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Is the Community Reinvestment Act to blame for the current Economic Crisis – Yes with a little help from cooking the books at Fannie Mae

Posted by rightwinger on December 11, 2008

Many politicians and government officials are not telling the truth when they say that the Community Reinvestment Act is not to blame for the current economic crisis.

There are three major reasons for the current Economic Crisis:

1. Community Reinvestment Act

2. Repeal of the Glass-Steagall Act

  • Banking regulations put in place after the Great Depression.
  • Repealed under Clinton
  • Led by a Republican, but signed by Clinton

3. Accounting Irregularities at Fannie Mae (aka cooking the books like Enron)

Barack Obama has interestingly enough blamed Bush for the Economic Crisis. In reality the economic crisis is rooted in Democrat legislation. When the Republicans tried to blow the whistle and say that reforms were needed, the Democrats stopped it. It all began with the Community Reinvestment Act (CRA) under Carter which guaranteed that low income individuals would be guaranteed loans. These loans are referred to as ninja loans – no income, no job, no assets. It didn’t cause a problem until under Clinton when they mandated that Fannie Mae’s portfolio be 50% of these ninja loans. It is interesting that Fannie Mae’s portfolio was increased right at the end of Clinton’s presidency and was inherited by Bush. By the way, Bush also inherited an economy in recession. Most people have forgotten this fact. In the Spring of 2000, the stock market crashed when the dot com bomb hit. Because of this a trend started where people started buying bigger fancier houses and investing less in the stock market. Also the house flipping trend came on the scene. This was the beginnings of the Housing bubble. Seven months after Bush took office, the US was attacked on 9/11. We were lucky due to Bush’s economic policies not to go into a deep depression.

No company can survive with 50% of its assets in junk holdings. It is destined to fail. This is what happened to Fannie Mae. Add to this ninja loans were mandated by Congress so lenders had a quota they HAD to meet in order to comply with the CRA. Now everyone was buying houses even people who were high risks. For awhile things were fine. It takes years for something like this to finally bust.

The Dems want to say that it is ALL because of the Glass-Steagall Act being repealed. Yes this was a contributing factor, but NOT the reason we are in this mess. At the heart of this debacle is that these junk loans were bundled and resold. Its the bad assets that caused the failure. If good assets had been bundled and resold we wouldn’t be in this mess. The assets being packaged and sold to other financial institutions were these worthless ninja loans that were mandated as being 50% of Fannie Mae’s assets. Now once Bush was in office and “accounting irregularities” were discovered the Republicans tried to blow the whistle as you will see in the below video. Although the Republicans controlled Congress they did not have enough votes to override the Democrats halting the new regulations being proposed. Fannie Mae was cooking the books. Franklin Raines should be in prison right about now. He oversaw Fannie Mae and personally profited to the tune of $90 million in 6 years. The Democrats in Congress knew this and covered it ALL up while fighting against any new regulation changes to Fannie Mae.

Vodpod videos no longer available.

How is Obama tied into the Fannie Mae debacle? Well he knew Fannie was in trouble and did nothing but take payoffs. In 2005 he knew it was in trouble and just got a large sum of money to go along with the Democratic cover-up. Obama even represented ACORN and sued one bank forcing them to make these junk loans. One of ACORN’s tasks was to intimidate banks into making these ninja loans. Obama both worked for ACORN and trained other community organizers in these harsh tactics. Obama having only been in the Senate for less than 4 years was number 2 on receiving payouts or should I say payoffs from Fannie Mae. Barack Obama is a liar who is saying the Bush policies caused the Economic Crisis. Wake up America! The main stream media continues to cover for his lies. See the video below where Michelle Obama was at this 2005 meeting where it was announced that Fannie Mae was in trouble and how these Democrats were Fannie Mae’s “family”.

Vodpod videos no longer available.

Let’s face it, if Obama was this great leader of change, he would have stood up and pointed out this corruption instead of simply staying quiet and receiving money. Barack Obama knew Fannie Mae was crumbling from within while he remained quiet.  Now that Obama has been elected, he is in major cover up mode for Fannie Mae and his friends that ran it.  You won’t hear anything about theses facts in the main stream media.  Nope.  It will just all be covered up.   It is bad enough Obama is lying about it, but the fact that he and the Democrats refuse to do anything about it is worse. The refusal of the Democrats to investigate Franklin Raines and the root cause of the crisis is putting our nation at peril. In fact the Democrats are blatantly lieing and saying that CRA wasn’t behind this mess. If anyone with any sense who looks further knows that it was at the heart of this crisis.  Another 10 years of these kinds of underhanded politics, business as usual, blame someone else (aka Bush) will destroy our economy while these politicians grease their own hands.  Guess what we all may become global citizens while the US becomes a third world nation.  Oh yess, Obama is going to see to this with his Global Poverty Act S.2433.

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