Attempt #839453847
Prologue: For those that are sick of the political ranting and raving, feel free to skip. Most of you probably know this stuff already so really you should all just skip it. I just have to get it out. Poor wurdsome can't be the only one bearing the burden of my rants.
ACORN
This one is most recent and aggravating in my mind, so I am posting about it first. ACORN is everywhere. The Republicans really seem to be getting some traction on this fake voter fraud thing. The traction, in my opinion, is due to the complete and utter failure of the media to do any sort of fact-checking or investigative work on the issue. In my observations, accusations from the McCain camp and others are broadcast unedited, unchecked, and as if they are truth. Even if by some luck a talking head from the Dems or elsewhere ends up on camera proving these accusations to be false, the very next story will again run as if they have not just been proven false 30 seconds ago. I know that this is a larger issue with national mainstream media, but this issue is so simple to understand there is no excuse for the piss-poor job they are doing.
Let me just make this clear for those that don't already know: the ACORN issue is not voter fraud. ACORN runs voter registration efforts. In order to get voters to register (and at the same time employ un- or under-employed people in these communities), ACORN pays for each completed voter registration card. The result is easily predictable - some of their canvassers get tired or lazy or need more money so they fake voter registration cards. Note that the only one being defrauded is ACORN itself - having paid its employees for what turn out to be fake voter registrations.
Now, ACORN does review cards before they are sent to the local election officials. Here's what no one in the media seems to report: ACORN IS REQUIRED, BY LAW, TO TURN IN EVERY SINGLE VOTER REGISTRATION CARD IT RECEIVES. If I were Joe Biden, I would repeat that again, slowly. Laws require that all voter registrations be turned in because otherwise, ACORN or other voter registration organizations could just throw out ones for the party(ies) it did not want to support. So what ACORN does is separate out the ones that it believes are false and labels them as such. Often, they include cover letters with the reasons they believe the registration card is suspicious and information so that the election officials can follow up if further investigation is warranted. But, again, it must turn them in - even the ones that say Jimmy Johns or Mickey Mouse or that have all the same handwriting. Furthermore, even if one of these false registrations were to somehow get past ACORN's procedures *and* those of the local election officials, it's not like there's someone with an ID that says Jimmy Johns waiting to actually vote on election day.
The reporting of this issue in the media has been absolutely abysmal and pretty much drives me up the wall. If you're not a political junkie or in our little liberal echo chamber, there's no way you have gotten an understanding of how this all works. I'm no conspiracy nut, but in my opinion, this is all a lead up to the Republicans contesting ballots all over the place on election day and beyond. And they're not going to be contesting ballots in Sugar Land, TX. They'll be contesting them in East Cleveland, OH or Pittsburgh, PA. They are trying to use house foreclosure lists in Michigan to deny people the right to vote. If they can't win this election, they will do their damnedest to steal it or question the legitimacy of its results.
The Financial Crisis
This one has dropped out of the news cycle a bit but it still pisses me off. I know that no one reading this believes the talking point that the financial crisis is the fault of low income (read: minority) home owners that had no personal responsibility and took on mortgages they knew they couldn't afford. Yet this belief is out there, and is more pervasive than it should be. First off, I would like to point to the very compelling and easy to understand episodes of This American Life that got me thinking about all this. Giant Pool of Money and Another Frightening Show about the Economy - seriously, listen to them. They explain the sub-prime mortgage crisis and Mortgage Backed Securities and Credit Default Swaps better than I ever could. Lately, I've had the fortune (?) of being able to hear from a few additional folks in the know thanks to my job.
First, a few weeks ago I attended a session at a conference for housing educators and researchers. The session was presented by a person from FHA. He presented compelling statistics about the market share of FHA loans out of all home loans being issued in the past few years. Historically, FHA loans make up about 5% of the total market. However, during the heyday of the sub-prime loan products, the FHA loan market share dropped to as low as 2%. What did this mean? It meant was that folks that would otherwise have qualified for non-predatory, 30-yr fixed FHA mortgages were finding themselves in predatory sub-prime products.
The next question is, why? Well, as the FHA guy and a later presenter at another conference explained, it's partly because of mortgage brokers. As a third party between the lender and the borrower, brokers are in this unique position of gaining financially when a loan is made but not suffering financially if the loan defaults. So they have little incentive to make sure they put people in loan products that are appropriate for them. (And as that This American Life episode shows, once mortgage debt became a Wall Street money maker, the pressure for more and more mortgage brokers led to pretty poor hiring practices and brokers with little to no experience or understanding of what they were doing.)
Then we had the sub-prime products - which were often stated income loans, interest only loans, etc. These loans required much less paperwork than the FHA loan that a somewhat riskier borrower would typically get. So if the broker wasn't as up front about the financial differences between the FHA loan and the sub-prime product, the borrower would choose the loan that was much easier to get. I don't have to provide any proof of my income? Score! Also, the market was so hot that sellers weren't interested in waiting around for FHA approvals - there was pressure for the borrowers to get loan approval and close ASAP. The result was that people that may have qualified for FHA loans ended up in sub-prime products that had tricky interest rate resets or balloon payments or what have you. Had they gotten into an FHA loan, they might have ended up with a smaller loan but would have been able to keep their house rather than foreclosing.
