Crash ...!!!

Mr. Chandler said Brown Brothers has long argued that government should set up an institution to soak up damaged U.S. mortgage securities similar to the Resolution Trust Corp. that bought up distressed assets during the U.S. Savings and Loan Crisis in the late-1980s/early 1990s.

QUIETLY, behind the scenes, the Clinton Administration is preparing for the biggest regulatory crackdown of recent years. Attorney General Janet Reno is linking up with banking regulators and with HUD Secretary Henry Cisneros to end the supposed epidemic of discrimination against minorities in making home loans. The implications for society at large are ominous.

Here, as in affirmative-action efforts in hiring, college admissions, and the drawing of voting districts, the Washington establishment is obsessed with "disparate impact," which it equates with racism. In the mortgage-lending area, there is ample evidence of disparate impact to feed this obsession. Data collected by the Federal Government reveal that in 1992, while 16 per cent of white applicants for mortgage loans were rejected, 36 per cent of black applicants were rejected.

But does disparate impact indicate racism? According to Lawrence Lindsey, the Federal Reserve governor who oversees the collection of mortgagelending data, even the celebrated Boston Fed study that inspired this crusade found that factors other than race--such as one's credit record and whether one has sufficient income to meet the payments--are enough to account for nearly all the difference in rejection rates. Furthermore, a different analysis of the data in the Boston Fed study by David Horne, an economist with the Federal Deposit Insurance Corporation, finds no evidence of a pattern of discrimination. In any case, Census data show whites and blacks, taken as groups, have similar default rates. If discrimination were in fact occurring--that is, if banks were applying a higher standard to blacks than to whites--you would expect blacks to have a lower default rate.

The essentially irrational assumption underlying the notion that there is widespread discrimination in mortgage lending seems to be that lenders are willing to give up good profits in order to feed their subtle but thorough-going racism. Says Senator Don Riegle (D., Mich.), "They talk about how the free-enterprise system is supposed to work, but it's sophistry, as we all know." Senator Riegle (one of the Keating Five who plans to retire rather than run for re-election next year) has made a holy crusade of mortgage-lending discrimination since he took over the Senate Banking Committee in 1989.

Senator Riegle has found enthusiastic allies in the Clinton Administration, particularly Attorney General Reno, Secretary Cisneros, and Comptroller of the Currency Eugene Ludwig. As Ludwig told the Senate Banking Committee, "We have to use every means at our disposal to end discrimination and to end it as quickly as possible."

One Size Fits All

MR. LUDWIG'S idea of ending discrimination is for blacks and whites to have the same rejection rates, regardless of the legitimate reasons for differences. The crackdown is already well under way, as the Administration turns many of its bank examiners into discrimination police by re-interpreting the Fair Lending Act of 1968 and the Equal Credit Opportunity Act of 1974.

[...]

They Gave Your Mortgage to a Less Qualified Minority
by Ann Coulter (more by this author)
Posted 09/24/2008 ET

On MSNBC this week, Newsweek's Jonathan Alter tried to connect John McCain to the current financial disaster, saying: "If you remember the Keating Five scandal that (McCain) was a part of. ... He's really getting a free ride on the fact that he was in the middle of the last great financial scandal in our country."

McCain was "in the middle of" the Keating Five case in the sense that he was "exonerated." The lawyer for the Senate Ethics Committee wanted McCain removed from the investigation altogether, but, as The New York Times reported: "Sen. McCain was the only Republican embroiled in the affair, and Democrats on the panel would not release him."

So John McCain has been held hostage by both the Viet Cong and the Democrats.
Alter couldn't be expected to know that: As usual, he was lifting material directly from Kausfiles. What is unusual was that he was stealing a random thought sent in by Kausfiles' mother, who, the day before, had e-mailed: "It's time to bring up the Keating Five. Let McCain explain that scandal away."

The Senate Ethics Committee lawyer who investigated McCain already had explained that scandal away -- repeatedly. It was celebrated lawyer Robert Bennett, most famous for defending a certain horny hick president a few years ago.

In February this year, on Fox News' "Hannity and Colmes," Bennett said, for the eight billionth time:
"First, I should tell your listeners I'm a registered Democrat, so I'm not on (McCain's) side of a lot of issues. But I investigated John McCain for a year and a half, at least, when I was special counsel to the Senate Ethics Committee in the Keating Five. ... And if there is one thing I am absolutely confident of, it is John McCain is an honest man. I recommended to the Senate Ethics Committee that he be cut out of the case, that there was no evidence against him."

It's bad enough for Alter to be constantly ripping off Kausfiles. Now he's so devoid of his own ideas, he's ripping off the idle musings of Kausfiles' mother.
Even if McCain had been implicated in the Keating Five scandal -- and he wasn't -- that would still have absolutely nothing to do with the subprime mortgage crisis currently roiling the financial markets. This crisis was caused by political correctness being forced on the mortgage lending industry in the Clinton era.

