Exploding The Myths Of "Predatory Lending"
October 20, 2008
By Christopher G. Adamo, www.chrisadamo.com
In a blatant example of political grandstanding rooted in sheer audacity, leaders of the Democrat Party are seeking to gain as much mileage as possible from the nation's economic woes. Worst of all is that they are doing so by incessantly blaming the situation on such easily refutable bogeymen as "greed on Wall Street" and "predatory lending." Yet by their nearly hysterical repetitions of these straw dogs, they inadvertently reveal their inherent vulnerabilities on the issue. Sadly, Republicans are still not rising to the challenge of exposing the whole debacle for what it is.
To begin with, the notion that "greed on Wall Street" somehow formulated the current financial fiasco is wholly without any factual basis, but rather is an indication of the contempt held towards Middle America by those elitists who consider themselves to be the "Ruling Class." Wall Street has always been driven by the desire of its participants to accrue and increase wealth.
If that is "greed," then every American employee who ever works overtime or seeks a pay raise is every bit as guilty of "greed" as well, but just not as successful as the competent investment broker. What causes similar motivations to undermine America's financial markets is not the mere desire for greater wealth, but the unchecked presence of corruption. And that begs the question of just who undermined or prevented oversight of the financial system necessary to maintain its integrity.
More significantly however, under even casual scrutiny, the commonly blamed activity of "predatory lending" evaporates into thin air. Consider this inane notion in contrast to those conditions necessary to devastate the nation's entire banking industry. It quickly becomes obvious that the phony scenario of a slick loan officer, seeking to extort the life-savings from mom and pop, simply will not generate such calamity unless powerful people in high public office have an ulterior stake in the operation and participate in the ruse.
Ultimately, it is those people who must be rooted out and held accountable. But it is also those people who are not only escaping any culpability, but who are the most vehement in their condemnation of the industry that, without their interference, would not have anything to gain by perpetrating such felonious action that, in the end, constitutes a crime against every honest citizen of this nation.
Even the most unscrupulous used-car salesman would not purposely seek to liquidate his entire inventory of vehicles if he knew that payment would consist entirely of bad checks. Simply moving stock off of the lot, without any hope of reaping a cash profit, would be the height of foolishness, and the surest way to destroy his business.
On the other hand, consider the typical operation of a government welfare office. Its supposed reason for existence is to improve the lives of those unfortunate individuals who "need assistance." Yet its real success is only determined by establishing ever-larger roles of recipients. Thus it seeks to ensnare, not bolster, the lives of those who stray into its midst. In the end, the enormous sums of money it distributes to its "clients," whether or not they qualify or actually need it, is secondary to the benefits it reaps from its enlarged role as a self-serving bureaucracy.
The same rules apply to those in the banking industry. A "predatory lender" in the free market only stands to destroy his livelihood if he makes loans to people who cannot qualify for them and are thus likely to be unable to pay them off. The only reason to make such an imprudent agreement is if one expects some alternative means of reaping a profit from the transaction. And that is where the insidious connection between the financial markets of New York and the bureaucratic monstrosity of Washington D.C. becomes profoundly relevant.
More importantly, that is why the current efforts of the liberal media/Democrat axis to deflect attention and essentially cover up the enormous scandal which precipitated the mortgage and banking collapse and subsequent "bailout" amount to a criminal theft of the wealth of America.
Bad loans could only be worthwhile to bankers who knew they could reap credit for them, while offloading them to governing entities which did not require any payoff. For the loaning institutions, it did not matter if the principals who received the loan ever paid back a penny. In the end, the balance due would come from Fannie Mae and Freddie Mac, the pseudo government organizations that have direct access to the public trough, and thus could collect tax dollars in lieu of real payments.
In other words, with the backing of Federal bureaucrats, and their unlimited stockpile of monies confiscated from taxpayers, it was sufficiently profitable to simply make loans to anyone and everyone who walked through the door, with the full expectation that Uncle Sam would pay for everything with your money. Such a financial "strategy" carried with it the iron-fist of the "politically correct," who not only enabled such perverse "lending" to ensue, they demanded it.
A May 31, 1999 article in the Los Angeles Times best highlights this abominable misuse of government power, explaining that Freddie Mac and Fannie Mae "are now required to devote 42% of their portfolios to loans for low and moderate income borrowers; HUD, which has the authority to set the targets, is poised to propose an increase this summer." Thus was the stage set during the Clinton Administration for today's monetary meltdown.
In the end, the "predatory lenders" turned out to be those same people in government who forced this outrage on America, who received kickbacks for the scam in the form of campaign contributions. Showing absolutely no shame, they now loudly boast of having crafted a phony $700 billion "solution" which somehow leaves them totally devoid of any responsibility and instead absurdly credits them with "fixing" the problem.
From the felonious former president to Assistant Attorney General Jamie Gorelick, Franklin Raines (now a key Obama advisor), Massachusetts Congressman Barney Frank, and Connecticut Senator Chris Dodd (Democrats all), the ranks of those who established and enabled the Fannie Mae/Freddie Mac federally sanctioned "money laundering" program reads like a "Who's Who" of Clinton Era cronyism.
They systematically prevented any effective oversight, and grew the monster to unfathomable proportions by feeding the huddled masses of low-income loan applicants into its gaping jaws (among those defaulting are an estimated five million illegals). Accordingly, they deserve condemnation in the loudest terms every time they open their sanctimonious mouths.
Only in such a manner can true justice be done. And only by their public disgrace and accountability (Does anyone remember how loudly these same people condemned Enron CEO Ken Lay?) can the nation hope to avoid an otherwise inevitable repeat of the fiasco.