His new book will enable George Bush to elbow his way into the headlines just in time to muddy a conservative GOP message

George Bush has positioned himself as the author of this year's October Surprise. To surprise us, however, he would have to come across as a conservative, and nothing in his past suggests such an unlikely course.

He has not received the discredit he deserves for the sorry condition of the American economy, the gigantism of its government, or the high-handedness that Washington officials demonstrate toward American citizens and state and local institutions on a daily basis.

We are where we are because Bush took it upon himself, as president, to destroy the traditional housing market so that banks, other financial institutions, and two hiring halls for out-of-work Democrats, Fannie Mae and Freddie Mac, could compassionately distribute house mortgages to anyone who asked.

The vehicle for Bush's largesse, the Community Reinvestment Act, had already been in effect for 23 years when Bush assumed the presidency in 2001. In truth, however, it had never amounted to much, as is apparent in the accompanying illustration. That soon changed, as Bush called for higher and higher increases in home ownership.

Some questions remain unanswered. Why, for instance, was it compassionate to encourage borrowers to obtain mortgages when there was little or no chance that the borrowers could keep up the monthly payments?

Once the housing bubble had materialized, why was it compassionate to continue pushing out high-risk mortgages given the likelihood of an eventual bursting of the bubble?

In deliberately destroying a traditional housing market that had relied largely on local lenders who could assess credit worthiness, Bush and his allies contravened free market principles that were central to the founding. Through elections and commerce, the founders left it to individuals and families to determine who had power, what was produced, and who was eligible to borrow money.

Bush's free-wheeling, high-risk mortgage bazaar ran directly counter to that carefully crafted system.

Now, while still reeling from the housing market collapse, we have to contend with an even more anti-market regime that believes government knows best, even as Arlington National Cemetery tries to correcr errors by matching corpses with the correct headstones.

While the arrogance, fascism and incompetence of the Obama administration is annoying, to say the least, it is having the effect anticipated by the founders. Free market, small government conservatives are again ascendant in the Republican Party, while the Tea Party provides strong conservative voices inside and outside the party.

Republicans appear to be heading for triumph in the November election.

So, the question arises: why is Bush publishing his book, Decision Points, shortly after the election, knowing that the publisher will start isssuing teasers to build interest in the book weeks earlier, during the campaign? A president known, and sometimes reviled, as a Big Government, big spending Republican apostate will elbow his way into the headlines at a time when a chastised Republican Party, under the watchful eye of the Tea Party, has a chance to return to power and place a tether on runaway government.

By doing so, Bush will  muddy the Republican message, perhaps deliberately. After all, if the Republican Party makes a right turn, no more Bushes will be elected president. Conservatism is not to be found in their genes.

Steve Sailer in VDare.com

...the Community Reinvestment Act was negligible until the 1990s. And it was still small potatoes until the Clinton “reforms” of 1995 and the rise of well-organized pressure groups of the kind affiliated with the NCRC.

But the biggest flood of CRA assurances came during the presidency of George W. Bush, who repeatedly called in 2002-2004 for 5.5 million more minority homeowners by 2010. Cumulative bank pledges (typically doled out over ten years) grew from $1.85 trillion in 2002 to $4.20 trillion in 2004.

Indeed, total CRA commitments increased by $1.63 trillion in 2004 alone, the first year of the Housing Bubble.

(snip)

In 2004 alone, banks publicly promised to lend over the next decade to CRA-qualified minority and lower income neighborhoods the sum of $1,630,000,000,000.00.

That’s a big number.

And those kind of numbers put a lot of upward pressure on home prices as they got incorporated into expectations. Not surprisingly, the subsequent mortgage defaults that plunged the world into economic crisis are disproportionately concentrated in CRA-covered minority and lower income communities.

Using the NCRC’s data, I created this more readable graph to show CRA agreements by year from 1977-2004:

...the CRA has contributed to the mortgage disaster through a more subtle “selection effect”.

Assume there are two distinct kinds of bankers:

Optimists who think lending more money to CRA-approved folks will turn out to be profitable.

Pessimists who don’t.

Of course, there are always a lot of people in the middle without strong opinions who will go with the flow toward whichever camp seems to be gaining in money, power, and popularity.

If you were a Pessimist who didn’t believe that the government’s favored borrowers were likely to pay their mortgages, the CRA couldn’t make you lend to them. But if you didn’t play ball with the CRA, you couldn’t buy other banks, which is the easiest way for a bank to get big.

And the CEOs of big banks get paid more:

"There continues to be a high correlation between CEO compensation and bank asset size, and no correlation with three-year [earnings-per-share] growth and shareholder returns,’ Citigroup banking analyst Ruchi Madan wrote in a May 6, 2005 report on bank executive pay.”[Are reforms working? Experts say link between pay, performance is lacking, By Len Boselovic, Pittsburgh Post-Gazette, May 15, 2005]

See how it works?

Not surprisingly, over the years the CRA’s chokehold on mergers changed the culture of banking. The most powerful and highest paid executives publicly saluted the CRA, while the CEOs who thought it was politically correct nonsense were relegated to the sidelines in the great game of mergers and acquisitions.

The optimists who agreed with Presidents Clinton, Bush, and Obama that “underserved” minorities would somehow come up with the scratch to pay off their mortgages were allowed to build empires, while the pessimists were not. Those in the middle camp went with the flow and started believing the CRA propaganda.

Q. Whom do we want to win: the Optimists or the Pessimists?

A. Neither! We want a financial system in which the realists succeed and wind up in positions of power. Whether the realists will turn out to be this moment’s Optimists or the Pessimists is not something we should decide ahead of time.

But, that’s exactly what the Community Reinvestment Act does. It puts the government’s thumb heavily on the scale on the side of the Optimists, with, as we’ve seen, catastrophic results.

It’s time to repeal the CRA.

And it’s long past time to recognize the reality of human differences.

In 2006, commenting on Iraq, I wrote:

“Not for the first time, our public class’s refusal to think rationally about race and ethnic differences had resulted in bad—in this case, catastrophic—public policy.”