subprime lending

Awhile ago I suggested it was time to focus on some high value targets for 2010 in the wake of the Scott Brown victory. 

Barney Frank comes immediately to mind.  He's vocal. He's liberal to the core. And he was wrapped around the failed financial regulatory agenda of the past decade that led to the collapse of the housing industry and the financial markets.

Really, If the public is outraged over Bailout Nation, it would seem they would have little use for the guy whose lax lending agenda created the necessity for bailouts and then was the architect of the bailouts themselves.

Frank's gerrymandered district was until January 19, 2010, thought of as a Democratic stronghold. Then something funny happened. It was carried by Scott Brown.

I also note Frank doesn;t seem prepared for a serious challenge as he only has $400K COH, an advantage one good moneybomb could quickly erase.

So the elements are there for a really hot fire. The problem here is upon review of the Brown performance, it was strongly due to an outstanding showing in a blue collar region 50 miles from Frank's home base. This should be an opportunity. But unless conservative or Republican activists jump in here and make something happen it will be a wasted opportunity.   

 The two candidates thinking now about challenging Frank are perennial candidate Earl Sholley and newbie Keith Messina.  

Neither's gonna get it done.

Sholley's tried before with dismal results. He got 24% in 2008, running behind John McCain even in his own hometown.  Morevover his persona--born in PA 60 years ago; owner of a horticulture business in a small suburb; known for lots of lawsuits--doesn't suggest he has a big upside in an ethnic Democratic district.  No matter how  revved the Tea partiers get over him; there's not enough of them to win here.

Messina lacks controversy, but his website offers little sense he's tied in enough to this district to unseat a 30 year incumbent.

We need a new candidate here

Someone who can exploit Frank's deficiencies and force him to play defense. Someone with sufficient roots here to "look" the part of an effective representative.

Here's where geography and ethnicity kicks in and we turn the gerrymandering of the 4th District against Barney Frank.

Frank's base is in the close-in, high-income towns next to Boston--Brookline and Newton.  Some of MA's wealthiest and best educated people live here and they would never dare vote for any rebellious Republican. In the Brown-Coakley election these town cast about 55,000 votes with about a 22,000 vote edge for Coakley 

On the other end of the district is the less affluent "South Coast" region around Fall River and New Bedford. The towns adjoining those two cities cast about 63,000 votes and Coakley barely carried the region, based on a 3,000 edge out of New Bedford.   Brown ran well ahead of Mitt Romney is this region, suggesting this area is swinging against the Democrats this cycle. While this area was once America's center of whaling,  it doesn't seem Republican candidates are playing the role of Captain Ahab anymore.

The remainder of the district was strongly pro-Brown, as he broke even in Wellesley, lost narrowly in heavily Jewish Sharon, and crushed Coakley elsewhere in Norfolk, Bristol and Plymouth counties, with margins of 2,500 in Taunton, 3,000 in Mansfield, and 2,500 in Foxborough.    

So, we need to find a candidate who can play well on the South Coast.  This is a region that is unique. The largest ethnic group here are Portuguese Americans.  Providence TV covers these communities. And New Bedford and Fall River have their own daily newspapers and radio stations.

And this region and its major ethnic group are forgotten in MA politics. I can find no evidence of a Portuguese American ever winning a MA congressional election. And the last resident of Bristol County to hold a House seat was North Attleboro's Joe Martin who left office in the 1960's.    MA pols tried to address this in a failed 2002 remap to draw a new House district; but it would have caused an existing seat in the Merrimack Valley to disappear and the plan failed.

Back in 1982 a much younger Barney Frank campaigned hard when this region was added to the district and won their votes.  Can an entrenched incumbent explain that 28 years later this area is still economically troubled--and it's not his fault?  Can a an urban social liberal bring back ethnic blue collar voters to the Democratic line?

Can he do this if we run a young, appealing Portuguese American lawyer or businessman from the South Coast against him?

