Legalizing Mortgage Fraud

From Kevin D. Williamson:

In lieu of the usual complex regulation larded with special-interest favoritism, here is a simple mortgage rule that could and probably should be adopted: No federally regulated financial institution shall make a mortgage loan without the borrower’s making a down payment of at least 20 percent derived from his own savings.

Period, paragraph, next subject.

Instead of doing that, we are sprinting flat-out in the opposite direction, with government-sponsored mortgage giant Fannie Mae rolling out a daft new mortgage proposal that would allow borrowers without enough income to qualify for a mortgage to count income that isn’t theirs on their mortgage application.

The Committee to Re-Inflate the Bubble strikes again: We’ve just legalized mortgage fraud.

Claiming that the money you are using for a down payment is yours when it has been lent to you by a family member or a friend was a crime, too. (A felony, in fact; a whole subplot in The Wire was based on that crime.) There is a reason for this: People who have saved up enough for a down payment on a house are very different kinds of borrowers from people who haven’t, and people whose mortgage debt is two times their annual income are different kinds of borrowers from those with mortgages that are eight times their income. One sort of borrower is a great deal more likely to default than the other sort — and, as we learned a few years back, mortgage default can, under certain circumstances, turn out to be everybody’s problem rather than a problem limited to the jackasses who write low-quality mortgages.

But Fannie Mae, the organized-crime syndicate masquerading as a quasi-governmental entity, has other ideas. Under its new and cynically misnamed “HomeReady” program, borrowers with subprime credit don’t need to show that they have enough income to qualify for the mortgage they’re after — they simply have to show that all the people residing in their household put together have enough income to qualify for that mortgage. We’re not talking just about husbands and wives here, but any group of people who happen to share a roof and a mailing address. And some non-residents can be added, too, such as your parents.

That would be one thing if all these people were applying for a mortgage together, and were jointly on the hook for the mortgage payments. But that isn’t the case. HomeReady will permit borrowers to claim other people’s income for the purpose for qualifying for a mortgage, but will not give mortgage lenders any actual claim against that additional income.

This is madness.

But mortgage madness is very much the order of the day. Groups such as the National Association of Realtors — the ninth-largest campaign donor, second-largest spender on lobbying, and 13th-largest source of outside spending dollars — have a strong economic interest in seeing as many house sales as possible — that’s where commissions come from — and that means insanely easy mortgage terms, regardless of the consequences.

In this case, there is also an immigration angle. As Investors Business Daily reports: “It’s all part of a government campaign to ease access to home loans for Hispanic immigrants, who tend to live in groups and pool finances. . . . The National Association of Hispanic Real Estate Professionals, a liberal trade group, is praising the move, arguing it will bring tens of thousands of Hispanic families into the home market who have been ‘skipped over’ by stingy (meaning prudent and responsible) lenders.”

And the down payments? Try 3 percent — i.e., squat.

Homeownership isn’t right for everybody. For one thing, enormous debt isn’t right for everybody, and homeownership without equity (3 percent, indeed) is nothing more than that. What’s more, as National Review’s Reihan Salam has shown, the social benefits associated with homeownership — stability, civic engagement, etc. — are present only when there is significant equity held. As Salam and co-author Christopher Papagianis put it: “The traits that enabled households to build up the savings necessary for significant down payments — hard work and the deferral of gratification — were misattributed to homeownership itself.”

Which is to say: Getting people without a ceramic vessel in which to engage in regular micturition nor the down payment and good credit to finance said vessel does not magically turn them into Ward and June Cleaver: It just makes them people who have added a huge new debt to their already-terrible finances. That isn’t so bad at times when house prices increase at a rate that outpaces the return on other investments, but that can go on for only so long. In reality — the reality that bit us on the hindquarters back in 2008 — the prices of houses, like the prices of widgets and lawn furniture and Picassos and aviation fuel and everything else, go up and down.

And when they go down, who is going to default? The guy who has put up 20 percent on a house that costs two times what he makes in a year, or the guy who has put up 3 percent on a house that costs 2.5 times what he, his wife, his parents, his uncle, his three spinster aunts, his son with the part-time job at Burger King, and that weird guy Bob who sometimes sleeps in the basement — all of them together — earn in a year?

All these years after the mortgage meltdown, we still don’t have sensible regulation of mortgage lending. We desperately need that. We also need to kill Fannie Mae and Freddie Mac, the Axis of Subprime Evil. And we need to do that before the next financial crisis is upon us, not in the middle of a new financial crisis.

