Free Republic
Browse · Search
Topics · Post Article

Skip to comments.

The Role of Congress in the Recession of 2008
Myself ^ | 2/15/2009 | Danae

Posted on 03/03/2009 5:20:47 PM PST by Danae

The Role of Congress in the Recession of 2008

Thomas Jefferson, 29 November 1802

In 2008, the United States would enter a recession that was 32 years in the making. Actions taken by congress starting in 1977 would begin the process that led to the catastrophic collapse of the housing market, which directly brought about the banking crisis that triggered the recession. The Community Reinvestment Act (CRA) passed in 1977 would create the framework for a machine of catastrophe. Building upon that framework, the Housing Enterprises Regulatory Reform Act of 1992 would force banks by law, to write sub-prime loans in federally mandated numbers that would eventually cause banks to collapse in America and around the world. Exacerbated by ACORN (Association of Community Organizations for Reform Now) and the Cloward-Piven Strategy of Orchestrated Crisis, the economy continues to spiral down in 2009.

In order to put the fiscal situation of the United States into some context, a basic understanding of several factors is necessary. The CRA, Federal Housing Enterprises Regulatory Reform Act of 1992, ACORN, The Cloward-Piven strategy, the Government Sponsored Entities (GSE’s) Fannie Mae and Freddie Mac, and their relationship with Congress are all significant gears in the machine that stopped the economy in its tracks.

First, the Community Reinvestment Act of 1977, known as CRA, was designed to ensure banks serviced their entire communities, community being defined by the area from which the bank accepted deposits. CRA made law the concept that banks should make loans to everyone, and follow standards of safe banking at the same time (FDIC). This is a contradictory mandate, as banks cannot make good safe loans to borrowers who are high risk. It is not the bank that makes the borrowers high risk; it is the borrowers themselves who are the risk. This is the foundation upon which our current crisis is built. The rate at which these types of borrowers default on their loans is higher than loans made to those with sounder credit and better more reliable sources of income, making them unsafe for both the bank and the borrower. CRA dictated to banks that they were to disregard those safe practices and begin to meet the needs of what supporters called the underserved market, those with poor credit and or very low incomes who could not otherwise get a loan.

Alex Schwartz in an article for Fannie Mae reported that Community Organizations (ACORN for example) could and did challenge banks trying to merge or acquire new assets on meeting their CRA requirements and “by 1997 more than 300 negotiated and voluntary agreements had been launched, amounting to more than $353 billion (National Community Reinvestment Coalition [NCRC] 1998)” (qtd. in Schwartz). The dollars wrapped up in the Sub-prime market would only continue to pile up in the ten years following that report. This is the frame work that would hold the machine together. What is perhaps as relevant, Fannie Mae and Freddie Mack knew as early as 1997 what was happening.

Another significant cog in the machine was manufactured in 1992. Congress would pass the Federal Housing Enterprises Regulatory Reform Act. Among other things, this Law would build upon the CRA. It would set specific goals for numbers of loans written to very low income to moderate income households otherwise known as Sub-Prime market, and would set penalties banks would be subject to if they failed to meet their quotas (United States 102nd Congress Title III Sec 305). Because the Federal Government was backing the loans through Fannie Mae and Freddie Mac, it made the inherent risk of loaning money to very low income families or those with poor credit acceptable. This law also opened the door to lawsuits against banks that failed to “adequately” meet those goals.

This brings up the question of exactly what “adequate” means and this was the basis for the legal challenges made to the banking industry. The 1992 Bill established several levels of compliance; however anyone could now challenge a bank at any level of compliance (United States 102nd Congress). Agencies like ACORN would hire lawyers to file law suits challenging the banks on the numbers of loans they wrote to the sub-prime market. As reported by Parke Chapman, in general those finding themselves facing ACORN would give in, it was easier than fighting the pickets, intimidation and bad publicity which were the strong arm techniques used by ACORN in achieving their goals (Chapman). Robert Garsson reports much the same thing, reporting briefly on ACORN storming the American Bankers Association meeting around the time that Bill Clinton was beginning his career in Arkansas politics (Garsson).

This brings us to the fuel system of this machine. ACORN, what is ACORN? It has been for years heavily invested in making use of CRA and the quotas set up in 1992. Where did this organization come from? In the 1960’s a group calling itself the National Welfare Rights Organization (NWRO), led by George Wiley and founded on the principles developed by Robert Cloward and Francis Piven, was fighting for the rights of the poor (“Roots”). According to ACORN’s own history, Wiley had a protégée, Wade Rathke, whom he would send to Little Rock Arkansas in 1970, tasked with uniting people across the social spectrum in the fight for the rights of the poor. By using a clause in the Arkansas Welfare laws, he was successful, and ACORN was created out of that success. Originally founded in 1970 under the name Arkansas Community Organizations for Reform Now, it later became the Association of Community Organizations for Reform Now, and the acronym remained the same (“Roots”).

