The Truth About the Financial Meltdown and Obama's "Grassroots" Role In It

Posted 05/15/2012 06:57 PM ET

Subprime Scandal: Analysts now say the housing market is
so weak it may not rebound in our lifetimes. Yet the White House is
pursuing the same policies that put it on its back.

Worse, many of the officials it has put in charge of reviving the
housing market are the same ones who crafted the fatal policies before
the crisis. First, consider the latest data supporting a lost generation
in housing:

• The average homeowner today has 7% equity in his home vs. 45% in 1990.

• Home prices in 20 major markets plunged 3.5% from a year earlier; adjusted for inflation, they're back to 1998 levels.

• The U.S. homeownership rate fell to a 16-year low of 65.4% in the first quarter.

• Homeownership for blacks, now at 43.1%, is the worst since 1995,
when the government first launched its reckless housing policies in a
national campaign to boost minority homeownership.

It was then, roughly a decade before the mortgage meltdown, that the
Clinton administration declared traditional underwriting standards
racist.

And it forced lenders to comply with new minority-friendly rules by
threatening to charge them with lending discrimination. Or deny their
expansion plans.

At
the same time, federal regulators pressured government-sponsored Fannie
Mae and Freddie Mac, which control the secondary market for home loans,
to lower down payment and other requirements to meet the government's
increasing loan quotas for low-income minorities. By the eve of the
crisis, these easier credit standards had been adopted industrywide.

When HUD in 1996 required Fannie and Freddie — which set qualifying
rules for the entire mortgage industry — to meet new lending quotas for
credit-poor borrowers, they reduced down payments to 3%.

By 2000 — when HUD lifted those quotas to 50% of their business —
Fannie and Freddie bought loans from banks with no down payments at all.

Shaun Donovan and Bill Apgar implemented these pre-crisis policies at
the Department of Housing and Urban Development. They now run HUD for
Obama, still pressuring Fannie and Freddie to ease credit for low-income
minorities. Housing chief Donovan, moreover, has referred a raft of
bank discrimination cases to Attorney General Eric Holder for
prosecution.

As a top official in the Clinton Justice Department, Holder led what
became a witch hunt against racist lenders. Today he's turned the job
over to another Clinton retread, Tom Perez, who as the new head of the
department's civil rights division has cracked down on no fewer than 60
banks for alleged lending bias.

Perez has ordered bank defendants to set aside "special financing
programs" for minorities with weak credit and donate millions to Acorn
clones that shake down banks for such risky mortgages.[How can the federal government do that in a supposedly "free" society?]

Copying the policies of the Clinton administration, the Obama Justice
Department also has ordered defendants to open new branches in
unprofitable areas devastated by the recession.

Scores of risky mortgages are already being inked, restarting another cycle of risky financing.

Many of the 1990s' discrimination cases were referred to HUD and
Holder by Acorn officials, who worked closely with the White House on
crafting banking and housing policies. Holder at the time also solicited
private civil-rights lawyers for "fair lending" cases.

One lawyer who heeded the call was Obama, who at the time was
agitating for looser credit standards as a Chicago civil-rights lawyer.
In 1995, he sued Citibank and other lenders on behalf of Acorn
deadbeats.[You might say that Obama was at the "grassroots" of the financial scandal he now blames on George W. Bush!]

Now he and the repeat offenders he's hired from the Clinton gang are
rebooting the same risky home-loan programs for low-income minorities.

These programs fed the subprime mortgage bubble and triggered record
defaults and foreclosures that devastated urban neighborhoods. They've
turned the American Dream into a nightmare for millions of minorities.
They've hurt more than helped the people Obama claims to care about
most.

So why is he doubling down on them?