RUSH: There's a story in the Washington Post today that cannot possibly be welcomed in John Edwards-ville. The headline says: "Edwards Says He Didn't Know About Subprime Push -- The hedge fund that employed John Edwards," the Breck Girl, "markedly expanded its subprime lending business while he worked there, becoming a major player in the high-risk mortgage sector Edwards has pilloried in his presidential campaign." He has! He's been out there ripping the subprime mortgage sector because it's high risk. He's been pillorying it and the hedge fund that employed him expanded its subprime lending business while he was there. "Edwards said yesterday that he was unaware of the push by the firm, Fortress Investment Group, into subprime lending and that he wishes he had asked more questions before taking the job." This is a crock. The first thing he says is he went to the hedge fund to learn about poverty, to which I said, "Well, I'm going to go work in a soup kitchen and learn about being rich." How absurd is this. He had no clue what was going on at this hedge fund! They were creating it.
He was there when all this was happening! "Largely as a result of the rise in subprime lending and the cooling housing market, home foreclosure filings rose to 1.2 million in 2006, an increase of 42 percent," and that hurts. "At the same time, the drop in value of subprime lenders has presented a buying opportunity for investors such as Fortress. Fortress hired [the Breck Girl] as an adviser in October 2005..." Now wait a minute! How can you hire someone as an "adviser" when you say they're going there to "learn" things? If you were an adviser, you teach! If you are an adviser, you advise. But he said he went there to learn about poverty," then while he was there he had no clue that this firm was expanding its subprime business while he's out there ripping the subprime market all to hell! They hired him "in October 2005, nearly a year after his losing campaign," as John Kerry's -- who served in Vietnam, by the way -- vice presidential candidate. "At the time, it owned a major stake in Green Tree Servicing LLC, which rose to prominence in the 1990s selling subprime loans to mobile-home owners and now services subprime loans originated by others."
Well, now let's be honest here. If you are selling subprime loans to mobile-home owners, the odds are that the majority of them are going to be in that category that Edwards calls the Second America. They're "less affluent," shall we say, and, of course, the subprime market ends up taking advantage of these people. Edwards didn't know what was going on, because he was there learning about poverty. "Last July, Fortress expanded its stake in the industry by buying Texas-based Centex Home Equity, a top-25 subprime lender, for an estimated $540 million." Edwards knew none of this while he was advising this bunch. "Edwards said yesterday that he recalls being told at the time of his hiring that some of Fortress's private equity holdings did lend to start-up businesses, which is why he asked about predatory lending practices. But he could not recall whether the firm's partners told him it had a major stake in Green Tree. 'Those are the things I remember,' [Edwards] said. 'They may have told me more.' Had he learned that Fortress owned a loan servicer with a history of predatory lending practices, he said, 'I would have asked some very specific questions about it.'"
Well, you didn't, because you didn't even know! I'm telling you, this is a long article and it goes on and on and on. But I guarantee you, at Camp Edwards today, this is not a good day. "Edwards said his role at a company with a growing stake in the subprime industry should not be seen as undermining his commitment to helping the poor. He noted that since the 2004 election, he has founded a poverty think tank, started a charity for poor college students and assisted campaigns to raise the minimum wage." You know where subprime loans have been particularly prevalent? New Orleans! (Ahem) Enough said. So his big house shouldn't be seen as hypocritical. His work at the hedge fund "shouldn't be seen as undermining his commitment to helping the poor" because he had a think tank. He had a think tank. You know what the think tank did. He even said this. I don't think the think tank is open. He had a think tank had a temporary, had a start and stop period and they issued papers. They sat around and they thought -- which is what some people do at think tanks -- and they wrote what they thought down on paper and they released these papers.
They're called position papers -- as though that's not been done before -- and, of course, as though what are you going to do? Take the position papers down to the homeless, say, "Here. Have this for dessert after you have the vegetarian pizza from the dead guy in Nashville"? The hypocrisy, ladies and gentlemen, is overflowing. He's out there trying to stoke up all kinds of class envy, saying he's going to this place to learn about poverty, which is a joke and an insult. If a Republican had said that it would have been treated as a joke and insult. He would have been laughed out of the place. Now he says he was an adviser. If you're an adviser, you're not there to learn things. You're there to advise and teach, and he said he didn't know all this was going on while he was there which, you know what it all adds up to. He probably wasn't there. He just put his name "rainmaker," on the letterhead, and gets a little money for it and so forth, and gets himself some "private sector experience" after doing the think tank gig for the poor.
It's all coming home to roost now.
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RUSH: You know the Breck Girl, we got a new name for him. He's the Gollll-ly Candidate. He didn't know anything about the hedge fund. Golly! He didn't know about the war when he voted on it. Golly! There's a moral to this, folks: just because you know about hair conditioners doesn't mean you know anything else.
