October 2011 Raub Report

Isn’t it interesting to make a comparison between the Occupy Wall Street mob and the Tea Party?

The Tea Partiers are middle-aged middle Americans, who wave the Stars & Stripes, clean up after themselves, and tout a clear message of reducing taxes and limiting government. Their result was a big success at the ballot boxes last November. Their meetings were mostly at “town halls” where they confronted elected officials, and they worked inside the establishment. I think they resemble the American Revolution.

By contrast, the Occupy Wall Streeters (OWS’ers) are twenty somethings, mostly college graduates without jobs, ultra leftists with a very muddled message of Marxism, hatred for bankers, and a love of bigger government. Their protests have turned violent in some cases. They resemble the French Revolution. Their numbers have been over-dramatized by the media, who often out number the protesters.

Interesting isn’t it that the OWS’ers focus on Wall Street while, Tea Partiers focus on D.C.? While the OWS’ers express anger at “greedy bankers” for their unpunished alleged crimes, they fail to recognize the banks are largely nationalized already. Anyone familiar with banking knows the regulations are quite onerous. In fact, the new Dodd-Frank Act is actually driving many small banks out of business because compliance is too costly for them to carry.

OWS’ers want bankers to wipe out their student loans since they can’t get a job so they can afford to pay the loans. But they have the benefit of the college education. So they want it for free? They feel that college should be provided free to them and at the tax payers’ expense, just like their high school education. By the way, there are plenty jobs available to them in the South Texas oil patch. Come on down, ya’ll.

OWS’ers accuse the banks of greedily conning innocent borrowers into taking money for homes that they could not afford. The fact is, the government required the banks to make a high percentage of loans to low income families. The Clinton Administration required Fannie Mae and Freddie Mac to make over 50% of their trillion dollar home loan portfolios to low income borrowers. This was through the reform of the Community Reinvestment Act, first passed under the Carter Administration. Thus, Sub-prime loans were born, because normal loan underwriting could not get enough low income families to qualify for new home loans. Consequently, new methods of making home loans were invented for those who essentially would not be able to make the payments once the teaser interest rate reset to a normal level. Fannie Mae was turned from a government backed liquidity provider into a low income housing subsidizer. Did you know that President Obama, while working as an attorney for ACORN, sued Citibank for not making enough low income loans in Chicago? Wonder how many of those loans that they subsequently made after his lawsuit have gone bad? Did you know that the Bush Administration, after the removal of Franklin Raines (later an Obama advisor) as head of Fannie Mae for fraud, went to the Congress more than a half dozen times to try to get Congress to reform these bad lending practices at Fannie? However, the Congress steadfastly refused. Rep. Barney Frank even co-signed a letter to Pres. Bush castigating him for being too concerned about safety. He was criticized for discriminating against low income families by making obtaining home loans difficult. How did that work out?

So, I come down on the side that the government is still the problem, more than the private sector. Is there greed? You bet. Greed for profit on Wall Street; Greed for power in the Capitol; and folks on Main Street are too fearful and uncertain of both to create new jobs. But let’s try to be upbeat – God Bless Texas!