203Before THEIR Parade Passes By
- Sep 30, 2008
--- In Rick-Reedfirstname.lastname@example.org://groups.yahoo.com/group/Rick-Reed-2009 Rick REED <arexar4@...> wrote:
This is the best explanation of what is happening and why.
Financial meltdown...the FACTS!
The cause of the financial meltdown
Many of us have felt that multiculturalism and political correctness
would eventually be very damaging to this nation.
It appears to have happened.
The biggest thing in the news right now is the financial meltdown in
process. But almost no one is talking about the real cause, which is
congressional bowing to multiculturalism and pressure from the
Clinton administration to give home loans
to those who are poor risks.
With incredible audacity and hypo crisy, Barack Obama is trying to
make political hay over this and blame President Bush.
However, it mainly started in the 1990s,
and the main blame goes to Bill Clinton and the Congress.
Earlier in his term, President Bush saw this coming and
tried to get Congress to fix the problem, but was fought by the
Democrats, such as Chris Dodd and Barney Frank.
The respected Investors Business Daily
summarizes the situation below.
Congress Tries To Fix What It Broke
By INVESTOR'S BUSINESS DAILY |
Posted Wednesday, September 17, 2008
4:20 PM PT
As the financial crisis spreads,
denials on Capitol Hill grow more shrill.
Blame an aloof President Bush, greedy Wall Street, risky
capitalism -- anybody but those in Congress
who wrote the banking rules.
Such denials won't hold against the angry facts
banging on their doors.
The only question is whether the guilty party
can keep up the barricade until Election Day.
A visibly annoyed House Speaker Nancy Pelosi
rejected suggestions that Democrats share blame
for the meltdown.
"No," she snapped at reporters who dared ask.
Stick to our narrative, she scolded:
The bursting of the housing bubble was another story of market
failure and deregulation.
"The American people are not protected
from the risk-taking and the greed
of these financial institutions," she said,
while calling for investigations of the industry.
Only, the risk-taking was her idea -- and
the idea of all the other Democrats,
along with a handful of Republicans,
who over the past 30 years have demonized lenders
as racist and passed regulation after regulation pressuring them
to make more loans to unqualified borrowers
in the name of diversity.
They were the ones who screamed -- "REDLINING!" --
and sent banks scurrying for cover in low-income neighborh oods,
where they have been forced to lower long-held industry standards
for judging creditworthiness to make the subprime loans.
If they don't comply, they are threatened with stiff penalties
under the Community Reinvestment Act, or CRA,
a law that forces banks to make home loans
to people with poor credit risks.
No fewer than four federal banking regulatory agencies
are responsible for20enforcing the law.
They subject lenders to racial litmus tests and issue
regular report cards, the industry's dreaded "CRA rating."
The more branches that lenders put in poor neighborhoods,
and the more loans they make there, the better their rating.
Those lenders with low ratings can not only be fined,
but also blocked from mergers and other business transactions
needed to expand.
The regulation grew to monstrous proportions
during the Clinton administration,
obsessed as it was with multiculturalism.
Amendments to the CRA in the mid-1990s
dramatically raised the amount of home loans
to otherwise unqualified low-income borrowers.
The revisions also allowed for the first time
the securitization of CRA-regulated loans
containing subprime mortgages.
The changes came as radical "housing rights" groups
led by ACORN lobbied for such loans.
ACORN at the time was represented by
a young public-interest lawyer in Chicago
by the name of barack obama.
HUD, in turn, pressured Fannie Mae and Freddie Mac
to purchase more subprime mortgages, and Fannie and Freddie,
in turn, donated to the campaigns of leading Democrats
like Barney Frank and Pelosi who throttled investigations
into fraud at the agencies.
Soon, investment banks such as Bear Stearns
were aggressively hawking the securities as "guaranteed."
Wall Street's pitch was that MBSs were as safe as Treasuries,
but with a higher yield.
But they weren't safe.
Everyone in the subprime business
from brokers to lenders to banks to investment houses
absolved themselves of responsibility
for ensuring the high-risk loans were good.
The mortgage lenders didn't care, because
they were going to sell the loans to other banks.
The banks didn't care, because
they were going to repackage the loans as MBSs.
The investors and traders didn't care, because
the MBSs were backed by Fannie and Freddie
and their implicit government guarantees.
In other words, nobody up and down the line
from the branch office on main street
to the high-rise on Wall Street analyzed the risk
of such ill-advised loans.
But why should they?
Everybody was just doing what the regulators
in Washington wanted them to do.
So everybody won until everybody lost,
including the minorities the government
originally mandated the banks to serve.
The original culprits in all this were the social engineers
who compelled banks to make the bad loans.
The private sector has no business conducting social experiments
on behalf of government.
Its business is making profit.
So it did what it naturally does and
turned the subprime social mandate into a lucrative industry.
Of course, it was a Ponzi scheme, because
they weren't allowed to play by their rules.
The government changed the rules for risk.
In order to put low-income minorities into home loans,
they were ordered to suspend lending standards
that had served the banking industry well for centuries.
No one wants to talk about it,
so they just scapegoat Wall Street.
Even John McCain has joined the Democrat chorus on this.
The FBI is now investigating 24 large mortgage lenders
for alleged abuses.
But who will investigate the pols and the lobbyists
and the community agitators who made the bad decisions
that ultimately forced businesses to make their bad decisions?
--- End forwarded message ---
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