A little history lesson for all of the misguided liberals who think conservatives are the cause of the financial mess!
The roots of today's mortgage-based financial crisis can be traced back to the Community Reinvestment Act (CRA), which Jimmy Carter (head tool) signed in 1977. Seeking to address complaints from anti-poverty activists and housing advocates about banks allegedly discriminating against minority borrowers and "redlining" inner-city neighborhoods, the CRA decreed that banks had "an affirmative obligation" to meet the credit needs of victims of discrimination in borrowing.
To add a government stick to the process, the CRA decreed that federal banking regulators would consider how well banks were doing in meeting the goal of more multiculturalism in loaning when considering requests by banks to open new branches or to merge.
A good "CRA rating" was earned by way of increasing loans in poor neighborhoods. Conversely, lenders with low ratings could be fined.
The Fed warned banks that failure to comply with government guidelines regarding the delivery of "equal credit" could subject them to "civil liability for actual or punitive damages in individual or class actions, with liability for punitive damages being as much as $10,000 in individual actions and the lesser of $500,000 or 1 percent of the creditor's net worth in class actions.
This well-intentioned in terms of delivering "economic justice," this push for more government-directed social engineering produced a widespread weakening of long-established industry standards for credit worthiness.
Led by Congressional Democrats, this policy of replacing private and decentralized decision-making with a system of centrally-delivered rewards and punishments was basically a one-party effort. Republicans, it seems, were more aware of the unintended consequences that flow from government interference in the market.
Over the past 30 years, Democrats, along with a handful of Republicans, have demonized lenders as racist and passed regulation after regulation pressuring them to make more loans to unqualified borrowers in the name of diversity. The march toward the eventual financial meltdown picked up speed during the Clinton administration via an increased lowering of loan standards in order to expand minority borrowing.
By intervening, even just threatening to intervene in the CRA review process, left-wing nonprofit groups have been able to gain control over pools of bank capital, which they in turn parcel out to individual low-income mortgage seekers, The radical group called ACORN had a $760 million commitment from The Bank of New York!
What makes this even more disgusting is that we are about to turn the government over to the people who were responsible for this fiasco to begin with. The voters seem hell bent on rewarding Democrats as better able to manage the economy.
