26 September 2008

Economic Crisis Video

This video is titled, Burning Down The House: What Caused Our Economic Crisis? It's not the highest quality production ever, but it is a good summary of many of the items that have led to the current financial situation. It goes rather quickly, so you may need to be ready on the pause button to keep up with all the information presented.

This is the link to YouTube if you don't want to watch it here.

(h/t Ace of Spades HQ)

UPDATE I have created an unoffical transcript of sorts for this video. It goes quickly, so this might help a bit. I also put links in for any of the references made in the video that I could find. Here it is.

UPDATE TWO YouTube pulled the original video due to a copyright complaint on the music from Warner. I have a new post with the revamped video here. Here is the link to the new version of the video on YouTube.

Watch this video to the end. It may change your vote. It may change your future.

What caused our economic crisis? Chris Dodd Knows...

[MSNBC Hardball Clip]
CHRIS DODD: "Basically a lot of bad mortgages, or a lot of bad securitized debt that's out there. It also has to be about the cause of the problem. The root cause of this is the housing foreclosure crisis. Still is today."

The housing bubble caused it. What caused the housing bubble?

[Consumer Affairs Screen Shot]
CLOSEUP ON TEXT: "Subprime Lender Implosion: Bad Omen For Housing Market"

Subprime mortgages? Risk mortgages to low-income, bad credit borrowers.

Where did they come from? Google this: "Community Reinvestment Act."

[Wikipedia CRA Screen Shot]

Jimmy Carter and Democrats passed it. It gave incentives to help low-income borrowers get a home. Not a bad idea, if done right. It helped a little, but only a little... until 1995.

[Wikipedia CRA Screen Shot]
HIGHLIGHT TEXT: "Clinton Administration Changes of 1995"
HIGHLIGHT TEXT: "new subprime authorization"

The Democrats added massive new provisions

[Wikipedia CRA Screen Shot]
HIGHLIGHT TEXT: "Part of the increase in home loans was due to ... lenders, like Countrywide, that do not mitigate loan risk ... using the new subprime authorization."
HIGHLIGHT TEXT: "The revisions allowed the securitization of CRA loans containing subprime mortgages."

That forced banks to issue $1 trillion in new "subprime" loans...

[PolicyLink CRA Screen Shot]
HIGHLIGHT TEXT: "requires that deposit-taking financial institutions offer equal access to lending"
HIGHLIGHT TEXT: "more than $1 trillion dollars"

[City Journal Screen Shot]
HIGHLIGHT TEXT: "Winter 2000"
HIGHLIGHT TEXT: "scheme against the nation's banks"

...and created subprime mortgage securities.

Bear Stearns was the first to do it.

[Wachovia Press Release Screen Shot]
HIGHLIGHT TEXT: "Bear, Stearns & Co."
HIGHLIGHT TEXT: "Backed By Affordable Mortgages"

Remember them?

Fannie Mae added fuel to the fire.

[CSR Wire Screen Shot]
HIGHLIGHT TEXT: "Purchase $2 Billion"
HIGHLIGHT TEXT: "Customize Affordable Products For Low- and Moderate-Income Borrowers"

And subprime mortgages started to grow.

[National Housing Institute Screen Shot]
CLOSEUP ON TEXT: "Going Subprime: Will low-income homebuyers gain or lose when Fannie Mae and Freddie Mac move into the subprime lending market? - By Allen J. Fishbein"

[Fannie Mae Subprime, Alt A, Other Purchases 1995-1999 Graph - Source Unknown]

And home prices started to rise.

[OFHEO Price Index Graph - Source Unknown]

Fannie Mae is a "Government Sponsored Enterprise." Fannie Mae guarantees mortgages, then Fannie sells them to banks and investors. The more mortgages, the more money Fannie makes.

How do you increase the number of morgages? You move down the income ladder...

[Washington Post Screen Shot]
HIGHLIGHT TEXT: "Fannie's Perilous Pursuit of Subprime Loans"
HIGHLIGHT TEXT: "As It Tried to Increase Its Business, Company Gave Risks Short Shrift"

...with "affordable mortgages."

