Posted on 10/16/2008 7:16:30 PM PDT by Libloather
Democrats Caused The Financial Mess
To the editor:
I saw a poll last week that indicated that 67 percent of Americans thought that the Democrats were better on the economy and/or fixing our financial problems. How can that be when it's clear that their policies and practices were the primary cause of the mess? Rep. Barney Frank (D-Mass.), Sen. Christopher Dodd (D-Conn.), Nancy Pelosi (D-Calif.) and others did nothing to protect us from those unscrupulous government-sponsored enterprise CEOs who cooked the books and walked away with millions in bonuses and severance pay. Chief among them was Franklin Raines, President Clinton's budget director. Raines alone received almost 100 million in bonuses from Fannie Mae. When the Bush administration tried (several times) to bring about reform in Fannie Mae and Freddie Mac, Frank and Dodd said (during hearings) that both companies were solvent and they didn't need any more regulations. Frank went on to say that more regulation would just prevent low-income individuals from receiving loans. What a joke! Dodd got a sweetheart mortgage deal and has received more campaign donations from Fannie Mae than any other member of Congress (#2 is Obama). Frank even got his his friend a senior executive job at Fannie Mae. How can we trust these same people to fix the problems that they created?
Sen. McCain warned of the potential for serious financial problems in Fannie Mae and Freddie Mac back in 2005/6. He cosponsored a bill that would have established proper regulation and oversight. The Democrats blocked passage of this bill; so let's put the blame where it belongs. Quit trying to blame Bush and the Republicans for everything bad that happens. We are sick and tired of doom and gloom politicians. This country is still the best in the world. How long we remain free and independent is up to us.
Mary Gracey
Waterfall
If you had any questions about the 'bail out' that was just passed and why it was necessary, read on...
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 (CRA) 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 (IA) 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.
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, enlisted Andrew Cuomo, then Secretary of Housing and Urban Development, 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.
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, 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! Link 1. Link 2 Link 3
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!!!
bttt
fannie mae mess explanation
bump
Sixty-seven percent of Americans believe the Dem line, because that’s all they’ve been told by Big Media. Many conservatives think that the FM scandal can’t help McCain because everybody knows about it. The real truth is that most likely less than fifty percent of Americans know the truth about Dodd, Frank, and the FMs. Forget about the CRA, I’d wager only about thirty percent have ever heard of that. Still time for McCain to publicize this thing stronger.
Dear Mark Gracey,
The GOP controlled Congress for 14 years through 2006 and has controlled the White House and its veto pen for nearly 8.
If, Mr. Gracey, have ever had a puppy, you might know that puppies, unless properly disciplined will go to the bathroom on the carpet. However, since a responsible dog owner knows this, s/he is foolish to blame the puppy if it soils the rug. It is the responsible adult’s fault.
Democrats are like puppies except not as cute. It is a bit ludicrous to blame them for messing up the nice carpet.
However you have identified a fundamental problem with a 2-party system: the only alternative to the obviously irresponsible adults is to put the puppies in charge of cleaning up the messy carpet.
Unfortunately, what you are likely to get is a situation in which they mess it up even more and try and convince you that living in $hit is a good thing.
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