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Rush's Morning Update: Reform September 13, 2010

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In July, Democrats passed the obscene sounding Dodd-Frank Act, a massive 2,300-page monstrosity to supposedly reform financial markets and deal with the underlying causes of the recession. Flash forward. The New York Times just ran an article – without even a hint of irony – about a new program, backed by Fannie Mae allowing homebuyers to get loans to purchase properties with no money down.

Buyers like Matthew and Hannah Middlebrook, a 20-something couple with a $32,000 income, they just scored a three-bedroom ranch in Milwaukee because they got a grant to cover insurance and closing costs. The payment made to close the house was: 67 cents.

I have no brief against the Middlebrooks. Who wouldn't plop down 67 cents to own a house? The program – called "Affordable Advantage" – gives first-time homebuyers a leg up on these kinds of deals. The mortgages are ultimately backed by Fannie Mae, which is already billions in the hole. Taxpayer dollars secure the loans.

I quote a spokesman from the Government Accountability Office: "Loans that have zero down payment perform worse than loans with down payments. And loans with down payment assistance perform worse than those that do not."

So, here we go again. Democrats refused to address the Fannie Mae and Freddie Mac problem in their so-called reforms even though subprime loans were the root cause of the financial collapse. Now they devise a new subprime loan package with the same old players backing them. You want real financial reform? Fire the Democrats. It is the only way, folks.

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