Smoking Gun: The Government Caused the Subprime Mortgage Crisis
October 31, 2011
RUSH: It is possible that we were talking about the subprime mortgage crisis as far back as 1998 because I remember Janet Reno, who was the attorney general at the time, threatening banks with investigations if they didn't make these loans. Now, Investors.com today, Investor's Business Daily has editorials, "Smoking-Gun Document Ties Policy To Housing Crisis." Now, they act like it's new, and it is to them, but I'm just gonna admit to you, folks, it gets frustrating sometimes being on the lead of this stuff. It really gets frustrating being years ahead of people, because when you're years ahead they ought to catch up years ago. Anyway, I'm not ripping Investor's Business Daily. Don't misunderstand. This is just a generic thing.
"President Obama says the Occupy Wall Street protests show a 'broad-based frustration' among Americans with the financial sector, which continues to kick against regulatory reforms three years after the financial crisis. 'You're seeing some of the same folks who acted irresponsibly trying to fight efforts to crack down on the abusive practices that got us into this in the first place,' he complained earlier this month. But what if government encouraged, even invented, those 'abusive practices'?" Well, you and I know because you listen here every day that they did. You know that it was Jimmy Carter that started it. You know that it was Bill Clinton that really ratcheted it up and you know that it was Barney Frank and Chris Dodd and a number of other the Democrats throughout the 2000s which kept this program alive under the whole concept of affordable housing. (imitating Frank) "We must make sure that people who can't afford houses are in houses, it's only fair," as Barney would say.
"Rewind to 1994. That year, the federal government declared war on an enemy -- the racist lender -- who officials claimed was to blame for differences in homeownership rates -- and launched what would prove the costliest social crusade in U.S. history. At President Clinton's direction, no fewer than 10 federal agencies issued a chilling ultimatum to banks and mortgage lenders to ease credit for lower-income minorities or face investigations for lending discrimination and suffer the related adverse publicity. They also were threatened with denial of access to the all-important secondary mortgage market and stiff fines, along with other penalties.
"The threat was codified in a 20-page 'Policy Statement on Discrimination in Lending' and entered into the Federal Register on April 15, 1994, by the Interagency Task Force on Fair Lending. Clinton set up the little-known body to coordinate an unprecedented crackdown on alleged bank redlining. The edict -- completely overlooked by the Financial Crisis Inquiry Commission and the mainstream media -- was signed by then-HUD Secretary Henry Cisneros, Attorney General Janet Reno, Comptroller of the Currency Eugene Ludwig and Federal Reserve Chairman Alan Greenspan, along with the heads of six other financial regulatory agencies.
'The agencies will not tolerate lending discrimination in any form,' the document warned financial institutions. Ludwig at the time stated the ruling would be used by the agencies as a fair-lending enforcement 'tool,' and would apply to 'all lenders' -- including banks and thrifts, credit unions, mortgage brokers and finance companies. The unusual full-court press was predicated on a Boston Fed study showing mortgage lenders rejecting blacks and Hispanics in greater proportion than whites. The author of the 1992 study, hired by the Clinton White House, claimed it was racial 'discrimination.' But it was simply good underwriting."
There was no problem. People were not lending money to people that couldn't pay it back. This was called discrimination. This was called redlining. This was called all kinds of horrible racist stuff, and so the pressure was on starting in '94 through '98, the Clinton years, to start making these loans and it's been that way since the get-go and even now Occupy Wall Street, all of this, everything that's happened since the subprime mortgage crisis became known to the general public. Everything has been about redirecting blame at Wall Street, at the banks when in fact the blame is going right to the Democrat Party when they ran the federal government.
Now, the thing is, we've known this for years. So here now the official smoking gun document which proves it, but this is not the only document that's out there. I didn't learn this from any back channels. This was all happening at the moment. We talked about it while it was happening, throughout the 2000s, even in the late nineties when Janet El Reno was making all of these threats. It gets frustrating to have the goods on this stuff and nobody pays attention to it, which leads me to believe everybody involved here knew it anyway. This is all part of the establishment, I don't care what party they're in, it's all part of the establishment trying to trying to shift blame away from themselves and back on to Wall Street, whatever favorite whipping boys because everybody knows at the end of the day the establishment's in bed with Wall Street anyway, and part of the deal is you take the public flogging and you take the abuse and we'll shut down one of your houses now and then, but we'll see to it you still get to keep your house in the Hamptons.
