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203Before THEIR Parade Passes By

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  • Rick REED
    Sep 30, 2008
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      --- In Rick-Reed-2009@yahoogroups.comhttp://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

      Dear friends:  

      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.

      Jim
      ________________________________________

      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.

      Period.

      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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