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  • Morning Bell: The Left's Official News Service

    The left is beginning to realize that its credibility on economic matters has been seriously compromised by its 40-year relationship with the government mortgage financing duopoly Freddie Mac and Fannie Mae. Witness Rep. Maxine Waters (D-CA) lying on HBO’s “Real Time” about how much money she accepted from the two mortgage giants. Enter McClatchy’s David Glodstein and Kevin Hall. McClatchy operates 32 daily newspapers in 29 markets, with a total circulation of 3.3 million. There are few better outlets through which one can propagate leftist lies.

    Goldstein and Hall have written an article, “Private sector loans, not Fannie or Freddie, triggered crisis,” which is a masterpiece in half-truths and opinion journalism disguised as hard news. Goldstein and Hall cite “Federal Reserve Board data” that show “More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.” This are the first and most prominent example Goldstein and Hall use to support their thesis. It is also completely irrelevant. As Goldstein and Hall later admit much later in their own article, Freddie and Fannie “don’t lend money, to minorities or anyone else.” Exactly. So the fact that 84% of subprime loans were made by private institutions is completely irrelevant. So why is it the first “fact” Goldstein and Hall cite?

    Goldstein and Hall then describe a little of what else Fannie and Freddie do in the real estate market: “They purchase loans from the private lenders who actually underwrite the loans. It’s a process called securitization, and by passing on the loans, banks have more capital on hand so they can lend even more.” Goldstein and Hall then begin to try and absolve Fannie and Freddie from their role in the subprime mess. They write: “Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent. … During those same explosive three years, private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie.”

    So, according to Goldstein and Hall, Fannie and Freddie are innocent in the subprime mess because it was private banks that securitized most subprime loans during the height of the boom. But this Disney version of the truth leaves one huge question unanswered: Who bought all those subprime securities from the investment banks who were securitizing them? You will not learn this in Goldstein and Hall’s hackjob, but according to the Washington Post, at the height of the subprime boom Fannie Mae and Freddie Mac purchased 44% of the entire subprime security market.

    Remember what Goldstein and Hall mentioned earlier: “It’s a process called securitization, and by passing on the loans, banks have more capital on hand so they can lend even more.” In other words, every government subsidized dime that Fannie and Freddie spent buying up subprime securities is another dime private banks had to make bad subprime loans. Countrywide Financial was among the biggest players in the subprime market. It has lost $2.5 billion in just the past year and has another $6 billion in nonperforming assets on its books. Fannie Mae was Countrywide’s biggest customer. This means that, through Fannie and Freddie, you the taxpayer helped subsidize Countrywide’s subprime loan underwriting.

    Fannie and Freddie played a primary role in creating our current financial crisis. Just ask Warren Buffet and George Soros. Despite these facts, politicians on the left such as Senate Banking Chairman Chris Dodd (D-CT) want to preserve Fannie and Freddie in their current form. The U.S. economy cannot afford their continued existence, and dishonest “journalism” from the likes of Goldstein and Hall only provide cover for the left’s crony capitalism. Check this list of McClatchy owned newspapers. If your local paper is on the list, write McClatchy and demand the truth is added to Goldstein and Hall’s story.

    Quick Hits:

    Posted in Ongoing Priorities [slideshow_deploy]

    15 Responses to Morning Bell: The Left's Official News Service

    1. Edwin Buck, Albuquer says:

      The way these crop of politicians can lie has to be an art. And yet, our guardians of truth, justice and the American way is in bed with them. This evil cabal didn't just come to being. It's been growing right before our eyes, but we were so stupid to say anything about it, because we were so comfortable with our lives. It is true, we deserve the kind of government we are getting. Unfortunately, because actions have their consequences, we are in for one horrendous payback.

    2. Michael J O'Bri says:

      The American people / taxpayer deserve the truth about the sub prime loan fiasco; involvement of Fannie and Freddie and most importantly what roles elected officials played in the sub prime fiasco. President Bush should form a commission outside of Congress to investigate the entire circle of banks, elected officials and their relationship with Fannie and Freddie. This did not happen over night, and Congress failed to provide any over sight of these GSEs. There have been problems with Freddie and Fannie’s books for sometime yet Congress or any government official raised any concerns. Indeed Dodd received a Special mortgage from Country wide, a company that has close ties to Freddie. This is while Barney Frank lived with the architect of the affordable housing product program for Fannie Mae.

