Greedy Rich White People

One of the ugliest yet most enduring tropes in American politics is blaming every problem on the poor, the marginalized, all those who are the victims rather than the perpetrators of socio-economic crimes.

Thus Reagan blamed the budget deficit not on corporate welfare and bloated defense contracts, but on single mothers on welfare.

Republicans blame job losses not on corporations shipping jobs overseas, but on affirmative action giving "undeserving" minorities the college spots and jobs whites needed.

They even blame the economic squeeze hurting small businesses not on the lack of universal health care, but on disabled people using the Americans with Disabilities Act.

So it's no surprise that the repugs and their corporate masters are blaming the financial crisis on poor people and minorities who believed mortgage brokers who assured them sub-prime loans were a good deal. Bonus blame to "big government" in the form of Fannie Mae and Freddie Mac.

But Daniel Gross in Slate exposes the real guilty parties: Greedy Rich White People.

(More after the jump.)

We've now entered a new stage of the financial crisis: the ritual assigning of blame.... On the Republican side of Congress, in the right-wing financial media (which is to say the financial media), and in certain parts of the op-ed-o-sphere, there's a consensus emerging that the whole mess should be laid at the feet of Fannie Mae and Freddie Mac, the failed mortgage giants, and the Community Reinvestment Act, a law passed during the Carter administration. The CRA, which was amended in the 1990s and this decade, requires banks—which had a long, distinguished history of not making loans to minorities—to make more efforts to do so.

SNIP

Let me get this straight. Investment banks and insurance companies run by centimillionaires blow up, and it's the fault of Jimmy Carter, Bill Clinton, and poor minorities?

SNIP

The Community Reinvestment Act applies to depository banks. But many of the institutions that spurred the massive growth of the subprime market weren't regulated banks.... the CRA didn't force mortgage companies to offer loans for no money down, or to throw underwriting standards out the window, or to encourage mortgage brokers to aggressively seek out new markets. Nor did the CRA force the credit-rating agencies to slap high-grade ratings on packages of subprime debt.... many of the biggest flameouts in real estate have had nothing to do with subprime lending....

(L)ending money to poor people and minorities isn't inherently risky. There's plenty of evidence that in fact it's not that risky at all. That's what we've learned from several decades of microlending programs, at home and abroad, with their very high repayment rates. And as the New York Times recently reported, Nehemiah Homes, a long-running initiative to build homes and sell them to the working poor in subprime areas of New York's outer boroughs, has a repayment rate that lenders in Greenwich, Conn., would envy. In 27 years, there have been fewer than 10 defaults on the project's 3,900 homes. That's a rate of 0.25 percent.

On the other hand, lending money recklessly to obscenely rich white guys, such as Richard Fuld of Lehman Bros. or Jimmy Cayne of Bear Stearns, can be really risky. In fact, it's even more risky, since they have a lot more borrowing capacity.

SNIP

Look: There was a culture of stupid, reckless lending, of which Fannie Mae and Freddie Mac and the subprime lenders were an integral part. But the dumb-lending virus originated in Greenwich, Conn., midtown Manhattan, and Southern California, not Eastchester, Brownsville, and Washington, D.C. Investment banks created a demand for subprime loans because they saw it as a new asset class that they could dominate. They made subprime loans for the same reason they made other loans: They could get paid for making the loans, for turning them into securities, and for trading them—frequently using borrowed capital.

SNIP

Lending money to poor people doesn't make you poor. Lending money poorly to rich people does.

Read the whole thing.

Cross-posted at They Gave Us A Republic.

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Nothing to Fear

Warren Street at They Gave Us A Republic steps back and takes a calm, cold-eyed look at what we're facing in the next five weeks.

Now is not the time to panic about anything. There is no impending financial meltdown crisis--that's a figment of the imagination ... Now is not the time to wonder about "martial law." ...

Everyone has to be prepared for the October Surprise. It's coming. ... It could be damned near anything.

(More after the jump.)

Calm heads must prevail. ... Every time something happens, we must be steely-eyed and non-plussed. We must double down and behave like an old Norwegian farmer who has seen and done it all. We must be prepared to weather a storm, fix a fence, react to a terrible blizzard, or put down a sick animal. We must have sturdy boots on our feet at all times for walking in the bullshit that scared, weak and terrified men are going to shovel about.

