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From Crony Capitalism to Crony Community Organizing: "Profit" Loophole in Bailout Bill Doesn't Require Net Profits.

Much of the blogosphere is up in arms because of the provision in Senator Dodd's financial bailout bill that might funnel profits from the bailout plan to ACORN Housing (related to the disreputable activist group ACORN), and other more reputable service organizations.

I have read Dodd's proposed statute and in some respects, it is far worse than has been reported. Senator Dodd has placed a loophole in the bill that is explicitly designed to siphon off tens or hundreds of billions of dollars to the Housing Trust Fund and the Capital Magnet Fund even if there are no net profits in the $700 billion venture.

Here is the provision that has already been widely noted:

d) TRANSFER OF A PERCENTAGE OF PROFITS.-

(1) DEPOSITS.-Not less than 20 percent of any profit realized on the sale of each troubled asset purchased under this Act shall be deposited as provided in paragraph (2).

(2) USE OF DEPOSITS.-Of the amount referred to in paragraph (1)-

(A) 65 percent shall be deposited into the Housing Trust Fund established under section 1338 of the Federal Housing Enterprises Regulatory Reform Act of 1992 (12 U.S.C. 4568); and

(B) 35 percent shall be deposited into the Capital Magnet Fund established under section 1339 of that Act (12 U.S.C. 4569).

(3) REMAINDER DEPOSITED IN THE TREASURY.-All amounts remaining after payments under paragraph (1) shall be paid into the General Fund of the Treasury for reduction of the public debt.

The biggest problem here is that the 20% is not taken from net profits, but rather from any profit in the sale of each and every individual troubled asset.

For example, assume that the new Agency buys three troubled assets for $1 million each. One is sold for $2 million, while the other two are sold for $300,000. Thus, $3 million in investments are sold for $2.6 million, representing a $400,000 loss.

But Senator Dodd's bill does not provide for losses to offset gains: "Not less than 20 percent of any profit realized on the sale of each troubled asset" must be given to the two housing funds, so $200,000 of the $1 million profit on the one asset that made a profit must be siphoned off to the housing funds, despite the $400,000 net loss on the three deals taken together.

As an analogy, imagine a regular trader of stocks who takes lots of hedged positions and had net losses of 25% this year, but couldn't offset his gains with his losses, instead having to pay 15% income taxes only on his gains.

How much might be siphoned off under the Dodd bill? It all depends on how long the new credit Agency is in force, how often it turns over its portfolio, and how variable its returns are.

If the agency is in force for 4 years and turns over its portfolio every two months, then it would generate about $15 trillion in sales overall (650 billion x 6 x 4 = 15.6 trillion).

Let's assume that $7 trillion of sales generate a profit of $2 trillion and $8 trillion of sales generate a loss of $2.1 trillion, leaving a net loss of about $100 billion.

With a net loss, one might think that nothing would be funneled to the housing funds for service organizations, but that is not what the statute says or means. One looks only at the sales generating gains to determine the size of the payments to the housing funds. With $2 trillion in profits and $2.1 trillion in losses, the housing funds nonetheless get $400 billion dollars in "profits." (This is over 40% of a typical year's US total federal income tax receipts.) And that is the result if only 20% of "profits" are skimmed; the statute puts no upper limit on the skimming, so long as they come from profits (not net profits). Theoretically, the new Agency could potentially siphon off $2 trillion to the two housing funds, more than its $700 billion portfolio limit.

400 billion dollars may be a high estimate for the housing fund payments, but if they turn out to be only a tenth as large ($40 billion), they would still be huge. To reduce this massive skimming required by the Dodd statute, the new government Agency would have the incentive to engage in fewer transactions and do less to create a public market for troubled assets, thus significantly undercutting the chance that the bailout will work.

I was mildly in favor of the bailout until I read Dodd's proposed statute. The way that the statute is drafted is so tricky and its definition of profit is so unsophisticated and nonsensical that the statute smells more of graft than of an honest attempt to solve the financial crisis. We are moving from failed "crony capitalism" to failed "crony community organizing."

Other posts will deal with other provisions in the Dodd bill and whether ACORN Housing will actually apply for any funding.

