Thursday vol.1

In the first article, Walter Williams writes about the major role of the housing market collapse in our financial market crisis… the George W. Bush administration urged Congress to enact the American Dream Down Payment Assistance Act, which subsidized down payments of homebuyers whose income was below a certain level. Public Money for Charity!!!

Also included below is another old article (from last October) by Walter Williams about "America's Most Over-rated Product: Higher Education… Is College Worth It? (Interesting statistics we already know…) Interesting he wrote about it…



A MINORITY VIEW
BY WALTER WILLIAMS
RELEASE: WEDNESDAY, MAY 27, 2009

The Housing Boom and Bust

Hot off the press is my colleague Dr. Thomas Sowell's 43rd book, "The Housing Boom and Bust." The book is an eye-opener for anyone interested in the truth about the collapse of the housing market that played a major role in our financial market crisis.
The root of the problem lies in Washington. The Community Reinvestment Act of 1977, later given teeth during the Bush and Clinton administrations, forced financial institutions to make risky mortgage loans they otherwise would not have made. President Clinton's Attorney General Janet Reno threatened legal action against lenders whose racial statistics raised her suspicions. Bank loan qualification standards, in general, came under criticism as being too stringent regarding down payments, credit histories, and income. Fannie Mae and Freddie Mac, two government-sponsored enterprises, by lowering their standards for the kinds of mortgage paper they would purchase from banks and other mortgage lenders, gave financial institutions further incentive to make risky loans.
In 2002, the George W. Bush administration urged Congress to enact the American Dream Down Payment Assistance Act, which subsidized down payments of homebuyers whose income was below a certain level. Bush also urged Congress to pass legislation requiring the Federal Housing Administration to make zero-down-payment loans at low-interest rates to low income Americans. Between 2005 and 2007, Fannie Mae and Freddie Mac acquired an estimated trillion-dollar's worth of subprime loans and guaranteed more than $2 trillion worth of mortgages. That, Sowell points out, is larger than the gross domestic product of all but four nations.
There were numerous warnings that went unheeded. In congressional hearings, U.S. Treasury Secretary John Snow said, regarding the risks assumed by Fannie Mae and Freddie Mac, "The concern is, if something unravels, it could cause systemic risk to the whole financial system." Peter J. Wallison, American Enterprise Institute scholar, warned that if Congress did not reign in Fannie Mae and Freddie Mac, "there will be a massive default with huge losses to the taxpayers and systemic effects on the economy."
There were many other warnings of pending collapse but Congress and the White House in their push for politically popular "affordable housing" ignored them. Congressman Barney Frank, who is now chairman of the House Committee on Financial Services, said critics "exaggerate a threat of safety" and "conjure up the possibility of serious financial losses to the Treasury, which I do not see." Chairman Chris Dodd, of the Senate Banking Committee, called Fannie Mae and Freddie Mac "one of the great success stories of all time" and urged "caution" in restricting their activities, out of fear of "doing great damage to what has been one of the great engines of economic success in the last 30 or 40 years."
Sowell provides numerous examples of government actions at both the federal and state levels that created the housing boom and bust and its devastating impact on domestic and foreign financial markets, but here's what I don't get: What can be said about the intelligence of the news media and the American people who buy into to congressionally created lies that our problems were caused by Wall Street greed and Bush administration deregulation? In the words of Barney Frank, "We are in a worldwide crisis now because of excessive deregulation" and "mortgages made and sold in the unregulated sector led to the crisis." The fact of the matter is our financial sector is the most heavily regulated sector in our economy. In the banking and finance industries, regulatory spending between 1980 and 2007 almost tripled, rising from $725 million to $2.07 billion. I challenge anyone to come up with one thing banks can do that's not covered by a regulation.
For the Washington politicians to get away with spinning the financial crisis the way they have suggests that American people are either stupid or ignorant. I hope it's ignorance because "The Housing Boom and Bust" is the cure.
Walter E. Williams is a professor of economics at George Mason University. To find out more about Walter E. Williams and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at http://www.creators.com/.
COPYRIGHT 2009 CREATORS SYNDICATE, INC.

A MINORITY VIEW
BY WALTER E. WILLIAMS
RELEASE: WEDNESDAY, AUGUST 27, 2008, AND THEREAFTER

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Is College Worth It?

As parents pack their youngsters off to college, they might ask themselves whether it's worth both the money they will spend and their children's time. Dr. Marty Nemko has researched that question in an article aptly titled "America's Most Over-rated Product: Higher Education (www.martynemko.com/articles/americas-most-overrated-product-higher-education_id1539)."

The U.S. Department of Education statistics show that 76 out of 100 students who graduate in the bottom 40 percent of their high school class do not graduate from college, even if they spend eight and a half years in college. That's even with colleges having dumbed down classes to accommodate such students. Only 23 percent of the 1.3 million students who took the ACT college entrance examinations in 2007 were prepared to do college-level study in math, English and science. Even though a majority of students are grossly under-prepared to do college-level work, each year colleges admit hundreds of thousands of such students.

While colleges have strong financial motives to admit unsuccessful students, for failing students the experience can be devastating. They often leave with their families, or themselves, having piled up thousands of dollars in debt. There is possibly trauma and poor self-esteem for having failed, and perhaps embarrassment for their families. Dr. Nemko says that worst of all is that few of these former college students, having spent thousands of dollars, wind up in a job that required a college education. It's not uncommon to find them driving a taxi, working at a restaurant or department store, performing some other job that they could have had as a high school graduate or dropout.

What about students who are prepared for college? First, only 40 percent of each year's 2 million freshmen graduate in four years; 45 percent never graduate at all. Often, having a college degree does not mean much. According to a 2006 Pew Charitable Trusts study, 50 percent of college seniors failed a test that required them to interpret a table about exercise and blood pressure, understand the arguments of newspaper editorials, and compare credit card offers. About 20 percent of college seniors did not have the quantitative skills to estimate if their car had enough gas to get to the gas station. According a recent National Assessment of Adult Literacy, the percentage of college graduates proficient in prose literacy has declined from 40 percent to 31 percent within the past decade. Employers report that many college graduates lack the basic skills of critical thinking, writing and problem-solving.

Colleges are in business. Students are a cost. Research is a profit center. When colleges boast about having this professor who has won a science award or that professor who has won the Nobel Prize, very often an undergraduate student will never be taught by that professor. It is a "bait and switch" tactic and very often your youngster will take classes not taught by a professor but taught in large classes by a graduate student. Faculty who bring in large grants are more highly valued than faculty who teach well. Teaching excellence is so often undervalued that the late Ernest Boyer, vice president for Carnegie Foundation for the Advancement of Teaching, quipped that, "Winning the campus teaching award is the kiss of death when it comes to tenure."

Parents and taxpayers cough up billions upon billions of dollars to the nation's colleges and universities. Colleges make money whether students learn or not, whether they graduate or not, and whether they get a good job after graduating or not. Colleges and universities engage in "bait and switch," confer fraudulent degrees and engage in other practices that would bring legal sanctions if done by any other business. There is little or no oversight of the nation's over 4,000 colleges and universities that enroll over 17 million students. There are some colleges, such as Grove City College and Hillsdale College, that do a fine job of undergraduate education. Useful information about what colleges are doing what can be found in the Delaware-based Intercollegiate Studies Institute's "Choosing the Right College" (http://isi.org/college_guide/choosing_right_college.html).


Walter E. Williams is a professor of economics at George Mason University. To find out more about Walter E. Williams and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at http://www.creators.com/

COPYRIGHT 2008 CREATORS SYNDICATE, INC.