When things like this happen, we must laugh at them and then get deadly fucking serious quickly and deal with them. Obama did that today. He didn't blink. He said 'the show must go on' in not so many words and he ran McCain's gambit right back into his face with a smile and a cool, collected fuck you expression.

They will try to scare us all. We must not give in to any of it. We must laugh at these assholes and their panic. Then we must run it back up the gut and down their throats and step on their kidney when we walk back to the huddle.

We are not sheep, shivering with our heads down praying The Leader will protect us from the scary threat.

We are Americans. Our strength is not in our leaders, our military or even our economy. Our strength is in ourselves, individuals whose government works for us, whose representatives we choose, whose executives we reward and punish as we see fit.

We have been deceived for seven years, but that's over. John McCain's desertion of his post as presidential nominee has exposed the whole cowardly core of the republican party. The repugs have spent the last 14 years, since Gingrich's takeover of Congress, refusing to deal with this country's real challenges and avoiding responsibility for lethal malfeasance.

Vote Democratic, and do so not in hope of a savior, but as a citizen hiring the right expert to solve multiple problems.

No Fear.

Cross-posted at Blue in the Bluegrass.

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Nailing the Crisis on McCain

So far, Obama has done a pretty good job of using the latest financial crisis to call attention to the utter inability of Walnuts Depends and Caribou Barbie to propose, much less achieve, changes to our profoundly dysfunctional economy.

But it cannot be emphasized enough how much McCain, his current advisors and the current leadership of the republican party are directly and personally responsible for creating an anything-goes financial environment that would embarrass the original robber barons.

At The Nation, Robert Scheer details the involvement of McCain BFF Phil Gramm.

As with any Ponzi scheme, the perps, who included the legislators as well as the bankers who exploited the loopholes they provided, expected to bail long before the bubble burst. The role of the legislators, Republican-led but with far too many Democratic running dogs, was critical to the success of the scam.

(More after the jump.)

The mortgage swaps distancing the originator of the loan from the ultimate collector were made legal only as a result of the Commodity Futures Modernization Act, which former Senator Phil Gramm, R-Texas, pushed through Congress just hours before the 2000 Christmas recess. Gramm, until recently co-chair of the McCain campaign, also had co-authored the Gramm-Leach-Bliley Act, which became law in 1999 with President Bill Clinton's signature. That gem, which Gramm had pushed for years with massive financial industry lobbying, destroyed the Depression-era barrier to the merger of stockbrokers, banks and insurance companies. Those two acts effectively ended significant regulation of the financial community, and no wonder we have witnessed an even more rapid and severe meltdown in housing values than during the Great Depression.

Not surprisingly, Gramm was rewarded for his service upon retirement as a senator and as head of the Senate Banking Committee with a top position at the Swiss-based UBS bank, which is close to drowning in the subprime mortgage nightmare he helped create. These folks have no shame, as was evidenced when the senator's wife, Wendy, was named a director of Enron, whose roiling of the energy market had been made possible only through yet another provision of Gramm's Commodity Futures Modernization Act.

While neophyte Palin can claim ignorance of such matters, that would be particularly difficult for McCain, who as a senator consistently lined up with Gramm in his deregulation crusade. Clearly McCain had not learned much from his previous involvement with the savings-and-loan debacle about the risks to consumers in unregulated banking.

McCain served as chair of Gramm's abortive 1996 presidential campaign, and Gramm returned the favor, providing critical support for McCain with the hard-line Republican base, including the editorial board of the Wall Street Journal. It was assumed in the business press that Gramm was the front-runner to be Treasury secretary in a McCain Administration. Gramm left his role as the top economic person near McCain only after he made an embarrassing statement blaming the current economic downturn on "whiners," an awkward reference to the victims of his disastrous legislation.

Republicans have been waging class war on working Americans for more than a 125 years, and except for the presidencies of those two class traitors Theodore and Franklin, pretty much succeeding.

Succeeding in no small part because every time a liberal objects to the latest attack on the middle class, the dems shush her, terrified they'll be accused of waging "class warfare."

As the immortal Molly Ivins wrote: "What do they think the republicans are playing? Mah Jong?"

Way past fucking time for Obama to say it like it is: Republicans in general and John McCain in particular have one economic policy and one economic policy only:

Strip working people naked and give everything they have to the parasitic rich.

Cross-posted at They Gave Us A Republic ....

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