The America Enterprise Institute's Peter Wallison held to the party line yesterday in an appearance in a discussion show. The housing/financial crisis was the result of government incompetence, of Fannie and Freddie, and that was the end of it. The banks had little if anything to do with it. His voice sharpened; he blasted his point of view, rushing past more civil (and I'd have to say, better informed) fellow guests on the show. The tone was so arrogant that many would dismiss him outright. But Wallison isn't stupid all the time, just some of the time.
I wonder if he's reading about James Theckston this morning.
As a regional vice president for Chase Home Finance in southern Florida, Theckston shoveled money at home borrowers. In 2007, his team wrote $2 billion in mortgages, he says. Sometimes those were “no documentation” mortgages.
“On the application, you don’t put down a job; you don’t show income; you don’t show assets,” he said. “But you still got a nod.”
“If you had some old bag lady walking down the street and she had a decent credit score, she got a loan,” he added.
Theckston says that borrowers made harebrained decisions and exaggerated their resources but that bankers were far more culpable — and that all this was driven by pressure from the top.......One memory particularly troubles Theckston. He says that some account executives earned a commission seven times higher from subprime loans, rather than prime mortgages. So they looked for less savvy borrowers — those with less education, without previous mortgage experience, or without fluent English — and nudged them toward subprime loans. ...Nicholas Kristof, NYT
Kristof talked with Chase executives. He called JP Morgan Chase and they, of course, verified Theckston's account.
And now, years later, 28% of all those mortgages are still "underwater" and undermining the American economy while the banks are afloat after a $7.8 trillion bailout by the Fed. That, let's remind ourselves, means that each of us (not each family) paid the banks over $25,ooo.
The federal government rescued highly paid bankers from their reckless decisions. It protected bank shareholders and creditors. But it mostly turned a cold shoulder to some of the most vulnerable and least sophisticated people in America. Last year alone, banks seized more than one million homes.
Sure, some programs exist to help borrowers in trouble, but not nearly enough. We still haven’t taken such basic steps as allowing bankruptcy judges to modify the terms of a mortgage on a primary home. Legislation to address that has gotten nowhere. ...Kristof, NYT
So conservatives -- who are responsible for legislation going nowhere -- are losing the argument. This is not just an argument, of course, it's people's lives today and in the future. And there is an election about what they've done and what they have failed to do coming up. How many votes will the party whose policies cost every single American $25,000 -- and cost many Americans their homes and jobs -- manage to get?
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The Republican party is getting worried. Worried enough to do a turnaround. Refusing to tax the wealthiest while hitting the middle class when it's down isn't (surprise!) a vote-getter. Think Progress put the sequence of events together in this video:
