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Dec. 7, 2011 - Rush Limbaugh Program
32:45
December 7, 2011, Wednesday, Hour #3
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I don't know.
It's the strangest thing.
I actually got eight hours of sleep last night.
I actually went to bed at 11.
I haven't been in bed at 11 o'clock.
I can't tell you how many years.
And I feel like I haven't slept at all.
I can't tell you how disappointing that is.
At any rate, I'm not complaining.
Nobody would care anyway.
Great to have you back.
Rush Limbaugh, the Excellence in Broadcasting Network, and the Limbaugh Institute for Advanced Conservative Studies.
It's great to have you with us and a phone number.
I just gave you that, an email address.
During the break at the top of the hour, actually the break before the top of the hour, I had mentioned to a caller that everybody working their own self-interest is how everybody helps everybody else out.
And sure shooting, I go to the email and I blistering attacks from people.
You don't know what you're talking about.
That's an essence of you rich people.
You're so selfish.
All you do is care about yourself and somehow you think that's going to bring everybody else along.
You don't know what you're talking about.
It's amazing to me how woefully inept our economics education has been in this country.
Let me define how that happens.
Let me explain to you how that happens.
Adam Smith wrote about this.
Adam Smith had a book called The Wealth of Nations.
And Adam Smith wrote, it was published in 1776, by the way.
That year might remind some of you people of something.
1776, The Wealth of Nations, Adam Smith, he wrote the following.
It is not from the benevolence of the butcher or the brewer or the baker that we expect our dinner, but from their regard to their own interest.
When you go to the grocery store, let's say you go to meat counter and there's a guy behind the meat counter and you order, do you think that the guy is there to help you?
Purely and simply.
I mean, in doing his job, yeah, you order something and he provides it for you, but what's he doing?
He's trying to feed his family.
He's looking out for himself.
He's selling you something, hoping you buy it because that helps him.
He's looking out for himself at the same time accommodating you.
So in just that one example, the butcher looking out for himself, he doesn't.
See, the left would have you, the left wants you to believe that the guy selling meat should sell it to you at no cost so that he doesn't profit from what he's selling.
Or the guy selling the TV set of the dishwasher, whatever, should sell it at no cost.
Because if the guy makes a profit on it, then you have been screwed.
And he's using you and taking advantage of you and ripping you off.
When the truth is, he's not giving you a dishwasher to be nice to you.
He's not selling you a TV set to be nice to you.
His job isn't to make sure you've got a television set.
His job is to make sure he's got one.
His job is to make sure his family has food.
Everybody benefits in the bargain.
I'm not saying the guy behind the counter is selfish.
What I'm saying is him looking out for himself benefits everybody he comes in contact with.
It's undeniable.
And there must be a profit in the route.
Otherwise, there's not going to be a guy behind the counter.
There won't be any reason for him to be there.
How does he go home and feed his family if he sells you whatever it is you're buying at the same price it cost him?
But Mr. Limbaugh, it's inherently unfair that something should cost me more than it costs somebody else.
Well, then why don't you go down the street and try to find it at a cheaper price?
Maybe there's some other butcher selling your filet mignon at a cheaper price.
Maybe he's trying to attract more customers with a cheaper price than your butcher.
And maybe this guy with a lower price is selling even more filet mignon to more people and more people are benefiting from the lower price.
It's still a profit, Mr. Limbaugh, and that's a fiend and it's unfair and it's outrageous.
And this is what we're up against, folks.
And these are the people, and that's the kind of thinking that Barack, our president, is inspiring.
This new castrati character of mine, they're real.
They're out there.
They're on the Occupy Wall Street march.
They're in America's classrooms.
Hell, some of them might even be your stupid kids.
Your kids.
Until you get hold of them and get them straightened out.
That's why there's a difference in selfishness and self-interest.
But everybody looking out for themselves, not in a selfish way, but in a self-interest way, benefits everybody else.
The guy behind the counter selling a television set, he's got to make sure there's a lot of them there to handle a demand.
He's got to make an investment in having a stock room full of the things that people might want.
He's got to take a risk in how many to buy and what kind based on the best evidence he has of what people are going to want and what they're willing to pay.
This is so common sense, I can't believe I'm having to explain it.
But we have to every day.
Because the Mr. Castratis, the new Castratis are everywhere and the education system is putting them out at geometric proportions or pumping them out, pumping out illiterate people, economically illiterate people on purpose and by design by the millions each and every year.
In the same book, The Wealth of Nations, in the same book, Adam Smith also wrote that the butcher or any producer, quote, intends only his own gain.
And he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
And by pursuing his own interest, he frequently promotes that of the society more effectively than when he intends to promote it.
