Government report to UN drafted by Hillary Clinton and coconspirators lies about the recession her party fails to end

Even as Americans wrestle with the after-effects of one of the most hare-brained social enngineering projects ever devised, subprime mortgages on a mass scale, the government refuses to face reality.

In a new report to the World's Worst Man-made Catastrophe, the United Nations, Secretary of State Hillary Clinton and some of her co-conspirators write this:

"The recession in the United States was fueled largely by a housing crisis, which coincided with some discriminatory lending practices." Those practices, the report strongly implies, resulted in a market where "fewer than half of African-American and Hispanic families own homes while three quarters of white families do."

So, it wasn't the mortgages-for-everybody scheme devised by Washington politicians and the Federal Reserve that caused the housing bubble and subsequent collapse. It was the antecedent to those policies, also known as a policy of mortgages only for those who could afford them, that was the problem.

Being an organization run by liberals and radicals, some from the third world, the UN demands victims. Being Democrats, Clinton and her coconspirators are willing to supply victims, even if the supporting story line boggles the mind.

Writing in American Thinker, Jack Cashill notes that "the U.N.'s 192 Member States assess their respective human rights performance over the preceding four years and submit a report on the same to the HRC, the U.N. Human Rights Council.


"During this past year, under the guidance of our HRC, Hillary Rodham Clinton, "senior representatives" from "more than a dozen" federal entities wandered the country listening to the self-serving laments of various liberal pressure groups. At the end of the process, they compiled these gripes into a 29-page report and sent it to the U.N. HRC for review.


"Among the reviewing states of the HRC are human rights luminaries like Cuba, Russia, Red China, Saudi Arabia, and -- when not busy sending "emergency transaction" e-mails -- Nigeria.


"Our State Department calls the UPR process "a unique avenue for the global community to discuss human rights around the world." Any sane person would call it a self-deluding boondoggle and, if its recommendations are followed, a self-destructive one as well.


"I could write a book on the various absurdities of the report we submitted -- e.g., a soulful plea for the rights of the transgendered and not a word on those of the unborn -- but let me focus on one that has the potential to wreak havoc anew on the world's economy: the call for "fairness and equality in housing."


"The recession in the United States," the report insists, "was fueled largely by a housing crisis, which coincided with some discriminatory lending practices." Those practices, the report strongly implies, resulted in a market where "fewer than half of African-American and Hispanic families own homes while three quarters of white families do."



"To prevent similar crises in the future," the report continues in its smugly accusatory way, "the federal government has focused resources and efforts to determine whether and where discrimination took place, as well as to ensure greater oversight going forward." As proof of the administration's eagerness to solve the problem, the report cites its "major financial reform legislation."


"I wish I were making this up, but our official 2010 UPR submission to the United Nation argues that discrimination against minorities in the housing market somehow caused the economic crisis and that the misbegotten Dodd-Frank act will somehow repair it. It is no wonder that the authors of this report oppose capital punishment. Upon reading it, even Sister Helen Prejean would want them taken out and shot.


"While the Obama apparatchiks were busy compiling this report, I was busy writing a book -- Popes and Bankers -- on the real causes of the economic crisis. What they see as the solution I see as the cause, and I can prove my point.


"To make the accusation of discrimination work, the report writers had to ignore the most telling set of data, namely default rates. In 2004, the Department of Housing and Urban Development did a comprehensive study of FHA loans that originated in 1992. The sample size was substantial -- nearly 250,000 loans.


"Given that the FHA insures only modest loans for low- and moderate-income people, the cross-racial comparisons were for comparable properties. What the study revealed, among other results, was that after the seven prosperous years from 1992 to 1999, blacks were defaulting on their loans more than twice as frequently as whites, and Hispanics were defaulting three times more frequently.


"Here is the crucial point: if minorities had been held to a higher standard than whites, their default rates should have been lower than whites, not higher. These numbers suggest the opposite and the obvious: blacks and Hispanics were held to lower standards and have been for at least the last forty years. Chinese-Americans, by the way, actually did have lower default rates than whites.