I know "what" the candidate here would look and sound like. I admit. I don't have a name.

That's where the MA GOP and the conservative activists need to step up. We need to find this person.  

I'm reasonably convinced that if we find my South Coast candidate Frank's numbers in the region will be held down sufficiently that we will have a reasonable shot of victory. (While Martha Coakley did many things wrong, leaving votes on the table in Brookline and Newton wasn't her problem; she pretty much topped out for a Democrat in a contested race there.) 

We will need to fund our target candidate  of course, and find a way to bypass Sholley and Messina. So inertia is not an option.   

And I'm not saying it's going to be easy. But Frank--due to his high profile, his atrophied campaign apparatus, and his acerbic persona--is going to be worth it.  

The question is: do we just want to kvetch about how Barney Frank burned down our financial house or do we want to do something productive to hold him accountable for his debacle.

I'm for getting to work. Anyone got a list of lawyers in Fall River for me to vet? 

This evening's news

Freddie Mac seeks $30.8B in US aid after 4Q loss

WASHINGTON (AP) -- Freddie Mac, facing mounting damage from the U.S. housing crisis, said Wednesday it will ask the government for nearly $31 billion in additional aid after posting a gargantuan loss of more than $50 billion last year.....

The Treasury Department has pledged up to $400 billion in aid for the duo. But as losses mount, many analysts see the companies remaining under government control, perhaps indefinitely. Until officials know the final bill for the housing crisis, it will be tough to figure out whether they can be spun off as private companies, said debt analyst Jim Vogel of FTN Financial in Memphis, Tenn.

Now, this wasn't supposed to happen!

“To suggest somehow that [Fannie Mae and Freddie Mac] are in trouble is simply not accurate,” Dodd replied.

The facts are that Fannie and Freddie are in sound situations,” Dodd said. “They have more that adequate capital, in fact more than the law requires

Why IS this man Chairman of the Senate Banking Committee?

The U.S. House tonight voted to approve a "mortgage relief" act which now permits a new form of bank robbery.

It's called the "mortgage cramdown".

You see, if the value of the your house has declined in value, now you will be able to file bankruptcy and reduce the principal amount of the debt down to the present, beaten down value.

Then in a few years, when inflation rears its ugly head and the nominal value of homes rises guess what?  The mortgage principal is permanently reduced. And our profligate borrower cashes in on a windfall, while his lender is stuck the removed principal, never to see this money again..

Now, ok , well maybe some poor downtrodden folks deserve some good luck. But, my friends, the U.S. House actually voted to let people who lied on their mortgage application get this relief.  

Writing off mortgage principal to a consenting adult who borrowed more than he should have is simply a bad idea.  It rewards bad behavior. It will only encourage another housing bubble.

I understand the desire to slow the wave of foreclosures and space out the readjustment in the housing markets. And yes, their are honest  folks who can make a go of it. But reduce their interest rates to current market; stretch the loan term; turn the arrearages into a zero interest bullet at maturity. Jeez, there are plenty of fair ways to help a borrower. (not that the servicers for investors like Countrywide try them very often) And that do not cause the borrower to renounce the basic obligation to either pay back the loan or give up the house.

Minnesota's Michelle Bachmann said this bill was   “a tax on all the responsible homeowners. This is the last thing homeowners and our economy need.”   

Let's hope her attitude goes into overdrive in the Senate. We need to find 41 members with non wobbly knees to either fix this bill so it does not reward greedy borrowers or to send the thing back to Barney Frank with a strong message attached.

Cause

Chris Dodd, March 13, 2007

``I am a strong advocate of subprime lending,'' Dodd said. ``I don't want that word to become a pejorative as junk bonds did.''

Effect

A stunning 48 percent of the nation’s homeowners who have a subprime, adjustable-rate mortgage are behind on their payments or in foreclosure

Why is this guy chairing the Banking Committee, anyway?