Look at this, Jim Geraghty, National Review Campaign Spot: "Former New Jersey governor Jon Corzine," who before that ran Goldman Sachs and started, when he left the governorship, a company called MF Global Holdings Ltd., a futures brokerage. Well, "MF Global Holdings Ltd., the futures broker run by Jon Corzine, was suspended from conducting new business with the New York Federal Reserve today after posting a record loss. The firm's board met through the weekend in New York to consider options including a sale to avert failure, according to a person with direct knowledge of the situation." Here's a guy living off of his fame at Goldman Sachs, goes to the United States Senate, participates in vote after vote after vote-for-deficit spending and deficit spending.
Then he becomes governor of New Jersey, and everybody has forgotten that this is the guy who left a record $8 billion budget deficit as governor of New Jersey. So now he's done the same thing to his own firm, MF Global Holdings. "As recently as August, there was speculation that Obama would name Jon Corzine his next Treasury secretary." I tell you, it's a den of thieves, Snerdley! It is just a den of thieves. The Daily Caller. There's a couple stories with this theme. "Experts Begin to Doubt Obama's Reelectability -- "Where's the evidence President Obama can win the 2012 election? Where's the evidence that swing voters even want to listen to him? Barack Obama polls below 50 percent in every state that matters."
You couple that with only 16% of the people who think the country's on the right track -- and those people are the losers that make up part of the Democrat Party base. You combine those two numbers and it looks bleak for the Bamster. "The economy has stalled, unemployment is much higher than the official number of 9 percent, and Hispanics and African Americans are disappointed. The president’s approval ratings have tanked, and the right-track/wrong-track number fell of the cliff in the summer." It's now 16% who think it's on the right track. "Obama has reached the stage of political doom when voters' disappointment is so deep that they just don’t want to listen to him, talk about him or watch him, said David Hill, a veteran GOP strategist and pollster, in an interview with The Daily Caller. 'Nobody says it to their loved ones … [and] they don’t want to do anything about it,' said Hill, who has worked for conservative and liberal Republicans on the East Coast, the West Coast and in the Midwest, since 1984.
"A tipping point might have been reached in August, when the monthly jobs report showed zero new jobs, Republican pollster Glenn Bolger told TheDC. 'With [George W.] Bush, it happened sometime in 2006, after Katrina and the 2005 Iraq situation,' said Bolger, who heads the polling firm Public Opinion Strategies. Even Obama-friendly experts are close to dismissing him," according to this story. There's a Dick Durbin is also in the news at the same website, the Daily Caller. (That's Chatsworth Osborne Jr.'s website, right? The Daily Caller?) "Illinois Democratic Sen. Dick Durbin told the Chicago Tribune that if the 2012 election is a 'referendum' on President Barack Obama, then Democrats are 'in trouble.'" So there's a theme: Obama's not electable.
It's starting to just appear ever so slightly, just starting to effervesce as a matter of panic and concern. Then there's this from the Business Insider: "Goldman Sachs analyst index does not reflect the modest cheer that people are feeling about the economy." You remember this past week when the gross domestic product came in at 2.5% and everybody was going out there having a party? And you remember that I, El Rushbo, was telling you, "Ah, ah, ah, ah, ah! Where is it? Can somebody show me this 2.5%?" Well, don't get too excited.
"From Goldman's Shuyan Wu: 'The GSAI fell 0.9 points from 43.3 in September to 42.4 in October. This is the third straight decline since July, and the second straight month that the headline index has registered below the 50 mark ... Declines in the headline index contrast with the small improvement in the September ISM manufacturing report.'"The bottom line here is that Goldman Sachs is telling their people, "Psst! Psst! Shhh! Shhh! Shhh! The economy is actually weak and it got worse in October. It didn't grow." That's what all these numbers add up to. That's what the story is all about. It's written very technically, but the essence of it is that the economy was weak and got worse. There wasn't any big growth -- and, see? Everybody knows this. Everybody alive, everybody living it knows it.