In other words, the butcher may not have the slightest idea what's happening.
The butcher selling you a cut of beef may not have the slightest idea what he's actually doing, but we are all part of an intricate web where we all prosper and benefit from the self-interest of others, not the selfishness.
Now, the wealth of nations was also an argument against government control.
England at the time had chartered monopolies back in 1776.
The king decided what companies would do what.
That's what Obama wants.
Obama, folks, this country was fought for independence from people like Barack Obama.
If you must know it, in straight between-the-eyes terms, Barack Obama, if he gets where he wants to go, will become the equivalent of King George, from which our ancestors fled, from whom our ancestors fled to found this country.
That's what we've done.
That's who we've elected.
We've elected a whole party of these people.
He doesn't act by himself either.
When Barack Obama acts in his own socialist self-interest, he's got a whole bunch of buddies in the bureaucracy, in the Senate, in the House, in certain governorships who are doing the same rotgut.
They're trying to expand their power and their government.
And they can't produce, as I said in the first hour, if Barack Obama, well, from the tie to the shoes to the suit to the airplane he flies to the food he eats, he doesn't produce one item of it, and he couldn't if his life depended on it.
And here he is attacking, in his speech yesterday, the system that produces it.
Self-interest is the invisible hand that Adam Smith writes about.
Self-interest is the invisible, hits what is not seen.
But today, self-interest has become greed.
Self-interest is said to be selfishness and greed and so forth.
And I'm going to tell you something, folks.
And again, if you're a moderate independent Democrat, you hate me.
You're just tuning in out of curiosity.
You haven't been here very long.
Hate me all you want, but I don't lie to you.
And I am here to tell you, the invisible hand, self-interest, everybody pursuing it, is how this society grows and prospers.
Now, everybody participates in it.
The greed and selfishness in this country is in the White House.
You'll find the greed and selfishness at all levels of government.
They'll think nothing about taxing you into poverty.
They will not do with one penny less from one year to the next.
Why do they get to say what you're worth?
Why do they get to say what you have to pay?
Why do they get to define what's fair and what isn't?
Who are they?
Why do you put such blind faith in incompetent people you've never met instead of yourself?
Why do you want to trust somebody who's not interested in your self-interest?
Why do you want to trust somebody and give your life over to people who don't care about you nearly as much as you ever will?
Is it easier than working?
Is it easier than facing the daily rigors of life?
For those of you who hate me, been told to hate me, let me give you some reason to here, for the fun of it.
I'll tell you another truth.
Self-interest, capitalism has fed more people than charity ever has.
Capitalism and self-interest has fed and clothed and driven however and whatever you want to describe more people than charity ever has.
Are you putting down charity?
No, I'm not putting down charity.
I'm trying to educate you idiots.
I'm putting down what you believe in.
You know why there wasn't any meat in the Goom store in the Soviet Union?
Because it didn't matter to the guy behind the counter.
There was no profit in providing meat or toilet paper or whatever.
They did it the way Obama wants to do it.
They did it the way Mr. New Castrati wants to do it.
No profit.
Whatever's there costs you whatever it costs whoever to put it there, except there was never very much there because there was no incentive to have it there.
A quick timeout.
We'll be back.
We will continue with your phone calls.
And we got some audio soundbites.
Republican Party consultants dumping on me and others.
If we get to all that, right after this.
Don't go away.
All right.
Lori, who can't say where she is.
Is that right?
She's worried about lawsuits.
She can't say where she is.
Lori, welcome to the EIB Network.
And you're worried about lawsuits from what you're going to say here?
Well, it's possible, Rush.
And by the way, it's an honor to speak to you.
Thank you.
I worked as both a packager and an advertising executive for a mortgage brokerage firm.
I saw the rise and fall of the housing market.
And what infuriates me about when Obama speaks or Barney Frank or anyone else who talks about these mortgage-backed securities and everything that happened is that nobody knows the real truth about what goes on in the mortgage business and why it failed.
It's not just people going to the bank, getting a loan, paying the bank back.
You know, in the late 90s and early 2000s, when real estate prices were sharply on the rise, anywhere between 99 and 03, depending upon what part of the country you lived in, housing prices were on the rise dramatically.
And there was a lot of pressure at Fannie and Freddie to get mortgages out the door.
We had a representative from FHA, HUD, Fannie, and Freddie, all of which visited this mortgage brokerage office.
And when Fannie began this idea of packaging these things as securities and grouping them together, you'll find that the number of mortgage brokers for residential mortgages in the country skyrocketed because they were suddenly getting what we call wholesale lines of credits from banks.
