On Sep 5, 9:59*pm, wrote:
Where is the outrage of all your CONservative "free market"
Republicans that dominate this newsgroup? Will your heroes - gasbags
Limbaugh, Hannity, Beck, and all the other right wing talk radio
screamers devote their shows denouncing this blatant SOCIALISM?

Of course not. Like you, *they are shallow partisan hypocrites
pandering to lemmings with IQ's of rat terriers. Or are you too busy
denouncing single mothers who receive $180 in food stamps to feed
their children while working two jobs?

WASHINGTON (AP) -- Fannie Mae and Freddie Mac are expected to be taken
over by the government as soon as this weekend in a bold move designed
to protect the mortgage market from the risk the companies could fail,
a person briefed on the matter said Friday night.

Some of the details of the intervention, which could cost taxpayers
billions, were not yet available, but are expected to include the
departure of Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard
Syron, according to the source, who asked not to be named because the
plan was yet to be announced.

Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry
Paulson and James Lockhart, the companies' chief regulator, met Friday
afternoon with the top executives from the mortgage companies and
informed them of the government's plan to take over the troubled
companies in a process known as conservatorship.

The news, first reported on The Wall Street Journal's Web site, came
after stock markets closed. In after-hours trading Fannie Mae's shares
plunged $1.70, or 24 percent, to $5.34. Freddie Mac's shares fell 95
cents, or almost 19 percent, to $4.15.
*http://biz.yahoo.com/ap/080905/mortg...ts_crisis.html

Bailout the Socialist policies of the Neo-Communist Liberal Fascist
Democrat controlled Congress.

Bankrupt "Exploiters" [ that's you! ]

In one of those front-page editorials disguised as "news" stories, the
New York Times blames "the lucrative lending practices" of banks and
other financial institutions for helping create the current financial
crisis of millions of borrowers and of the financial system in
general.

It must take either a willful determination to believe whatever they
want to believe or a cynical desire to propagandize their readers for
the New York Times to call "lucrative" the lending practices that have
caused many lenders to lose millions of dollars, some to lose billions
and some to go bankrupt themselves.

Blaming the lenders is the party line of Congressional Democrats as
well. What we need is more government regulation of lenders, they say,
to protect the innocent borrowers from "predatory" lending practices.

Before going further down that road, it may be useful to look back at
what got us into this mess in the first place.

It was not that many years ago when there was moral outrage ringing
throughout the media because lenders were reluctant to lend in certain
neighborhoods and because banks did not approve mortgage loan
applications from blacks as often as they approved mortgage loan
applications from whites.

All this was an opening salvo in a campaign to get Congress to pass
laws forcing lenders to lend to people they would not otherwise lend
to and in places where they would not otherwise put their money.

The practice of not lending in some neighborhoods was demonized as
"redlining" and the fact that minority applicants were approved for
mortgages only 72 percent of the time, while whites were approved 89
percent, was called "overwhelming" evidence of discrimination by the
Washington Post.

Some people are more easily overwhelmed than others, especially when
they find statistics that seem to fit their preconceptions. But if we
do what politicians and the media seldom bother to do-- stop and
think-- an entirely different picture emerges.

In our own personal lives, common sense leads us to avoid some
neighborhoods. If you want to call that "redlining," so be it. But
places where it is dangerous to go are often also places where it is
dangerous to send your money.

As for racial differences in mortgage loan application approval rates,
that does not tell you much if you are comparing apples and oranges.
Income, credit history and net worth are just some of the things that
are very different from one group to another.

More important, in the same ways that blacks differ from whites,
whites differ from Asian Americans. The fact that whites are turned
down for conventional mortgage loans, and resort to subprime loans,
more often than Asian Americans do is seldom reported in "news"
stories about lending practices, even though such data are readily
available.

Shocking as it may be to some, lenders are in the business of making
money, and they don't much care whose money it is, so long as they get
paid.

Politicians, on the other hand, are in the business of getting votes,
and they don't much care whose votes it is-- or what they have to say
or do in order to get those votes.

It was government intervention in the financial markets, which is now
supposed to save the situation, that created the problem in the first
place.

Laws and regulations pressured lending institutions to lend to people
that they were not lending to, given the economic realities. The
Community Reinvestment Act forced them to lend in places where they
did not want to send their money, and where neither they nor the
politicians wanted to walk.

Now that this whole situation has blown up in everybody's face, the
government intervention that brought on this disaster in is supposed
to save the day.

Politics is largely the process of taking credit and putting the blame
on others-- regardless of what the facts may be. Politicians get away
with this to the extent that we gullibly accept their words and look
to them as political messiahs.


We don't look to arsonists to help put out fires but we do look to
politicians to help solve financial crises that they played a major
role in creating.

How did the government help create the current financial mess? Let me
count the ways.

In addition to federal laws that pressure lenders to lend to people
they would not otherwise lend to, and in places where they would
otherwise not invest, state and local governments have in various
parts of the country so severely restricted building as to lead to
skyrocketing housing prices, which in turn have led many people to
resort to "creative financing" in order to buy these artificially more
expensive homes.

Meanwhile, the Federal Reserve System brought interest rates down to
such low levels that "creative financing" with interest-only mortgage
loans enabled people to buy houses that they could not otherwise
afford.

But there is no free lunch. Interest-only loans do not continue
indefinitely. After a few years, such mortgage loans typically require
the borrower to begin paying back some of the principal, which means
that the monthly mortgage payments will begin to rise.

Since everyone knew that the Federal Reserve System's extremely low
interest rates were not going to last forever, much "creative
financing" also involved adjustable-rate mortgages, where the interest
charged by the lender would rise when interest rates in the economy as
a whole rose.

In the housing market, a difference of a couple of percentage points
in the interest rate can make a big difference in the monthly mortgage
payment.

For someone who buys a house costing half a million dollars-- which
can be a very small house in many parts of coastal California-- the
difference between paying 4 percent and 6 percent interest would
amount to more than $7,000 a year.

For people who have had to stretch to the limit to buy a house, an
increase of $7,000 a year in their mortgage payments can be enough to
push them over the edge financially.

In other words, government laws and policies at federal, state and
local levels have had the net effect of putting both borrowers and
lenders way out on a limb.

Yet, when that limb began to crack, the first reaction in politics and
in the media has been to look to government to solve this problem
because-- as always-- it was called the market's fault, the lenders'
fault and everybody's fault except those politicians who created this
dicey situation in the first place.

Markets often get blamed for conveying a reality that was not created
by the market.

For example, the fact that "the poor pay more" for what they buy in
stores in low-income neighborhoods is often blamed on those who run
these stores, rather than on those who create extra costs through
crime, vandalism and riots.

If the store owners were making big profits, the big chain stores
would be rushing in to share in the bonanza, instead of avoiding low-
income neighborhoods like the plague.

Markets were also blamed for the Great Depression of the 1930s and New
Deal politicians were credited with getting us out of it. But
increasing numbers of economists and historians have concluded that it
was government intervention which prolonged the Great Depression
beyond that of other depressions where the government did nothing.

The stock market crash of 1987 was at least as big as the stock market
crash in 1929. But, instead of being followed by a Great Depression,
the 1987 crash was followed by 20 years of economic growth, with low
inflation and low unemployment. The Reagan administration did nothing
in 1987, despite outrage in the media at the government's failure to
live up to its responsibility, as seen in liberal quarters. But
nothing was apparently what needed to be done, so that markets could
adjust. The last thing politicians can do in an election year is
nothing. So we can look for all sorts of "solutions" by politicians of
both parties. Like most political solutions, these are likely to make
matters worse.

http://townhall.com/Columnists/ThomasSowell/