"As to why black homeownership rates are lower, only the willfully blind can fail to see the problem: namely, the government-induced collapse of the two-parent black family. In 1993, the average income for households headed by divorced women was 40 percent that of married couples; for unmarried women, it was only 20 percent. As the numbers suggest, many of these women could not manage homes of their own. Homeownership rates for female-headed households have struggled to stay above 50 percent. For married couples, by contrast, the rates have hovered consistently in the 80th-percentile range.


"With blacks vastly overrepresented among single-parent families -- by 1993, 57 percent of black children were growing up in a single-parent household, as compared 21 percent of white children -- white homeownership rates inevitably outstripped those for black homeownership. By the early 1990s that gap was at least 25 percentage points, around 70 percent for whites and in the low 40s for blacks.


"The writers of the UPR report, however, refuse to acknowledge family breakdown as a problem, let alone as an explanation for the disparity in homeownership rates. Their preferred explanation for every unequal outcome in every endeavor is the inevitable "discrimination."


"Worse, the report writers -- and indeed, the Obama White House -- seems unaware that the forced march of unqualified buyers into the homeownership field was the single most explosive variable in the subprime blow-up.


"They seem unaware that the Clinton administration demanded that banks quantify -- under duress -- the progress they were making in giving loans to "LMIs," people of low and moderate income.


"They seem unaware that the government encouraged banks to use "innovative or flexible" lending practices -- aka "predatory loans" -- to reach their LMI numbers.


"They seem unaware that HUD, which Congress had made the regulator of Fannie Mae and Freddie Mac in 1992, began to pressure these agencies to set numerical goals for "affordable housing" even if that meant buying subprime mortgages.


"In 2004, under extreme government pressure, homeownership rate reached a new peak. "'Stop! We're at 69 percent homeownership. We should go no further. These are people who should remain renters,'" former HUD secretary Henry Cisneros wished someone would have said at the time.


"Cisneros added that it was "impossible to know in the beginning that the federal push to increase homeownership would end so badly."


"In 2010, everyone knows how badly the push ended -- everyone, that is, save the clowns who wrote the UPR report and the jokers who approved it."

Is Tim Geithner preparing a redo of subprime mortgages?

Subprime Scandal: You can't talk about the housing crisis or reforms without talking about the affordable-housing goals HUD slapped on Fannie and Freddie. That is, unless you're Tim Geithner.

The Treasury secretary hosted a summit Tuesday to discuss redesigning the mortgage-finance system — 75% of which is still controlled by Fannie and Freddie, which are still bleeding billions at taxpayer expense.

Geithner vowed to fundamentally "change" the failed government-sponsored mortgage giants. Yet, suspiciously, he didn't offer how. Nor did he explain why they lowered their underwriting standards and collapsed under the weight of subprime loans and securities. So here's a refresher:

• In 1996, as part of Clinton housing policy, HUD required that 42% of Fannie's and Freddie's mortgage financing go to "underserved" borrowers with unproven or damaged credit.

• To help them meet that goal, HUD, their regulator, authorized them to relax their lending criteria.

• HUD also authorized them to buy subprime securities that included loans to uncreditworthy borrowers.

• Unhappy with the results — despite Fannie and Freddie committing trillions in risky low-income loans — HUD in 2000 raised its affordable-housing target again, this time to 50%.

• By 2008, HUD's target had topped out at 56%. And Fannie and Freddie had drowned in a toxic soup of bad subprime paper.

HUD Secretary Shaun Donovan insists that affordable-housing goals aren't to blame. "We should be careful not to learn the wrong lesson from this experience," he said, "and sacrifice an important feature of the current system: wide access to mortgage credit."

This is revisionist history. Fannie and Freddie e-mails confirm that executives then were under huge pressure to meet "HUD goals."

But as Orwell warned, whoever controls the present controls the past. And right now, the people who pushed Fannie and Freddie — along with our entire financial system — off the cliff in the name of "affordable housing" are running the show.

