Rick Santelli already got a pie in the face courtesy of Jon Stewart (as most of you will remember, this was an early segment within one of the most amazing adventures in the history of the Daily Show, culminating with the epic, terrifying public destruction of Jim Cramer)...
But if you're like me, and still sometimes find yourself face to face with an ignoramus who continues to regurgitate the meme: "homes were bought by 'people who couldn't afford them' wink wink," I just read an article in Bloomberg which adds some more ammo to our pie arsenal. Please join me if you want more flavors to throw at Rick...
First, let's review the paradigm presented by our worthy opponents. Here's Rick Santelli's thoughtful analyis of the foreclosure crisis and the efforts to minimize the damage to the individual families and the economy at large:
How about this, (Mr.) President and new administration — Why don’t you put up a web site to have people vote on the Internet as a referendum to see if we really want to subsidize the losers’ mortgages, or would we like to, at least, buy cars and buy houses in foreclosure and give them to people who might have a chance to actually prosper down the road, and reward people that could carry the water, instead of drink(ing) the water.
Too wobbly? How abut Rush:
It was the Clinton administration -- and we have Robert B. Reich backing this up on television last night -- "obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street's most revered institutions. Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making." Robert B. Reich just confirmed this last night on TV. "It was either that or face stiff government penalties," if you didn't loan to these people.
Wow, Mr. Rush, you even got to throw in a "these people" in your rant!
The most natural response to these cretins would simply be "Hey asshats, STFU!" But if you prefer a more socratic approach, here is a left-right-left combo that should do the trick. It goes like this:
1st, it's proven that the subprime fiasco was driven by predatory lenders taking advantage of lower-income families. To suggest that it was the lower-income families taking advantage of the predatory lenders is asinine and not grounded in fact. Speaking of facts, try some:
An excellent pre-buttal, if there's such a term, can be found in this Marketwatch article from July '07:
Compared with their white counterparts, African American and Hispanic borrowers were more than 30% more likely to receive a higher rate on many types of loans, even after accounting for differences in risk, according to a 2006 report from the Center for Responsible Lending, a research and policy nonprofit.
In an investigation of large and small mortgage brokerages, white testers were offered better pricing than black or Hispanic testers in the most egregious cases, according to the NCRC. The test, which was performed on small and large mortgage brokers from 2004 to 2006, found a 46% rate of disparate treatment based on race and national origin.
"Given the strong financial incentives to make unaffordable loans packed with fees, mere guidelines and suggestions will not be enough to stop risky loan practices and dangerous loan products," said Michael Calhoun, president of CRL. "It is troubling that brokers, who have aggressively marketed dangerous loans in communities of color and low-wealth neighborhoods, and who have routinely charged excessive and unnecessary fees, have no financial interest in the ultimate success of the loans."
Santelli can barely wipe the coconut cream from his eyes when here comes another:
At the risk of spoiling a promising artistic and commercial venture, people should know that Mr. Santelli is firing at the wrong target. The big gainers from the latest plan to help homeowners are not "loser" homeowners, but rather banks and investors who will earn far more on their loser loans than would otherwise have been possible.
This is easy to see if we just adhere to the most basic rule in policy analysis: follow the money. When we follow the money, we see that the government checks do not go to homeowners.
The government checks are all made out to banks and loan servicers.
Santelli’s screed is part of a continuing effort to blame the poor and minority communities for the economic meltdown. There are millions of people who think the Community Reinvestment Act (CRA) was responsible for bad mortgages, when most of these mortgages were either made by institutions that were not covered by the CRA or were loans that would not have been covered by the Act even if the institution was covered. Of course the idea that government bureaucrats were forcing banks to make loans that were hugely profitable at the time is laughable on its face.
At some point Santelli and his followers are going to have to deal with reality. The problem is not poor and moderate income homeowners or African Americans or Latinos. The perps in this case where rich bankers, the vast majority of whom were white males.
I think that one was lemon meringue.. But what caught my eye today was this:
Borrowers such as Dayton, whose 2004 compensation was almost 10 times the median U.S. household income, are becoming trapped by the same issue facing the poorest subprime homeowners: falling home prices erase equity and make it impossible to sell or refinance without losing money.
The number of U.S. homes valued at more than $729,750, the jumbo-loan limit in the most affluent areas, entering the foreclosure process jumped 127 percent during the first 10 weeks of this year from the same period of 2008, data compiled by RealtyTrac Inc. of Irvine, California, show. The rate rose 72 percent for homes valued at less than $417,000 and 78 percent for all homes, RealtyTrac said.
"It’s the trickle-up effect," said David Adamo, chief executive officer of Luxury Mortgage Corp., a home-loan bank in Stamford, Connecticut. "Just like homeowners in smaller homes, these homeowners anticipated being able to refinance mortgages to continue making payments and at a future date sell for a gain and put it toward their next home. That strategy backfired when the market for jumbo mortgages dried up."
Foreclosures have come to the Hamptons, the beach towns about 100 miles east of New York City on Long Island, where homeowners have included Blackstone Group LP Chief Executive Officer Stephen Schwarzman, hedge fund manager John Paulson and Goldman Sachs Group Inc. CEO Lloyd Blankfein.
Almost 90 borrowers entered the foreclosure process in the towns of East Hampton and Southampton in the first 10 weeks of 2009. That compared with 109 in the same period last year and 73 in the first 10 weeks of 2007, according to the Real Estate Report in West Islip, New York.
"There was this unrealistic view that the crazy financing was limited to subprime when of course it was across the board," said Andrew Laperriere, Washington-based managing director at research firm International Strategy & Investment Group. "A lot of jumbo mortgages were nothing down with high debt-to-income ratios."
California is hardest hit by luxury-home foreclosures. More than 1,500 borrowers with properties in the state that once sold for more than $1 million defaulted on their mortgages in February, said Mark Hanson, managing director of the Field Check Group, a real estate company in Palo Alto, California.
So, Rush, by "these people" were you referring to homeowners in the Hamptons? Are these the "losers" you're referring to, Santelli?
No-one should get any pleasure out of anyone else's economic troubles. I have no idea who Chuck Dayton is (referenced in the above article), but I wish him all the best. No matter what race, national origin, income or assets, here's to more power to people who follow their dreams.
But to have orcs like Rush not just try to piss on the dreams of some of his fellow Americans, not just blame those who have been cheated during their pursuit of happiness, but to insinuate that these families in crisis are somehow to blame for the whole f**in mess... To listen to some nut blab on that first-time home buyers whose dreams were taken advantage of by powerful people are somehow "losers" ... is that not too much to stand?
In the end, Rick, by any measure that counts, it's you and Rush and your shrinking base who are the losers. The rest of us are in this together.