Buchanan: Systemic Failure

[hokie4redskins]

Let the accusations of Buchanan's hackery commence.

http://www.humanevents.com/article.php?id=31154

As the U.S. financial crisis broadens and deepens, wiping out the wealth and savings of tens of millions, destroying hopes and dreams, it is hard not to see in all of this history's verdict upon this generation.

We have been weighed in the balance and found wanting.

For how did this befall us, save through decisions that brushed aside lessons that history and experience had taught our fathers?

It all began with the corruption called sub-prime mortgages.

The motivation was not wicked. Democrats wanted to raise home ownership among African-Americans from 50 percent to the 75 percent of white folks. Rove Republicans wanted to do the same for Hispanics.

Banks were morally pressured by politicians into making home loans to folks who could not remotely qualify under standards set by decades of experience with mortgage defaults...................

Does Dr. Obama have the cure for the sickness that ails the republic?

He is going to borrow and spend trillions more to bring back the good old days, though it was the good old days that brought us to the edge of the abyss into which we have fallen. Then he is going to spend new trillions to give us benefits we do not now have, though the national debt is surging to 100 percent of the Gross National Product, and may reach there by 2011.

Is Obama willing to speak hard truths?

Is he willing to say that home ownership is for those with sound credit and solid jobs? Is he willing to say that credit, whether for auto loans, or student loans, or consumer purchases, should be restricted to those who have shown the maturity to manage debt -- and no others need apply?

"Avarice, ambition," warned John Adams, "would break the strongest cords of our Constitution as a whale goes through a net. Our Constitution is made only for a moral and religious people. It is wholly inadequate to the government of any other."

In this deepening crisis, what is being tested is not simply the resilience of capitalism, but the character of a people.

[GibbsFactor]

I'd expect more from him. This mess is at least 30 years in the making.

[Dictator]

Is he willing to say that home ownership is for those with sound credit and solid jobs? Is he willing to say that credit, whether for auto loans, or student loans, or consumer purchases, should be restricted to those who have shown the maturity to manage debt -- and no others need apply?

I disagree with this^

Credit should be for everyone. Just don't ***** and moan at the rate you're charged based upon the decisions you've made.

[Brad_Edwards_Fan]

He makes a good point...

You hear people talking about how we need to start lending again, that people cant get car loans and that needs to be fixed. What i havnt heard yet is that a portion of the lending that used to exist shouldnt exist ever again. When the numbers bear out that based on everything that we have seen an applicant is not likely to repay a debt, credit should not be extended. Unfortunaltly, if we start to deny credit to the non creditworthy we will see complaints that banks only lend to rich (white?) people and the govt will be asked to step in and make banks lend to everyone else too. Then we will have another situation where banks have to use high rates to protect themselves from less creditworthy borrowers, people with loans they cant pay back and we will be right back to where we are today....

Its too bad that we as a country are not willing to admit that certain things should only be available to those that can afford them...

[Brad_Edwards_Fan]

I disagree with this^

Credit should be for everyone. Just don't ***** and moan at the rate you're charged based upon the decisions you've made.

But then you end up with all the predatory lending complaints of "rich white guy x is only charged 5% and poor minority Y is being charged 10%" and govt pressure to make things even. Of course no one will look at the fact that maybe guy X has a FICO of 720 and applicant Y is at 510.

[#98QBKiller]

This mess is at least 30 years in the making.

Exactly.

[Brad_Edwards_Fan]

I also agree that this is not an issue that is new... i agree it is MANY years/decades in the making

[hokie4redskins]

I'd expect more from him. This mess is at least 30 years in the making.

You mean Carter imposing affirmative action in lending with the CRA? He mentions it at the beginning. I doubt Buchanan is ignorant of CRA's ramifications just because he doesn't harp on it.

[Predicto]

Interesting.

So, it was affirmative action for blacks that caused banks to lend all of those trillions to unqualified people flipping houses in Phoenix, Las Vegas, Orlando, San Diego, Stockton, Tampa, etc.

