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Help a fellow Kossack out.  I and a few friends will be either in the Sonoma area or the Santa Clara area on election night.

Where should a bunch of East Coast Foodie Progressives go to watch the election results and get some great food?  Any recommendations will be appreciated.  

What?  You want some substance?  Well, it's cheating a little because I've diaried some of this before, but let's lay bare a few GOP fallacies.

The Community Reinvestment Act (CRA) is responsible for all those sub-prime morgages. No it's not.  Quick name a sub-prime lender...Countrywide, HCL (who proudly coined the phrase NINJA loan for no income no job no assets), New Century.  Guess what?  None of them were governed by the CRA.  They weren't CRA lenders.  Only banking institutions are. Federal Reserve studies have shown that 50% of subprime loans weren't made by CRA insititutions at all and the loans that CRA institutions did make to less credit worthy borrowers are less risky, less predatory and on better terms than the non-CRA lender's subprime loans.  Your hometown bank, lending in its neighborhood in accordance with CRA, even when lending to folks with less than perfect credit, did not cause this problem.  No, it was the Countrywides and the billions of other "mortgage brokers" who were inundating all of us (but especially and by deliberate voluntary action poor credit risks) with loan offers for loans we didn't actually want. Remember the ones who hawked "take a vacation on your house" etc.  That's who wrought this mess.

Fannie and Freddie Caused This Problem. Not. There is a reason we all know the name Countrywide.  It is because Countrywise and a bunch of other mortgage companies were the ones writing up all these sub-prime loans.  They fueled the fire because writing up these loans was hugely profitable to the Angelo Mozilla's of the world.  And there was a lot of money in them because Phil Gramm's Commodity Modernization Act allowed these crappy mortgages to be bundled and securitized and sold with little regulation as low risk high return too-good-to-be-true securities.  Fannie and Freddie, and lots of banks and pension plans and darn near everybody then fueled the market for the continual creation of these securities by buying them like they were going out of style.  The only way to keep the whole thing going was to loan ever more money against real estate - any warm body would do - hence your NINJA loans.  Fannie and Freddie played a role - but not the main one. That would be Mr. Phil Gramm.

Bush's Dirty Hands.  If you are really looking for someone to blame - try the Bush Administration.  To feed the country's appetite for mortgage backed securities, more loans had to be constantly generated.  Hence your predatory lending.  By 2002 the states had figured out that predatory lending was a major problem and were cracking down.  Georgia, that bastion of liberalism, wanted everyone who bought an interest in a predatory loan to be on the hook.  The money boyz couldn't have that!  It would have brought the securitization of mortgages party to a grinding halt.  Hundreds if not thousands of entities might own an interest in a single predatory loan.  Plus if we stopped predatory lending - how could new mortgage backed securities keep being created?  Can't stop the gravvy train.  That's why in 2003 Bush used the obscure Office of the Comptroller of the Currency to issue federal regulations preempting all of the states predatory lending laws.  BUSH DELIBERATELY KEPT THE STATES FROM CRACKING DOWN ON PREDATORY SUBPRIME MORTGAGE LENDING.  These Regs were issued over the objections of the Attorneys General of all 50 states, the state banking regulations of all 50 states, the national association of state legislatures, etc. Michigan sued back wanting to enforce its own consuming protection laws and lost.  Then the Administration sued to keep New York from investigating subprime lending.

Originally posted to trillian on Tue Oct 21, 2008 at 07:31 PM PDT.

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