Alice was chatting with some friends and Sarah Palin and the coming debate was mentioned. One woman remarked about “how dumb Sarah Palin is.” At that point Alice interjected that Joe Biden was really dumb, and for an example told her friends how he had said that as soon as the stock market crashed, Franklin Roosevelt had immediately gone on television to explain the situation to the American public.
None of the women had heard of Biden’s remark, but one of them said: “Well, of course he meant radio.”
Alice replied, “Maybe he did, but Roosevelt wasn’t President then.”
“Well he soon was, so that’s when he told Americans what was happening,” the woman continued.
“No he wasn’t,” Alice corrected her. “He wasn’t President until three years later. Do you know who was President?”
None of the women knew, so Alice answered her own question: “Herbert Hoover.”
Then Alice wondered why none of her friends had heard of Biden’s remark. Alice assumed that it was because the main stream media chose to ignore it to avoid embarrassing a Democrat.
“That’s not it,” said another of her friends, “it isn’t being reported because it’s just not important.”
“Don’t you think it’s at least as important as Dan Quayle misspelling “potato”? asked Alice. “Don’t you remember the big deal that was made of that? People still talk about it.”
“You know, you’re right,” the woman replied.
The purpose of my presenting this exchange is not to once more prove the already proven, that Americans are history illiterates. Test after test, and example after example has provided ample proof of that. My purpose is to illustrate that people are willfully ignorant, that they call something a “fact” only as it is relevant to supporting their viewpoint.
However, as the last fair-minded Democrat, the late Senator Patrick Moynihan, remarked: “Everyone is entitled to their own opinions, but no one is entitled to their own facts.”
Patrick is rolling over in his grave now, as Democrats and the main stream media place the blame for the financial crisis on Republicans for favoring deregulation, when it is obvious that Democrat policies going back to Jimmy Carter caused the collapse.
To get to the core of this issue, answer one simple question: “Why did lenders loan to very bad credit risks, and make them loans which could only survive if the housing market continued to go up, and interest rates continued to stay down?”
These loans were made with no down payment, low introductory interest rates changing to variable, stated income instead of verifiable (including income not declared on tax returns), and even interest-only loans to be restructured in two years.
So again my question, why were these loans made?
The answer is obvious: because of pressure from Democrats to enable low-income families to buy “affordable” housing. Republicans recognized the potential for problems and opposed the lowering of standards, but Democrats got their way.
It started with the Community Reinvestment Act (CRA) of 1977 under Jimmy Carter and the Democrats, which was “reformed” in 1993 by Bill Clinton and the Democrats. According to Robert Rubin, Assistant to the President for Economic Policy: "(In) conjunction with (President Clinton’s) Community Development Bank and financial institution legislation, which recently passed the House of Representatives, CRA reform will generate billions of dollars in new lending and extend basic banking services to the inner cities and to distressed rural communities around the country.”
Banks were to be judged by how well their statistics for loans to low-income families matched the rates for higher income earners. In other words, on a percentage basis the rates for loans to high-risk and low-risk borrowers should be the same.
In 2003 the Bush administration recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis over a decade before.
Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee, and the Democrats disagreed and blocked the reforms: ''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Frank. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''
Shortly after Frank’s statement, Congress held a hearing on accounting irregularities at Fannie Mae. By the end of 2004, Franklin D. Raines, former head of the White House Office of Management and Budget under President Clinton, and then chief executive of Fannie Mae, was forced out by the board, accused by regulators of overseeing accounting manipulations to bolster his compensation.
Raines settled charges brought by the Office of Federal Housing Enterprise Oversight by agreeing this spring to pay $2 million and forfeiting $22.7 million in stock and other benefits – all covered by insurance.
Some think that the distorted profitability numbers Raines reported at Fannie Mae contributed to its current slide.
Still Democrats didn’t learn, and in 2005 and 2006, Republicans including John McCain as a co-sponsor, put forth S. 190 [109th]: Federal Housing Enterprise Regulatory Reform Act of 2005, “(a) bill to address the regulation of secondary mortgage market enterprises, and for other purposes.”
Again reform was blocked by Democrats, and three of the top Democrats blocking it – Chris Dodd, John Kerry, and Barack Obama – were the top three recipients of campaign contributions from Fannie Mae and Freddie Mac.
When you read the articles warning about the consequences of making loans, it is no mystery why or how the current financial crisis occurred. Democrat handwriting is on the Wall - all over the wreckage of Wall Street, that is.