[Loans With Affordablility Features And Adjustable Rates Graph - Source Unknown]

[CSR Wire Screen Shot]
HIGHLIGHT TEXT: "give flexibility to lenders by allowing variances that borrowers need to qualify for loans"
HIGHLIGHT TEXT: "These variances apply to ... loan-to-value ratio, borrower contribution, housing expense-to-income ratio, and others"

Remember, the banks had to issue subprime mortgages or pay big penalties.

How do you keep them "affordable?" No money? No money down! Interest only! Low variable rate! No income verification! Bad credit? No credit? No problem! Just sign here!

2004 Fannie Mae subprime loans: 92% were variable rate.

2005 Fannie Mae subprime loans: 91% were variable rate.

[Fannie Mae Subprime, Alt A, Other Purchases Graph - Source Unknown]

Fannie tells the banks, "Make the loans; we'll guarantee them."

Home ownership kept rising. So did prices.

[OFHEO Price Index Graph - Source Unknown]


Interest rates rose!

[Mortgage Rate Graph - Source Unknown]

Gas prices shot up! Paychecks got squeezed! Especially low-income paychecks.

Some borrowers stopped paying, so banks stopped lending.

[Loans With Affordablility Features And Adjustable Rates Have Lost Significant Market Share Graph - Source Unknown]

So the subprime market collapsed.

[Subprime Mortgage Originations Graph - Source Unknown]

Foreclosures started piling up. No buyers, only sellers. Home prices started falling.

[Price Change Graph - Source Unknown]

More borrowers stopped paying.

[60+ Day Delinquency Rates Graph - Source Unknown]

Fannie Mae "guarantees" became worthless...

[Market Watch Screen Shot]
HIGHLIGHT TEXT: "Options expert calls Fannie, Freddie shares 'worthless'"

...because they kept overstating their assets.

[Bloomberg Screen Shot]
HIGHLIGHT TEXT: "Regulators Spin Public to Boost Fannie, Freddie: Jonathan Weil"

Banks collapsed...

[CNN Money Screen Shot]
HEADLINE: "12th bank failure of the year announced"

...due to worthless government sponsored securities issued by Fannie Mae.

Jobs disappeared. And here we are.

[Guardian Screen Shot]
HIGHLIGHT TEXT: "IMF says US crisis is 'largest financial shock since Great Depression'"

Why is the expansion of the Community Reinvestment Act to blame? Look at this: Before CRA expansion, home prices increase with inflation.

[Home Prices & Inflation Graph - Source Unknown]

[Home Prices & Homeownership Rates Graph - Source Unknown]

After CRA...

[Home Prices & Inflation Graph - Source Unknown]

[Home Prices & Homeownership Rates Graph - Source Unknown]

...CRA caused home prices to rise too fast.

[Home Prices & Inflation Graph - Source Unknown]

A bubble waiting to burst. Did it have to happen? NO!

Someone tried to stop it...

[New York Times Screen Shot]
HIGHLIGHT TEXT: "New Agency Proposed to Oversee Freddie Mac and Fannie Mae"

...in 2003. You'll never guess who.

[New York Times Screen Shot]
HIGHLIGHT TEXT: "The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago."
HIGHLIGHT TEXT: "...a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry."

But the Democrats stopped it.

[New York Times Screen Shot]
HIGHLIGHT TEXT: "Supporters of the companies said efforts to regulate the lenders tightly under those agencies might diminish their ability to finance loans for lower-income families."

[New York Times Screen Shot]
HIGHLIGHT TEXT: "Barney Frank (D-MA) 'The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.'"
HIGHLIGHT TEXT: "Melvin Watt (D-NC) '...and in the process weakening the bargaining power of poorer families and their ability to get affordable housing.'"

Affordable housing?

[Home Prices & Homeownership Rates Graph - Source Unknown]

The time bomb ticked away.

Someone else tried to stop it in 2005. You'll never guess who.

[The Minority Report Screen Shot]

He co-sponsored a bill, "The Housing Enterprise Regulatory Act Of 2005."

[GovTrack.us Screen Shot]
HIGHLIGHT TEXT: "Sen. John McCain [R-AZ]"

Google it. www.govtrack.us bill s-190

This bill would regulate Fannie Mae and Freddie Mac. The Democrats blocked it.