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Against Trump

From National Review:

Donald Trump leads the polls nationally and in most states in the race for the Republican presidential nomination. There are understandable reasons for his eminence, and he has shown impressive gut-level skill as a campaigner. But he is not deserving of conservative support in the caucuses and primaries. Trump is a philosophically unmoored political opportunist who would trash the broad conservative ideological consensus within the GOP in favor of a free-floating populism with strong-man overtones.

Against Trump

Against Trump

Trump’s political opinions have wobbled all over the lot. The real-estate mogul and reality-TV star has supported abortion, gun control, single-payer health care à la Canada, and punitive taxes on the wealthy. (He and Bernie Sanders have shared more than funky outer-borough accents.) Since declaring his candidacy he has taken a more conservative line, yet there are great gaping holes in it.

His signature issue is concern over immigration — from Latin America but also, after Paris and San Bernardino, from the Middle East. He has exploited the yawning gap between elite opinion in both parties and the public on the issue, and feasted on the discontent over a government that can’t be bothered to enforce its own laws no matter how many times it says it will (President Obama has dispensed even with the pretense). But even on immigration, Trump often makes no sense and can’t be relied upon. A few short years ago, he was criticizing Mitt Romney for having the temerity to propose “self-deportation,” or the entirely reasonable policy of reducing the illegal population through attrition while enforcing the nation’s laws. Now, Trump is a hawk’s hawk.

He pledges to build a wall along the southern border and to make Mexico pay for it. We need more fencing at the border, but the promise to make Mexico pay for it is silly bluster. Trump says he will put a big door in his beautiful wall, an implicit endorsement of the dismayingly conventional view that current levels of legal immigration are fine. Trump seems unaware that a major contribution of his own written immigration plan is to question the economic impact of legal immigration and to call for reform of the H-1B–visa program. Indeed, in one Republican debate he clearly had no idea what’s in that plan and advocated increased legal immigration, which is completely at odds with it. These are not the meanderings of someone with well-informed, deeply held views on the topic.

As for illegal immigration, Trump pledges to deport the 11 million illegals here in the United States, a herculean administrative and logistical task beyond the capacity of the federal government. Trump piles on the absurdity by saying he would re-import many of the illegal immigrants once they had been deported, which makes his policy a poorly disguised amnesty (and a version of a similarly idiotic idea that appeared in one of Washington’s periodic “comprehensive” immigration reforms). This plan wouldn’t survive its first contact with reality.

On foreign policy, Trump is a nationalist at sea. Sometimes he wants to let Russia fight ISIS, and at others he wants to “bomb the sh**” out of it. He is fixated on stealing Iraq’s oil and casually suggested a few weeks ago a war crime — killing terrorists’ families — as a tactic in the war on terror. For someone who wants to project strength, he has an astonishing weakness for flattery, falling for Vladimir Putin after a few coquettish bats of the eyelashes from the Russian thug. All in all, Trump knows approximately as much about national security as he does about the nuclear triad — which is to say, almost nothing.

Indeed, Trump’s politics are those of an averagely well-informed businessman: Washington is full of problems; I am a problem-solver; let me at them. But if you have no familiarity with the relevant details and the levers of power, and no clear principles to guide you, you will, like most tenderfeet, get rolled. Especially if you are, at least by all outward indications, the most poll-obsessed politician in all of American history. Trump has shown no interest in limiting government, in reforming entitlements, or in the Constitution. He floats the idea of massive new taxes on imported goods and threatens to retaliate against companies that do too much manufacturing overseas for his taste. His obsession is with “winning,” regardless of the means — a spirit that is anathema to the ordered liberty that conservatives hold dear and that depends for its preservation on limits on government power. The Tea Party represented a revival of an understanding of American greatness in these terms, an understanding to which Trump is tone-deaf at best and implicitly hostile at worst. He appears to believe that the administrative state merely needs a new master, rather than a new dispensation that cuts it down to size and curtails its power.

It is unpopular to say in the year of the “outsider,” but it is not a recommendation that Trump has never held public office. Since 1984, when Jesse Jackson ran for president with no credential other than a great flow of words, both parties have been infested by candidates who have treated the presidency as an entry-level position. They are the excrescences of instant-hit media culture. The burdens and intricacies of leadership are special; experience in other fields is not transferable. That is why all American presidents have been politicians, or generals.

