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the big lie

May 30, 2015

John Hargrove's Weblog

Here’s the reality. In addition to redistributing wealth and income (welfare) and redistributing outcomes (affirmative action), Democrats sought to redistribute home mortgage loans, which I call “affirmative credit”.

With the naming in 1999 of long-time Democrat operative Franklin Raines as its CEO, Democrats turned Fannie Mae into a campaign machine. They redistributed hundreds of billions in mortgage credits by undercutting traditional credit standards… reducing down payments to zero, weakening income and credit score requirements; creating “Liar’s Loans” and “No Docs”. The goal was to make credit available to people who could never have qualified for a mortgage before, and it succeeded.

This created a huge swell of new housing demand, which drove the housing market into the bubble we all recall. Weak borrowers, however, always create delinquencies, then foreclosures, which destroyed the mortgage derivatives those “Alt-A” and “Sub-Prime” loans underwrote, which in turn destroyed the financial institutions that held the…

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