Before the Democrats' affirmative action lending policies became an embarrassment, the Los Angeles Times reported that, starting in 1992, a majority-Democratic Congress "mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains."

Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities. Clinton's secretary of Housing and Urban Development, Andrew Cuomo, investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low- to moderate-income borrowers by the year 2001.

Instead of looking at "outdated criteria," such as the mortgage applicant's credit history and ability to make a down payment, banks were encouraged to consider nontraditional measures of credit-worthiness, such as having a good jump shot or having a missing child named "Caylee."

Threatening lawsuits, Clinton's Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage. That isn't a joke -- it's a fact.
When Democrats controlled both the executive and legislative branches, political correctness was given a veto over sound business practices.

In 1999, liberals were bragging about extending affirmative action to the financial sector. Los Angeles Times reporter Ron Brownstein hailed the Clinton administration's affirmative action lending policies as one of the "hidden success stories" of the Clinton administration, saying that "black and Latino homeownership has surged to the highest level ever recorded."

Meanwhile, economists were screaming from the rooftops that the Democrats were forcing mortgage lenders to issue loans that would fail the moment the housing market slowed and deadbeat borrowers couldn't get out of their loans by selling their houses.

A decade later, the housing bubble burst and, as predicted, food-stamp-backed mortgages collapsed. Democrats set an affirmative action time-bomb and now it's gone off.
In Bush's first year in office, the White House chief economist, N. Gregory Mankiw, warned that the government's "implicit subsidy" of Fannie Mae and Freddie Mac, combined with loans to unqualified borrowers, was creating a huge risk for the entire financial system.

Rep. Barney Frank denounced Mankiw, saying he had no "concern about housing." How dare you oppose suicidal loans to people who can't repay them! The New York Times reported that Fannie Mae and Freddie Mac were "under heavy assault by the Republicans," but these entities still had "important political allies" in the Democrats.

Now, at a cost of hundreds of billions of dollars, middle-class taxpayers are going to be forced to bail out the Democrats' two most important constituent groups: rich Wall Street bankers and welfare recipients.
Political correctness had already ruined education, sports, science and entertainment. But it took a Democratic president with a Democratic congress for political correctness to wreck the financial industry.

Ann Coulter is Legal Affairs Correspondent for HUMAN EVENTS and author of "High Crimes and Misdemeanors," "Slander," ""How to Talk to a Liberal (If You Must)," "Godless," and most recently, "If Democrats Had Any Brains, They'd Be Republicans."
http://www.humanevents.com/article.php?id=28714

Russia is the next Lehmans, AIG
Posted: September 18, 2008, 5:02 PM by Diane Francis
Greed, Energy, Russia, U.S. Politics
http://network.nationalpost.com/np/blogs/francis/russiansoldiers.jpg

Ruble and Russian markets collapsing as Russians and foreigners flee dictatorship

Attention is focused on Wall Street's implosion, but Russia is collapsing in a hurry. This morning we woke up to learn that it has closed its stock markets until at least Friday.

What tanks and a tiny army in Georgia could not pull off to repel the over-reaction mass invasion by Moscow, the world's investors are doing. They are voting with their electronic transfers. Capital flees, investment plans have been iced and even the homegrown oligarchs are getting heat from foreign governments and partners. This is a direct push back from the rest of the world against Vladimir Putin's Potemkin (fake) democracy which flouts laws, invades or intimidates neighbors and is run by people who are even greedier than Wall Street's high rollers if that is possible.
Russia's two stock markets closed after frightening collapses in value. Banks cannot meet obligations and the Ruble wobbles. Moscow blames "emotion", but the firestorm has hit, Russia's government bailout funds to prop up markets has failed and there will be no one to right Russia's sinking economic ship.
The nail in the coffin for many foreign investors was Putin's announced intention last week to join OPEC. This marked his next tactic to hold the oil-consuming world to ransom. The good news is that this is tanking his economy and is hurting his regime politically. At the same time, this implosion will do more for conservation and alternative fuels around the world than Al Gore ever dreamed of. Every country that imports more oil than it produces now understands that conservation and getting off oil is not an energy policy, it is a foreign policy.