But even given this situation, with homeowners being foreclosed on (for whatever reason), without the Wall Street-ization of real estate debt, it would not have created the worldwide financial crisis that it did. The small percentage of foreclosures out there just doesn't total enough money to completely rock the financial system.
Wall Street created securities (bonds) out of pools of mortgage debt. What I learned last week at my company's conference was that not only did Wall Street create mortgage backed securities (MBS), it took the poorly rated ones (B or even junk status), added a little equity, mixed it up with a big spoon, re-sorted it, and created more highly rated (AAA!) bonds called Collateralized Debt Obligation or CDO Bonds. Again, a Joe Biden moment. THEY TOOK RISKY, BADLY RATED DEBT AND MANAGED TO SQUEEZE AAA RATED STUFF OUT OF IT. (Link to pdf of conference slides here. Check out page 6.) There is some criticism of the bond rating agencies like Moody's, Standard and Poors, etc. for their lack of oversight in the matter as well. They get paid by the bond issuer to do the ratings so there is pressure on them not to rate them too low. Then to make it worse, Wall Street created these Credit Default Swaps (CDS) and MBS indices (MBX) so that investors could make money off these products without even owning them (page 10-12 of the slides). The result? For every $1 in actual mortgage money that defaulted, the system took a $30, $40 or more hit because that $1 was leveraged that many times. Before things started to go bad, this leverage made people very rich, and created pressure on mortgage brokers and banks to issue more and more mortgages to meet the demand for these Wall Street derivatives. Also important is that all of these products - the MBSs, the CDO bonds, the CDSs and MBXs, were traded "over-the-counter". No SEC oversight, no state oversight of CDSs even though they are basically a kind of insurance, no record-keeping requirements, no way to really value these products. So once the house of cards started to fall, everyone panicked because *everyone* had this shit on their books yet none of them knew what it was actually worth or what kind of hit they were going to take.
Long story short, the whole thing was a clusterfuck and should not be placed at the feet of poorly prepared and likely misled homeowners (or former homeowners).
Edited to add: wurdsome just sent me an interesting link to a video of a guy explaining Collateralized Debt Obligations. Check it out. Apparently he's also done one for Credit Default Swaps, which I haven't watched yet.)
Ok, the end for now. I thought I might rant about more but I'm out of steam this evening.
ACORN
This one is most recent and aggravating in my mind, so I am posting about it first. ACORN is everywhere. The Republicans really seem to be getting some traction on this fake voter fraud thing. The traction, in my opinion, is due to the complete and utter failure of the media to do any sort of fact-checking or investigative work on the issue. In my observations, accusations from the McCain camp and others are broadcast unedited, unchecked, and as if they are truth. Even if by some luck a talking head from the Dems or elsewhere ends up on camera proving these accusations to be false, the very next story will again run as if they have not just been proven false 30 seconds ago. I know that this is a larger issue with national mainstream media, but this issue is so simple to understand there is no excuse for the piss-poor job they are doing.
Let me just make this clear for those that don't already know: the ACORN issue is not voter fraud. ACORN runs voter registration efforts. In order to get voters to register (and at the same time employ un- or under-employed people in these communities), ACORN pays for each completed voter registration card. The result is easily predictable - some of their canvassers get tired or lazy or need more money so they fake voter registration cards. Note that the only one being defrauded is ACORN itself - having paid its employees for what turn out to be fake voter registrations.
Now, ACORN does review cards before they are sent to the local election officials. Here's what no one in the media seems to report: ACORN IS REQUIRED, BY LAW, TO TURN IN EVERY SINGLE VOTER REGISTRATION CARD IT RECEIVES. If I were Joe Biden, I would repeat that again, slowly. Laws require that all voter registrations be turned in because otherwise, ACORN or other voter registration organizations could just throw out ones for the party(ies) it did not want to support. So what ACORN does is separate out the ones that it believes are false and labels them as such. Often, they include cover letters with the reasons they believe the registration card is suspicious and information so that the election officials can follow up if further investigation is warranted. But, again, it must turn them in - even the ones that say Jimmy Johns or Mickey Mouse or that have all the same handwriting. Furthermore, even if one of these false registrations were to somehow get past ACORN's procedures *and* those of the local election officials, it's not like there's someone with an ID that says Jimmy Johns waiting to actually vote on election day.
The reporting of this issue in the media has been absolutely abysmal and pretty much drives me up the wall. If you're not a political junkie or in our little liberal echo chamber, there's no way you have gotten an understanding of how this all works. I'm no conspiracy nut, but in my opinion, this is all a lead up to the Republicans contesting ballots all over the place on election day and beyond. And they're not going to be contesting ballots in Sugar Land, TX. They'll be contesting them in East Cleveland, OH or Pittsburgh, PA. They are trying to use house foreclosure lists in Michigan to deny people the right to vote. If they can't win this election, they will do their damnedest to steal it or question the legitimacy of its results.