As part of a wider social goal, Wiley and Rathke used Cloward-Piven Strategy of Manufactured Crisis in their success. The Sophia Smith Collection Biography of Francis Fox Piven includes this information on the Strategy:

NWRO and ACORN were both founded on the principles of making social changes by overwhelming Government agencies with huge numbers of welfare recipients to the point where those systems would collapse; forcing the Government to makes the changes desired by those orchestrating the movements. The success of ACORN in this area was not enough to bring about the sweeping social changes that Cloward, Piven, Wiley and Rathke wanted. From welfare, they branched out to include the financial industry. In 1999 Madeleine Adamson wrote a brochure for ACORN titled “To each their home”. In it, ACORN brags about its success in undermining the Banking industry:

Clearly these sources of income were not only non-traditional, some are in and of themselves signs of credit un-worthiness, yet ACORN successfully used the CRA to flood the mortgage market with large numbers of very risky loans using these very criteria. Adamson’s brochure for ACORN tells us they were successful in getting the banks to lower down payments and closing costs, again lowering the bar in terms of basic loan requirements for both qualifying and completing the loan process. The evidence of their success lay in the very scope of the collapse of the housing market. This ACORN brochure was brought to light by Matthew Vadum on October 28th, 2008 in an article titled “ACORN’s Food Stamp Mortgages”. In his article he states:

Vadum goes further, connecting ACORN’s overall strategy:

Clearly ACORN is an agency that uses the Cloward-Piven Strategy, and their work in overloading the banking system with toxic mortgages reached critical mass in 2007-8. All that was missing was a sudden increase in the cost of living to tip the system over, and that would come from a sudden spike in Oil prices in 2007 and 2008. As reported by Shane Sherlund for the Federal Reserve Board, when Oil went over 140$ a barrel, many of those very low income people could no longer pay for their mortgages, this and other predatory lending practices allowed by the CRA, would cause the huge spike in Defaulting Mortgages that shut down bank lending. In Figures 1 and 6 it is clear that as the price of Oil went up, so too did the rate of defaulting Mortgages: (Sherlund Fig. 1, 6).

Fig. 1

Source: Sherlund, S. "The Past, Present, and Future of Subprime Mortgages." The Federal Reserve Board. 3 Dec 2008. The Federal Reserve. 7 Feb 2009 Figure 1, Figure 6 <>.

How can one “Community Organization” for the poor be able to do all of this? ACORN has several areas of influence, one of which is assisting people favorable to their goals in being elected to Congress. As reported by Ryan Grim in Politico, ACORN is a political ally of Democrats (Grim). ACORN works actively to get its candidates into office. They provide campaign canvassers to talk to voters, and they register new voters by the thousands, which have generated numerous lawsuits alleging voter registration fraud. ACORN also receives government funding; according to Senator John Bohner in the “Leader Alert”, ACORN received more than 31 Million dollars in federal funding since 1998. He also rightly calls into question the advisability of funding an organization under investigation by the FBI for Voter Registration fraud and other illegal activities. However, ACORN has friends. Examples of ACORN backed politicians can be found in the Congressional Black Caucus (CBC). In fact, the CBC is often the instrument by which ACORN pushes legislation because ACORN helped get the members elected. CBC members can be found at ACORN events and members of the CBC are the staunchest defenders of the GSE’s and of ACORN and its mission, in any Committee hearings in Congress, particularly the House of Representatives. Not coincidently, the CBC also works very closely with the GSE’s Fannie and Freddie. Jan 4th 2005 would see Daniel H. Mudd, the Interim CEO of Fannie Mae address the swearing in of the Congressional Black Caucus (which is exclusively Black and Democrat):

Fannie Mae and Freddie Mac were the Government Sponsored Enterprise’s (GSE’s) charged with guaranteeing subprime loans with United States Government Authority, they were a quasi-government agency. The relationship between the GSE’s and Congress is a corrupt one. The GSE’s gave campaign donations to members of congress in positions to regulate the GSE’s Fannie and Freddie. Between 1989 and 2008 the top three recipients of donations from the GSE’s totaled over $400 thousand. In the same time frame the GSE’s would make $4,844,572 in political campaign contributions (“Update”). In 2005 once again legislation capable of reforming and regulating the GSE’s was killed before it ever reached a vote; Senate Bill 190: the Federal Housing Enterprise Regulatory Reform Act of 2005 may well have prevented the disaster that occurred in 2007 (United States 109th Congress). It is not surprising to note that Senate Bill 190 did not make it out of the committee that has the single largest recipient of GSE Campaign Donations as its Chairman, Senate Finance Committee Chairman Chris Dodd (Mayer).