There's more than one way to skin a Cossack

"The Russian stock market down is calamitously. Nobody wants to do business with the oligarchs," said Robert Amsterdam to me a couple of days ago. He's the outspoken Canadian lawyer who represents jailed oil capitalist, Mikhail Khodorovsky, whose company was stolen from him by Moscow. "Foreign investors and Russian investors have had their own referendum on Georgia and they haven't exactly given it a ringing endorsement."
At the same time, the Euros and the Americans have begun to play rough, according to some sources, demanding banking and other taxation records from the oligarchs and their partners to double-check their dealings in the west.
This form of harrassment is a better weapon than anything the Pentagon can threaten to throw at Him.
"The United States said to the Russians want to play tough let’s make sure every bank dealing with the oligarchs has to produce their records," said Amsterdam in a telephone interview. "The Ruble is wobbing, people are not buying this stuff."
Meanwhile, the Russians are playing the old Cold War card as if that still has currency. Nobody will invest there for years. Even so, press releases by official Russians try and put a good face on the currency/economic crisis.
“Certain signs of a crisis are seen on the market but they are mostly emotional,” said a Russian source yesterday to Reuters. He asked not to be named.
Alexei Kudrin, Russia's finance minister, also insisted that the financial system was not in a systemic crisis even though the Russian central bank injected a record $14.16bn in one-day funds into the money market and admitted it didn't work. Then he was quoted as saying: "we recognise our responsibility to our counter-parties and to the market and we are working intensively to resolve the situation.”
Yeah. Sure. Yeah, right.

The Putin fallout
Moscow actually thinks it's a super power, but economically size-wise it's about as important as Alberta, or Norway. It's a tiny economy with an attitude and lots of oil and nobody will help the Ruskies.
Russia will implode, like it did in the late 1990s, and its problems and steroid-retro foreign policy won't help oil prices which are its only competitive advantage. It will hurt Moscow in the long-run because getting off oil for everyone has to be a priority.

The collapse of Russia is a bigger bankruptcy issue than is AIC, Lehmans or any number of other rapacious players in the global financial economy that are about to go out of business, be merge or be bought.
Stay tuned...

http://network.nationalpost.com/np/blogs/francis/archive/2008/09/18/russia-punished-next-meltdown.aspx

THE BRILLIANCE OF MCCAIN'S MOVE
By DICK MORRIS & EILEEN MCGANN
Published on DickMorris.com on September 26, 2008

McCain has transformed a minority in both houses of Congress and a losing position in the polls into the key role in the bailout package, the main man around whom the final package will take shape. He arrived in Washington to find the Democrats working with the Bush Administration to pass an unpopular $700 billion bailout. The Democrats had already cut their deal with Bush. The Dems agreed to the price tag while Bush agreed to special aid to families facing foreclosure, equity for the taxpayers, and limits on executive compensation. But no sooner had McCain arrived than he derailed the deal.

Knowing how unpopular the bailout is with the American people, the Democrats are not about to pass anything without broad Republican support even though their majorities permit them to act alone. Instead of signing on with the Democratic/Bush package, the House Republicans are insisting on replacing the purchase of corporate debt with loans to companies and insurance paid for by the companies, not by the taxpayers. That, of course, is a popular position. McCain would be comfortable to debate this issue division all day. And, if the Dems don't cave into the Republican position, that's probably exactly what he'll do on Friday night's scheduled debate in Mississippi.

But the Democrats are not about to be stubborn. They know their package is a lemon and need the political cover of Republican support. So the Republicans can write their own ticket -- and they will. John McCain will be at the center of the emerging compromise while Obama is out on the campaign trail kissing babies. If the deal is cut before Friday's debate, my bet is that McCain shows up in triumph. If it isn't, he shows up anyway and flagellates Obama over the differences between the Democratic package and McCain's.

By Monday, at the latest, the Democrats have to cave in and pass the Republican version. They don't dare pass their own without GOP support, so they will have to cave in to the Republican version.
Then McCain comes out of the process as the hero who made it happen when the president couldn't and Obama wouldn't. He becomes the bailout expert.

And, of course, the bailout will work. With the feds standing behind the bad debt, whether by purchase or loans and insurance, Wall Street will breathe a sigh of relief. Bears won't dare bet against the economy with the entire weight of the federal government on the other side. They may be bears but they are not rabid.

Finally, McCain, as the reigning expert on bailouts, then can take the tax issue to Obama, saying that a tax increase, such as the Democrat is pushing, would destroy the bailout, ruin the economy, and trigger a collapse.
This bold move by McCain is about to work. Big time.

Go to DickMorris.com to read all of Dick's columns!

Dennis Prager Talks To Joe Lieberman About The Bailout
Dennis Prager
Friday, September 26, 2008

As the conversations and accusations continue to swirl around the proposed bailout legislation, Dennis Prager sought clarity from Senator Joe Lieberman. He spoke to Dennis from the Senate cloak room.

Prager: Let’s begin with this: Were you surprised? The public is being told a deal was made and then torpedoed by House Republicans. Is that the fact?

Lieberman: This is not the fact. There was not a deal. There was an agreement, let’s say, among some members of the Senate Banking Committee and the Democrats in the House side of the House Financial Services Committee. They went out and announced it. Frankly, I think they announced it prematurely, because the normal course is to take those agreements back to the four caucuses. So, there never was an agreement. It was clear the House Republicans are very much against the Paulson plan. I was in the Senate Democratic caucus with Paulson the other night—one of my rare appearances these days, Dennis, at Senate Democratic…

Prager: I was thinking that.

