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October 09, 2009

Lessons Unlearned: Obama and Dem leadership double down on stupid. [krakatoa]

(Pulled from the ArthurK's headline.)

It is beginning to look less like ignorance, and more like willful malice towards our economy. Forbes puts us some knowledge on the issue, and the future of CRA.

Brief recap: CRA forced banks to make concessions to "community activists", like ACORN of late scandal, in the form of committing to huge numbers of loans to those who are least able to afford them.

Forbes pegs the dollar amount of total commitments as of 2007 at 2.7 trillion dollars. Trillion.

Washington Mutual, for example, pledged $1 trillion in mortgages to those with credit histories that "fall outside typical credit, income or debt constraints,"... Four years later it was taken over by the Office of Thrift Supervision. In 2004 Bank of America agreed to provide $750 billion in CRA loans to applicants with poor credit ... By 2008 Bank of America was reporting that CRA loans represented only 7% of its portfolio but 29% of its losses... J.P. Morgan Chase agreed to provide $800 billion of such loans over the course of 10 years.

Democrats in congress and the President are now looking to expand the program to include Credit Unions and Insurance Companies. And instead of increasing regulation of the program, they want to remove what little enforcement of it there is from the Federal Reserve, and create a new oversight bureaucracy, the Consumer Financial Protection Agency.

This agency's core concerns would not be safety and soundness but, in the words of the Obama administration, "promoting access to financial services," which is really code for forcing banks to lend to those who would not ordinarily qualify.

In other words, their goal will not be sound economics, but instead will be to expand the concept of the common mortgage as a welfare device to dizzying new levels.

2.7 trillion? It is to laugh.

If this goes through, at some point in the not-so-far future we will look at the most recent crash and ongoing recession and unemployment numbers with fond memories.

This to me is one of the crucial issues in the next election cycle. Of course, anyone who runs on the plank of killing CRA will be crucified by the MSM and the race-baiters. But I need to know that my candidates will not vote for what is an obviously suicidal economic policy wrapped in a mantle of "social justice".

This will require candidates who are able to reduce the issue into its base components, and stick to them. It's not a complicated issue, and explaining it simply to the people while the Left tries to convince the voters that they are just too stupid to understand it would be a winning strategy in my opinion.

Our politicians on the Right just cannot allow the Left to continue framing these debates. The new media must encourage and defend rational discourse over populism and hysteria.

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posted by xgenghisx at 10:50 AM

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