The Ghost of Freddie Mac

Remember in 2008 after the financial crisis hit and it was considered raaaaaaycist to criticize Freddie Mac’s part in it? You may recall this from Dakinat’s coverage of it at The Confluence in the fall of 2008. Remember how fast the prog factions supporting Obama tried to smack her down, saying that The Confluence was stoking racism?

Well, now that Freddie Mac can be used against white, conservative politicians (Gingrich, and increasingly Romney), it’s no longer racist. It went through the Democratic laundry machine and came out sparkling clean. Not a hint of racist smell at all! Let’s take a walk down Memory Lane and recall the details, so the about-face is all that much more dramatic, shall we?

It all started with Dakinat’s post called Back to the Roots of the Problem. The post was originally published at The Confluence, but has since been flushed down the memory hole there. Luckily, Dakinat preserved a copy at her own blog, Sky Dancing. Thanks in no small part to her, the narrative of Freddie Mac’s reckless practices began to make its way into the news cycle, at which point Barney Frank was appointed the dog to bark this idea out of the yard. Racism was his bark of choice. Here’s coverage of his comments circa September of 2008:

Frank said Monday that Republican criticism of Democrats over the nation’s housing crisis is a veiled attacked on the poor that’s racially motivated….

“They get to take things out on poor people,” Frank said to 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.”

Frank’s comments are in response to widespread criticism of Fannie Mae and Freddie Mac, the two government-backed mortgage-bundling giants that played fast and loose with both risk and their bookkeeping.

The debate got so heated that even our friends at Hot Air were reporting on this at the time:

Barney Frank’s latest defense of Congress over the financial meltdown could be predicted based on the success of Barack Obama’s campaign in using the same defense.  According to Rep. Frank, any attempt to pin the blame for the collapse of Fannie Mae and Freddie Mac on the activities of both, as well as Congressional policy that fueled it, is now officially racist.  Frank says conservatives want to blame minorities for the collapse:

Frank charged that conservatives aim to shift blame for the market meltdown away from Wall Street and toward minority-lending laws like the federal Community Reinvestment Act.

“The bizarre notion that the Community Reinvestment Act . . . somehow is the cause of the whole problem, (conservatives) don’t mind that,” the lawmaker said. “They’re aware that the affordable-housing goals of Fannie Mae and Freddie Mac (and) the Community Reinvestment Act (aim to help) poor people. And let’s be honest, the fact that some poor people are black doesn’t hurt either from their standpoint.”

Let’s keep score.  Criticizing Obama means we’re racists.  Criticizing Congress means we’re racists.  Getting angry at Congress for pushing Fannie Mae and Freddie Mac into buying bad loans and infecting the entire financial system with essentially fraudulent paper — at a cost of up to $700 billion in taxpayer money and potentially trillions in lost investments — means we’re racists.

That’s the back story. Clearly criticizing Freddie Mac and Fannie Mae was just racist code for not wanting poor black people to have homes (end snark).

Now we’re three years into Obama’s presidency and my how things have changed. Here’s Pro Publica, in a joint effort with progressive media mainstay NPR reporting on the fact that Freddie Mac has a serious conflict of interest that is leading to–wait for it–cash-strapped poor people paying far more for their mortgages than those outside the Freddie/ Fannie portal. And they are actually waging bets that they can make this work (through their own policies, of course!), betting once again AGAINST the interests of everyday Americans:

 Freddie Mac, the taxpayer-owned mortgage giant, has placed multibillion-dollar bets that pay off if homeowners stay trapped in expensive mortgages with interest rates well above current rates.

Freddie began increasing these bets dramatically in late 2010, the same time that the company was making it harder for homeowners to get out of such high-interest mortgages.

The report is rather damning:

“We were actually shocked they did this,” says Scott Simon, who as the head of the giant bond fund PIMCO’s mortgage-backed securities team is one of the world’s biggest mortgage bond traders. “It seemed so out of line with their mission.”

The trades “put them squarely against the homeowner,” he says.

Those homeowners have a lot at stake, too. Many of them could cut their interest payments by thousands of dollars a year.

Go, read the whole thing. Freddie Mac (and Fannie Mae) has been an immoral disaster for a long time, and now this tax-payer owned organization is in charge of making sure struggling families can’t refinance their mortgage so that Freddie’s bets pay off.

Now THAT’S racism, considering the volume of people of color a) struggling financially, and b) in the Freddie Mac holding pen. But that’s not how this story is designed to play out. It’s designed to play out as a way to label the likes of Gingrich and Romney as racists, even though the Freddie Mac machine was built by Democrats to serve Democratic constituencies and to enrich the pockets of friends of Democrats. They own this albatross, but they will hang it around the GOP’s neck.

