Socializing The Mortgage Debt: Let the Feds Subsidize Criminals and  Dead Beats with your Taxes.

So, a bunch of people cannot afford to continue payments on their mortgages.  What ever shall we do? Why, rush to cover those debts with tax money and, along the way, ask for votes for Democrats. That sounds like a neat plan and it has its adherent in most major cities in the US.

This historical record of how this mess originated is rooted in the phony Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.)[1] This piece of social engineering was designed to stop redlining[2], a bank process whereby certain low income areas should not receive bank loans because their repayment history and default propensity was very high.  The opposite of redlining is greenlining,  a representative  view of how this process ought to work and illustrated by  a group[3] who wants banks to just put out loans and become ‘philanthropic’ with their money to minorities. Some think this is just good business practice as it answers the question:

Question: Why should banks loan money to dead beats, criminals, drug addicts, honest people with poor credit and losers who cannot pay them back?

Answer: Because it makes for good politics. Liberals can trade bank assets for votes.

The thrust of this law and the political basis of it rests squarely on the notion that wealth must be distributed so that the outcome is nearly equal  for all—not that all people should become educated, work hard, be ethical, avoid drugs and crime and enjoy our society and earn their way. No. They are politically entitled to a home and the liberals will force the banks to give you one. You are entitled to a big share of the American Dream and the liberals will give that to you for your vote.  Isn’t this a happy scene? Let us all come together in community service and share in our prosperity. Magna c*m hokum.

Now, we know there are honest people who were offered loans that they at least had a decent chance to make payments on and the market drop in housing values caused their payments to rise [ARM] and that is a problem. We also know that Baltimore has probably the nation’s second highest drop out rate as only 39% can graduate in a four year span.[4] There are also speculators who attempted to ‘flip’ houses with cheap loans and many succeeded. There are crooks and drug addicts and others mixed in this mess. The message here is to state up front this maxim:

Business Maxim: You CANNOT force the banks to just give out money for potential bad loans and absorb the loses because they will lose profits and many will fail.

The Reply to this Maxim: Oh yes you can must ! And, if you cannot then the law will come after you.

So, this impasse is partially solved by having the government run a slush fund to take over bad loans and that wreckage turned out to be the two ugly tax whores: Fanny Mae and Freddie Mac. We scrounged for persons with the least skill in business or anything related to cognitive processes and came up with crooks like Franklin Raines and some other losers who ‘controlled’ these bad debts and took enormous bonuses for their crooked and incompetent work. Raines slithered away with 90 million dollars. He is a Clintonite and works for Obama now. HE is a liberal Democrat. Do we see a pattern here?

Now, not everybody is stupid, so some in the know shuttled the bad loans off to Fannie and Freddie and they, in turn, dumped them onto other unsuspecting buyers and many bought bad debt without realizing what they had done.  After all Frumpy Fred and his ugly, inbred sister were thought to ‘guarantee’ such mortgages. Did Obama get $110,000 from Frumpy?

That is the basis of where we are.

So, cities like Baltimore now suffer because they cannot collect the usually obscene taxes from homeowners in their victimhood because the taxes or the mortgages are in default.[5] Lenders around Baltimore are, of course, blamed for the problem.[6]

The party line:

“Mayor Sheila Dixon believes that Wells Fargo has been doing just the opposite in Baltimore – that lenders have been targeting borrowers for credit on unfair terms because they are black.

"You know, years ago we talked about redlining. …Now we're talking about reverse redlining," Dixon says.

“"We're talking about a pattern of conduct," says John Relman, a fair-housing advocate and lawyer helping represent the city. "With a foreclosure rate that is four times greater in the minority community — that doesn't happen unless something is going terribly wrong."

This is the political numbers game. What is not included here are discussions about the high crime rates[7], excessive school drop out rates, chronic drug usage with no hope of rehabilitation, murder rates in the streets, lousy schools staffed with incompetent teachers, and other insoluble social problems that plague the minorities in inner cities like Baltimore. The numbers game is used to show that if you take some average and half the people fall in the bottom half [or are below the median or have numbers below the arithmetic mean for those who live  in Baltimore] , for what ever reasons, the system is unfair. We should expect communities with high crime rates, low educational levels and drug use histories to have the same credit ratings and loan default rates as low crime areas? Of course! It is only ‘fair.’ These are not ‘crimes’ they are a social response by victims to racism, bigotry and other schemes designed to marginalize persons of color. They can solve their social problems if you give them enough money.  Education and honesty and the work ethic have nothing to do with success and the proper handling of credit. The evil capitalists owe you a  living.

So, there you have it. The system is rigged so that the unfortunate, unlucky, all freeloaders, nasty criminals and drug addicts in high crime areas with no educational achievements get to have homes, cars, TVs and such at taxpayer expense. Let us now fix the problem by subsidizing mortgage payments for those who cannot afford to pay until all citizens own homes. The taxpayers will fund this as we soar to societal greatness in our wonderful cities. Next to come is ‘fixing’ credit, but that is another trillion dollar story. Soon.

If you feel real good about this and gush at this wonderful social mechanism to ‘share the wealth’ then be sure to vote for your local liberal Democrat. We should all live in areas like San Francisco, Detroit and Baltimore so we can participate in liberal socialism.

The price tag is a bit steep, but let us not disscruple to provide our fellow citizens with funds to keep their homes. Ah, $ 1000 bln [1 trillion and that is what this will cost us, or even more]  is about $8000 per worker [1 bln dollars divide by 130 million workers is 8$] , but the lower half [see how the numbers work!] don’t pay taxes so the tax bill for workers with good credit will be $16,000 each for this little exercise.

The government vision of payback to taxpayers from Bernanke:

“To unclog the market, he said, the government would have to determine the hold-to-maturity price for assets with no other buyers. “Just as you sell a painting at Sotheby’s, until you sell it, nobody knows what it is worth,” Mr. Bernanke said.

He described a system of reverse auctions, in which the Treasury would name a price it was willing to pay, and the banks would decide whether to sell. Mr. Paulson said the government would also use other methods, depending on the assets involved, and was open to experimentation. Both officials pleaded with Congress not to tie the government’s hands by writing any particular sales method into the bailout legislation.”

Really? Then how do people with no credit--hence bad loans and worthless mortgage--find other housing?

I love the idea of experimentation with my tax money and investments. I want to invest in some mortgage while it goes through a bankruptcy judge and then be all excited to find out how much the principle and interest have been altered and that there is no possibility of foreclosure. I like the idea of investing in bad debts—it sounds so ‘progressive.’ I want to move to Baltimore or San Francisco and participate in this splendor. I like the notion that “until you sell it, nobody knows what it is worth.” That makes me want to rush out and invest in some bad debt! Maybe it will be worth more than what I paid for it! This is an ‘investment’

This is the new American Dream and Obama will give it to you for your tax payments.

rycK

Comments to: ryckki@gmail.com