Community Reinvestment Act

  For you conspiracy theorists, Here's the bottom line culprit

 

For those looking for the real explanation to today's financial meltdown and government rescue, you need to go back to 1977, and the Jimmy Carter presidency.

It was then, for the best and purest of reasons, that well-meaning Democratic members of Congress brought the Community Reinvestment Act into being.

The main idea, as the late Democratic Sen. William Proxmire said on the Senate floor in 1977, was "to eliminate the practice of redlining by lending institutions." That term, "redlining"  may seem quaint today but in the 1970 s, it was widely and erroneously seen as the cause of housing disparities between white and black Americans.

The redlining theory went thus: Banks set up shop in low-income areas, took deposits, then lent the funds to richer areas -- leaving poor and minority communities starved of housing and capital. That was never the case. Banks in the days before the CRC evaluated loans based on sound and traditional banking practices. Anyone, regardless of where they lived, were adjudged “loan worthy” based on their credit history, assets and, in the case of companies and entrepreneurs, their experience, equity and business plan.

President Carter, a economic nitwit and reformist former governor from the racially aware "New South," embraced the 1977 CRA as a way to end the supposed practice of redlining.

Coming as it did just years after other major civil rights legislation -- including the 1964 Civil Rights Act, the Fair Housing Act of 1968 and the Equal Credit Opportunity Act of 1974 -- community activists and others viewed it as essential to bringing African-Americans into the American dream. What it did in fact was create the biggest financial disaster that America or any country has ever seen.

At the time, the U.S. was in the middle of what came to be known as stagflation. After the first oil embargo in 1973 sent prices spiraling upward, the economy struggled to emerge from a vicious two-year recession in 1974 and 1975.

By 1977, inflation hit 7% -- on its way to 14% + in 1980. A year earlier, in 1976, 30-year mortgage rates crested 9% for the first time ever.

Meanwhile, the jobless rate stood at 7% -- 14% for blacks. Many African-Americans felt frozen out of homeownership. As home prices soared, affordability became a crisis for not only black families but anyone who didn’t make a reasonable living and have a 20% deposit- completely as it should be. Carter will forever be remembered as America’s most inept and worst president.

 In such a nasty economic environment, it's easy to see why something like the CRA got passed.

Good intentions, bad results- very bad. Millions of non-qualifying bad loans made to individuals who had not a chance of paying their bills and indeed, had long track records of not being responsible citizens.  Unfortunately, this fundamentally stupid law eventually led to a housing boom based on shoddy loan practices and totally unqualified buyers and to what we have today- a subsequent bust and financial disaster.

Initially, the CRA was supposed to not just lend to poor areas, but to do so "consistent with safe and sound lending practices." That latter key proviso was ignored as CRA was implemented. The key here is that actual purpose of the CRA was that the liberals in congress wanted to pander to their base- the poor and uneducated voters who might just vote for good ole white boy who got the banks to loosen the purse strings.

The CRA forced banks and savings institutions -- then, far more heavily regulated than today -- to make loans to poor, often un-creditworthy minority borrowers. 99% of the $700 billion in bad loans today that are killing our financial institutions are mortgages from blacks and minorities that never had a dime of equity in the properties. This debacle can be and needs be laid 100% at the feet of the idiot libs in congress.

How did the libs pressure the banks? Banks were required to keep extensive records of their minority lending practices. Those that didn't pass muster could be denied the right to expand their branches, merge with other banks, or boost lending in new markets.

Regulators didn't need to do much policing; they let that job fall to radical community groups, such as ACORN and NACA, which siphoned literally billions of dollars from banks and lent the money in poor communities who never ever could repay the loans.

It wasn't entirely altruistic.

The community groups booked thousands of dollars in fees for every loan. And loans often required recipients to become active in radical causes -- what's today called "community organizing."

If a community group decided a bank was operating in bad faith, it could affect the bank's "CRA rating" -- the scorecard for how well it was doing as a minority lender.

Banks became pliable, easy targets. No bank CEO wanted to be mau-maued as an enemy of the poor. They became shakedown targets, channeling billions of dollars to groups that had, at best, meager results to show for it.

That's how it began. Later, in the Clinton era, Fannie Mae and Freddie Mac, managed by greedy and stupid blacks got involved -- buying up bad loans from banks, and securitizing them for sale on world markets. The seeds of the subprime meltdown were planted.

As of last year, the homeownership rate among all Americans was 68.1% -- up from 63% in 1970. For black Americans, it's up from just below 42% in 1970 to 47.2% last year. It's still below 50%, and still the lowest of any minority group.

Today, Americans might rightly ask 31 years after the CRA was passed whether the more than $1 trillion lent under its auspices did what its proponents promised.

For my money, it certainly did do what was intended- the destruction of many white financial institutions and the ability of the lib fat cats in Washington to remain in power. So let’s put the blame exactly where it belongs- on the bloody libs and their idiotic socialist ideas. Pin the tail on the donkey!

 

Robert Firth

 

  

THE TRULY EVIL DEMOCRATS

 

WHO THEY ARE AND WHAT THEY DID

 

AMERICAN’S WILL NOT REST UNTIL THE TRUE VILLAINS HAVE BEEN EXPOSED AND PUNISHED.

 

What you are about to read here is the simple truth and no amount of dodging by those responsible for this disaster will mitigate the fact that the congressional democrats diligently and with malice aforethought caused the greatest financial disaster in world history. They can try to blame Wall Street, Main Street and any other street, but, in the end, we will show that they alone are 100% responsible.

