No Joke: The Regime Replicates the Policy That Created the Subprime Mortgage Crisis
Jul 27, 2012
RUSH: Folks, do you remember that the banks wouldn’t lend to blacks and Hispanics ’cause they were racist? And then do you remember how Jimmy Carter and then Clinton and then, after that, Clinton came along and they passed something called the Community Reinvestment Act. And you remember what that did? The federal government forced banks to lend money to people who had no prayer of ever paying it back. Janet El Reno, the attorney general for Clinton, even threatened the big banks all over the country with investigations if they didn’t do this.
The Reverend Jackson was running around complaining about redlining, that people of color were not being given loans because of the racist policies of the banks. The American dream was defined as everybody should have a house, and the Democrats came along and said it’s not fair some people have houses and other people don’t. Well, we gotta put the people that don’t have houses in houses. Well, how do we do that if they can’t afford it? It’s simple. We make the banks loan them money at low-interest rates, and then the dirty little secret is they can’t pay it back, so it’s up to the banks. The banks are gonna eat it. That was the philosophy. The banks owed this because the banks had been screwing people for so long.
Remember all this? You remember then that Wall Street banks — after doing this under threat of investigation and threat of the use of force under the intimidation of federal government — then made these loans. And then what they did is they pooled them together. Worthless pieces of paper. Worthless mortgage after worthless mortgage. The banks pooled these things together in consort with Fannie Mae and Freddie Mac.
And they went out and they gave these new pooled mortgages names, “derivatives” and so forth, and then they sold them to unsuspecting people. And they said, “Look at this income stream we’ve got for you! We have put together 25,000 mortgages here. Yeah, look at the income stream you’ve got. AAA rating on these loans! AAA rating on these mortgages.” The banks were stuck with worthless paper that the government made them issue. The government made them make these loans.
So the banks said, “Okay, how can we get the money back? We gotta get rid of this.” They package all the stuff together and they sell them to unsuspecting investors who think they’re buying a phenomenal income stream. And all of this is backed up by Fannie Mae and Freddie Mac. And remember, they kept selling these things down the line. As one group of buyers discovered they had been taken, they quietly repackaged what was worthless and sold it again.
And this kept happening until finally there were no suckers left to buy this stuff. And what happened was, people were unable to pay these mortgages. The banks all over this country were left holding the bag. All five of the Wall Street investment houses either went under or had to be bailed out by the federal government. Lehman Brothers went south. (Get the movie Margin Call. It’s fabulous.) And then, after it was all over, after that happened? Guess what we were told?
We were told that the banks… This is the subprime mortgage crisis. We were told that the banks had engaged in predatory lending, that they had forced these unsuspecting, unwitting, unqualified, poor people of color to take these loans. I mean, these people were walking along the street. They walked past the front door of the bank. And some evil banker went out there and grabbed ’em and pulled ’em in and intimidated ’em and said, “You are going to buy that house, and you’re gonna do it with this mortgage!”
They were forced. This was the story. You remember how all of this led to the financial crisis. It’s still the foundation of what’s plaguing this country to this day because all of this cost the government a trillion dollars. It destroyed the housing market because it put a bunch of people into it who had no ability to be there. So equity went south, home prices went south, and they’re still going south. Home values are still plummeting, and home sales, too.
This subprime mortgage thing was a government creation, brought to us by liberals under the guise of compassion. “It’s unfair that some people should have homes and others shouldn’t.” All of this cost at least a trillion dollars. It put the government in a gigantic hole that we are still in. We still have not dug ourselves out of it! You’ve heard me tell this story how many times? Then we had the investors jumping in. Interest-only loans! No documentation loans!
We’ve had people call here telling us that they went to seminars put on by the government on how to get people with no credit rating a AAA credit rating. How to do all of this. Well, you might be saying, “Rush, we know all this. What’s the point?” Well, according to William Tucker of the American Spectator, the federal government is about to start the whole process again. “[B]elieve it or not, the federal government is now starting another initiative to force banks to lend to low-credit-rated blacks and Hispanics — not just anybody but specifically blacks and Hispanics — and is threatening — and already imposing — huge punitive fines if they don’t.
“Moreover, this time they’re going even further. They’re going to take over the credit rating agencies and force them to change their standards to accommodate blacks and Hispanics so that nobody will have any idea who is a bad credit risk and who is not. In so many words, the government is about impose its will on the whole home-lending market and force another round of bad loans so that the banks are going to be looted once again so that even the federal government may not be able to bail them out this time.”
I’m not making it up.
I know it sounds impossible. I am not kidding.