The Financial Crisis
This one has dropped out of the news cycle a bit but it still pisses me off. I know that no one reading this believes the talking point that the financial crisis is the fault of low income (read: minority) home owners that had no personal responsibility and took on mortgages they knew they couldn't afford. Yet this belief is out there, and is more pervasive than it should be. First off, I would like to point to the very compelling and easy to understand episodes of This American Life that got me thinking about all this. Giant Pool of Money and Another Frightening Show about the Economy - seriously, listen to them. They explain the sub-prime mortgage crisis and Mortgage Backed Securities and Credit Default Swaps better than I ever could. Lately, I've had the fortune (?) of being able to hear from a few additional folks in the know thanks to my job.
First, a few weeks ago I attended a session at a conference for housing educators and researchers. The session was presented by a person from FHA. He presented compelling statistics about the market share of FHA loans out of all home loans being issued in the past few years. Historically, FHA loans make up about 5% of the total market. However, during the heyday of the sub-prime loan products, the FHA loan market share dropped to as low as 2%. What did this mean? It meant was that folks that would otherwise have qualified for non-predatory, 30-yr fixed FHA mortgages were finding themselves in predatory sub-prime products.
The next question is, why? Well, as the FHA guy and a later presenter at another conference explained, it's partly because of mortgage brokers. As a third party between the lender and the borrower, brokers are in this unique position of gaining financially when a loan is made but not suffering financially if the loan defaults. So they have little incentive to make sure they put people in loan products that are appropriate for them. (And as that This American Life episode shows, once mortgage debt became a Wall Street money maker, the pressure for more and more mortgage brokers led to pretty poor hiring practices and brokers with little to no experience or understanding of what they were doing.)
Then we had the sub-prime products - which were often stated income loans, interest only loans, etc. These loans required much less paperwork than the FHA loan that a somewhat riskier borrower would typically get. So if the broker wasn't as up front about the financial differences between the FHA loan and the sub-prime product, the borrower would choose the loan that was much easier to get. I don't have to provide any proof of my income? Score! Also, the market was so hot that sellers weren't interested in waiting around for FHA approvals - there was pressure for the borrowers to get loan approval and close ASAP. The result was that people that may have qualified for FHA loans ended up in sub-prime products that had tricky interest rate resets or balloon payments or what have you. Had they gotten into an FHA loan, they might have ended up with a smaller loan but would have been able to keep their house rather than foreclosing.
But even given this situation, with homeowners being foreclosed on (for whatever reason), without the Wall Street-ization of real estate debt, it would not have created the worldwide financial crisis that it did. The small percentage of foreclosures out there just doesn't total enough money to completely rock the financial system.
Wall Street created securities (bonds) out of pools of mortgage debt. What I learned last week at my company's conference was that not only did Wall Street create mortgage backed securities (MBS), it took the poorly rated ones (B or even junk status), added a little equity, mixed it up with a big spoon, re-sorted it, and created more highly rated (AAA!) bonds called Collateralized Debt Obligation or CDO Bonds. Again, a Joe Biden moment. THEY TOOK RISKY, BADLY RATED DEBT AND MANAGED TO SQUEEZE AAA RATED STUFF OUT OF IT. (Link to pdf of conference slides here. Check out page 6.) There is some criticism of the bond rating agencies like Moody's, Standard and Poors, etc. for their lack of oversight in the matter as well. They get paid by the bond issuer to do the ratings so there is pressure on them not to rate them too low. Then to make it worse, Wall Street created these Credit Default Swaps (CDS) and MBS indices (MBX) so that investors could make money off these products without even owning them (page 10-12 of the slides). The result? For every $1 in actual mortgage money that defaulted, the system took a $30, $40 or more hit because that $1 was leveraged that many times. Before things started to go bad, this leverage made people very rich, and created pressure on mortgage brokers and banks to issue more and more mortgages to meet the demand for these Wall Street derivatives. Also important is that all of these products - the MBSs, the CDO bonds, the CDSs and MBXs, were traded "over-the-counter". No SEC oversight, no state oversight of CDSs even though they are basically a kind of insurance, no record-keeping requirements, no way to really value these products. So once the house of cards started to fall, everyone panicked because *everyone* had this shit on their books yet none of them knew what it was actually worth or what kind of hit they were going to take.
Long story short, the whole thing was a clusterfuck and should not be placed at the feet of poorly prepared and likely misled homeowners (or former homeowners).
Edited to add: wurdsome just sent me an interesting link to a video of a guy explaining Collateralized Debt Obligations. Check it out. Apparently he's also done one for Credit Default Swaps, which I haven't watched yet.)
Ok, the end for now. I thought I might rant about more but I'm out of steam this evening.