title: Insane! Huge Financial Disaster On The Horizon With Obama’s Housing Bubble And Easy Lending In The Name Of “Fairness”
text: I ll bet most Americans have no idea that we re in another huge housing bubble thanks to Obama s desire for everyone to own a home. Remember Barney Frank and his pals forcing this bubble to get bigger and bigger and then pointing the finger at Republicans? Well, that s what s next unless the lame Republicans take the bull by the horns and get control of our debt. BILL CLINTON S HUD SECRETARY ANDREW CUOMO DISCUSSING FAIR HOUSING: THIS IS A MASSIVE SHELL GAME THAT OBAMA CONTINUES:Just this September, HUD  awarded $38 million to  fight housing discrimination  so the shell game continues but here s more of the rest of the story:OBAMA S HOUSE OF CARDS:  Eric Holder and Tom Perez who re Obama administration political shills, did the dirty work in targeting banks. The excerpt below is from a fantastic piece in the New York Post that spells out the Obama administration s efforts with minority home ownership and  perceived injustices  that just aren t there. Typical Obama to rewrite the rules or just not follow them to get what you want. That isn t stopping the administration from trying to correct perceived injustices. Cordray says CFPB will rewrite the rules for how the private credit bureaus collect, maintain and analyze such data. He is working on  reforming  the system with the liberal Center for Responsible Lending and other housing activists who believe it denies minorities the credit they deserve. The federal government also isn t shy about fining and suing banks to get its way. CFPB also has been working closely with the Justice Department to enhance fair lending enforcement. Justice has pressured banks to relax their mortgage underwriting standards and approve loans for minorities with poor credit as part of a new crackdown on alleged discrimination, court documents show. Attorney General Eric Holder, who served as Reno s deputy, has filed a record number of fair-lending enforcement actions against lenders. More than 60 investigations are active or said to be in the pipeline, and dozens of banks have already settled, including giants Wells Fargo and Bank of America. Prosecutions have already generated more than $550 million in rebates, loan set-asides and other subsidies from banks that have settled out of court rather than battle the federal government and risk being branded racist by the media. Leading the charge is Holder s top civil-rights cop, Thomas Perez, another Clinton retread. Perez has compared bankers to Klansmen, arguing that while bankers may discriminate  with a smile  and  fine print,  it s  every bit as destructive as the cross burned in a neighborhood. STEPHEN MOORE: The Fed, the White House and Congress are setting up the next financial bubbleMy 13-year-old son told me at the dinner table the other day that Franklin Roosevelt was one of America s  greatest presidents  because  he ended the Great Depression.  He s usually a good student, so I checked where he got this tripe and sure enough the fairy tale was right there in his American history book.Sure enough his text book tells kids that the New Deal ended the Great Depression and even saved capitalism. Of course the New Deal exacerbated the pain and financial devastation of a stock market crash, and unemployment lingered in double digits for a decade after Roosevelt was elected until the start of World War II.Here s the latest story line: bailouts, trillions of dollars of government spending and debt, easy money, and re-regulation of Wall Street ended the 2008 Great Recession. The myth took on new life last week when Ben Bernanke took a bow in The Wall Street Journal for in his mind saving the economy with his $3 trillion of quantitative easing and zero interest rate policy. No, actually this is what created the crisis. Don t be surprised if Mr. Bernanke receives a Nobel Peace Prize.As Peter Wallison of the American Enterprise Institute and other scholars have thoroughly documented, the crash of 2008 was caused by the Federal Reserve s easy money policies for nearly a decade, government housing policies that led to preposterous mortgage loans being issued, and massive overleverage of government, companies, and households.Why does any of this history matter? Since Washington doesn t understand what went wrong in 2007 and 2008, so the Fed, the White House and Congress are recreating the very same conditions for another financial bubble. If it pops, we could replay the same devastating effects as occurred during the first bubble in 1999 and 2000. It is doing so in four ways:First, the Dodd-Frank regulations are causing one of the greatest consolidations of the banking industry since the Great Depression. Those indispensable small savings and loans that Jimmy Stewart operated in the movie  It s a Wonderful Life  are disappearing from the American landscape. This is because only really big banks have the size to spread the costs of Dodd-Frank compliance officers and costs. So we have created a competitive advantage that allows the sharks to swallow the minnows. Meanwhile, the  too big to fail  safety net to Bank of America, Citi, and other titans exacerbates this cost advantage of big banks and thus makes bailouts even more likely in the future.Second, Fannie Mae and Freddie Mac are engaged in the same low interest rate lending mania of 2004-07 and the Obama administration is on a Bush-like home-ownership push. Some Republican House heroes like Jeb Hensarling of Texas wanted to eliminate taxpayer subsidies to Fannie and Freddie but the housing lobby kept them alive. So now the two government enterprises are back issuing taxpayer guarantees on mortgages with as little as 3 percent down payment. Have we learned nothing at all?Third, the Fed refused to raise interest rates off zero in September, and, hello, that easy money policy is how we got into the mess in 2000 and then in 2008. Wall Street cheered Janet Yellen s decision to keep the cheap dollars flowing. Isn t this all starting to sound familiar?Finally, there is the saturation of debt. When the crisis hit in 2008 the national debt stood at a little under $10 trillion. Now we are at $18 trillion. Government is hopelessly overleveraged. The interest rate exposure is enormous with each one percentage point rise in long term rates causing the servicing costs of the debt to rise by about $1 trillion over 10 years. Meanwhile, on top of that, the Fed owns at least $1 trillion in mortgage debt and so if housing markets fall again, taxpayers get double walloped.The point is that government and politicians have no learning curve. All of the conditions of financial wreckage are reappearing. This is why congressional Republicans absolutely should put up a fight on the debt ceiling by requiring more budget discipline as a condition of higher debt levels. They should require at least 8-10 percent downpayments on all government insured mortgages. They should repeal all or part of the Dodd-Frank bill that is destroying community banks, while promising voters they will never again bail out a bank or financial institution. Finally, they should be urging the Fed to restore sound money by gradually raising short term interest rates. And the presidential candidates should start warning voters that Washington is rebuilding another financial house of cards.If they don t, when the financial crash comes and Americans see their life savings disappear, the media and the history books will again blame Republicans for the destruction from the rampant financial negligence of government.  Stephen Moore is an economic consultant with Freedom Works and a Fox News contributor.VIA: WT