Any candidate can promise the moon. But politicians have records of success, failure, or plain backsliding by which their promises may be judged. Trump can try to make his blankness a virtue by calling it a kind of innocence. But he is like a man with no credit history applying for a mortgage — or, in this case, applying to manage a $3.8 trillion budget and the most fearsome military on earth.

Trump’s record as a businessman is hardly a recommendation for the highest office in the land. For all his success, Trump inherited a real-estate fortune from his father. Few of us will ever have the experience, as Trump did, of having Daddy-O bail out our struggling enterprise with an illegal loan in the form of casino chips. Trump’s primary work long ago became less about building anything than about branding himself and tending to his celebrity through a variety of entertainment ventures, from WWE to his reality-TV show, The Apprentice. His business record reflects the often dubious norms of the milieu: using eminent domain to condemn the property of others; buying the good graces of politicians — including many Democrats — with donations.

Trump has gotten far in the GOP race on a brash manner, buffed over decades in New York tabloid culture. His refusal to back down from any gaffe, no matter how grotesque, suggests a healthy impertinence in the face of postmodern PC (although the insults he hurls at anyone who crosses him also speak to a pettiness and lack of basic civility). His promise to make America great again recalls the populism of Andrew Jackson. But Jackson was an actual warrior; and President Jackson made many mistakes. Without Jackson’s scars, what is Trump’s rhetoric but show and strut?

If Trump were to become the president, the Republican nominee, or even a failed candidate with strong conservative support, what would that say about conservatives? The movement that ground down the Soviet Union and took the shine, at least temporarily, off socialism would have fallen in behind a huckster. The movement concerned with such “permanent things” as constitutional government, marriage, and the right to life would have become a claque for a Twitter feed.

Trump nevertheless offers a valuable warning for the Republican party. If responsible men irresponsibly ignore an issue as important as immigration, it will be taken up by the reckless. If they cannot explain their Beltway maneuvers — worse, if their maneuvering is indefensible — they will be rejected by their own voters. If they cannot advance a compelling working-class agenda, the legitimate anxieties and discontents of blue-collar voters will be exploited by demagogues. We sympathize with many of the complaints of Trump supporters about the GOP, but that doesn’t make the mogul any less flawed a vessel for them.

Some conservatives have made it their business to make excuses for Trump and duly get pats on the head from him. Count us out. Donald Trump is a menace to American conservatism who would take the work of generations and trample it underfoot in behalf of a populism as heedless and crude as the Donald himself.

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Trump: A Republican, but Not a Conservative II

More from Thomas Sowell:

Former governor Sarah Palin is an intelligent person, contrary to how liberals have tried to portray her. So it seemed to me that, if anybody could explain why they were promoting the candidacy of Donald Trump, it would be Governor Palin.

But I listened in vain for any evidence or logic that would provide a reason to vote for Donald Trump for the office of President of the United States. There were lots of ringing assertions, just as in Trump’s own speeches, but no convincing facts or demonstrable reasons.

After all these months, no coherent plans have emerged from the rhetoric of “The Donald”– just sweeping boasts about all the things he says he will achieve. But boasts about the unknown future are hardly reassuring.

However puzzling the fervent support for Donald Trump may be today, given how little basis there is for it, such blind faith is not unique in history. Other dire or desperate times have produced other charismatic leaders to whom desperate people have turned, with hopes of deliverance.

Trump is certainly different from establishment Republicans, but it that enough?

Things were appalling in 1917 Russia, when people turned to Lenin to try to get them out of a disastrous war abroad and a bitter economic situation at home.

The fact that Lenin was quite different from the czar who had led the country into catastrophe might have seemed promising to some people. He was also different from the ineffective Kerensky government that failed in its brief months in office. But the totalitarian government that Lenin established proved to be even worse than its predecessors.

The idea that someone quite different from those who led a nation into disaster can be expected to produce an improvement is a non sequitur that has seduced many people in many places and times.

Germany’s Weimar Republic was nobody’s idea of an ideal government but Hitler’s reign that followed was far worse in every way. Many Americans denounced the rule of the Shah of Iran, but he was never a worldwide sponsor of terrorism, like those who replaced him.

A pattern that would appear in many other places and times was one in which people’s hopes became focused on someone new, charismatic and with ringing rhetoric– but utterly untested for the job of governing a nation.

That is where we are today.