So mortgage company A or B goes to the bank and he gets a $15 million line of credit called a wholesale line.
He fills that line up with mortgages and then they're guaranteed they're bought off.
Fannie and Freddie buy them up immediately, repackage them, or leave them whole, and send them out to places like Lehman Brothers.
And I work for a company that...
Wait, wait, wait, wait.
Hold on.
Hold on a minute.
Why would somebody like Lehman Brothers buy these things?
Well, at the time, no one knew that they were insolvent, number one.
Why?
These were mortgages that were, a lot of them.
I'm sure you're not talking explicitly here about subprime, but a lot of these mortgages were made to people that weren't paying back.
There wasn't an income stream on these mortgages.
Here's the problem.
People talk about subprime.
I'll bet 95% of the mortgages that went out of our office were subprime, even if they weren't rated that way.
Because I'll tell you the pressure we got from somebody else.
We used to get visits by our credit representatives from the three major credit bureaus.
They were under a lot of pressure to develop a program to allow people to, quote-unquote, fix their credit faster than who was the source of this pressure, Lori.
Well, according to the people from the Credit Managers Bureau, they were getting that pressure from Congress and FHA and Fannie and Freddie that they weren't doing enough to help credit.
The government.
Yeah, they weren't doing that.
This credit agencies were being unfair because they weren't doing enough to allow people who had had financial problems to fix their credit.
So here's what happened.
It went from, yeah, maybe it took a long time to fix your credit, to what we call a rapid rescour process.
Our office could literally, in one day, take everybody's bad credit issues, write a one-line sentence about each one, fax it over to the credit bureau that we were members of, that we paid to be members of, and boom, within an hour, they were dropped off and their credit was rescored.
Why?
Why would this be done?
Why?
You tell me, because people wanted people to qualify for mortgages, especially the beginning of this problem with what they call non-income qual mortgages.
People who are self-employed giving out 1099 for W-2s.
Wait, what are we hearing?
Non-income mortgages.
Yeah, that was the original part of this rapid rescoring this problem.
If you had a business and you were a small business person and you didn't necessarily have a 1099 or W-2 or your books didn't show or you didn't want it to show that you had enough to pay for this loan, all you had to do was walk in the door with a credit score of greater than 700.
And I can tell you that if you were anywhere up north of 580, we could rapid rescore you into 700 within an hour.
And let me cut to the chase here.
So everything that's happened since all this fell apart is all these people that you had to deal with that were forcing all this credit readjustment, all this stuff being done, all the crime labs, all the churn, all the volume, all this was being, everything being said now is by people to cover their rear ends.
Yeah, and then, you know, then what happened is I ended up going to work for a firm on the East Coast that saw the beginning of the end here and tried to start buying small portions of these packages from people like Lehman Brothers because they knew they wouldn't get bailed out because they weren't Goldman Sachs.
Okay, I got a break.
I got a break in five seconds.
Don't lose your train of thought.
We'll come back to you after this obscene profit timeout, which does not consist of any mortgage company.
So this is funny.
Michael Moore was reading the Washington Post the other day and he read that Obama has collected more campaign donations from Wall Street banks than all of the Republican candidates combined.
So now he's beside himself.
He was on CNN.
He said, what does this mean?
Wall Street's got their guy and it's Obama.
Whoa, whoa, whoa, whoa.
His world's been turned upside down.
I tried to tell you people on the left.
I tried to tell you Wall Street is liberal Democrat and its money is going to Obama.
And if any of you think that Wall Street is going to take any kind of a financial hit, if Obama gets his way up that speech yesterday, you have got a big wake-up call coming.
Backnot a Laurie, who can't say where she is because she fears lawsuits.
She was in the mortgage business.
You know, I checked some emails during the break here, Lori, and you know what?
People are reacting to your call.
And it's tough to pick one thing, but your description of the rapid re-scoring of consumer credit has sent people through the roof.
It should.
Yeah, it should.
People's credit scores were just restored to 700 to perfect just to qualify them for mortgages.
And it took literally less than 15 minutes at the end of the day.
I mean, we could fax it over and have it faxed back and rapid re-scored.
Now, did that hold?
If six months later they applied for credit, was that still there?
No, oftentimes it wasn't, which means that's all it was for.
You couldn't rapid rescore for a credit card.
Wait, wait, wait, wait, wait, wait.
You got to let me in here for questions because this is blockbuster.
So the rapid re-score was a temporary re-score just to get people a mortgage, but that credit rating didn't survive if they tried to use it for anything else.
It wouldn't survive the next update from the credit bureau from whichever the major three, if they're doing it quarterly, monthly.
The next time that update came along, everything was back on.