Related Posts (on one page):

  1. From Crony Capitalism to Crony Community Organizing: "Profit" Loophole in Bailout Bill Doesn't Require Net Profits.
  2. Incentive Problems in the Dodd Bailout Bill.
LM (mail):
The drafting errors you pointed out here and in your other post cast doubt on the intentionality of the subterfuge for ACORN's benefit. When a document is that poorly drafted, it's perilous to draw any conclusions about the drafter's intention.

As a practical matter, even if this bill was passed as drafted, it would necessarily be re-drafted when none of the banks (except possibly some with little or no net worth) were willing to play. No bank lawyer with a pulse would overlook these problems. Which would then bring the ACORN provisions into higher public relief, presumably causing embarrassment and appropriate re-drafting.

The point is that only an idiot would try to hide that ACORN provision in a document with so many other holes. It's like trying to smuggle drugs in a car with no license plate, and that's billowing black smoke. The alternative, that all the errors were unintentional, isn't exactly flattering, but at least it's consistent. Assuming the drafters were smart enough to cook up the diversion, but too stupid to execute it well enough to avoid inevitable exposure isn't impossible, but it seems more cynical than sensible.
9.27.2008 5:04am
Asher (mail):
Go tell Sandy Levinson. He's huffing up a storm on Balkinization about how McCain killed this wonderful bill. For a guy who's so brilliant... anyway. Thanks for the informative posts.
9.27.2008 6:04am
A. Zarkov (mail):
"The point is that only an idiot would try to hide that ACORN provision in a document with so many other holes."

You're being much too generous. If we didn't have an abundance of idiots we wouldn't have gotten into this mess in the first place. But let's keep our eye on the ball-- 100% of the profits should be returned to the taxpayers. Why should anything go to the Housing Trust Fund and the Capital Magnet Fund? Moreover outfits like ACORN are part of the root causes of the lax underwriting standards to have led to the entire subprime mortgage problem. ACORN itself stands accused of voter fraud, and ACORN founder and chief organizer Wade Rathke hid his brother's embezzlement of nearly $1 million dollars.
9.27.2008 7:42am
Francis Marion (mail):
This is exactly why Secretary Paulson's plan should have been passed immediately as originally drafted. Delay provides time for members of Congress to add on ridiculous provisions such as the one at issue. A three page plan has now grown to well over 100 pages. By the time it will all be over, the bill will probably be as long as Tolstoy's War and Peace and not have been entirely read by any voting member of Congress.
9.27.2008 8:31am
Fub:
LM wrote at 9.27.2008 4:04am:
Assuming the drafters were smart enough to cook up the diversion, but too stupid to execute it well enough to avoid inevitable exposure isn't impossible, but it seems more cynical than sensible.
Prisons are full of people smart enough to dream up clever evil schemes to enrich themselves, but too stupid to avoid being caught.

Most senators are at least smart enough to put themselves in a situation where getting caught doesn't land them in prison. That doesn't make their schemes less evil. It just means they don't care quite so much whether they get caught.
9.27.2008 8:54am
Smokey:
Francis Marion:

Why the big rush?? Things were much worse in the late '70's [double-digit stagflation, very high unemployment, etc.], but no bailout was provided.

The world didn't end. The economy adjusted. Now our GDP is 300% higher.

Why the rush to "bail out" people who made foolish misjudgements? Any bailout would be at the direct expense of already hard-bitten taxpayers. Enough! Let those who made foolish decisions pay.

The ultimate effect of shielding men from the effects of their folly is to fill the world with fools.

~Herbert Spencer
9.27.2008 8:57am
Simon (391563) (mail) (www):
About 30 seconds worth of internet research reveals a long list of rabidly left-wing organizations conspiring to funnel money to ACORN -- the American Institute of Architects, the Easter Seals, the Friends Committee on National Legislation (awk! the Quakers! run for the hills!), Habitat for Humanity, the National Apartment Association, the National Trust for Historic Preservation (now I'm beginning to weep with fear), and the United Church of Christ. Oh, and the U.S. Conference of Catholic Bishops.

Thanks for your work helping to expose this conspiracy.
9.27.2008 9:11am
Smokey:
By the time it will all be over, the bill will probably be as long as Tolstoy's War and Peace and not have been entirely read by any voting member of Congress.
There is a very simple solution: put the original draft of the bill online, and immediately update any changes. There are plenty of folks who will read every word, and raise the hue and cry over shenanigans like the conniving ACORN giveaway.