 President Bush, along with many conservative congressmen, saw the problem coming early on and tried to stop it before it was too late. Had they succeeded we and the world might not have found ourselves in our present dire straits.

 This story begins with Carter, unarguably America’s worst president, passing into law the Community Reinvestment Act which was a piece of progressive toxic legislation designed to legally force our banking system to make home loans to unqualified and often unemployed people who would not ever be able to pay them back. Thus, began the dumbest and most destructive federal program in America’s history- a truly magnificent and colossal dung heap of wealth redistribution and social engineering surpassing, by far, any of the previous mad-hatter dumb-ass schemes hatched by the wacko libs. 

Before this idiotic bill there was no such thing as a “sub-prime” loan. The non- qualifying, zero down, 100% financed ARMs were unheard of. These absurd instruments had to be invented by lenders as mechanisms to give deadbeats trillions in what has tuned out to be the taxpayers money. 

McCain, a champion of common sense regulation, supported Senate bill 109, introduced in 2005 by Charles Hagel, a Republican member of the Banking Committee from Nebraska. McCain announced in a speech that he was a co-sponsor of the bill. The purpose of the bill was to stop Fanny May and the congressional dems from forcing banks into making even more risky loans and investing what the conservatives knew would eventually be the taxpayer’s money into toxic loans. Lib-dems, under Chris Dodd, the chairman of the Senate  banking committee, acted in lock step to kill the bill in committee and continued to encourage Franklin Raines at Fanny May to buy up as many of the diseased loans as possible.  

Why would Barney Frank, Dodd and company not want to stop Fanny May from continuing this dangerous and ominous practice? Well, for one reason, Raines, the black boss at Fanny May, was paying off many of the libs in both houses. Dodd received thousands from raines as did obama and many others. Public records show that the top two recipients of Fannie/Freddie campaign contributions are Sens. Chris Dodd and b. Husain obama, taking $165,000 and $126,000, respectively. Mr. obama, who now says he’s going to remedy the whole situation, personally entered many banks intimidating them with threats of legal action if they didn’t loan more money to black deadbeats. 

Republican attempts to reform Fanny and Freddy as early as 1999 failed. In 2003,  Greenspan testified that Fannie and Freddie’s loose practices could endanger the financial system. Unbelievably, the lisping, homosexual, democrat, barney frank said these institutions were fundamentally sound and should be even more aggressive in loaning money to low-income people.  

Look, it doesn’t matter how much of a smoke screen the dems put up- in the end, the American people will see for themselves what these criminals have done and they will be held accountable. Why did they do it? Well, for one thing, to gain political power. They were pandering to their base; buying votes and currying favor with the millions of deadbeat voters and using the taxpayer’s money to do so. Secondly, they were stuffing their pockets with pay-offs from Frank Raines. Dodd even got a “sweetheart” personal; mortgage deal from the head of Countrywide, one of the big players in the sub-prime scandal. 

Of course, the banks and investment houses  (secondary money markets)  played fast and loose, buying up and packaging these diseased loans and flogging them worldwide as security for huge loans they couldn’t pay for when the underlying collateral failed.(which it predictably did)  I am by no means excusing them for their monumental greed and stupidity, but, and this is a big BUT, they couldn’t have done it had not the congressional lib-dems provided them with billions in toxic loans in the first place. That has to be crystal clear! So much for Wall Street’s culpability in this mess! 

Now, there’s one other extremely serious element of this democratically engineered tragic monstrosity that we have to understand. Many people have and are seeing their home’s value decline. In many cases, home owners owe more than the home is worth. The lib-dem progressive socialists have told you that this was just the housing bubble breaking but they failed to tell you why. I will tell you why. The value of a home, like the value of everything in a market economy, is subject to the laws of supply and demand.  

Housing prices fell and are in decline because there are five million foreclosed homes on the market. Supply simply exceeds demand by a huge factor. The number of foreclosed homes is growing every month so don’t look for existing home values to increase anytime soon. Ninety percent of all foreclosures are sub-prime loans. Now, if your home has lost 20 to 50% of its value, you know who to blame. The stinking lib-dems in congress tossed a ‘legislative monkey wrench’ called the CRA, (Community Reinvestment Act) into the American banking industry then stood there grinning like idiots and cheering as Fanny and Freddy greedily gobbled up billions of these DOA notes like a starving kid in a candy shop!  

Don’t let these miserable excuses for Americans get away with pulling the wool over your eyes- These bad boys thought it would be “oh so wonderful” if everyone who wanted to buy a home could do so. They decided that home ownership should be an “entitlement,” just like the billions in other “entitlements” they have passed into law each one becoming an increasing burden on the productive tax-paying citizens. 

Opps! This time they really screwed up. The burden was just too much and the system blew up in their faces. Now they sit there pontificating and desperately trying to shift the blame to anyone anywhere, except themselves! Don’t let them do it! 

Home ownership is, and always has been, a privilege and a reward reserved for those who have earned it. Those who place their hard earned money on the table and who reliably make their payments can buy a home and the banks are open to them. Deadbeats and worthless scum can rent or live in a box on the street but, they will not get past the guard at the bank’s door! Not anymore! The Community Reinvestment is a dead duck and an incredibly stupid idea - words that should be chiseled on Carters tomb.

 

Robert Firth