Everything was like it was before.
I actually knew people who had friends that owned mortgage businesses, and they would go in there to have them rescore them so that they could go get a car loan.
Okay.
So I'll tell you who's really ticked off about this, hearing your call, is all these people played by the rules.
They didn't buy anything they couldn't afford.
And now what you're basically saying is that people who were unqualified were qualified on a temporary basis to go buy whatever they wanted.
And then that paper, that mortgage, it was packaged with a bunch of other mortgages and sent down the trail where they tried to find value in it somewhere else along the line.
Absolutely.
And the people that played by the rules that got hurt by that were just the beginning of the bargain.
I worked for a company then on the East Coast that went to work and started to buy small packages of mortgages that had already started to go bad.
The first package they bought was from Lehman Brothers.
And because these people were very savvy investors and real estate prices were still on the rise, they would negotiate these people out of their homes.
They would give them what they could.
They would take the homes back.
They would sell them again to qualified buyers.
And for a very short period of time, this was successful.
But if somebody wants to spend some time and Google this, at least four different states, prosecutors in at least four different states sued three of these groups doing this under RICO statutes.
I got scooped up in that.
That's why I'm worried.
I had to testify at three of those trials because somebody at the end of the day came back and said, well, they negotiated me out of my house and I should have gotten more because real estate prices were still on the rise.
What does that mean they negotiated me out of my house?
Well, these groups would buy these mortgages that were already late from companies that had bought mortgage-backed securities that had started to get the idea that these things were going to go bad.
Because here's the problem.
The vast majority of, especially the non-income qualifying loans that were given out during this period of time, and a huge majority of just regular loans were called arms.
They were adjustable rate mortgages.
And 95% of them, I would bet you, were two and three-year ARMs, given between 04 and 05.
So at the end of 06, these two-year arms had started to circulate.
They had to come do.
They had to refinance their house.
And they had to now not only pay 2.5% interest, they had to pay a reasonable interest rate plus just a regular amortization schedule.
They had to be paying principal down every month.
These payments, in some instances, were four and five times the original payment.
If they were paying $1,000 a month, now their payment was $4,000 or $5,000.
That's when this all started to go bad.
It's when the companies that had bought mortgage-backed securities tried to find a way out.
There were investors that moved in to try and help them do that.
And as these people started falling behind in their loans, these people would negotiate with them to take whatever the value of the house was with prices still on the rise because no one realized the amount of poison that had been injected into the security.
I don't believe nobody knew the amount of poison.
No, I think somebody did, but the public didn't.
The people who were falling behind and their mortgages didn't.
And I have to say, too, Sanny and Freddie spread this stuff out so far and so wide that you would have had to really have been in on the ground floor of this to realize how much, how many millions, billions, trillions, whatever it was in dollars of these securities were floating around in the open market.
And I bet that if there's any FOIA left in this country, someone could find out that many, many, many of these packages went out.
And if those loans were rapid rescored, they were in one package.
And if they were actual qualified mortgages, they were in another package.
If you were on the witness stand, somebody asked you to Point a finger.
At one place, if people wanted to understand who is responsible for this, could you do it?
I probably couldn't name a name, but I can tell you that it was Fanny and Freddie because every mortgage seminar that we went to, remember that little Fannie-Freddie junk that they just had in Chicago that people were upset about the $600,000 they spent.
Those are relatively common in the mortgage business.
We used to go to them once or twice a year.
And Fanny and Freddie were there, and they had, they might as well have set up a carnival booth.
I mean, they were so excited about the fact that if you were a new mortgage business and you could get a wholesale line of credit, you could Rapid Rescore and qualify 500,000 people in a year, and they would back and buy everything you could send them.
It was on this basis that all the executives there were paying themselves these bonuses, right?
Yeah, because that's exactly what was happening.
The number of mortgage brokers in this country, I would bet you, doubled or maybe even tripled between 98 and 2004.
I know that the office I originally worked for, the owner and two other brokers were the only brokers in the field.
By the time Rapid Rescore really got going, he had 20 brokers in the field, and he sat in the office and did nothing but pull in wholesale lines of credit.
And these wholesale lines of credit, oftentimes, well, one of the big banks that was doing wholesale lines was WAMU, and they're no more.
Yeah.
WAMU and they are no more, and a lot of others are no more either.
And Lehman is no more.
You know, Lori, I have some questions about the cases that you're testifying, and I know you can't tell me.
I know you don't want me to.
So, could we get your number and stay in touch with you down the line months or so whenever this shakes out and query you further about it when it's safe for you?
Sure.
Okay, good.
Don't hang up.
Snerdley will get your name.