The reason Obama blew up and ended up engaging in an emotional shouting match at the president's recent meeting was due specifically to the fact that details of the plan had been leaked. Obama couldn't pull a fast one.

Obama lost the control he thought he had with the bill's secrecy, and as a result he threw such a major tantrum [when he saw that there was opposition to his pals at ACORN feeding at the public trough] that people goy up and walked out of the meeting -- and the president was on Obama's side on this issue.

Obama's "my way or the highway" attitude does not bode well for the country. It reeks of inexperience. And if he's willing to give away multi-$billions to his cronies as a mere senator, how much more would he shovel toward them as president?

The only reason to keep the details of this bailout secret is to hoodwink the taxpayers. The bailout proposal is a scam. Public transparency is the answer.
9.27.2008 9:16am
Justin (mail):
Salon has already explained why this is completely wrong. Jim gets no points and may God have mercy on his soul.
9.27.2008 10:22am
Ryan Waxx (mail):
Salon makes very strong claims - "there's nothing true about Graham's statement"... "the basis for their criticism is, at best, misinformed. At worst, it's an outright lie", etc.

Their evidence consists entirely of asking ACORN officials if it's true, and taking them at their word that they wouldn't apply for the funds.

Fortunately for Justin, the word "gullible" is no longer listed in the dictionary.
9.27.2008 11:12am
Angus:
This stupid ACORN meme is just as insane as SNL's spoof: "Obama supports tax cuts for pedophiles" because he supports tax cuts for everyone.

Now it's "The bill gives money to ACORN!" except that it just sets aside money to help homeowners generally and the bill gives zero money to ACORN.
9.27.2008 11:24am
Angus:

Their evidence consists entirely of asking ACORN officials if it's true, and taking them at their word that they wouldn't apply for the funds.
Where's the evidence that ACORN will 1) apply for funds, and 2) be approved for funds, and 3) Republicans won't block ACORN from either #1 or #2 should they apply?

The GOP talking point on this is utterly dishonest and dishonorable. I expect such brainless pap from Michelle Malkin and Ann Coulter, but not at VC.
9.27.2008 11:30am
Ryan Waxx (mail):
So as long as the graft goes to other people too, then that makes it not really graft according to Angus's logic. I wonder if he has that attitude towards republican-sponsored pork, or is this a special case?
9.27.2008 11:30am
Ryan Waxx (mail):

Where's the evidence that ACORN will 1) apply for funds, and 2) be approved for funds,


Um, you do realize that that is a question for which evidence isn't possible, right? Were you asking that question in good faith?

and 3) Republicans won't block ACORN from either #1 or #2 should they apply?


If there was a republican-sponsored amendment to the bill that was actually likely to be added, don't you think that would be news?
9.27.2008 11:41am
Angus:

So as long as the graft goes to other people too, then that makes it not really graft according to Angus's logic. I wonder if he has that attitude towards republican-sponsored pork, or is this a special case?
Frankly, I don't give a rat's ass about pork. It's a meaningless percentage of the federal budget and it actually does end up funding some important projects. Despite McCain's cheap shot line, I think it is worthwhile to use the DNA of bears to track and maintain the endangered American Grizzly population in the face of increasing urban sprawl and declining habitat.
Northern Divide Grizzly Bear Project
9.27.2008 11:46am
Angus:
Um, you do realize that that is a question for which evidence isn't possible, right? Were you asking that question in good faith?
A total lack of evidence doesn't stop GOP talking heads from saying "the bill specifies that 20% of the profits will go to ACORN!!!!!!!!"
9.27.2008 11:49am
Ryan Waxx (mail):
Name one GOP talking head that specifically said that 20% of the profits will go to ACORN.
9.27.2008 11:53am
Angus:
Ryan Waxx,
Michelle Malkin
Hot Air
The Corner
Quote from Senator Lindsey Graham:
"And this deal that's on the table now is not a very good deal. Twenty percent of the money that should go to retire debt that will be created to solve this problem winds up in a housing organization called ACORN that is an absolute ill-run enterprise, and I can't believe we would take money away from debt retirement to put it in a housing program that doesn't work."
9.27.2008 12:04pm
James Lindgren (mail):
I linked to the Salon piece in my original post above and noted the issue that ACORN might not apply for grants: "Other posts will deal with other provisions in the Dodd bill and whether ACORN Housing will actually apply for any funding."

