;: :: The economic mess

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> ;: :: The economic mess
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> I am sounding an alarm! For the life of me, I cannot figure
>out why this is not being discussed on the media or why conservatives are
>not making their case: IT IS SO IMPORTANT!!!!! The following is a
>condensation of a series from the Investor's Business Daily explaining
>"What Caused the Loan Crisis":
>
> 1977: Pres. Jimmy Carter signs the Community Reinvestment Act
>into Law. The law pressured financial institutions to extend home loans to
>those who would otherwise not qualify. The Premise: Home ownership would
>improve poor and crime-ridden communities and neighborhoods in terms of
>crime, investment, jobs, etc.
>
> Results: Statistics bear out that it did not help.
>
> How did the government get so deeply involved in the housing
>market? Answer: Bill Clinton wanted it that way.
>
> 1992: Republican representative Jim Leach (IO) warned of the
>danger that Fannie and Freddie were changing from being agencies of the
>public at large to money machines for the principals and the stockholding
>few.
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> 1993: Clinton extensively rewrote Fannie Mae and Freddie Mac's
>rules turning the quasi-private mortgage-funding firms into
>semi-nationalized monopoies dispensing cash and loans to large Democratic
>voting blocks and handing favors, jobs and contributions to political
>allies. This potent mix led inevitably to corruption and now the collapse
>of Freddie and Fannie.
>
> 1994: Despite warnings, Clinton unveiled his National
>Home-Ownership Strategy which broadened the CRA in ways congress never
>intended.
>
> 1995: Congress, about to change from a Democrat majority to
>Republican, Clinton orders Robert Rubin's Treasury Dept to rewrite the
>rules. Robt. Rubin's Treasury reworked rules, forcing banks to satisfy
>quotas for sub-prime and minority loans to get a satisfactory CRA rating.
>The rating was key to expansion or mergers for banks. Loans began to be
>made on the basis of race and little else.
>
> 1997 - 1999: Clinton, bypassing Republicans, enlisted Andrew
>Cuomo, then Secretary of Housing and Urban Developement, allowing Freddie
>and Fannie to get into the sub-prime market in a BIG way. Led by Rep.
>Barney Frank and Sen. Chris Dodd, congress doubled down on the risk by
>easing capital limits and allowing them to hold just 2.5% of capital to
>back their investments vs. 10% for banks. Since they could borrow at lower
>rates than banks their enterprises boomed.
>
> With incentives in place, banks poured billions in loans into
>poor communities, often "no doc", "no income", requiring no money down and
>no verification of income. Worse still was the cronyism: Fannie and
>Freddie became home to out-of work-politicians, mostly Clinton Democrats.
>384 politicians got big campaign donations from Fannie and Freddie. Over
>$200 million had been spent on lobbying and political activities. During
>the 1990's Fannie and Freddie enjoyed a subsidy of as musch as $182
>Billion, most of it going to principals and shareholders, not poor
>borrowers as claimed.
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> Did it work? Minorities made up 49% of the 12.5 million new
>homeowners but many of those loans have gone bad and the minority
>homeownership rates are shrinking fast.
>
> 1999: New Treasury Secretary, Lawrence Summers, became alarmed
>at Fannie and Freddie's excesses. Congress held hearings the ensuing year
>but nothing was done because Fannie and Freddie had donated millions to key
>congressmen and radical groups, ensuring no meaningful changes would take
>place. "We manage our political risk with the same intensity that we
>manage our credit and interest rate risks," Fannie CEO Franklin Raines, a
>former Clinton official and current Barack Obama advisor, bragged to
>investors in 1999.
>
> 2000: Secretary Summers sent Undersecretary Gary Gensler to
>Congress seeking an end to the "special status". Democrats raised a ruckus
>as did Fannie and Freddie, headed by politically connected CEO's who knew
>how to reward and punish. "We think that the statements evidence a
>contempt for the nation's housing and mortgage markets" Freddie
>spokesperson Sharon McHale said. It was the last chance during the Clinton
>era for reform.
>
> 2001: Republicans try repeatedly to bring fiscal sanity to
>Fannie and Freddie but Democrats blocked any attempt at reform; especially
>Rep. Barney Frank and Sen.Chris Dodd who now run key banking committees and
>were huge beneficiaries of campaign contributions from the mortgage giants.
>
> 2003: Bush proposes what the NY Times called "the most
>significant regulatory overhaul in the housing finance industry since the
>savings and loan crisis a decade ago". Even after discovering a scheme by
>Fannie and Freddie to overstate earnings by $10.6 billion to boost their
>bonuses, the Democrats killed reform.
>
> 2005: Then Fed chairman Alan Greenspan warns Congress: "We are
>placing the total financial system at substantial risk". Sen. McCain, with
>two others, sponsored a Fannie/Freddie reform bill and said, "If congress
>does not act, American taxpayers will continue to be exposed to the
>enormous risk that Fannie Mae and Freddie Mac pose to the housing market,
>the overall financial system and the economy as a whole". Sen. Harry Reid
>accused the GOP ;of trying to "cripple the ability of Fannie and Freddie to
>carry out their mission of expanding homeownership" The bill went nowhere.
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> 2007: By now Fannie and Freddie own or guarantee over HALF of
>the $12 trillion US mortgage market. The mortgage giants, whose executive
>suites were top-heavy with former Democratic officials, had been working
>with Wall St. to repackage the bad loans and sell them to investors. As
>the housing market fell in '07, subprime mortgage portfolios suffered major
>losses. The crisis was on, though it was 15 years in the making.
>
> 2008: McCain has repeatedly called for reforming the behemoths,
>Bush urged reform 17 times. Still the media have repeated Democrats'
>talking points about this being a "Republican" disaster. A few Republicans
>are complicit but Fannie and Freddie were created by Democrats, regulated
>by Democrats, largely run by Democrats and protected by Democrats. That's
>why taxpayers are now being asked for $700 billion!!
>
> If you doubt any of this, just click the links below and listen
>to your lawmakers own words. They are condeming!
>
> http://www.youtube.com/watch?v=68D9XrqyrWo&feature=related#
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> http://www.youtube.com/watch?v=pIgqfM5C8lY#
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> http://www.youtube.com/watch?v=H9juJr8CSY4&feature=related#
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> Postscript: ACORN is one of the principle beneficiaries of
>Fannie/ Freddie's slush funds. They are currently under indictment or
>investigation in many states. Barack Obama served as their legal counsel,
>defending their activities for several years.
>
> Please share this with everyone you know. Send it. Print it.
>Talk about it. America needs to know!!!
>