Posted by Bini on May 11, 2009, 5:23 pm, in reply to "Re: The Crash: Who's to blame?"
66.215.57.194
HOW IT REALLY HAPPENED AND WHO DID IT ! ! !
It is mandatory that each and every one of us learn who committed the acts
that created this mess.
1977: Pres. Jimmy Carter signs into Law the Community Reinvestment Act
the foundation and cornerstone for the impending disaster.. The law
pressured financial institutions to extend home loans to those who would
otherwise not qualify.
The publicized premise: Home ownership would improve poor and crime-ridden
communities and neighborhoods in terms of crime, investment, jobs, etc.
The 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 stock-holding few.
1993: Clinton extensively rewrote Fannie Mae and Freddie Mac's rules
turning the quasi-private mortgage-funding firms into semi-nationalized
monopolies 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 in Congress, enlisted Andrew
Cuomo, then Secretary of Housing and Urban Dev elopement, 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", "no assets", requiring no money
down, no verification of income, no nothing . 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.
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.
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, and 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 condemning!
http://www.youtube.com/watch?v=68D9XrqyrWo&feature=related #
http://www.youtube.com/watch?v=pIgqfM5C8lY#
http://www.youtube.com/watch?v=H9juJr8CSY4&feature=related #
Postscript: ACORN is one of the principlal 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. Last year the democratic congress gave ACORN
$500 million and attempted to sneak in $20 BILLION (Yes BILLION) into the
first version of the bailout. That's why Republicans voted no.
Please share this with everyone you know.
Send it. Print it. Talk about it.
America needs to know!!!
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