually you run out of other people's money". And in some respects that's what happened even before we had Obama come in and triple down on the failure. Quixote talks about the bad loans not having been a contributing problem to the burst bubble of 2008, but that's an insane arguement you should expect to hear from the left defending their bad habits. Look at the default rates on loans today across the country and in states with the highest illegal immigration rates. The default rates are at record levels.
The saddest part of all of this is that I was a Democrat until I opened my eyes to what was happening. There's not a democrat involved with this fiasco who is poor, and quite to the contrary, the games they have played with the system have made them and their friends extremely rich. Their claims to care for the poor sure are questionable in my mind when instead it seems as if they've used the poor as pawns to do their own selfish wealth-building.
Don't know if anyone will have read all this, but if one person learned some history that helps them see that we don't repeat it in November it was worth it to me.