I never even knew there were so many black people there.

I'm glad to know that the creation of mortgage derivatives and the ability of banks to sell their mortgages immediately (thus disconnecting the lender making the loan from the risk of holding the loan) - I'm glad that this wasn't behind the current problems.

Because, you know, fixing that would be a lot harder than just blaming black people and old Democrats.

[Dictator]

Predicto, I tend to like buchanan, but i agree with you here.

also, I don't recall the banks crying when all these loans were being processed.

[Brad_Edwards_Fan]

Interesting.

So, it was affirmative action for blacks that caused banks to lend all of those trillions to unqualified people flipping houses in Phoenix, Las Vegas, Orlando, San Diego, Stockton, Tampa, etc.

I never even knew there were so many black people there.

I'm glad to know that the creation of mortgage derivatives and the ability of banks to sell their mortgages immediately (thus disconnecting the lender making the loan from the risk of holding the loan) - I'm glad that this wasn't behind the current problems.

Because, you know, fixing that would be a lot harder than just blaming black people and old Democrats.

If you are refering to my post, then no, that is not what i'm saying. I'm looking forward that if banks stop making loans to certain segments of the population going forward, excluding all except for those that appear to be the most credit worthy, then there will be significant populations that will no longer have access to the credit that they did 3-4 years ago.

If this occurs there will surely be groups that pull HMDA numbers to show that certain ethnic groups are now under represented in the new loans and petition the government that somehting shady is going on. I then think that it is likely that the govt, rather than looking deeper into the data, will simply say "we need to make this fair" and tell the banks to "just do something about it".

Then i think that we would see the comeback of non-prime lending as if banks are required to lend to higher risk populations they will have to do so at higher rates, a practice which would lead to additional complaints.

...and i agree about the CDO's. It was the growing secondary market for riskier loans that led to most banks making them (as opposed to govt regulation).

[GibbsFactor]

Interesting.

So, it was affirmative action for blacks that caused banks to lend all of those trillions to unqualified people flipping houses in Phoenix, Las Vegas, Orlando, San Diego, Stockton, Tampa, etc.

I never even knew there were so many black people there.

I'm glad to know that the creation of mortgage derivatives and the ability of banks to sell their mortgages immediately (thus disconnecting the lender making the loan from the risk of holding the loan) - I'm glad that this wasn't behind the current problems.

Because, you know, fixing that would be a lot harder than just blaming black people and old Democrats.

Really? University of Chicago? And you're going to make that argument?

C'mon man. You can do better then that.

[Predicto]

If you are refering to my post, then no, that is not what i'm saying. I'm looking forward that if banks stop making lending to certain segments of the population going forward, excluding all except for those that appear to be the most credit worthy, then there will be significant populations that will no longer have access to the credit that they did 3-4 years ago.

If this occurs there will surely be groups that pull HMDA numbers to show that certain ethnic groups are now under represented in the new loans and petition the government that somehting shady is going on. I then think that it is likely that the govt, rather than looking deeper into the data, will simply say "we need to make this fair" and tell the banks to "just do something about it".

Then i think that we would see the comeback of non-prime lending as if banks are required to lend to higher risk populations they will have to do so at higher rates, a practice which would lead to additional complaints.

...and i agree about the CDO's. It was the growing secondary market for riskier loans that led to most banks making them (as opposed to govt regulation).

I was referring to Buchanan's thesis, not your post.

I might add that the history of racially discriminatory lending practices is not a complete myth, not by a longshot. Things may be better now, but it was not so long ago that it was very difficult to get a bank loan if you were black, much more difficult than it would have been for a white in the same community with the same credit score.

Contrary to Buchanan's insinuations, the subprime market crisis is not all due to loans to unqualified racial minorities because of government pressure.

It is the result of lenders loaning any amount to anyone, anywhere in an appreciating real estate market, and not giving a damn about whether they could pay it back, because it wasn't their concern. The government had only a small part in that.