Just look at some of the experts Geithner invited to his Potemkin summit. Like ex-Clinton aide Ellen Seidman, who became head of the Office of Thrift Supervision. She aggressively enforced Clinton's beefed-up Community Reinvestment Act, which codified the "flexible" underwriting that Fannie and Freddie adopted.

Seidman argued that Fannie's and Freddie's support for "low-income and minority communities" — especially now amid a wave of foreclosures — is "absolutely critical." She wants government to take an even larger role in pushing housing for "underserved markets."

What this country needs is a John Galt Trade-of-a-Lifetime Award for John Paulson

What this country needs is a respected, conservative and courageous institution, well known in the fields of economics and finance, to step forward for an important bit of public affairs theater.

The objective is to rescue the market system from the clutches of the collectivists, who are in the process of replacing that system with a command economy. Although few noticed it, a command economy is what President Obama clearly indicated he wanted during his campaign. As president, he has done nothing that would suggest a change of mind.

In the current scene, Obama's Securities and Exchange Commission is making a bogeyman out of John Paulson, a hedge fund proprietor who persuaded Goldman Sachs to devise a financial instrument that he could use to short the subprime mortgage market a few years ago.

Goldman obliged, creating the Abacus as a proxy for collections of specific mortgage-based derivatives that Paulson had chosen as likely candidates for the ashheap. Entering the market at or near its red-hot peak, Paulson sold high.

Then the economy weakened. As Paulson had anticipated, subprime home owners began defaulting on their mortgages, the derivatives market began its meltdown, and the economy cratered. During the decline, Paulson bought low, closing out his transactions with a profit reported to be in the billions of dollars.

Now the collectivists are seeking "justice," denouncing Paulson and Goldman Sachs while the Securities and Exchange Commission is suing Goldman, alleging fraud in Goldman's shorting the market, on its own and on Paulson's behalf, while continuing to sell derivatives to rank and file investors and institutions.

While that practice may seem unseemly, it is not an unusual situation. Brokerages routinely sell a stock to some clients while shorting the same stock for other clients. In earlier administrations, this was regarded as normal behavior reflecting differing judgments and expectations.

Paulson's short sales may have hastened the slide in the derivatives market, but that isn't the main problem. The main problem is that the derivatives market did not originally provide for short-selling, which serves as a brake on overheated markets. If the Abacus had been available earlier, the derivatives market might never have reached unsustainable levels, and the ensuing selloff might not have cratered the economy.

Investors who were buying mortgage-based derivatives while Paulson was selling short are, of course, furious. Since bad judgment is never a suitable explanation of a bad trade, they are looking for a scapegoat. Paulson is available. Pillorying him may produce some votes for Democrat politicians crying for blood.

Why doesn't some well-meaning, conservative, market oriented institution - say, the Hoover Institution - invent a new award and give it to Paulson. Call it the John Galt Trade-of-a-Lifetime Award.

In Congress, the suspects do the questioning

WASHINGTON — The committee examining the causes of the financial crisis heard a strong defense of the Federal Reserve from its former chairman on Wednesday as the panel began three days of hearings 0n the failure to rein in Citigroup, Fannie Mae and the subprime mortgage market.

He pointed out that the Fed had warned about subprime lending and low-down-payment mortgages in 1999, and again in 2001. And he argued that if the Fed had tried to slow the housing market amid a “fairly broad consensus” about encouraging homeownership, “the Congress would have clamped down on us.”

He added: “There is a lot of amnesia that’s emerging, apparently.”

Mr. Greenspan’s testimony kicked off a day of hearings for the Financial Crisis Inquiry Commission, a bipartisan panel appointed by Congress to examine the mortgage meltdown and banking bailouts.

Michelle Malkin on Citibank-ACORN mortgage scam

"GOP California Gov. Arnold Schwarzenegger now wants an investigation. But neither the Terminator nor any other California public official raised a peep when the very same San Diego ACORN office publicly announced a partnership with Citibank to secure home loans for illegal aliens.


