Was it Racist of Wall Street Journal to Use So Many Hispanic Defaulters in its Article?

Oct 22, 2008 by Hussein the Trojan Horse | Posted in Elections

Is the WSJ blame sub-prime mortgage mess on Hispanics and the candidates they vote?
California is the site for 45% of defaults on mortgages in America, although the state has only about 13% of the population of the United States.

If true, I do not see how it could be called racist.

Would it be wise for the government to bail out those stupid people that took advantage of sub prime loans?

Aug 21, 2007 by mission_viejo_california | Posted in Politics

Would it be wise for the government to bail out those stupid people who took advantage of subprime loans? I think that you are responsible for your own choices and you must pay the price for your decisions
Last Friday, the Fed lowered the rate at which it lends direct to banks, sending a signal to Wall Street, he is aware of the credit crunch that hit global financial markets.At the same time, the Fed has wisely decided not to lower its target federal funds rate, through which it controls monetary policy, although Fed officials have indicated that a reduction could be if the air markets do not stabilize soon. " The Bush administration has also shown admirable restraint, resisting calls to let the troubled mortgage buyers Fannie Mae and Freddie Mac support the market and increase their holdings.

Demagogic politicians (and frantic investors) have shown less self-control, and the inevitable pressure to "do something" is bound to intensify.The administration and the Fed should resist this pressure. First, the current crisis is unlikely to affect the economy significantly. As it becomes clearer, the hysteria will subside. On the other hand, it is necessary that those lenders, borrowers and investors who created the sub-prime mortgage mess to bear its consequences.

What we see today is a necessary market correction. Several years of poor lending and borrowing decisions in the sub-prime mortgage market led to a sharp increase in seizures this year.Consequently, Wall Street is to reassess the credit quality of billions of dollars of mortgage securities. Having found many to be overvalued, the market is making the necessary adjustments:

Lenders are less risky loans. Some of the greatest, such as Countrywide Financial, have operated lines of credit to cover the short-term loans, has announced layoffs, and instituted other cost reduction measures.

Some hedge funds have imploded, and a few others are in deep trouble.Because these funds, lightly regulated typically leverage their bets with billions in borrowed money, compounding their losses when risky investments - such as debt mortgage sub-prime - turn sour.

Some of the greatest credit on Wall Street, companies have taken notes well-deserved hit in the press for giving many securities backed by subprime mortgage debt higher ratings than they really deserve. The next chapter for them could be investigated to determine if they fraudulently manipulated their assessments.

Several members of Congress and some '08 Democratic candidates have argued that these market adjustments are not enough and that we need additional layers of regulation. Back in February, when the crisis really began, John Edwards has attacked the "practices" predatory lending, and proposed a new government agency to regulate mortgage lenders (in addition to the five that already exist). Of course, that was before the Wall Street Journal reported that hedge fund investing and Edwards had worked for links to sub-senior lenders who exercised on victims of Hurricane Katrina.

In fact, sub-loans to high risk is not an absolute evil. The advent of sub-loans to high risk has increased quite dramatically in the U.S. home ownership, which for decades hovered around 64 percent until shooting up to 69 percent between 1994 and 2004. To be sure, unscrupulous players entered the market as sub-loans to high risk has become more profitable, and some of them hid the true cost subprime borrowers naive. But borrowers were often complicit, wildly exaggerating their incomes to qualify for loans they could not afford.The New York Times in March that these "liar loans accounted for 40 percent of sub-issuance of mortgages last year, up 25 per cent in 2001."

Hillary Clinton has proposed a federal bailout of $ 1 billion to help such borrowers avoid foreclosure. And his fellow New York senator, Chuck Schumer, joined him in calling for a greater role for Fannie Mae and Freddie Mac in stabilizing the mortgage markets.The Bush administration has rightly decided not to remove restrictions on Fannie Mae and Freddie Mac that were established last year, when investigators discovered that both institutions had engaged in accounting irregularities.

Fannie Mae officials argue that they can provide badly needed liquidity in the mortgage market. But, as economist Brian Wesbury said Monday, liquidity is not the real issue. The problem is a lack of information - no one seems to know how many of these mortgages are really worth.The best thing the government can do is stand aside while the market reprices these securities.
These range from the Fed, too. The Fed hinted it might cut the federal funds rate, if the market continues to decline. In the esoteric world of Fed policy, where words can affect the markets provided that the action was the right thing to say. But it would not be the right thing to do. Shrewd move Fed Chairman Ben Bernanke to reduce the discount rate instead of the more consequential federal funds rate-calmed investors panicked without interfering with the market adjustment already underway.By cutting only the rate that the Fed charges on its own loans, Bernanke offered a lifeline to large institutions in serious financial difficulties, and has bought more time for the market to correct itself without a change in monetary policy.

Demagogues in Congress and on the campaign trail should learn a lesson here. The lenders, hedge funds, rating companies, and yes, imprudent borrowers pay a price for their excesses. Let's not compound their folly by adopting a policy ill-conceived.

No. we would bail out lenders, not those who lost their homes.

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