[GibbsFactor]

It is the result of lenders loaning any amount to anyone, anywhere in an appreciating real estate market, and not giving a damn about whether they could pay it back, because it wasn't their concern. The government had only a small part in that.

Yeah, a very small part, the start of it, then left it unchecked for us animals to destroy ourselves.

[deejaydana]

I was referring to Buchanan's thesis, not your post.

I might add that the history of racially discriminatory lending practices is not a complete myth, not by a longshot. Things may be better now, but it was not so long ago that it was very difficult to get a bank loan if you were black, much more difficult than it would have been for a white in the same community with the same credit score.

Contrary to Buchanan's insinuations, the subprime market crisis is not all due to loans to unqualified racial minorities because of government pressure.

It is the result of lenders loaning any amount to anyone, anywhere in an appreciating real estate market, and not giving a damn about whether they could pay it back, because it wasn't their concern. The government had only a small part in that.

You did well until that last sentence. The gov't was very much a part of the problem, more so than is alluded to in the press and than any camp will admit. Who cares where the blame lies now? The damage is done. I'm interested in seeing what we do going forward because gov't oversight is clearly in need but how much, how often and when?

[Predicto]

Yeah, a very small part, the start of it, then left it unchecked for us animals to destroy ourselves.

Buchanan (and others) want to focus on the "start" for political reasons.

They want the problem to be viewed as resulting from affirmative action and amorphous government wrongdoing, rather than from simple greed and lack of government oversight.

They are casting about for the best way to blame the government (and Democrats if they are lucky) rather than blaming bankers and private lending practices.

[SparkleMotion]

FTA:

"Who is to blame for the disaster that has befallen us?

Their name is legion.

There are the politicians who bullied banks into making loans the banks knew were bad to begin with and would never have made without threats or the promise of political favors.

There is that den of thieves at Fannie and Freddie who massaged the politicians with campaign contributions and walked away from the wreckage with tens of millions in salaries and bonuses.

There are the idiot bankers who bought up securities backed by sub-prime mortgages and were too indolent to inspect the rotten paper on their books. There are the ratings agencies, like Moody's and Standard & Poor's, who gazed at the paper and declared it to be Grade A prime.

In short, this generation of political and financial elites has proven itself unfit to govern a great nation. What we have is a system failure that is rooted in a societal failure. Behind our disaster lie the greed, stupidity and incompetence of the leadership of a generation."

That's the meat of Buchanan's argument. To me, it isn't political at all.

He is saying that the most powerful people in this country have failed it miserably. I think most of us could agree to that.

[zoony]

Because, you know, fixing that would be a lot harder than just blaming black people and old Democrats.

Excellent post Predicto (I wish I'd written it)

[hokie4redskins]

Interesting.

So, it was affirmative action for blacks that caused banks to lend all of those trillions to unqualified people flipping houses in Phoenix, Las Vegas, Orlando, San Diego, Stockton, Tampa, etc.

Nope, but the CRA certainly set a thirty-year precedent on relaxing lending rules toward woefully unqualified borrowers, which is, arguably, indirectly responsible for allowing practices like flipping to thrive to begin with. Perhaps if banks weren't forced to lend to those a free market would've normally declined, we might have avoided economic catastrophe?

:whoknows:

And you're missing the point...........badly. Buchanan is not blaming black people or "old Democrats." He's blaming the idea of government imposing its will on markets. He slams "Rove-Republicans" as well, or, as usual, did you not read the article?

It's funny hearing people scream "we need regulation" when regulation essentially snowballed us into this mess. I wouldn't expect you to understand that though since government is your remedy to all ills.

[deejaydana]

That's the meat of Buchanan's argument. To me, it isn't political at all.

He is saying that the most powerful people in this country have failed it miserably. I think most of us could agree to that.

You would think so. Many of these threads fall quickly into partisan bickering, I think that's exactly the response both parties want from us.