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RUSH: Mike, in Miami, you're next on Open Line Friday. Great to have you with us.
CALLER: Thanks, Rush. It's a pleasure. I think it should be obvious to Edwards that the way to alleviate poverty is through granting credit to the poor. There's a guy that won a Nobel Peace Prize for that by showing that if you gave credit, micro credit, that you build economies. We ought to be thanking God for the subprime market, because in the last few years, hundreds of thousands of people who would not otherwise have been able to were able to buy their first home -- something that is a basic tenet of getting people out of poverty.
RUSH: Wait a minute. What's the downside when you start lending money to people that really can't afford it and you make a special deal for them, and then they run into trouble or the rate rises and they can't pay it off?
CALLER: Rush, that is on the individual. There are a lot of individuals that are financially irresponsible. That's not the problem of the lender. That's the problem of the borrower. The lender, go back 20, 30 years. There used to be discrimination in lending. Neighborhoods that wouldn't be lended to. People that wouldn't be lended to. We don't hear those problems in the last five, six, seven, eight years, the housing boom.
RUSH: That's true. They're giving money away.
CALLER: People that would previously have been victims of discrimination, that would have been unable to get credit, were able to get credit and buy their first homes. They have barely a job, live in an apartment. Now, if people had eyes bigger than their stomach and were buying $500,000 houses when they could only afford a $200,000 house, that's not the problem of the subprime lender. That's the problem of the borrower.
RUSH: I understand that, but I'm saying there's some people on the low end here that the subprime -- correct me if I'm wrong on this. I may be taken in and fooled here by the Drive-By Media. But like this story on the Breck Girl with the Fortress Group, they were heavily involved in the subprime market for mobile-home owners. Well, a lot of people want to own their homes that really are not financially able to, and yet they're still being lent money and they're having trouble paying it back at some point.
CALLER: Rush, Rush, there used to be a thing called "character lending," not looking at a balance sheet, but looking at the individual, and people of good character would take out what they think they can reasonably afford to pay, and that goes back to the borrower. You might have had some egregious instances, but overall, I think the capital markets were making a business decision on loaning to lots of people, and what they probably did, the capital market, is they misjudged the amount of deadbeats that were out there. Now the subprime market is in trouble, but an entire industry is getting castigated for open-ended lending, which is in the grand scheme of things, is a very good thing, something that should be encouraged.
RUSH: Mike, what business are you in?
CALLER: I'm close to that business. (Laughing.) I'm on the building side, okay? I'm on the building side. I'm on the building side, but I can tell you that I've known personally a lot of people who otherwise would not have normally qualified that were able to buy a house and get a mortgage, and did very well with that.
RUSH: I know. There's no question about it. The Drive-By Media has been trying to scare up this housing bubble for how many years now? They've been trying to scare us because everything is doom and chaos, doom and gloom and so forth. Look, I'm glad you called. I would only depart in one minor way with you in discussing what's the best cure for poverty, and it's not only access to credit. I'm not disagreeing with that, but the best cure for poverty is free markets. It's not government programs. We've tried that. The world has tried it. It doesn't work. Access to capital and free markets is -- well, education goes without saying -- one of the fundamental characteristics to getting rid of poverty. I would suggest, by the way, folks, that in this country we have... Compared to real poverty in other parts of the world, we have poor people here, but relative to the way a lot of people in this world live, our poverty is quite a few steps up. When you start talking about people under the poverty line, in this country some own cars. Some of them have their own houses. Some have televisions, multiple televisions, air conditioning and so forth. That's not poverty. There are pockets of disadvantaged people in this country. I'm not trying to gloss over it. But we've done a remarkable job here in dealing with it. The people who are in the worst shape in this country regarding the future are those who become totally dependent on the meager subsistence they get from these redundant government programs that have, not at all developed their own potential ambition or any of those characteristics which are the ultimate ways out of it for everybody.
I've always marveled at this. Back during the heated homeless days, I would say on the radio or say in a speech somewhere, "Why don't these people just get a job?"
A liberal would say, "Oh, easy for you to say!"
"What in the world is insulting about that?"
"Well, easy for to you say, 'Get a job.'"
What if all of us said, 'The hell with a job! We'll just sit around and wait"? A job is honorable. Work is how many people define themselves. The left and their never-ending commitment to the concept of failure on the part of most people is what holds the people under their tutelage down. They have no expectations of success. The left has no expectations that the poor can rise above their circumstances. They think they're perpetually locked. That's why in the abortion debate, the libs tried to say, "We don't want that mother to give birth to that baby. Look at the neighborhood! Look how it's going to grow up. Look at the circumstances, the economics. Nobody wants to be born into poverty." Take a look at the successful people all over the world who were born into such circumstances. It's depressing. I don't want to talk about it anymore. The whole thing just depresses me.
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