[GovTrack.us Screen Shot]
HIGHLIGHT TEXT: "Scheduled for Debate -"
HIGHLIGHT TEXT: "Voted on in Senate -"
HIGHLIGHT TEXT: "Voted on in House -"
HIGHLIGHT TEXT: "Signed by President -"

It came back in 2007. No luck, because Fannie Mae had friends.

In the Senate.

[Chris Dodd Photo]
CAPTION: Chris Dodd (D-CT) Sweetheart Loan Recipient"

[Slate Screen Shot]
HIGHLIGHT TEXT: "Chris Dodd’s Loan Problem"

Guess who else covered Fannie's backside?

[Barack Obama Photo - Source Unknown]

And you'll never guess who Barack Obama chose to select his VP.

[MinnPost Screen Shot]
HIGHLIGHT TEXT: "Obama turns to trusted political insider Jim Johnson for key campaign role"

He received a "sweetheart loan" from Countrywide Mortgage. Meet Jim Johnson.

1985-1990 Managing Director, Lehman Brothers - Now bankrupt
1991-1998 CEO of Fannie Mae - When CRA was expanded

But Jim Johnson was corrupt. Johnson improperly deferred $200 million in expenses. Fannie Mae under-reported Johnson's compensation: Originally reported it as $6-7 million; Johnson actually received $21 million.

He gave Barack Obama the maximum donation - $4,600.

Now he is a wealthy private banker, and is on the board of Goldman Sachs, which has given another $700,000 to Barack Obama and raised another $500,000 through "bundling."

[Los Angeles Times Screen Shot]
HIGHLIGHT TEXT: "Barack Obama advisor Jim Johnson quits under fire"

He got a "sweetheart loan" too.

[Salon Screen Shot]
HIGHLIGHT TEXT: "company involved in the subprime crisis."

Google it! Also visit "Center for Responsive Politics" www.opensecrets.org.

And you'll never guess who Barack Obama gets advice from on housing issues. Meet Franklin Raines.

[Wall Street Journal Screen Shot]
CAPTION: "He lives in a $7.6 million house..."

Do you?

[Politico Screen Shot]
HIGHLIGHT TEXT: "Advice from Raines"

1977-1979 Carter Administration - When CRA was first enacted
1980-1991 Investment Banker, Lazard Ltd.
1991-1996 Vice Chairman, Fannie Mae - When CRA was expanded
1996-1998 Clinton Administration OMB Director
1999-2004 CEO, Fannie Mae

[Washington Post Photo Of Franklin Raines]
CAPTION: "He got a $25 million golden parachute"

He also got a sweetheart loan...

[Chart Of Mortgage Rates For Johnson And Raines - Source Unknown]
CAPTION: "Did you?"

...and resigned due to accounting irregularities.

[BBC News Screen Shot]
HIGHLIGHT TEXT: "irregularities were uncovered at the company"

And you'll never guess who got more money from Fanny Mae than anyone.

[Open Secrets Screen Shot]
HIGHLIGHT TEXT: "Obama, Barack S IL D $126,349"
CAPTION: "In just 3 years he collected more than John Kerry in 20 years"

[Fannie Mae Contributions Per Year In Congress 1989-2008 Graph - Source Unknown]
CAPTION: "Obama received FOUR TIMES more money from FANNIE MAE per year than ANY OTHER SENATOR over the last 20 years!"

Obama received 49 times more money than John McCain

[Fannie Mae Contributions Per Year In Congress 1989-2008 (Obama & McCain Only) Graph - Source Unknown]

Calling for regulation of Fannie Mae doesn't pay.

And you'll never guess who worked at a law firm...

[Miner, Barnhill & Galland Screen Shot]
CLOSEUP ON TEXT: "Miner, Barnhill & Galland"

...that sued banks for not issuing enough subprime loans. They sued CitiBank.

[Chicago Sun Times Screen Shot]
HIGHLIGHT TEXT: "Obama represented Calvin Roberson in a 1994 lawsuit against Citibank, charging the bank systematically denied mortgages to African-American applicants and others from minority neighborhoods."

