Blame Game

So, the market's in crisis and there's blame a plenty to go around. But let's face facts here. The majority of it goes straight into the laps of liberal Democrats.

It began in 1977, when Democrat Jimmy Carter was President when the Community Reinvestment Act(CRA) was passed. Simple, noble-minded bill. The law mandated that each banking institution be evaluated to determine if it has met the credit needs of it's entire community", in other words, it outlawed "redlining" which is basically a form of profiling, only loaning to areas where there was no risk of the loan not being paid back.

Then in 1995, Democrat President Bill Clinton, with the idea of extending the American Dream of home-owner ship to all income ranges, including the ones who couldn't afford it, revised the bill to now require that banks make loans to people with little, no or bad credit. Not only require it, but also increase the number of CRA loans to low-income aka, the people who probably wouldn't be able to pay it back. It allowed companies to now securitize these CRA loans aka "sub-prime mortgages"

The first company to do so was Bear Stearns.

And they were so happy about it back then, quoting the article: "CRA loans are loans targeted to low and moderate income borrowers and neighborhoods under the Community Reinvestment Act of 1977.

'The securitization of these affordable mortgages allows us to redeploy capital back into our communities and to expand our ability to provide credit to low and moderate income individuals,' said Jane Henderson, managing director of First Union's Community Reinvestment and Fair Lending Programs. 'First Union is committed to promoting home ownership in traditionally underserved markets through a comprehensive line of competitive and flexible affordable mortgage products. This transaction enables us to continue to aggressively serve those markets.'"

From the beginning this was opposed by many and in 2003, Republican President George W. Bush proposed a complete overhaul, called by the New York Times as "...the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.", of the CRA requiring the two largest sub-prime mortage holders, Freddie Mac and Fannie Mae (boy all these names sure sound familiar) submit to greater oversight and begin to take action on securing this debt.

Quoting from the article: "The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates."

Guess what happened? The legislation was blocked by a party line vote, opposed by Democrats. Why? Quoting the NYT again: "Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

"These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said."

In fact, a few weeks later, Barney Frank, Democrat, told the AP: "I don't think we face a crisis. I don't think we have an impending disaster." In a way he was right, the disaster wasn't impending...it took about 5 years.

Two years later, in 2005, Republicans tried again, one of those I might add was Arizona Senator John McCain. And again it was blocked by Democrats, quoting Minority (now Majority) Leader Harry Reid: "The legislation from the Senate Banking Committee passed today on a party-line vote by the Republican majority, includes measures that could cripple the ability of Fannie Mae and Freddie Mac to carry out their mission of expanding home ownership...While I favor approving oversight by our federal housing regulators, to ensure safety and soundness, we cannot pass legislation that could limit Americans from owning homes and potentially harm our economy in the process"

It was opposed by Democrat Senator Chris Dodd, ranking member of the Banking Committee and I might add, highest receiver of donations from Fannie Mae and Freddie Mac. #2? Senator Barack Obama, Democrat, Illinois who didn't lift a FINGER to head off the crisis that now confronts us today.

Bush and the Republicans tried to fix this looming Democrat-created problem two times in the last 5 years and were blocked at each and every turn by Democrats in Congress.

You wanna lay blame? Lay it where it belongs.

Rogue