Buzz in CT today is that we are about to see the biggest whitewash job since Tom Sawyer had at the fence in 19th century Missouri

Remember out old friend Chris Dodd.  The rumor is that he will stop this clock running by doing the classic public relations approach of someone trying not to relate to the public. Which of late, isn;t all that fond of the Senator for Life.

Yes, late tomorrow afternoon, on a Friday before a holiday weekend, in the dead of winter and right when the Obama inaugural is going to dominate the media, we may actually be treated to some documentary evidence of how the Senator got his sweetheart mortgages from Angelo Mozilo's Countrywide Financial. 

Now why, besides the timing intended to blunt public response, do I think this is going to be a whitewash worthy of  Mark Twain?  Well, Senator Dodd has been spending heavily on criminal lawyers of late.   Well over $180,000 of legal fees ought to generate a very well scrubbed document, I would say.

But Bryan DeAngelis, the senator’s press secretary, confirmed Tuesday night that the firm is also offering Dodd “ethics advice” – a term that includes representing the senator in the Countrywide matter. No word on how much of that total bill is for other than electoral matters, or how much that bill is growing. 

In passing, State Republican Chairman Chris Healy notices that Dodd is using the same law firm that sued the government over Gitmo.  Well, there are all types of clients I suppose. I hope the detainees aren't embarrassed they hired the same lawyers Dodd uses.

Apart from his funky loans from Mozilo on his stateside properties, maybe we will be treated to some light on how Dodd financed his third home in Ireland. 

In surveying the ordinary course of political business, I see our Senators approved sending away the second installment of $350 billion of TARP funds, after of of course, the immeidate crisis has passed and the first installment embarassed its sponsors.

Then again, Countrywide's new owners, Bank of America, need $20 billion of additional bailout loans No conflict of interest, here...naw?

Perhaps the reason Countrywide/BOA need the money is they have thoroughly botched the loan modification business. Check out this shocking story from a NH lawsuit.

  In marketing, advertising and testimony before Congress, Countrywide Home Loans has said repeatedly that it is working hard to modify the mortgages of financially strapped borrowers caught up in the subprime meltdown. But in a New Hampshire court, attorneys for the lending giant are singing a different tune, describing such assurances as “mere commercial puffery.”

Gary and Jessica Raymond are the plaintiffs in the suit, which seeks unspecified damages. The Raymonds say they lost the home of their dreams in Canterbury, N.H., after Countrywide strung them along for eight months in the belief their loans could be modified. They say the company then flatly rejected their efforts to negotiate an interest-rate cut.

“The one thing we wanted was to save the house,” Jessica Raymond, 30, told msnbc.com. “We never imagined … that we’d be sitting here in a lawsuit and talking to a reporter about it.”

Maybe tomorrow afternoon Dodd will explain why he decided new legislation to control Countrywide wasn't necessary back in 2007. Maybe that's because unlike the Raymonds, he was a "Friend of Angelo"

I'm betting against the explanations. My money is on white paint.

I really don't like to be a Johnny-one-note on Chris Dodd, but my word, he is a gift that just keeps on giving

Evidentlly he and his partner in economic incompetence, Barney Frank, were peeved at a recent USA Today editorial which properly called the Democrats to task for not reining in the GSE's while there was time to avoid the meltdown. And of course, the claim was it was all those clueless, free market Republicans that caused the mess.  So this response.

  First, it will be hard to justify that Democratic "members supported virtually any program that provided credit to low-income purchasers and inner cities, regardless of whether this lending was prudent," when in fact we have been trying to pass a national anti-predatory lending legislation for years. But we were thwarted by a deregulation-loving Republican Congress that wanted to allow the "free" market to work its magic.

Of course , trying to enact laws against "predatory lending" at the same time you make the Community Reinvestment Act more stringent makes as much sense as driving by trying to floor the accelerator with the parking brake on, but, I digress.

Readers of this blog will know what Dodd is saying is objectively, unquestionably false.