Be patient.

But (as I will show) if you take what is said at Salon at face value on ACORN, then you aren't thinking too clearly here.
9.27.2008 12:37pm
mnarayan:
The Salon post makes the pretty ridiculous claim that because ACORN is currently taking money from the housing fund, explicitly due to there not being much money to take, that it will not take money when there is an arbitrarily large amount to take. I don't even know how to comment on that claim.
9.27.2008 1:16pm
mnarayan:
s/currently taking/not currently taking/
9.27.2008 1:17pm
David M. Nieporent (www):
Despite McCain's cheap shot line, I think it is worthwhile to use the DNA of bears to track and maintain the endangered American Grizzly population in the face of increasing urban sprawl and declining habitat.
Northern Divide Grizzly Bear Project
Sure you do. You think it's always worthwhile to spend other people's money; that's what makes you a liberal. If you had to pay for DNA testing of bears, suddenly you'd think you had better things to do with your money. As evidenced by the fact that I'm betting you contributed exactly $0 to this allegedly worthy cause last year.
9.27.2008 1:28pm
Angus:

If you had to pay for DNA testing of bears, suddenly you'd think you had better things to do with your money.
Just checked my tax forms, and yep, sure enough I did help pay for it.
9.27.2008 1:44pm
therut (mail):
I suggest someone put in the bill that 20% of any profits go to the NRA so homeowners can learn to protect their property. See if th liberals whine with that.
9.27.2008 1:48pm
Christopher Cooke (mail):
I agree with the criticism of how "net profits" should be based on the overall sale of assets, and not measured by individual asset sales.

The ACORN criticism seems to be a right-wing bogeyman. Very unsubstantiated.
9.27.2008 1:59pm
therut (mail):
I am also tired of all the "give the profits to the taxpayers" crap. Taxpayers are not getting any money the Federal Government MIGHT get some. If they want the taxpayers to get some money then refund the profits according to the percentage of Federal taxes paid back to the taxpayers. Spare me the rhetoric.
9.27.2008 2:18pm
Angus:
I think Lindgren's criticism of profit on individual sales is valid, but I'm not sure of the alternative. Some of these assets may be held as long as 5 or 6 years until the market can seriously bounce back (not just begin its recovery). Perhaps longer.

So, do we have to wait 5 or 6 years with funds in a "lockbox" before the government can do anything with them? Maybe set it as "20% of any profit made in a fiscal year?"
9.27.2008 2:45pm
Sagar (mail):
Angus,

"The GOP talking point on this is utterly dishonest and dishonorable. I expect such brainless pap from Michelle Malkin and Ann Coulter, but not at VC."

don't confuse comments with posts - surely there are people who believe your opinions are better suited at Kos rather than at VC.

You checked your tax returns? If "you" paid for something, you should check your checkbook, credit card statements or bank records - not tax returns. You also "helped" pay for the Iraq war, now don't oppose it! Sounds logical?
9.27.2008 3:45pm
Michael B (mail):
"This stupid ACORN meme is just as insane as SNL's spoof: "Obama supports tax cuts for pedophiles" because he supports tax cuts for everyone."

Right, because a sneering dismissiveness is a sure sign of probative, inside knowledge, knowledge that is not to be questioned.

Christopher Dodd is among the mother of all D.C. based, self-aggrandizing bullshitters and meta-bullshitters, yet we're to somehow forego a thoroughgoing skepticism applied to a $700,000,000,000 bailout plan advanced by the Barney Franks and Christopher Dodds of the world. Puhleeeeez, whether it's ACORN or some other set of parasitic groups who may benefit from misconceived aspects of such a bailout plan would make little if any difference.

By contrast, what, exactly? We're suppose to trust the Dodds and Franks of the world?
9.27.2008 3:54pm
Michael B (mail):
From Power Line, excerpt:

"That Republicans have significant bargaining power, notwithstanding their minority status, is testament to the deep unpopularity of the Democrats' bailout measure ..."

