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1999 NY Times Story Predicted the Fannie/Freddie Mortgage Meltdown

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RUSH: This is from September 30th, 1999. Headline: "'Fannie Mae Eases Credit To Aid Mortgage Lending' -- In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders. The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring. Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

'''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. 'Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.' Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market. In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's."

Right here it is, the New York Times, a story by Steven Holmes, September 30th, 1999. The Clinton administration pressuring Fannie Mae to make loans to people that couldn't pay 'em back. It's a great thing we're doing, affordable housing.

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RUSH: Okay. We just went back in time to the news archives of the New York Times September 30th, 1999, and learned everything we know about the mortgage industry. Fannie Mae, Freddie Mac. Make loans to people who can't afford them. Expanding home ownership for millions of families. Reducing down payment requirement. All the things that led to all this. It's right there in five or six paragraphs of the New York Times, 1999. Let's jump forward to yesterday, the Houston Chronicle: "Houston taxpayers could start footing the bill to help first-time homebuyers pay off debts and improve their credit scores, under a proposal before [Houston] City Council this week." This makes me speechless, almost. This is an exact repeat of what we just read happened nationally in Fannie Mae and Freddie Mac.

In other words, people who cannot afford to buy homes are going to be given $3,000 by the taxpayers of Houston so that their qualification scores are raised and they can get a loan. "The 'Credit Score Enhancement Program' will give up to $3,000 in grants to individuals who are trying to qualify for mortgages through the city's homebuyers assistance program. City officials say some applicants fall short of eligibility by only 10 or 20 points on their credit scores, and paying off some debt balances can quickly improve their numbers." Now, get this next paragraph. "The proposal has aroused critics who say the city should not use public funds to help people pay down car loans, credit card balances, or other debts -- even if the slight credit bump would help them realize the dream of home ownership." You know what? We've gotta stop calling this "home ownership," because that's not what we're talking about here.

We're talking about occupancy. We're talking about home occupancy. We're talking about squatters. We're talking squatters paid for by the citizens playing by the rules. We're not even talking renters. We're talking home occupiers. I mean... (laughs) (interruption) Why are...? (interruption) Why are...? Why are...? Why are we doing this? Why are they doing this? The question is, "Why are the people in Houston doing this?" I will guarantee... I don't know this, so I can't guarantee it, but my wild guess is that whoever is behind this idea has huge political aspirations in Texas; like maybe wants to run for mayor of Houston someday, might want to run for governor, might want to run for senator. So the guy has come up with a unique way of playing off what Obama's doing, to give people three grand. They can wipe out some of their credit balance and buy a house.

Yip yip yip yip yahoo. It's the old Texas way. This is why, Snerdley. Why do you think? It's to buy votes! Somebody wants votes. That's what this is all about. Somebody wants to create dependents. Somebody wants to give somebody something for nothing -- or make them think it's for nothing. "'We just can't give away government money to help people with their credit scores,' Councilman Mike Sullivan said Monday. 'You're giving them other taxpayers' money to pay off the bills.'" Ho-hum. We just can't give away money. We just can't. That carries all the weight, doesn't it? Well, we just can't give away other people's money. Sure we can! What the hell have we been doing, Mr. Sullivan, for how many years? Of course we can!

And we still haven't got it all. There are still a lot of people out there who haven't given enough, and so Obama's going to go out there and raise their taxes in a couple years. What do you mean we can't just give away money? Hell's bells, we gave away houses! Why the hell can't we give away three grand? It's chump change compared to giving away houses. Anything to avoid the foreclosure sign, right? Keep property values up. Anything to avoid weeds and un-mowed yards in the foreclosed home of the guy next to you, to keep your property values up, right? (interruption) No, you don't ask some neighborhood kid to come over mow the grass anymore. It's too hard. The neighbor kid is too worried about playing video games. You can't make 'em sweat in the summertime! No, no, no. You gotta get professional landscaping service to come in from across the border to do that kind of work.

Kids can't be expected to do that. What do you mean kids? Expectations today have just gone way too high. Oh, maybe it's time for a little despair, but it's not time to panic. It's not time to panic, but full-on despair is called for. (laughing) You know what I intended to lead with today? I was going to leave with these polls. I wasn't going to mention the golf clubs and the jets. I wasn't going to mention it but I just couldn't help it because it just infuriates me. See, I don't talk about things that bother me personally here, folks, because I figure nobody will care. Nobody's going to care. I never complain about anything 'cause nobody will care. Nobody will listen. Understandably so. I don't complain anyway. I'm not complaining now, except the loss of freedom.

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