Lieberman: And there was a lot of really emotional challenging of Paulson. [It was the same among] Senate Republicans. So no deal, and then Senator McCain came back to try to put one together. I think he’s in a position now as the titular leader of the Republican Party to have a special ability to bring people together. And his goal is to get an agreement that saves the country from an economic disaster—but to make sure the taxpayers’ money is protected in it, and I think that’s the direction in which we’re heading.

Prager: What was the major Senate Democratic objection to the Paulson plan?

Lieberman: Now the difference: To some extent the things people focus on in the different caucuses are different, but the overall concerns are not. There’s real concern about one making sure that if it does end up being $700 billion of taxpayers’ money that the taxpayers are protected as best we can—and that we basically try to get an ownership interest in any fiscal entity that we put money into. That was not there in the original Paulson plan. That’s a major concern of House Republicans as well, and also Senate Democrats obviously want to go after Wall Street and cap compensations—so does John McCain—of the CEOs on Wall Street. Of course, they would like to introduce a tax increase into this bill, but that will never go.

Prager: Alright, so what is the big divide? Are there one, two, three issues? What’s the big divide?

Lieberman: You know it’s an interesting question. I think there’s a conceptual agreement that there has to be protection for the taxpayers’ money, there has to be a cap on executive compensation, there has to be a sort of oversight—none of which was in the original Paulson plan. The House members are very concerned. They want to—they would prefer—that the government have the ability to try to just insure some of these banks instead of actually buying assets, because that could be done more cheaply, and [they want] to have Wall Street pay for it. Secondly, Secretary Paulson seems to be skeptical about whether that would work. I think that compromise may be—make that one of the options that he has to consider. But the good news here is that we’re now down to four people negotiating—one for Senate Democrats and Republicans, one for House Republicans and Democrats.

Prager: And who are they?

Lieberman: It’s Chris Dodd, senator from Connecticut for Senate Democrats, Judd Gregg, senator from New Hampshire for Senate Republicans. On the House side it’s Barney Frank from Massachusetts for Democrats and Roy Blunt from Missouri for Republicans. I feel quite optimistic that these four can reach an agreement, hopefully by the end of the day that we can take to the floor of both chambers tomorrow. I think everybody understands that we have got to get something done before the markets open on Monday. But frankly, it’s got to be something sensible because it makes no sense to rush to do something that doesn’t get the job done and is unfair to the taxpayers. And I think that’s the whole McCain approach. That’s why he flew back. That’s why I think he’s been constructive. That’s why I think you are seeing some coming together of the parties.

Prager: So Senator McCain’s coming back to Washington was helpful?

Lieberman: Yes, I mean the Democrats are trying to put out the message that there was a total agreement and McCain came back and blew it up. That’s just not right, not true. There was no total agreement. The House Republicans particularly were always not part of the proposed agreement and a lot of Republicans and Democrats in both Houses were not part of it. I think McCain went back and forth yesterday afternoon, this morning between Senate and House. He talked to a lot of people, was on the phone with the administration, the White House, Paulson and I think he’s a big part of the reason why it’s down to four strong negotiators that are roomed together. That’s always the best way to get something done. And then they come out to the caucuses. So he felt that there was enough progress made that he could take off for Oxford, Mississippi. He’ll be at the debate tonight, and then he will fly back right afterward to be here tomorrow to see if we can close the deal.

Prager: Did Senator Obama play any analogous role on the Democratic side?

Lieberman: Not that I can see. And that’s an interesting point. I wasn’t in the White House meeting yesterday. Some of the Democrats criticized John McCain for not making a long speech saying that Senator Obama had, but John’s here not to make speeches. It was a very contentious meeting and he basically said for the sake of the country and the people we serve we got to get together and reach a bipartisan agreement. And then he went to work to try to make that happen.

Prager: I have to tell you that was my read before you came on. It was all conjecture and, ironically, I came to that conclusion based on Harry Reid’s comments.

Lieberman: It’s really been laughable. The truth is, when McCain came back he did it sincerely. He did something risky because staying on the campaign trail you are not accountable for what happens here. He came back to try to do something right for the country. But, if it doesn’t happen, then he’s accountable for it.

Prager: That’s right.

Lieberman: I think he is going to help make it happen this weekend in a way that will protect taxpayers. So to say that he caused a problem—I think Obama and McCain are the now leaders of their parties by virtue of their nomination.

Prager: That’s right. Well said.

Lieberman: This is a big problem. And for them not to be here would have been a mistake.

http://townhall.com/columnists/DennisPrager/2008/09/26/dennis_prager_talks_to_joe_lieberman_about_the_bailout