And from an excerpted Roll Call piece:

"Bachus said Republican presidential nominee Sen. John McCain (Ariz.) significantly helped GOP Members by returning to the Hill this week because his message was that "House Republicans are relevant" and "we're not going to roll the House Republicans."

"McCain has "turned the negotiations around" within 48 hours, he said."

A tipping point may have been reached, but at least a checks-and-balances principle is being applied in the process.
9.27.2008 4:15pm
cubanbob (mail):
This was supposed to be a buy and hold to maturity scheme. If implemented as such and without embellishments, it could very profitable for the taxpayers. ACORN distribution and such similar idiocy should be grounds for summary execution.

Hold to maturity and apply the the collections to reducing the national debt. Specifically towards the social security portion of the debt. In the interim the interest portion collected above and beyond the debt service required to float the buy out should be rolled in to the FDIC reserve account.

The Republicans should stand fast and not vote for any bill that is not short, sweet and straight to the point. Or the alternative proposal of the insurance plan they proposed. Otherwise let Pelosi and Reid pass the bill they want out in the open and take the blame for it.
9.27.2008 4:15pm
Is this really happening?:
Whether or not a dime of this money goes to ACORN or the Chinese Communist party isn't the point here. Large quantities of money are going to be siphoned out of this bailout for something out of the control of the taxpayers who are about to pay for all this fun.

If you compare this to a typical Vulture Capital deal, the Limited Partners, i.e. the taxpayers, are paying a 20% carried interest on only the gains, without calculating the losses. The key word here is "each". Billions of dollars will go into a complete black hole. No limited partner in their right mind would pay any carried interest on a deal like this until all the chips have been counted and all the good deals offset with all the bad deals.

The right deal for the taxpayer would be to use whatever proceeds are recovered to permanently shut down Fannie and Freddie so this kind of debacle is not permitted to happen again with taxpayer money.

All the Dems must have been licking their chops to get a "free" $100B for socialized housing that they NEVER could have passed through congress and the president.

Putting Dodd and Barney Frank in charge of this charade is like letting a kid who just burned down the house go play with matches in the rest of the neighborhood. Yikes!
9.27.2008 4:23pm
Acornholio:
Justin: "Salon has already explained why this is completely wrong. Jim gets no points and may God have mercy on his soul."

The Salon piece consists of an ACORN representative, Brenda Muniz, making the claim that ACORN will not try to get its hands on any of the fund that would be created in the Dodd bill cited above.

Even if we choose to take Brenda Muniz at her word, the Salon piece does nothing to refute Jim's point. After I get robbed by the federal government, I don't really care whether Obama gives my money specifically to ACORN as opposed to some other group of aggrieved lefty communitiy activists, whose scheme is to pressure banks to make bad loans in the name of fostering "diversity". For all I care, Obama can use my stolen money to distribute cigarettes to homeless people in exchange for registering as Democrats, or for a nice state dinner for Ahmadinejad at the White House.

The criticism is not limited to ACORN. I guess you found it confusing when, in the very first sentence of the piece, Jim mentioned that the fund could go towards ACORN "and other more reputable service organizations."
9.27.2008 6:30pm
trailing wife:
I thought y'all might find useful the following from The Corner on the National Review Online:

Paulson Update [Rich Lowry]

Quick e-mail from friend following negotiations quickly (excuse typos):

So it looks like a deal is shaping up

Treasury purchases plus mbs insurance (cantor)

Strong oversight/taxpayer protection

Limits on executive comp

No liberal add-ons (acorn, bankruptcy judges, proxy access)

Govt equity stake likely to be scaled back or dropped. No staff-level enthusiam for it.

Limit on amount of first tranche of money (less than $700 billion)

This deal gets 100 house gop votes

09/27 02:15 PM

link
9.27.2008 6:59pm
Smokey:
Anyone interested in this bailout scam should read about ACORN's serial voter fraud and other lawbreaking.
9.27.2008 7:25pm
EricH (mail):
Great. Then ACORN can use the money to pressure banks to give new risky mortgages to unsafe borrowers.

And then we can have another bailout five years from now. With the "profits" going to ACORN to pressure banks to....

Groundhog Day II: The Revenge of Greenspan.
9.27.2008 9:07pm
YabbaDabba:
Most, if not all, of the previous commenters are ignorant and downright wrong about how this subprime mortgage mess began. You think that ACORN or other liberal groups pressured banks into making regular and exotic mortgages to risky borrowers?