The Republican field of candidates has had a number of people with experience governing at the state level, so that they have a track record that we could scrutinize. But the media obsession with Trump has left little time for weighing the pros and cons of those governors.

Some of them have already had to withdraw before we learned whether their qualifications were good, bad or indifferent. This may be a misfortune for their political careers but it can turn out to be a disaster for the country, if it leaves the field open only to people whom we must judge solely on the basis of their rhetoric.

There are still some governors left in the running, but they are not among the candidates who have the highest support in the polls, where most have received the support of fewer than 10 percent of the voters polled.

Former governor Jeb Bush looked like the front runner at the outset, especially with his impressive amount of money in his campaign chest. But it is not nearly as easy to buy an election as some commentators seemed to think, so perhaps we can take some solace from the discrediting of that notion.

We might also take some solace from the support received by Dr. Ben Carson, despite the media-fed notion that conservatives are racists. Even after his brief time leading the candidates in the polls has passed, Dr. Carson remains the candidate with the highest favorability rating among Republican voters who were polled.

But there are few other things to feel positive about as the primaries approach. Common sense by the voters may be the best we can hope for. And that can save the day, after all. In fact, they may be all that can save the day.

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Trump: A Republican, but Not a Conservative

From Thomas Sowell:

Those of us who like to believe that human beings are rational can sometimes have a hard time trying to explain what is going on in politics. It is still a puzzle to me how millions of patriotic Americans could have voted in 2008 for a man who for 20 years — TWENTY YEARS — was a follower of a preacher who poured out his hatred for America in the most gross gutter terms.

Today’s big puzzle is how so many otherwise rational people have become enamored of Donald Trump, projecting onto him virtues and principles that he clearly does not have, and ignoring gross defects that are all too blatant.

There was a time when someone who publicly mocked a handicapped man would have told us all we needed to know about his character, and his political fling would have been over. But that was before we became a society where common decency is optional.

Yet there are even a few people with strong conservative principles who have lined up with this man, whose history has demonstrated no principles at all, other than an ability to make self-serving deals, and who has shown what Thorstein Veblen once called “a versatility of convictions.”

With the Iowa caucuses coming up, it is easy to understand why Iowa governor Terry Branstad is slamming Trump’s chief rival, Senator Ted Cruz, who has opposed massive government subsidies to ethanol, which have dumped tons of taxpayer money on Iowa for growing corn. Iowa’s Senator Charles Grassley has come right out and said that is why he opposes Senator Cruz.

Former Senator Bob Dole, an establishment Republican if ever there was one, has joined the attacks on Ted Cruz, on grounds that Senator Cruz is disliked by other politicians.

When Senator Dole was active, he was liked by both Democrats and Republicans. He joined the long list of likable Republican candidates for president that the Republican establishment chose– and that the voters roundly rejected.

With both establishment Republicans and anti-establishment Republicans now taking sides with Donald Trump, it is hard to see what principle– if any– is behind his support.

Some may see Trump’s success in business as a sign that he can manage the economy. But the great economist David Ricardo, two centuries ago, pointed out that business success did not mean that someone understands economic issues facing a nation.

Trump boasts that he can make deals, among his many other boasts. But is a deal-maker what this country needs at this crucial time? Is not one of the biggest criticisms of today’s Congressional Republicans that they have made all too many deals with Democrats, betraying the principles on which they ran for office?

Bipartisan deals — so beloved by media pundits — have produced some of the great disasters in American history.

Contrary to the widespread view that the Great Depression of the 1930s was caused by the stock market crash of 1929, unemployment never reached double digits in any of the 12 months that followed the stock market crash in October, 1929.

Unemployment was 6.3 percent in June 1930 when a Democratic Congress and a Republican president made a bipartisan deal that produced the Smoot-Hawley tariffs. Within 6 months, unemployment hit double digits — and stayed in double digits throughout the entire decade of the 1930s.

You want deals? There was never a more politically successful deal than that which Neville Chamberlain made in Munich in 1938. He was hailed as a hero, not only by his own party but even by opposition parties, when he returned with a deal that Chamberlain said meant “peace for our time.” But, just one year later, the biggest, bloodiest and most ghastly war in history began.

If deal-making is your standard, didn’t Barack Obama just make a deal with Iran — one that may have bigger and worse consequences than Chamberlain’s deal?