Here's my June 18, 2008 post

  http://www.thenextright.com/ironman/chris-dodds-countrywide-bridge-sale-continues

Chris Dodd says:

"I've been pretty tough on Countrywide," he said, referring to hearings he has held as Senate banking committee chairman on the nation's mortgage crisis."

Reality Check:

Hearings his Committee held on Mozilo's stock deals:?

Hearings his Committee held on the Bank of America deal?

Last year a Countrywide executive was summoned to a hearing on subprime lending: Dodd's response

Senator Christopher J. Dodd, Democrat of Connecticut and the chairman of the banking committee, said he did not know if new legislation was necessary, saying regulators could addresses most excesses under existing laws.  http://query.nytimes.com/gst/fullpage.html?res=9E01EEDE1530F930A15750C0A9619C8B63

In 2009 Dodd tells USA Today the Republicans prevented legislation to limit excessive subprime lending.

In 2007 Dodd tells the NY Times he doesn't think new legislation to limit excessive subprime lending is necessary.

At tha time he is, of course, is on the "Friends of Angelo" list at the largest subprime lender, Countrywide Mortgage.

And before the mortgage meltdown, Dodd certainly was quite friendly with all those terrible "free market" types and not at all concerned about deregulation.

 Chris Dodd was "the Bankers' Candidate" for President  Each of these big-money interests applauds his light-handed approach to financial regulation and considers him a reliable friend "

One reason it helps to tell the truth is given enough time, it's hard to keep all your lies straight.

If you want to take action, well grassroots groups are forming in CT to start getting a more credible replacement for the Senator from Countrywide 

Senate Banking Committee Chairman Chris Dodd has identified the villain in the recent financial crisis gripping the globe.

The Press.

Dodd scolds media, says blame for mortgage crisis is misplaced

Sen. Chris Dodd effusively praised advocates for affordable housing in an afternoon speech here Wednesday.

He took a much dimmer view of the reporters waiting for him just outside the door.

The Democratic senator's frustration has reached a low boil with what he - alongside many housing experts - sees as the scapegoating of federal laws requiring banks to lend to minorities and the poor in the ongoing search for a cause of the nation's mortgage and foreclosure crisis

http://www.theday.com/re.aspx?re=505ec8f7-c80e-47b9-a399-23f8fcfabb52

See, it wasn't federal policy that mandated the massive amount of lending to previously noncreditworthy borrowers that tanked our economy, says the esteemed Senator.  That's the press just getting it all wrong.

Of course, giving a speech in front of 700 people all of whom earn their living in the "affordable housing" business, what was Dodd going to say? Of course, the solution to Dodd is to get going and have the Feds make even more uneconomic loans.

Evidently after giving his absolution to the home state people who helped create the housing mess, Dodd went down to DC to hold what Redstate. com termed a "show trial"  . http://www.redstate.com/diaries/redstate/2008/oct/16/chris-dodds-show-trial/ Here's what one of the biased members of the press, the Wall Street Journal, had to say about the fiasco

Mr. Dodd has shrewdly selected a series of witnesses who, like him, contributed to the mess, and have every incentive to point fingers elsewhere.

http://online.wsj.com/article/SB122411797796038903.html

Dodd has made a mantra of acting as if he was the only one in Washington sounding the alarm while "the Bush adminstration was asleep at the switch"  Now there are numerous facts contradicting these chant of innocence, including Dodd's failure to support GSE reform in 2005.. 

But as late as 2007, Dodd didn't think the subprime problem warranted a reaction.  His reaction after a hearing which featured testimony from a top Countrywide Lending executive.. 

Senator Christopher J. Dodd, Democrat of Connecticut and the chairman of the banking committee, said he did not know if new legislation was necessary, saying regulators could addresses most excesses under existing laws.

 

http://query.nytimes.com/gst/fullpage.html?res=9E01EEDE1530F930A15750C0A9619C8B63

This was your switch Senator...mind explaining the snoring?

Perhaps this explains it!