ACORN, Congress, Fannie Mae and Freddie Mac are all linked together. ACORN (and by extension it’s socialist founders) uses Congress to pass laws favorable to it, Congress uses Fannie and Freddie to keep ACORN happy. A ‘you scratch my back I will scratch yours’ circle of corruption that is built upon the backs of the poor of America, those people living right on the financial edge. Apparently it did not concern anyone involved what would happen to all of those families if the cost of living should suddenly rise. The Oil Spike of 2007 and 2008 would be just what was needed to start the cycle of widespread foreclosures that would devastate the banking industry and our economy.

Fannie Mae and Freddie Mac would go bankrupt in September of 2008 due to unprecedented numbers of foreclosures and were nationalized. Unable to back all of the aggregated loan bundles they had sold to investment bankers and overseas lenders, the GSE’s could not make the loans good when the homeowners stopped paying. The investment banks began to go bankrupt as well, Bear Sterns being the first; they got a bailout from the National Treasury. Lehman Brothers would follow a couple of weeks later, and they would get no bailout, the U.S. Treasury refused, recognizing that this was a systemic problem that every single bank writing or holding Mortgages in the United States was facing, and all for the same reasons. The source for this river of money was the homeowner, and when the homeowners stopped paying, the river dried up. The machine was complete; all the needed parts were in place and running great. Unfortunately, this machine was meant to destroy capitalism.

In conclusion, this is the plan as developed by Cloward and Piven in their article “A Strategy to end Poverty” written in 1966. The article abstract reads:

The object was to create a guaranteed income for everyone, in other words, Socialism. The users of the Cloward-Piven Strategy used the plight of poor people to their advantage in the war on capitalism, and indeed we are all victims of it today. The use of this strategy has brought the banking system to its knees, and cost thousands of families their homes, and hundreds of thousands of people their jobs. It can easily be said users of Cloward-Piven have created more poor people, all while publicly stating it was their mission to help the poor. In reality, they were using the poor and creating a bigger poorer constituency to become dependent on Government help. With a willing constituency in congress, supported and elected with the strategy in mind, the Congress of the United States was the creator and ultimate facilitator of the economic disaster of 2008. As of February 2009, congress has not been called to account for its actions, nor has ACORN. The CBC is still defending its own failed policies and vigorously defending the GSE’s and ACORN. Perhaps this should not be surprising; they still need ACORN’s help in getting re-elected – and the machine rumbles along.


TOPICS: Crime/Corruption; Editorial; Front Page News; News/Current Events
KEYWORDS: 110th; acorn; congress; fanniemae; pelosi; recession; reid
Navigation: use the links below to view more comments.
first 1-2021-4041-6061-80 ... 101-110 next last
This is my own original work, after being graded for my English course work for American Military University. Yes I got 100%.
1 posted on 03/03/2009 5:20:48 PM PST by Danae
[ Post Reply | Private Reply | View Replies]

To: Danae; Jim Robinson; LucyT; autumnraine; The Sons of Liberty; Shady Ray; editor-surveyor; ...

Well done! I’m pinging a few who will enjoy your excellent work.

2 posted on 03/03/2009 5:26:21 PM PST by MHGinTN (Believing they cannot be deceived, they cannot be convinced when they are deceived.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Danae


3 posted on 03/03/2009 5:28:04 PM PST by g'nad
[ Post Reply | Private Reply | To 1 | View Replies]

To: Danae

Would you permit me to post the entire essay on my blog (

4 posted on 03/03/2009 5:28:08 PM PST by MHGinTN (Believing they cannot be deceived, they cannot be convinced when they are deceived.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: MHGinTN; Danae

Yes, excellent. Thanks for the ping.

5 posted on 03/03/2009 5:32:02 PM PST by milford421 (U.N. OUT OF U.S.)
[ Post Reply | Private Reply | To 2 | View Replies]

To: Danae

Good for you. Bookmark for later reading.

6 posted on 03/03/2009 5:32:06 PM PST by IrishCatholic (No local Communist or Socialist Party Chapter? Join the Democrats, it's the same thing!)
[ Post Reply | Private Reply | To 1 | View Replies]


Well. I predict free fall. ...Commie in White House.

7 posted on 03/03/2009 5:32:34 PM PST by screaminsunshine (f)
[ Post Reply | Private Reply | To 2 | View Replies]


I would be honored! Thank you!

8 posted on 03/03/2009 5:33:27 PM PST by Danae (Amerikan Unity My Ass)
[ Post Reply | Private Reply | To 4 | View Replies]

I can sum it all up in three words.

We got screwed.

9 posted on 03/03/2009 5:34:17 PM PST by blackbart.223 (I live in Northern Nevada. Reid doesn't represent me.)
[ Post Reply | Private Reply | To 4 | View Replies]


Thank you very much, I posted an earlier version, this on is the final one.