By the way, would you like an iPad?
I have one, but thank you very much.
Okay, all right.
You could make me just as happy by just continuing to do what you're doing.
Well, I appreciate that.
More than you know.
I really appreciate that.
Hang on, and we'll get a number and find a way to stay in touch with you, but only when you, countrywide's no more either, by the way.
Friends of Angela, whenever it's safe for us to talk to you or for you to tell us more about it.
No, Watkovi is not gone, as well as Fargo now.
At any rate, we'll stay in touch, and I appreciate you doing that.
She's got to testify in three cases.
And I would love to ask her about the cases.
I'm not going to put her in that position.
We'll find out from her later.
Thanks, Lori, very much.
We'll be back and roll right on right after this.
One more thing.
Lori, when she was talking to Mr. Snerdley, communicating ways we can stay in touch with her, she said one more thing that she wanted me to pass on to you, and that is that everybody involved in this, Fanny and Freddie, all these various mortgage bankers, all the government entities involved here knew when this thing was going to blow up.
They knew when Judgment Day was coming.
They knew when the phrase, the jig was up.
They knew when the paper was coming due.
They knew when all this was going to blow up.
They knew it was going to blow up in 2008.
They knew, therefore, that they could blame all this on George Bush.
They could blame all of this on the party of the president serving in the White House, which is what happened and which is what continues to happen to this day.
Now to translate what Lori said, what actually, to synthesize this, it's very difficult to do this because it simplifies it more than it should be.
The housing meltdown, real problem with it was, based on, this is my opinion after listening to her.
Everybody from the mortgage brokers to Fannie and Freddie and the executives there, anybody involved, they were all turned into commission salespeople is what happened.
They got money for every mortgage they processed.
It didn't matter whether it was a good mortgage or a bad mortgage.
They got a commission on it.
And when the government leaned on them to loan to the poor, they were more than happy to do so because they had all been converted into commissioned salespeople who could also qualify anybody for a mortgage with this temporary rapid re-score.
So it was the industry, Fannie and Freddie and the mortgage brokers taking care of themselves.
Did you hear her say that Fannie and Freddie were like a carnival?
They set up booths explaining rapid re-scoring of credit rate right out in the open at seminars, which means they were granted permission to temporarily qualify anybody who wanted a mortgage.
The people who gave us the mortgage meltdown are all wealthy people.
They are all wealthy people, and they knew that it was all coming due in 2008.
Ergo TARP, Ergo, all the other stuff, all the financial panic that you heard about, it was all related to this.
And how fortuitous that it comes to fruition, that it blows up right in the middle of the 2008 campaign.
Blame it on Bush.
And they were, I'm sure, entirely comfortable doing that because Bush had shown he weren't going to defend himself against any of this.
All they had to do was go tell Bush, hey, look, we've got a collapse of epic proportions coming unless we do something.
Oh, yeah, can't have that.
They told Bush that the blame would be on him if the collapse happened.
So, yeah, I knew.
Yes, I knew that Paulson was Chuck Schumer's guy.
I questioned Paulson's choice by Bush the moment it happened.
And that wasn't the first choice.
I was scratching my head over.
Yeah, I knew Paulson was Schumer's guy.
Wall Street is owned by the Democrat Party, folks.
This notion that Wall Street and big business is a bunch of Republicans.
Who the hell sits on Obama's Jobs Commission?
Jeff Immelt, CEO, General Electric.
Republican?
Really?
I get so.
She didn't mention, if you listen to her whole call, Lori did not say the words Wall Street one time.
And yet who's out there blaming Wall Street for Obama?
And the people on Wall Street are winking all the way to the bank, giving him money for his reelection campaign.
What a day we have had here.
The President of the United States gives a speech in Osawatomie, Kansas yesterday, in which he is finally forthcoming, tells us exactly who he is, tells us that this country has never worked since the days of its founding.
This country has been immoral, unjust, and unfair since the days of its founding.
And he's out to change it.
I've tried to tell people from the get-go when I said I hope he fails that this is what we were dealing with.
And now, to give a speech like yesterday, which is a campaign speech running for re-election on the premise that this country has never worked and it will only work if Obama gets to totally transform it.
And then we hear what really happened in the mortgage fiasco.
And we learn that people we think looking out for us are just scamming us.
Instinctively, you probably suspect it, know it, whatever, but what's it feel like to actually hear it firsthand?
Temporary credit scores.
Rapid re-score temporary credit scores for 30-year mortgages.
All right, folks, that's it.
We got to go.
But there's always tomorrow.
Tomorrow's Thursday, right?
Yeah.
Days are zipping by here.
We'll see you then.
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