      Further, the justice department should investigate lenders, banks, elected officials, Fannie and Freddie to see what monies changed hands and who and what are responsible. The American people have $1.25 trillion at stake, and this does not even consider losses in our 401ks and savings. This sub prime fiasco and the Washington D.C beltway are largely responsible for the world's economic problems. Yet, not one of these liberals know how to accept truth, and responsibility, and this is specifically true about Dodd, Reid, Pelosi and the king of finance himself, Barney Frank. The American people deserve the truth and these folks just will not give it to us. It is indeed understandable why the left are running for cover. No one in Washington is ever the blame; it is just possible that the homeowner who pays his mortgage on time and keeps his books balanced is the culprit.

    3. Ron Norman, San Fran says:

      I read last week that rather than suspend the buying of sub prime loans Fanny and Freddy are still in the market in Texas. Maybe Chris Dodd and Barney Frank should be contacted and told about this so that they can schedule hearings on it next year after they get their contributions cut of course. Our 'government' is in the bag with payola, 'earmarks' and anything else that isn't nailed down. Don Corelone said to his son, "why be in the family when you can steal much more with a briefcase if your an attorney." Alas, the advice wasn't taken by the Don's son but the likes of Barney Frank and Howard Raines took it to heart and found it to be true. How can it be that you lose $700 Billion Dollars thru stupidity, greed and duplicity and not do one day in jail? Our laws are worthless, immigration laws, voting laws, banking laws, perjury laws and a host of others are as the late Billionaire Leona Hemlsley said, "laws are for the little people."

    4. Patrick w. Beck, Hav says:

      It is amazing that a democrat controlled house and senate with a job satisfaction rating lower than the President, is allowed to continually deflect cuplability for the mortgage meltdown. This could only occur with the full complicity of a morally bankrupt mainstream media and corrupt congress. Thankfully there are are a few leaks in the liberal firewall such as the Heritage Foundation.

      Unfortunately, leaks notwithstanding, I fear that once the crisis has passed and the hearings begin, as in the 9/11 hearings, we will be treated to a fantasmagorical story with the left portrayed as a paragon of public good that did everything possible to protect us from the evil and corrupt right who created the entire mess simply for the sake of greed. If the people accept the fabrication that is sure to be spewed by the majority in collusion with an unscrupulous media, we deserve everything we are going to get, or lose, as the case may be.

    5. Laurie, Utah says:

      As a high school journalism student in Michigan, and later at Brigham Young University on a journalism scholarship in the late 1960's, had I submitted a non-editorial page piece that even remotely sounded opinionated, I would have failed the assignment and would not have been published. Today one cannot find news media in this country that is otherwise.

    6. Pingback: Morning Bell: The Left’s Official News Service

    7. Duke Lynch CA says:

      Cook county Illinois, Southside Chicago and Obama/Acorn territory connect to Lake County, Indiana, home of all the Acorn voter registration fraud…I believe there is a concentrated effort by NCAAP, BLACK CONGRESS CAUCUS, and other groups to steal this presidential election…I am open to criticism…dkl

    8. Della Martin, Clover says:

      Let's start with the easy ones first. 1) Go get 'em, Sheriff Joe Arpaio! Too bad the rest of the country can't see what you're accomplishing by simply enforcing existing laws on both domestic crime and illegal immigration. 2) Schools failing? I once worked in the California school system and when they shut down the border one time for three days, we "lost" almost two-thirds of our students but, nationally, there's more to it than that. The teacher's unions have made it impossible to get rid of bad teachers. There's a young man here who got his HS diploma without being able to read or write above a 6th grade level. The same teachers are still teaching! And 3) Freddie & Fannie? Even organized sports have "judges" watching every move–who was watching the money trail and practices of these giants who had so much control of our tax dollars? NOBODY! It was wide open for corruption and greed and somebody left the building without turning the lights out! Bad, bad handling of so much power! But "sorry" doesn't cut it anymore–a whole pack of SOMEBODIES ought to be sacked! That's what our vote in November should reflect and I pray it will.

    9. Mike, Cleveland, OH. says:

      I can not believe that anyone can objectively, (or subjectively for that matter), look at written print in most areas of the country and not see liberal bias in virtually every article. It is no wonder a majority of papers are losing circulation and cutting staff.

      In this instance, the ignorance exhibited by 50% of the reading population regarding the culpability of the federal government for this entire financial crisis will continue until the conservative "slant" can find its way into print.