GIVE ME A FREAKING BREAK!

Lenders like Countrywide set up shop in low-income minority neighborhoods, contracting with brokers to shop these risky loans, for which the brokers would earn commissions per. The brokers engaged in fraud, deceit and outright lies in order to make as many loans as possible. The banks were in this for the profit. No borrower bit off more than they could chew without being pressured by the BANKS to take that bite. Someone please point me to evidence implicating ACORN in these schemes.
9.27.2008 9:30pm
SE Morgan (mail):
What I really do not understand is why no one really brings up the truth about how we arrived at this mess. If the Democrats would not have used our money to give unaffordable housing to people that's only income is welfare and child support and then threaten banks with "scrimination" lawsuits and other "TNB" we wouldn't be this way. Liberals (Marxists) have always had the desire to turn all our hard earned assets over to the government to be distributed evenly to those people who sit on their asses collecting 'der foostamps, and other gubbment "entitlements" cause dey be need raperations.
Get a job..
9.27.2008 9:45pm
YabbaDabba:
SE Morgan: You're an idiot.
9.27.2008 9:47pm
SE Morgan (mail):
Another point... Chris Dodd, Hussein Obama, and Barney Fag are up to their asses (No pun intended in re of barney frank) in this mess. As well as, and its not surprising. The Congressional BLACK caucus...
9.27.2008 9:48pm
YabbaDabba:
SE Morgan: You're a bigot in addition to being an idiot.
9.27.2008 9:50pm
SE Morgan (mail):
YabbaDabba... thanks for sharing.. I understand the facts in this matter bother you. which explains your retort.
9.27.2008 9:51pm
SE Morgan (mail):
YabbaDabba,... youre a liberal.
9.27.2008 9:52pm
SE Morgan (mail):
And please explain to me how when telling the truth I become a bigot. Trust me, you won't get me to see things in your warped twisted view of the world by attempting to shame me with liberal white guilt. I suffer from no such complex thereby allowing me to state such a fact without consequence.
9.27.2008 9:56pm
YabbaDabba:
SE Morgan: You've said nothing resembling truth.

First, Chris Dodd (Chair of the Senate Banking Committee) and Barney Frank (Chair of the House Financial Services Committee) are "up to their asses ... in this mess" because, well, they are CHAIRS of the freakin' committees charged with negotiating the bailout proposal and sending it to full Congressional bodies.

Second, you have no clue how this mortgage mess started. Did Fannie and Freddie "make" most of the risky loans at issue? No, commercial lenders did. Are (because you won't say it, you stupid bigot) black people responsible for borrowing more money than they could handle? Perhaps, but blacks do not comprise a majority of risky borrowers.
9.27.2008 10:03pm
YabbaDabba:
People like you make me sick. I thought ignorant bigots such as yourself were relics of history. I'm saddened you still exist in cyberspace (and in real life).
9.27.2008 10:05pm
Morat20:
Ah, good to see the "It's the fault of blacks" has hit the ground running.

There's really nothing that can't be blamed on the poor, or minorities, or better yet both.

I saw a neat little bit of info about the CRA and this crises. The study was quite interesting -- it turns out there was a significant link between how exposed an institution was and how tightly regulated it was under CRA. Unfortunately, what the link showed was that the more tightly a bank was required to adhere to CRA, the less exposure it had to toxic debt and bad mortgages.

But don't let facts get in the way of blamin' darky.
9.27.2008 10:20pm
EricH (mail):
Wow, if I default on my mortage, I get to blame the bank. Who knew?

And here I thought I would be the responsible party.

Is that written anywhere in the contract? 'Cause I must have missed it.
9.27.2008 11:00pm
SenatorX (mail):
Link please Morat20.
9.27.2008 11:00pm
Smokey:
YabbaDabba perfectly fits the definition of a Troll: substance-free name calling.