In 2005, Citibank and ACORN Housing Corporation — which received tens of millions of tax dollars under the Bush administration alone — began recruiting Mexican illegal aliens for a lucrative program offering loans with below-market interest rates, down-payment assistance and no mortgage insurance requirements. Instead of the Social Security numbers required of law-abiding citizens, the program allows illegal alien applicants to supply loosely monitored tax identification numbers issued by the IRS.

The San Diego Union-Tribune reported that "undocumented residents" comprise a vast market representing a potential sum of "$44 billion in mortgages." Citibank enlarged its portfolio of subprime and other risky loans. ACORN enlarged its membership rolls. The program now operates in Miami; New York City; Jersey City, N.J.; Baltimore; Washington, D.C.; Chicago; Bridgeport, Conn.; and at all of ACORN Housing's 12 California offices.

San Diego ACORN officials advised illegal alien recruits that their bank partners would take applicants who had little or no credit, or even "nontraditional records of credit, such as utility payments and documentation of private loan payments."

The risk the banks bear is the price they pay to keep ACORN protesters and Hispanic lobbyists from the National Council of La Raza screaming about "predatory lending" off their backs. These professional grievance-mongers have turned the 1977 Community Reinvestment Act — which forced lenders to sacrifice underwriting standards for "diversity" — into lucrative "business" opportunities. Or rather, politically correct blackmail."

ACORN helped illegals get billions in mortgages

"In 2005, Citibank and ACORN Housing Corporation -- which received tens of millions of tax dollars under the Bush administration alone -- began recruiting Mexican illegal aliens for a lucrative program offering loans with below-market interest rates, down-payment assistance and no mortgage insurance requirements. Instead of the Social Security numbers required of law-abiding citizens, the program allows illegal alien applicants to supply loosely monitored tax identification numbers issued by the IRS.

The San Diego Union-Tribune reported that "undocumented residents" comprise a vast market representing a potential sum of "$44 billion in mortgages." Citibank enlarged its portfolio of subprime and other risky loans. ACORN enlarged its membership rolls. The program now operates in Miami; New York City; Jersey City, N.J.; Baltimore; Washington, D.C.; Chicago; Bridgeport, Conn.; and at all of ACORN Housing's 12 California offices. San Diego ACORN officials advised illegal alien recruits that their bank partners would take applicants who had little or no credit, or even "nontraditional records of credit, such as utility payments and documentation of private loan payments."

The risk the banks bear is the price they pay to keep ACORN protesters and Hispanic lobbyists from the National Council of La Raza screaming about "predatory lending" off their backs. These professional grievance-mongers have turned the 1977 Community Reinvestment Act -- which forced lenders to sacrifice underwriting standards for "diversity" -- into lucrative "business" opportunities. Or rather, politically correct blackmail. "

Was subprime mortgage collapse a result, not a cause, of the global recession?

"In 1983, economist James Hamilton of the University of California at San Diego showed that "all but one of the US recessions since World War Two have been preceded, typically with a lag of around three-fourths of a year, by a dramatic increase in the price of crude petroleum." The years 1946 to 2007 saw 10 dramatic spikes in the price of oil -- each of which was soon followed by recession.

In The Financial Times on Jan. 3, 2008, I therefore suggested, "The US economy is likely to slip into recession because of higher energy costs alone, regardless of what the Fed does."

In a new paper at cato.org, "Financial Crisis and Public Policy," Jagadeesh Gokhale notes that the prolonged decline in exurban housing construction that began in early 2006 was a logical response to rising prices of oil and gasoline at that time. So was the equally prolonged decline in sales of gas-guzzling vehicles. And the US/UK financial crises in the fall of 2008 were likewise as much a consequence of recession as the cause: Recessions turn good loans into bad.

The recession began in late 2007 or early 2008 in many countries, with the United States one of the least affected. Countries with the deepest recessions have no believable connection to US housing or banking problems."

http://www.nypost.com/seven/04092009/postopinion/
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