Bob Brinker Sez More Today

Bob Brinker, one of the more trusted financial people, mentioned a book on his Money Talk programme today. The name of the book is "Chain of Blame." *1

It's a wonderful book, one that the mainstream media, the politicians, their fat lobbyists, and their fatter wall street friends loathe. It's one that I believe you need to borrow and read in its entirety.

Why? Because it's right on the money. Literally.

Here's part of the Wikipedia article about it: "The authors find that, while blame can be laid at every link of the mortgage production chain (borrowers, brokers, wholesale lenders) the ultimate culprits are Wall Street firms that carelessly securitized mortgage loan pools without appropriate diligence and attention to the quality of the underlying loans." *2 (Links left intact and are Wikipedia's.)

Let's distill that down: First, according to the authors, blame can be laid at every link in the ... chain. They didn't say almost every link, or nearly every link, they said "...at every link..." Unless you're a liberal that doesn't understand this, that means at every step in the process ... including the people who took out loans without reading or understanding the fine print. Granted, they do say that the ultimate culprits are Wall Street firms, but they say "...at every link..." and by definition that includes the people that signed on the dotted line.

But let's continue on: "...that carelessly securitized mortgage loan pools without appropriate dilligence and attention to the quality of the underlying loans."

Or as Mr Brinker put it today (to paraphrase) : "No job, no income, no security? ::bangs hand on table:: APPROVED!" For the liberals, that would be the quality of the underlying loans. In plain English, you wouldn't loan money to people you knew or had reason to believe couldn't pay you back, would you?

These firms did. Why? Ever hear of the 1977 Community Reinvestment Act? *3 Well....

"The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.[1][2][3] " (Links are Wikipedia's and are left intact.)

I'm going to distill that down to "The CRA is a federal law designed to encourage commercial banks and saving associations to meet the needs of borrowers ... including low- and moderate-income neighborhoods." (I left the entire quote above to avoid being accused of taking things out of context yet again.)

But why did those institutions make these loans? I know the law was written to allow it with proper regulation, but that doesn't answer it. Why did they make those loans? Who helped write the law, or helped it be written?

"The original lobbyists for the CRA were the hardcore leftists who supported the Carter administration and were often rewarded for their support with government grants and programs like the CRA that they benefited from. These included various "neighborhood organizations," as they like to call themselves, such as "ACORN" (Association of Community Organizations for Reform Now). These organizations claim that over $1 trillion in CRA loans have been made, although no one seems to know the magnitude with much certainty. A U.S. Senate Banking Committee staffer told me about ten years ago that at least $100 billion in such loans had been made in the first twenty years of the Act.

So-called "community groups" like ACORN benefit themselves from the CRA through a process that sounds like legalized extortion." *4

Again, let's distill this down. The original lobbyists for the CRA were the hardcore leftists. They supported the Carter administration and were often rewarded for their support with government grants and programs like the CRA that they benefited from. The article names ACORN by name as one of these "...hardcore leftists..." groups. And, it claims that ACORN itself benefits from this law "...through a process that sounds like legalized extortion."

You don't say. Why does that matter now?

"It [ACORN] was a major contributor to the subprime meltdown by pushing lenders to make home loans on easy terms, conducting "strikes" against banks so they'd lower credit standards. But the organization's real genius is getting American taxpayers to foot the bill. According to a 2006 report from the Employment Policies Institute (EPI), Acorn has been on the federal take since 1977." (emphasis added) *5

STRIKES?!?!? "ACORN’s Hypocritical House of Cards: How One “Community” Group Helped the Housing Crisis Harm Taxpayers." *6, *7

But it goes further: "Which brings us to Mr. Obama, who got his start as a Chicago "community organizer" at Acorn's side. In 1992 he led voter registration efforts as the director of Project Vote, which included Acorn. This past November, he lauded Acorn's leaders for being "smack dab in the middle" of that effort. Mr. Obama also served as a lawyer for Acorn in 1995, in a case against Illinois to increase access to the polls. *5 (emphasis added)

The only reason I quoted that last it because the Obamessiah, the "saviour" in the "saviour-based economy" was one of the people who helped create this problem.

And now he thinks he can fix it? By doing what Mr Obamessiah? Screwing other people over?

*1 - Chain of Blame at Amazon.com: http://www.amazon.com/Chain-Blame-Street-Caused-Mortgage/dp/0470292776
*2 - Chain of Blame on Wikipedia: http://en.wikipedia.org/wiki/Chain_of_Blame
*3 - Community Reinvestment Act of 1977: http://en.wikipedia.org/wiki/Community_Reinvestment_Act
*4 - The Government-Created Subprime Mortgage Meltdown: http://www.lewrockwell.com/dilorenzo/dilorenzo125.html
*5 - http://online.wsj.com/article/SB122394051071230749.html?mod=djemEditorialPage
*6 - http://www.consumersrightsleague.org/UploadedFiles/ACORN_AHC_Report.pdf
*7 - http://noquarterusa.net/blog/2008/09/27/consumer-rights-league-obama-acorn-and-the-subprime-mortgage/