The most simple minded just drop back into the standard political/partisan 'fall back' position and blaze away with both guns until they feel they've silenced their critics, impressed their dyed in the wool friends, spoken loudly enough and pumped themselves up to feel some measure of self-importance. All I'm looking for are some politicians with the stones to accept some of the mess they've created and not just finger point at Wall Street. The blame runs many ways & it does reside on Capitol Hill as well, why not just take ownership collectively & work forwards? I think we still can. The trickier part is not reforming Wall Street alone, I believe, it's 'decoupling' Wall Street & Congress.

[Larry]

Interesting.

So, it was affirmative action for blacks that caused banks to lend all of those trillions to unqualified people flipping houses in Phoenix, Las Vegas, Orlando, San Diego, Stockton, Tampa, etc.

I never even knew there were so many black people there.

I'm glad to know that the creation of mortgage derivatives and the ability of banks to sell their mortgages immediately (thus disconnecting the lender making the loan from the risk of holding the loan) - I'm glad that this wasn't behind the current problems.

Because, you know, fixing that would be a lot harder than just blaming black people and old Democrats.

Agreed.

It's amazing the eternal life the completely bogus claim that these bad loans are loans that were made to minorities purchasing their first house has.

The numbers I've seen say that, I think, in Florida, more than half of the foreclosures are for second (or non-primary) homes. (I think something like 30% of them are for third (or more) homes.)

But the response of a lot of people is to blame minorities.

[deejaydana]

Agreed.

It's amazing the eternal life the completely bogus claim that these bad loans are loans that were made to minorities purchasing their first house has.

The numbers I've seen say that, I think, in Florida, more than half of the foreclosures are for second (or non-primary) homes. (I think something like 30% of them are for third (or more) homes.)

But the response of a lot of people is to blame minorities.

Who is blaming the minorities? I've not come across this personally, either through first hand experience or in the media. It's an easy card to play though. I don't think the gist of the article, even though it's from a more far right person, is calling out minorities in any measure. Just wondering....

p.s. I live in Orange County and while there has been, to date, a large number of Hispanics that have been foreclosed on their homes locally, the media has covered it VERY fairly and come down hard of the lending institutions (and lesser so to gov't) and never on apportioning blame to minorities. Never. I'd love to see some back up to it though if you have any (not doubting you but I've just not come across it personally).

[Larry]

Buchanan (and others) want to focus on the "start" for political reasons.

They want the problem to be viewed as resulting from affirmative action and amorphous government wrongdoing, rather than from simple greed and lack of government oversight.

They are casting about for the best way to blame the government (and Democrats if they are lucky) rather than blaming bankers and private lending practices.

Actually, I do put a lot of the blame on the government, but to me, it's a lot more due to the intentional dismantling of a lot of banking regulations than it is from a 30-year-old law preventing redlining.

I'll freely admit to not being an expert on the subject, but I'm certain that I've been making posts on ES for the last 3-5 years, in various threads, that it seemed to me that the government is repealing/suspending/granting exceptions to banking rules that, I thought, were put in place following the Great Depression specifically to prevent our financial system from being vulnerable to a systemic collapse.

Face it, folks: If these investments weren't leveraged out the wazoo, nobody'd care about it.

[SparkleMotion]

Agreed.

It's amazing the eternal life the completely bogus claim that these bad loans are loans that were made to minorities purchasing their first house has.

The numbers I've seen say that, I think, in Florida, more than half of the foreclosures are for second (or non-primary) homes. (I think something like 30% of them are for third (or more) homes.)

But the response of a lot of people is to blame minorities.

Do you think Pat Buchanan is blaming minorities for the crisis in this article?

Saying that minority home ownership was the the motivating factor behind the easing of some credit requirements and saying that it is the fault of those minorities who wanted to own a home are two completely different things.

[hokie4redskins]

Do you think Pat Buchanan is blaming minorities for the crisis in this article?

Most of the people posting in this thread think that.