It ain’t over ’til it’s over

Mitt, Newt, Rick and Ron

---

InsiderAdvantage Poll: Gingrich Surging, Race ‘Tighter Than Expected’

A new InsiderAdvantage poll conducted Sunday night of likely Republican voters in the state of Florida shows a significant surge for former House Speaker Newt Gingrich.

The poll has former Massachusetts Gov. Mitt Romney leading with 36 percent of voters, followed by Gingrich at 31 percent.

The Sunday results of 646 likely GOP voters are as follows:

Romney 36 percent
Gingrich 31 percent
Santorum 12 percent
Paul 12 percent
Other/Undecided 9 percent

“The race will be tighter than expected,” Matt Towery, chief pollster of InsiderAdvantage told Newsmax.

Towery noted that his poll showed a surge for Romney on Wednesday, with him leading Gingrich by 8 points. The InsiderAdvantage poll was among the first to show Romney’s resurgence after his dismal showing in the S. Carolina primary.

The InsiderAdvantage poll was also the first to show Gingrich’s rise in S. Carolina and accurately forecast his win there.

“The trend is favoring Gingrich,” Towery said, noting that while Romney’s lead was still outside the margin of error of 3.8 percent, “It’s not by much.”

Towery said Gingrich is doing “substantially better” with men than Romney, 38 to 28, but the former House Speaker still faces a “gender gap,” as women are still favoring Romney.

“Men are moving in droves to Gingrich and away from Romney,” Towery said.

---

If Newt pulls out a win in Florida the fit will hit the Shan.

This is starting to remind me of the movie Jeepers Creepers, where the “good guys” were so stupid I began to root for the monster.

“Hey sis, I think that guy was dumping dead bodies into a pipe. Let’s go back and check.”

---

Where the money is

---

J.E. Dyer at Hot Air:

No, taxes shouldn’t be a “fairness” issue

What are we, six years old? Taxes should pay for the costs of government. That’s what we have taxes for.

The proper purpose of taxes is not to establish a condition of “fairness.” It’s to pay for government: a legislature, executive, military, police, firefighting, courts, schools. But for 100 years now, the percentage-based income tax has been shifting public dialogue on taxes steadily away from their proper purpose, and toward increasingly juvenile arguments over “fairness,” as if the tax code is like Mom, telling Makayla to share the toys and be patient because Brendan is little.

If we let taxation be about “fairness,” rather than paying for the cost of government, the two big problems we have are defining “fairness,” and defining the role of government in promoting it. Those questions will never be settled to the satisfaction of all.

It might seem that the first question – “what is fair?” – is the more contentious one. We discuss it incessantly, after all. But the more fundamental question is actually what government should be doing about fairness. The freighted nature of our discussions about fairness is largely relieved if we assign a limited, utilitarian role to government. It doesn’t much matter what other people think is “fair,” in a lengthy list of situations, if they can’t harness the power of the armed state to enforce it on their fellow men.

Thus, I reject the whole idea that government needs to keep an eye on the citizens’ incomes, and worry about “fairness” as if the numbers are a meaningful indicator of it. For much of American history, no government at any level actually knew how much income individual citizens had. That was not a problem. It didn’t need correction. We could do away with virtually our entire tax code, if we did away with the modern idea that government needs to know what our incomes are.

---

The article starts out okay but you can see where this is going – an argument against the progressive income tax and in favor of a flat tax and/or national sales tax, two chimeras of modern right-wing politics.

Nobody likes paying taxes. It’s easy to convince people they are taxed too much, and fairness will always be an issue because nobody wants to pay more than their fair share (or see someone else pay less.) There will always be plenty of people on both sides of the political spectrum who object to paying taxes for things they don’t thing government ought to be doing.

Dyer conflates the issue of how taxes should be spent with how they should be raised.

There is an urban legend about the infamous bank robber Willie Sutton. When asked why he robbed banks Sutton allegedly answered “Because that’s where the money is.”

If we look only at the question of who should pay taxes, the answer is simple – the people who can afford to pay them.

We could pass a law that says every man, woman and child in the nation has to pay a flat $5,000 per year in taxes, but how many would be able to pay? People living below the poverty line cannot afford to pay taxes. Neither can most children or the disabled. The elderly may have income but most of them are living off retirement savings, investments and pensions.

There are lots of working poor that can afford to pay a little bit in taxes, but less than their “equal” share. Then there are the people in the middle class who can carry their own weight. Last but not least there are the rich and the super-rich.

That’s where the money is.

---