Make a legitimate point, Troll, or go back under your bridge where you belong.
9.27.2008 11:04pm
SE Morgan (mail):
Yes Smokey you're correct. If yabbadabba had his, her, or for that matter its facts correct, he, she or it would see that the same committees its fantasy lovers (chris Dodd and Barney Fag) are members of , are responsible for strong arming federal regulators into allowing more of the poorly thought out but sinister methods of fleecing the American Taxpayer by again leaving us holding the bag due to banks and lending institutions being forced to again... make these risky loans based mostly on race (Black) and not on the ability of those people, the blacks to pay the debt. As we all know but some are afraid to admit, Democrats, as well as their homies seek short term satisfaction and don't take into account the lasting effects of their dishonest and marxist actions. Honestly, we all know that their actions were mostly for the purpose of buying the black democrat vote which that had to have known that the blacks had neither the desire or the means to repay the loans with new cars, Baby Phat, and spinners being mo' im'potant. "PRAISE THE LAWD, WEEZE BE GETTIN FREE HOUSESES AND SHEEIT!!!" Democrats, much like marxists always claim to look out for the little people and are only interested in consolidating their power. Sadly it looks as though the Democrat Party's Magic Negro, B. Hussein Obama, if elected, will continue to make matters worse. In closing I would like to say FU to the Democrat marxist bastards for screwing up another economy... By the way YabbaDabba, looks like you Liberals have also tanked the British Economy. I understand that Liberal Marxist Democrats want the United States to resemble Kenya, or any one of those African Third World Jenkem huffing Shitholes but sorry.. it won't happen. We still have many Good, honest, hardworking Republican Conservative thinkers left in the ole USA.. Well then again, Democrats have turned Detroit, St. Louis, Atlanta, D.C., Gary, and many more "diverse" cities into what closely resembles a mudd hutt commune. You are going to find that Americans are growing tired of Social Experimentation forced down our throats by the Democrats and no longer desire to foot the bill.
9.28.2008 12:06am
SE Morgan (mail):
How are we going to get out of this mess the Democrats have created??? I'm sure Michelle's kids are scared..
9.28.2008 12:13am
Random Commenter:
"The GOP talking point on this is utterly dishonest and dishonorable. I expect such brainless pap from Michelle Malkin and Ann Coulter, but not at VC."

Thanks for elevating the discourse.
9.28.2008 1:07am
Random Commenter:
"SE Morgan: You're a bigot in addition to being an idiot."

And we have another winner!
9.28.2008 1:11am
Random Commenter:
"chris Dodd and Barney Fag"

And another.
9.28.2008 1:13am
SE Morgan (mail):
YabbaDabba needs to get his facts straight. He,She, It Needs to block out the liberally tainted history lessons pounded into his brain by the Marxist reeducation camps also known as the public education system and read up on what happened approximately 9 years ago to when the "First Black President" William Jefferson Clinton and his cronies were in office and planted the seed, No, not the seed planted in Monica's molar container but the seeds of "diversity" that is the primary cause of our current financial mess. Using Janet Renos justice department to force banks into writing bad loans to 13% of our "diverse" population created this mess. Barney Fag and Chris Dodd and Maxine Waters and the Congressional Black Caucus shoved it down our throats (again, not a pun on Barney) per se.
9.28.2008 1:29am
NickM (mail) (www):
Fannie Mae and Freddie Mac weren't making the subprime loans; they were just buying them up afterward. Without their huge bankroll, there would have been far less of a market for that junk paper, and lenders weren't making many rotten loans that they didn't think they could sell off right away.

As for Chris Dodd, at least the House had sense enough not to put Alcee Hastings in charge of the Intelligence Committee. The difference between his behavior and that of Duke Cunningham is one of degree, not of kind.

Barney Frank is just a wacky ideologue. How could anybody think that now was a good time to overturn a FHA prohibition on participation in loans involving seller-financed down payments (one of the biggest indicators of loan fraud)?

Nick
9.28.2008 3:39am
WER:
This is an excellent breakdown of the subprime mess. I thought so anyway. From Forbes mag.
9.28.2008 3:43am
LM (mail):
SE Morgan:

We're a great country despite your vile bigotry, certainly not because of it. Don't be confused by the fact that our greatness includes your Constitutional right to disseminate such hatred to your heart's content. It doesn't mean there's a speck of value to it.
9.28.2008 3:47am
WER:
try this link, From forbes
9.28.2008 3:49am
Cornellian (mail):
Where do I sign up for the position of "Crony?" Seems like nice work if you can get it.
9.28.2008 3:59am