The Banker's Candidate

http://www.washingtonpost.com/wp-dyn/content/article/2007/02/15/AR2007021501555.html

Yep, the "Banker's Candidate" was all over his benefactors....right!  The guy who called the subprime mortgage market "one of the great success stories of all time."  was really racking down on it all along.

Paging Mr. Orwell.

By the way, remember those documents about Dodd's sweetheart loan from Countrywide? Not gonna see 'em, not now, not ever. 

 U.S. Sen. Christopher J. Dodd hedged Wednesday on whether he will release documents on two mortgages from Countrywide Financial Corp. that sparked an ethics inquiry.

When asked after a speech in Hartford whether his mortgage documents ever will become public, Dodd replied, "Not right now. No." http://www.courant.com/news/politics/hc-dodd1016.artoct16,0,1032594.story

Perhaps the new channeling of Richard M. Nixon's "stonewall" strategy is because the big lawsuits over Countrywide's unethical lending practices were quickly settled by new owner Bank of America before the politicians in the "Friends of Angelo" club were questioned under oath.  http://www.ct.gov/ag/cwp/view.asp?Q=424350&A=2795 

Whatever. Chris Dodd has no credibility on the financial crisis and he is planning to go off to Washington to "fix the crisis". If rewarding the likes of ACORN with billions of dollars the taxpayers don;t have is your idea of "fixing the economy", Dodd will be just swell.

For the rest of us,  well, I hope Chris Dodd enjoys the press he is getting. He deserves  it all, and more

The racebaiting has turned from tragedy to farce.  Barney Frank...

Rep. Barney Frank said Monday that Republican criticism of Democrats over the nation's housing crisis is a veiled attack on the poor that's racially motivated. [...] "They get to take things out on poor people," Frank said at a mortgage foreclosure symposium in Boston. "Let's be honest: The fact that some of the poor people are black doesn't hurt them either, from their standpoint. This is an effort, I believe, to appeal to a kind of anger in people."

 I hardly know where to begin.

• Yes, "subprime mortgage crisis" is obviously just code for "minorities".
• Yes, it's obviously inappropriate to suggest that extending mortgages to people who can't afford them is somehow responsible for this financial crisis of people unable to afford their mortgages.
• No, it's not at all ridiculous for Rep. Barney Frank to say these things just weeks after he had praised Bernanke's new rules that restricted mortgages that were "inappropriate" for unqualified borrowers.
• No, it's not at all hypocritical for Barney Frank to say it's racist to point out the problems with loans made to poor/underqualified people just weeks after he had said we need regulation that says "Do not lend money to people who can't pay it back."
• No, it's not at all contradictory for Barney Frank to say "They get to take things out on poor people" just weeks after he had said "we have made a mistake in this society" by "push[ing] and encourag[ing] people into home ownership - people who, in some cases, weren't ready for it."

I keep thinking these people are going to get called out on this obvious, laughable crap, but they keep saying it and - with a few noteworthy exceptions that do "fact check their ass" about the mortgage crisis - the media keeps transcribing it. 

The CT press was trying to make sense of the utter collapse of confidence in our financial markets this weekend.

So they went seeking the story from Senate Banking Committee Chairman Chris Dodd, who proceeded to make no sense at all.

  http://www.stamfordadvocate.com/localnews/ci_10580864

http://www.theday.com/re.aspx?re=6170c810-d216-4cf1-af4d-64b821153459

Now Chris has a rather difficult task, since as I was told long ago being honest is easier than being deceitful, since it's hard to keep track of all your prior false statements.

Let's start with this one. 

   At the end of my tenure on this committee, I want it to be said that the safety and soundness of our financial institutions was not weakened on my watch," Dodd said.

These people who did high fives about the wonderful bailout bill last week http://www.washingtonpost.com/wp-dyn/content/article/2008/07/30/AR2008073002950.html?referrer=emailarticle   will soon eat a whole nest worth of crow.