No, it’s not a joke.
It’s being done on purpose.
RUSH: Snerdley wants to know if he qualifies for this, ’cause he’s black. Well, let’s find out. “The principle instrument” in the new round of subprime mortgages (I guess that’s what we’re gonna call this) “is not the Justice Department, Fannie Mae and Freddie Mac, as it was last time, but the brand-new Consumer Finance Protection Bureau, designed by” Elizabeth Warren. Elizabeth Warren is administering this. I think that’s part of Dodd-Frank, if I’m not mistaken. Am I right about that?
The Consumer Finance Protection Bureau? I think that’s Dodd-Frank.
“As reported in last Sunday’s New York Post by Hoover Institution Media Fellow Paul Sperry, the CFPB has just announced that it is adopting a 20-page ‘Policy Statement on Discrimination in Lending’ issues by the Interagency Task force on Fair Lending in 1994 that kicked off Attorney General Janet Reno’s draconic enforcement of the Community Renewal Act.” They’re apparently readopting that. They’re going way back to the Clinton years and are just gonna duplicate this.
“Part of the policy statement reads, ‘Applying different lending standards or offering different levels of assistance to applicants who are members of a protected [i.e., minority] class is permissible in some circumstances. Providing different treatment to applicants to address past discrimination would be permissible if done in response to a court order.'” Do you know what they’re doing now? You know what this is?
The first time they were sneaky about it.
They did exactly what they did but they didn’t trumpet it.
Now they’re just doing it. It’s open and shut. (We have people that have been discriminated against. They ought to be in houses, but they’re not in houses ’cause the banks are racist. And we have this new part of Dodd-Frank that allows us to go ahead and do this so they’re just redoing it all over again.) “Just two weeks ago Wells Fargo caved to a Justice Department offensive and paid $175 million for alleged past discriminating against minority borrowers.”
RUSH: I don’t know if you’ve seen it or not, but Eric Holder has already been shaking down the banks on this. Folks, they’re reinstituting this. They’re doing it all over again, this time under the auspices of Dodd-Frank. They’re replicating it, under the guise… This time they’re being open and up front about it. The first subprime mortgage fiasco, there was never any of this, “We’re gonna make sure that we got people that can’t pay back the loan.” There was none of that.
Now they’re being up front and admitting that that’s what they’re doing. Here are the last two paragraphs of William Tucker’s story in the American Spectator: “With the current administration in power, the perception is growing among minorities that everything in the economy can be had for free and that President Obama and his administration are going to provide it for them.” That’s exactly right. That’s what Obama out there saying (impression), “You didn’t build that! You didn’t make that happen.”
That’s exactly what that’s all about.
Obama is essentially trying to tell minorities (and I think everybody who’s in economic straits) that they’ve been screwed since the founding of this country. This country has been run by the 1% ever since the days of the founding. The current incarnation of the 1% are the Republicans and Mitt Romney and the Wall Street guys. And they got rich unjustly, unfairly, immorally. They didn’t pay you for what they took from you. They didn’t pay you for the work you did.
You made it possible for them to get rich and they did nothing but screw you!
That’s exactly what Obama’s doing. That’s his whole campaign. And Tucker says that the perception is growing among minorities that everything’s rigged against them (of course, they’ve always believed that) and that Obama and his administration are going to solve everything for them. “For instance, there is a scam going on around the country right now where con artists call up homeowners and tell them that President Obama has a new program where he is going to pay their electrical bills.”
We told you about that. Remember that? This is a scam. It happened during the power outage in the great capital of this country, Washington, DC, and Maryland. And at the time people started calling up and saying, “Obama wants to pay your electric bill! This is gonna make sure that the power company continues to have power, so there won’t be any more power outages.” Tucker: “All the homeowner has to do is provide his Social Security number and other personal information.”
It was an identity theft scam, which we told you about.
“The con game started in Michigan among minority populations in depressed cities such as Flint and Grand Rapids. It has now spread as far as far as Florida and Mississippi. More than 2,300 people in Michigan were bilked out of $1 million,” and they were told specifically that Obama was going to pay their electric bills. Not “the government.” Obama. And they believed it. And you know full well that there are a number of minorities who thought that that’s what Obama’s election meant.
Now, as Tucker points out, “What is amazing is that all these people actually believe that President Obama is ready to pay their electrical bills. It is symptomatic of a rising tide of dependency and the growing sense that nobody has to be responsible for anything anymore and we can all live off ‘the rich.’ If we don’t get these people out of office soon, there isn’t going to be much left to pick over in the American economy.” By design, it’s exactly what’s happening.