A Horror Tale of Financial Woes

Cross posted at Monkey in the Middle

Hat tip to Maggie’s Notebook

Once upon a time, in a land called the United States, people would try and buy a home. They would save for years and keep their credit clean. They would look through out the neighborhood for a home they would like to buy. Then they would hope and pray that their local bank would grant them the all important mortgage. When the bank would grant this wondrous gift, they would rejoice and move into their new home. But this gift of mortgage came with a price. They had to pay it back to the bank. A payment to be made on the 1st of each month, over the course of 30 years. The people did not mind paying the mortgage. It was not as much as the rent they had been paying. The nation was in good shape when this was done.

Then in 1977 a strange thing happened. Jimmy Carter, then the President of the United States, convinced the members of Congress (the people who make the laws) to pass the Community Reinvestment Act. This Act gave birth to 2 children: Fanny Mae and Freddie Mac. This Act was a good idea, for it gave the gift of mortgage to more people, in neighborhoods in which the banks originally gave a redline to. As long as the people had good credit and some savings, the bank would give them a mortgage and the nation was in good shape.

Then one day in 1995, a new President by the name of Bill Clinton decided that although the Community Reinvestment Act was good, it needed to become better, to let more people buy a home. So he changed the Act so everybody could buy a home.

This should have been a good thing, but it was the worst thing that could have been done. For no longer would the people have to have good credit and savings to get the gift of mortgage. They could have no savings, bad credit and still get this marvelous gift.

And no longer would the gift of mortgage be fixed at a special rate. It would be variable and be able to climb to any rate the bank wanted. These special mortgages were called Subprime and allowed the banks to make a lot of money on their mortgages.

And the people rejoiced and everyone went out to buy their home. But a strange thing started to happen. Homes that once were $60,000 or $70,000 were now being sold for $250,000, $400,000 or even $500,000. Builders started to build new homes and selling them for more than they were actually worth. But the people would scream “We want this house!” and the bank would give them the gift of mortgage.

But not all was right. A new President, George W. Bush, saw that this could become a problem. People with low incomes buying homes they really could not afford. And he tried to make it better. In the year 2003 he tried to move governmental supervision of Fanny Mae and Freddie Mac to a new agency created within the Department of the Treasury. But the evil Democrats who ruled the Congress said, NO!

Again voices were raised that Fannie Mae and Freddie Mac were not well. They tried to sound the alarm in the year of 2005. A group of Senators from the Congress, headed by John McCain, tried to heal the 2 children, but to no avail. For the evil Democrats said NO! IT WOULD HURT THE POOR. So nothing again was done.

Then came the bad year, 2007. What was warned about started to happen. The people who didn’t have the good credit or the savings found that their gift of mortgage was not a very good gift. The payment that they owed each month was getting bigger and bigger, while their paycheck was getting smaller and smaller. And when they could not pay their mortgage to the bank, the bank took their house away.

This was happening to many people who cried to their President and Congress for help. But what did their Congress do? They just laughed. For Fanny and Freddie were sneaky children. They would give their friends in Congress many gifts and presents. Gifts of special mortgages (that the poor people could never get) and gifts of money. Some got many gifts. Dodd of Connecticut got $133,900, Obama of Illinois got $105,849, Pelosi of California got $32,750. And they did nothing for they wanted more gifts.

And then the crash came, August of 2008. The banks started failing and there was no one to give the gift of mortgage. For Fanny and Freddie were very, very ill. They couldn’t save the banks or even themselves. And the Congress finally had to do something before they would die. But what did they do? They gave them more money. $700 trillion of the people’s money they would give. It would help save the 2 children and give the banks a chance to live.

But them people who knew how the banks should have worked said please don’t do this, it will do more harm than good. To give such a sum without government oversite, would only create the same conditions we now face.

So nothing is being done, and banks are failing. The people are still losing their homes, and all we get is the evil Democrats crying: IT’S JOHN MCCAIN’S FAULT!


If you have like this little tale feel free to cross post it, just give me a link back to my site.

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