    10. Gary Green, Phoenix says:

      While I will definitely write McClatchy, I fear it will fall on deaf ears. Fortunately, we have you, Investors Business Daily, The Wall Street Journal and the Patriot Post, amongst other, to voice our perspective to a large and, I believe, growing audience of readers disgusted with the leadership of our country both in DC and on Wall Street.

    11. smrstrauss says:

      Re: “You will not learn this in Goldstein and Hill’s hackjob, but according to the Washington Post, at the height of the subprime boom Fannie Mae and Freddie Mac purchased 44% of the entire subprime security market.”

      It is traditional in conservative discussions of business policy NOT to blame companies simply because they are big. For example, AT&T once completed 99% of the telephone calls in the USA. Microsoft sells 70% of operating systems. Citicorp has a huge share of credit cards. Exxon Mobil is the largest company in the world.

      In the mortgage business, Fannie and Freddie were BIG. Naturally they took a big share. But, although they were backed by the credit of the USA, the government equity that had formed them was paid back long ago. Although they are called government sponsored entities (GSEs), they were in effect private companies, And their mistakes were like other private companies. Not like government agencies.

      You can point out, quite rightly, that if Fannie and Freddie fail, the US government has to pay off their bonds. Yes, but it turns out now that they are no different from any other company we consider too big to fail. If Citibank, Bank of American, General Motors were near to failing, we’d have to bail them out too. So being called GSEs doesn’t make them government bodies.

      So, first they took a big share because they were big companies. Second, and because they WERE private for-profit companies, Fannie and Freddie did not buy sub-prime paper because it was composed of mortgages made to minority groups or poor people. They bought the paper because they thought it was going to be a profitable investment. In fact, when they bought the paper, they were competing to buy it with Wachovia, IndyMac, Washington Mutual, Etc, all of whom thought the same thing.

      Third, as the subprime market soared, Fannie and Freddie’s share of the purchases declined, largely because they discovered or realized that they were limited to taking only the best of the sub-prime paper.

      This will confirm:

      “Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication.

      One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.”

      This quote comes from this article:
      http://www.miamiherald.com/news/politics/AP/story

      Moreover, it is hard to say that sub-prime paper is necessarily caused by loans to minorities or to the poor. Some could have been on speculative real estate investments during the bubble.

      This article shows the extend of speculation:

      The Wall Street Journal February 6, 2008

      Speculators May Have Accelerated Housing Downturn:Rising Number of Defaults

      Also Could Complicate Effort to Help Homeowners

      By RUTH SIMON and MICHAEL CORKERY February 6, 2008; Page B8

      As lenders pore over their defaulted mortgages, they are learning that the number of people who bought homes as investments is much greater than previously believed. Such borrowers turn up frequently in analyses of loans that defaulted within months after origination.

      In many cases, these speculators lied on loan applications, saying they intended to live in the homes in order to obtain more favorable loan terms or failed to provide the requested information. Roughly 20% of mortgage fraud involved “occupancy fraud,” or borrowers falsely claiming they intended to live in a property, according to an analysis by BasePoint Analytics, a provider of fraud-detection solutions in Carlsbad, Calif.

      Another study, by Fitch Ratings, looked at 45 subprime loans that defaulted within the first 12 months even though the borrowers had good credit scores. In two-thirds of the cases, borrowers said they intended to live in the property but never moved in. Some home builders have come to similar conclusions: They now believe that as many as one in four home buyers in some markets were investors during the boom, up from their earlier estimates of one in 10 buyers. The high number of hidden speculators helps explain some of the problems roiling the housing and mortgage markets.

      The loans backing these speculator purchases turned out to be riskier than ratings agencies and investors who bought mortgage-backed securities once thought. Investors tend to be more likely than borrowers who live in the homes to walk away from their purchases when home prices fall. “We couldn’t understand what was driving so many borrowers to default so early in the life of their mortgage,” said Glenn Costello, a managing director at Fitch. Much of the occupancy fraud was concentrated in markets such as Florida, Nevada and Arizona, where prices were appreciating by double-digit percentages annually, said Kevin Kanouff, president of Denver-based Clayton Fixed-Income Services, a unit of Clayton Holdings Inc. that reviews about seven million loans a month on behalf of investors. In Las Vegas, as many as 60% of the foreclosures last year involved non-owner-occupied homes, according to Applied Analysis, a real-estate-research firm.

      End quote

      Re Countrywide. Not only Couontrywide. It can be said that for every dime Fannie and Freddie spent buying up mortgages or, more important INSURING mortgages, Citicorp, Bank Of America, JP Morgan Chase, Etc – all would have more money to buy mortgages. Fannie and Freddie has $2.5 TRILLION in mortgage guarantees, which allows Citicorp and all the other banks and mortgage companies to buy more mortgages.

      Those of us who have received mortgages with the participation of Fannie or Freddie (and there are MILLIONS of us) resent what you say. Without those two institutions, many of us would not be owning our homes.

      It was not Fannie or Freddie’s fault that the value of homes have collapsed since the bubble. That was the fault of overbuilding, and the bubble itself was largely caused by speculation.

      And Fannie and Freddie had nothing to do with credit default swaps, auction rate securities (which chopped down the value of several money market funds), the high rate of leverage of banks (sometimes 33-to-1), bank and investment bank assets held in “off balance sheet” companies, Etc. Who caused all that? The SEC’s “voluntary” regulation program, the Fed’s inability to discover 33-to-1 leverage, the administration’s lack of interest in regulating derivatives.

      So you say that Fannie and Freddie were supporters of Democrats? Well, the American Bankers Association gave 59% of the $24.24 million it contributed over the period 1990-early 2008 to Republicans, according to OpenSecrets.com.

      The Democrats called repeatedly for the regulation of commercial mortgage companies (which were responsible for 84% of the sub-prime mortgages)! Republicans wouldn't even consider it.

      No, it was the Republicans who caused the financial crisis.

    12. Pingback: The Fannie Mae Contagion And Its Electoral Consequences | PoliticsMuch.com

    13. William Rickard says:

      Excellent article! How has this country reached a point where many feel the government is obligated to provide the necessities of life when they make no effort to support themselves except go to the mailbox to get the government check provided by taxes from the working class of America.

      I feel many politicians use welfare programs to build a voter base to further their career. Unfortunately this welfare group appears to be growing while the working class shrinks. Now we find many in this welfare class being financed by our tax dollars with what would appear to be a very brazen effort to steal this election. Yet we are told that it is an effort to deny minorities their right to vote. Someone should explain to these people that every right comes with a responsibility. No one on the left ever talks about responsibility. Every American (not felons and illegal immigrants) has the right to vote but the responsibility is to register legally and cast only one vote.

      Every American has the right to any home they can afford. With that right comes the responsibility of choosing what we can afford and making the payments we agreed to when we signed the contract.

      Fannie Mae and Freddie Mac should be disbanned or very strongly regulated and those responsible for this financial chaos should be punished along with the politicians aiding them in this effort.

      Americans are fed up with partisan politics and unbridled greet and corruption. Thanks for sharing things we need to know.

    14. Dave, laguna niguel, says:

      I guess you dummies will just never learn!! Let the demorats in congress ROB the taxpayers of HUNDREDS OF MILLIONS OF DOLLARS, they laugh at us all the way to the bank because they know NOBODY WILL HOLD THEM ACCOUNTABLE including the SOCIALIST PRESS!!! If these were the eighteen hundreds we would all be marching on Washington and the likes of that supreme idiot Maxine Waters to Barney Franks to Chris Dodd to Jamie Gorlick and all their crooked cronies would look like swiss cheese, then on to all the leftist rats in the media. We would have cleaned up the wwhole rotten mess of them, not to mention those traitors in HOLLYWIERD! I personally used to speak to "working" Canadiens on the phone as it was a telemarketing job and I was completely astounded about what they were telling me…Canada is socialist, just like we are about to become with Obama, and these working Canadiens were at the end of their collective ropes and totally INCENSED about their hard work and efforts resulting in their take-home pay being equal to the welfare of those who refused to work for a living!! Their forced taxation payed for the lazy!! And their biggest complaint of all? There was NOTHING they could do about it!!! Folks, welcome to the socialist republic of America, formerly a free country, where initiative will get you nowhere, hard work will get you the same thing that the bum/druggie has(not much), all education for everyone, even illegals will be paid by YOU(the non-govt worker), all health care, even illegal births, well baby care and everything else will be paid by YOU(the non-govt worker) all the trillions of dollars paid into the social security system was given away by the democrats long ago so your retirement will be when you die and the government will send your family the bill for your funeral. Hollywood will be forced to make only govt-approved movies and actors will make minimum wage. All white people will be scorned daily, remember Obama's words, " white man's greed fuels a world in need" so Obama hates the other side of himself. Michele Obama, First Lady…excuse me while I puke! Not because she is black, because of who she really is…an America hater just like hubby Obamy! We are truly a country LOST!!!

    15. Personal Injury Lawy says:

      Who are you picking in the super bowl?

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