What kind of deals would Donald Trump make? He has already praised the Supreme Court’s decision in “Kelo v. City of New London” which said that the government can seize private property to turn it over to another private party.

That kind of decision is good for an operator like Donald Trump. Doubtless other decisions that he would make as president would also be good for Donald Trump, even if for nobody else.

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Republicans Beware

From Thomas Sowell:

After months of watching all sorts of political polls, we are finally just a few weeks away from actually beginning to see some voting in primary elections. Polls let people vent their emotions. But elections are held to actually accomplish something.

The big question is whether the voters themselves will see elections as very different from polls.

If Republican voters have consistently delivered a message through all the fluctuating polls over the past months, that message is those voters’ anger at the Republican establishment, which has grossly betrayed the promises that got a Republican Congress elected.

Whether the issue has been securing the borders, Obamacare, runaway government spending or innumerable other concerns, Republican candidates have promised to fight the Obama administration’s policies– and then caved when crunch time came for Congress to vote.

The spectacular rise, and persistence, of Republican voter support for Donald Trump in the polls ought to be a wake-up call for the Republican establishment. But smug know-it-alls can be hard to wake up.

Even valid criticisms of Trump can miss the larger point that Republican voters’ turning to such a man is a sign of desperation and a telling indictment of what the Republican establishment has been doing for years– which they show pathetically few signs of changing.

Seldom have the Republicans seemed to have a better chance of winning a presidential election. The Democrats’ front-runner is a former member of an unpopular administration whose record of foreign policy failures as Secretary of State is blatant, whose personal charm is minimal and whose personal integrity is under criminal investigation by the FBI.

Meanwhile, the Republicans have fielded a stronger set of presidential aspirants than they have had in years. Yet it is by no means out of the question that the Republicans will manage to blow this year’s opportunity and lose at the polls this November.

In other times, this might just be the Republicans’ political problem. But these are not other times. After seven disastrous years of Barack Obama, at home and overseas, the United States of America may be approaching a point of no return, especially in a new age of a nuclear Iran with long-range missiles.

The next President of the United States will have monumental problems to untangle. The big question is not which party’s candidate wins the election but whether either party will choose a candidate that is up to the job.

That ultimate question is in the hands of Republicans who will soon begin voting in the primaries.

Their anger may be justified, but anger is not a sufficient reason for choosing a candidate in a desperate time for the future of this nation. And there is such a thing as a point of no return.

Voters need to consider what elections are for. Elections are not held to allow voters to vent their emotions. They are held to choose who shall hold in their hands the fate of hundreds of millions of Americans today and of generations yet unborn.

Too many nations, in desperate times, especially after the established authorities have discredited themselves and forfeited the trust of the people, have turned to some new and charismatic leader, who ended up turning a dire situation into an utter catastrophe.

The history of the 20th century provides all too many examples, whether on a small scale that led to the massacre in Jonestown in 1978 or the earlier succession of totalitarian movements that took power in Russia in 1917, Italy in 1922 and Germany a decade later.

Eric Hoffer’s shrewd insight into the success of charismatic leaders was that the “quality of ideas seems to play a minor role,” What matters, he pointed out, “is the arrogant gesture, the complete disregard of the opinion of others, the singlehanded defiance of the world.”

Is that the emotional release that Republican voters will be seeking when they begin voting in the primaries? If so, Donald Trump will be their man. But if the sobering realities of life and the need for mature and wise leadership in dangerous times is uppermost in their minds, they will have to look elsewhere.

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Is the United States Navy a Paper Tiger?

From former Marine, Dean of The Naval War College, and Assistant Secretary of Defense Bing West:

The humiliating videos of American sailors on their knees and apologizing will be shown for years by Iran across the Middle East. This is a serious blow to American credibility and toughness.

The surrender should also raise a legitimate inquiry inside the Navy about rules for self-protection and opening fire vs. surrendering. It is not clear from the video whether overwhelming Iranian force was applied. It does not seem so judging from the size of the Iranian boats.

The British crew members of a similar riverine craft were captured by Iran years ago. Shame on the U.S. Navy and CENTCOM if they did not issue guidelines after that happened. And if there were guidelines, did they stipulate surrendering?

The U.S. Navy and CENTCOM have an obligation to make our rules plain to all service members. I cannot conceive of a guideline advising a captured American serviceman to apologize to his captors.

Nor could I believe that an American secretary of state THANKED the Iranians! That select example of groveling will also be played throughout the Middle East for years to come.

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