[Barack Obama Photo - Source Unknown]

Nobody likes discrimination. Everybody deserves a home, not a house of cards. So why not focus on providing good inner-city schools...

[New York Times Screen Shot]
HIGHLIGHT TEXT: "Schools in Chicago Are Called the Worst By Education Chief"

...with accountable teachers?

[The New Republic Screen Shot]
HIGHLIGHT TEXT: "Obama, Education, and Accountability"
HIGHLIGHT TEXT: "...his campaign rhetoric on the subject has been rather muted and equivocal."

[Christian Science Monitor Screen Shot]
HIGHLIGHT TEXT: "Kids' protest highlights rich-poor schools gap in Illinois"
HIGHLIGHT TEXT: "Critics say Chicago students shouldn't miss class to point out education-funding disparities."

To help people get better jobs? And why not focus on protecting low-income workers from undocumented workers who take their jobs at half the wage?

[Knowledge@Wharton Screen Shot]
HIGHLIGHT TEXT: "If you allow more unskilled workers into the U.S., it will lower costs for employers. It will also lower wages for people who do those jobs."

Poor people did not cause this. Free markets did not cause this. Deregulation did not cause this. A bad government regulation caused this.

That made main street banks become predatory lenders to fulfill a government mandate to offer souped-up, shell game "affordable mortgages."

Self-interested lawyers caused this. Greed and stupidity on Wall Street caused this. And Obama got his wish: Lots of "affordable mortgages" that people could not really afford, while his friends got richer and the rest of us got poorer.

Bad social engineering caused this, creating the environment and the wrong incentives that set up low-income families to fail, to have their dreams torn away by reality, while getting Wall Street to finance it all. Is [sic] not hope, it is not change; it is cruel.

[Barack Obama Photo - Source Unknown]

His heart may be in the right place, but his head is not.

His friends caused this.

[Kansas City Star Screen Shot]
CLOSEUP ON TEXT: "Fannie Mae, Freddie Mac blind to bubble"

[CNN Money Screen Shot]
CLOSEUP ON TEXT: "4 Fannie Mae senior execs resign"

[Nancy Pelosi Photo]
CAPTION: Nancy Pelosi (D-CA) Says... Democrats Accept No Responsibility"

[The Hill Screen Shot]
HIGHLIGHT TEXT: "Pelosi: Dems bear no responsibility for economic crisis"

His political philosophy caused this, and now he lectures the country...

[Barack Obama Photo - Source Unknown]

...about "failed economic policies," and he ridicules John McCain.

[Washington Post/The Trail Screen Shot]
HIGHLIGHT TEXT: "Obama Ridicules McCain's Economic Response"

This is not change.

[Barack Obama Photo - Source Unknown]

This is more of the same.

This is hypocrisy!

Or hope-o-crisy.

And hope is not a strategy.

This crisis started growing in 1995, but it ends now! Because change is on the ballot!

[John McCain Photo - Source Unknown]

[Sarah Palin Photo - Source Unknown]

Change is on the way!

[McCain/Palin Photo - Source Unknown]

Share this video! Email this link to anyone who votes. Post this link everywhere.

Undecided voters might see it.

Blogs, forums, chat rooms on every topic: auto repair, gardening, home improvement, on everything and anything. Be respectful in your comments; cheap shots only turn people away.

Everything in this video is fact. Just Google to see for yourself.

Remember, the 2000 Election was decided by 500 votes. This video can make the difference.

We do not have to agree on everything. Both parties make mistakes, but we can all agree that this can never happen to us again!

Post this video everywhere: On web sites, in battleground states, Michigan, Pennsylvania, Wisconsin, Minnesota, Ohio, Florida, Colorado, Nevada, Iowa, Virginia, New Hampshire.

And rate it at a 5 for freedom!


Matt said...

Thanks for this transcript... I can't believe youtube pulled the video... what's up with that? Any other places where you can see the video? Anyone grab a copy before it got pulled?

Trin said...

Thank you for this, I was beginning the same project, but found your site when I started looking for the various unreferenced charts.

USMC 9971 said...

No problem, Trin. If you find links to any of the unreferenced charts, please let me know.

Anonymous said...

I think I have found those unknown Graphs, from a report from Fannie Mae themselves!!!

I think this is it!