I’m not an economist. Bonddad’s charts usually make my eyeballs spin. But I have a fairly good memory and I recall some Administration talk going on before and after the last election that scared me at the time because it seemed to me to be a conservative economic pipe-dream and a way to exploit people’s ignorance for some short-term political and economic gain, kind of a Stalinesque economic experiment. Now it seems the termites have come home to roost.
The particular Administration talk was about the concept of the "Ownership Society":
"...if you own something, you have a vital stake in the future of our country. The more ownership there is in America, the more vitality there is in America, and the more people have a vital stake in the future of this country."
-President George W. Bush, June 17, 2004
Do you recall Bush’s great push for privatized Social Security? This was only one aspect of the Ownership Society concept. Home ownership for "the poor and disadvantaged" was another key part of it. The White House’s policy paper on OS is still posted on it’s web site:
One of the key elements of OS was to push for individual home ownership for the poor. Here’s the Bush-thought on this topic from the policy paper:
Expanding Homeownership. The President believes that homeownership is the cornerstone of America's vibrant communities and benefits individual families by building stability and long-term financial security. In June 2002, President Bush issued America's Homeownership Challenge to the real estate and mortgage finance industries to encourage them to join the effort to close the gap that exists between the homeownership rates of minorities and non-minorities. The President also announced the goal of increasing the number of minority homeowners by at least 5.5 million families before the end of the decade. Under his leadership, the overall U.S. homeownership rate in the second quarter of 2004 was at an all time high of 69.2 percent. Minority homeownership set a new record of 51 percent in the second quarter, up 0.2 percentage point from the first quarter and up 2.1 percentage points from a year ago. President Bush's initiative to dismantle the barriers to homeownership includes: * American Dream Downpayment Initiative, which provides down payment assistance to approximately 40,000 low-income families; * Affordable Housing. The President has proposed the Single-Family Affordable Housing Tax Credit, which would increase the supply of affordable homes; * Helping Families Help Themselves. The President has proposed increasing support for the Self-Help Homeownership Opportunities Program; and * Simplifying Homebuying and Increasing Education. The President and HUD want to empower homebuyers by simplifying the home buying process so consumers can better understand and benefit from cost savings. The President also wants to expand financial education efforts so that families can understand what they need to do to become homeowners.
At the time I first heard about this it was creepy to me. How many winks and nods and backroom deals came from HUD and the white house to various mortgage brokers and the likes of CountryWide and CitiFinancial to go for broke and round up as many poor suckers as they could find. It was good for the economy to have many new homeowners. It was not well thought-out what the consequences would be when disadvantaged people with marginal financial skills faced the realities of mortgage/taxes/insurance/repairs. I remember well the culture shock I experienced 20 years ago when as a many-years renter I purchased my first home and when things went wrong I had no landlord to call to fix things.
When we look at the go-for-broke hard sell of tricky mortgage packages and gotcha adjustable rates, weren’t the Bushies cheerleading all this on and creating a climate for financial institutions to exploit the poor and lower-middle class? Seems so to me.
So now, who is losing their homes in the mortgage melt-down? All the new homeowners of the past few years. They are victimized over and over, tricked into impossible loans, charged phony and inflated fees, charged even more phony fees in foreclosure, scammed over again in desperate attempts to refinance, traumatized by the enormity of their financial ruin, and their credit is destroyed.
Thanks George! Uniter not divider, Decider, and now Great Provider.