Now to do an essay on Ethics.... hum... wonder what my topic should be..?

10 posted on 03/03/2009 5:34:32 PM PST by Danae (Amerikan Unity My Ass)
[ Post Reply | Private Reply | To 2 | View Replies]

To: blackbart.223

Oh yes we did. Deliberately screwed.

11 posted on 03/03/2009 5:35:17 PM PST by Danae (Amerikan Unity My Ass)
[ Post Reply | Private Reply | To 9 | View Replies]

To: Danae; Abathar; Abcdefg; Abram; Abundy; akatel; albertp; AlexandriaDuke; Alexander Rubin; ...

Rare offlist ping to an OUTSTANDING original commentary by a list member.

Well done!

12 posted on 03/03/2009 5:36:01 PM PST by bamahead (Few men desire liberty; most men wish only for a just master. -- Sallust)
[ Post Reply | Private Reply | To 1 | View Replies]

To: bamahead

Thank you sir! (blushing)

13 posted on 03/03/2009 5:37:12 PM PST by Danae (Amerikan Unity My Ass)
[ Post Reply | Private Reply | To 12 | View Replies]

To: betty boop; rabscuttle


14 posted on 03/03/2009 5:38:24 PM PST by metmom (Welfare was never meant to be a career choice.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Danae
"Oh yes we did. Deliberately screwed."

I seemed to have left that word out. But the end result is the same.

15 posted on 03/03/2009 5:40:18 PM PST by blackbart.223 (I live in Northern Nevada. Reid doesn't represent me.)
[ Post Reply | Private Reply | To 11 | View Replies]

To: MHGinTN; BroJoeK; AdmSmith; Berosus; Convert from ECUSA; dervish; Ernest_at_the_Beach; ...
Thanks MHGinTN.
It's worth remembering that in 1801, when Jefferson became president, the US national debt was around $100 million, about 10 times annual federal revenues. This was literally "the cost of freedom," and would correspond today to a national debt around $30 trillion. Since our actual national debt is $13+ trillion, the government is in better financial shape today than it was in Jefferson's time. And at the time, Jefferson's number one priority was paying down the national debt. So, how did he do it? How does ANY wise government ever increase its revenues? Yes, that's right! JEFFERSON REDUCED GOVERNMENT SPENDING AND CUT TAXES.-- BroJoeK

16 posted on 03/03/2009 5:44:31 PM PST by SunkenCiv ( Profile updated Monday, January 12, 2009)
[ Post Reply | Private Reply | To 2 | View Replies]

To: SunkenCiv

Exactly. It is the only way to get anyone or any entity out of debt.

Anything else only ever makes the problem WORSE, not better.

17 posted on 03/03/2009 5:48:14 PM PST by Danae (Amerikan Unity My Ass)
[ Post Reply | Private Reply | To 16 | View Replies]

To: Danae; All
"Actions taken by congress starting in 1977"

Hmmmm, let me think for a minute, who was President back in '77, let's see now, it wasn't Nixon or Ford, and Ronald Reagan wasn't elected until 1980, golly, this is a tough one, somebody that was in the White House between 1976 and, and 1981, boy this is difficult to figure out here, hmmm, what else happened in that 4 year period, I seem to remember inflation, unemployment, gas lines, economic chaos, Soviet expansionism, America retreating on almost every global front, I remember a bunch of little Iranian Islamofascist punks encouraged by the Assahollah Khomeini seizing our Embassy in Tehran and holding our fellow citizens hostage for 444 days, the B-1 bomber getting canceled, the Panama Canal being given away to some thug named Torrijos, Taiwan being stabbed in the back, wow, can anybody help me out here?

I'm thinking about some blundering, mush-mouthed, chiklet-grinning, buffoon in a cardigan sweater, babbling on TV about mayonnaise, malaise, something like that, finally got his ass stomped in the Reagan landslide of '80, only carried 6 states and was sent home to become a bitter old anti-Semite, damn, I just can't quite name the miserable sonuvabitch, ya know?

Just give me time, it'll come back to me.
18 posted on 03/03/2009 5:55:33 PM PST by mkjessup (You're either with our Constitution, or you are with TKU ("The Kenyan Usurper"). CHOOSE!!!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Danae

Done ... and thank you!

19 posted on 03/03/2009 5:58:29 PM PST by MHGinTN (Believing they cannot be deceived, they cannot be convinced when they are deceived.)
[ Post Reply | Private Reply | To 8 | View Replies]

To: mkjessup


Ummmm, do I smell peanuts?

20 posted on 03/03/2009 5:59:58 PM PST by Danae (Amerikan Unity My Ass)
[ Post Reply | Private Reply | To 18 | View Replies]

Navigation: use the links below to view more comments.
first 1-2021-4041-6061-80 ... 101-110 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794 is powered by software copyright 2000-2008 John Robinson