You're right, Cabo, I think it's fair to trace much if the current financial crisis back to the passage of the Community Reinvestment Act (CRA) which was passed by the 104th Congress and signed by President Carter in 1977. But maybe a little more meat on he bones of history would help.

The CRA was passed by the 95th United States Congress and signed into law by President Jimmy Carter in 1977 as a result of national pressure to address the deteriorating conditions of American cities – particularly lower-income and minority neighborhoods. The Act was intended to reduce discriminatory credit practices against such neighborhoods, a practice known as 'redlining'. The Act requires the appropriate federal financial supervisory agencies to encourage regulated financial institutions to meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation. To enforce the statute, federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches or for mergers or acquisitions.(Note: As a retired banker, let me tell you what this means. The practical result of CRA was that you HAD to make loans to borrowers ansd secured by collateral that the lender found highly likely to default. If the bank examiners found that you weren't making your quotat of loans required, they could and would make life VERY difficult in the course of their frequent examinations.)

The CRA was a high-minded and well-controlled program dating back to its original passage. But since its enactment many changes were made which lead to the current crisis. Two of the more important changes were permitting the participating banks and S&L's to simply originate the loans instead of being required to hold them on their books. This permitted the banks to shift all the risk to Fannie Mae and Freddie Mac or the holders of publicly-traded mortgage backed bonds. The second important way that CRA was changed to result in the horrible results we know all know was the weakening of regulation of the banks and particularly of Fannie and Freddie. Much of the more damaging de-regulation of banks and investment banks was accomplished within the last eight years within the Executive branch by political appointees and the President himself. The Congress itself had little to do with the most damaging de-regulation.

How did this happen? Who was responsible? Yes, the original CRA was enacted under a Democratic President with a Democratic House and Republican Senate. Since that time we have had 20 years of Republican Presidents and 8 years with a Democrat in the White House, the last eight under Republican George Bush. The Republicans have controlled the House for 12 of the last 16 years and the Senate for 10 of the last 16 years.

Could this have been foreseen? Why wasn't anything done? This situation WAS predicted...by Congressional committees, by the financial media, by individual elected politicians, and most importantly by the various regulators who inspected the banks, insurance comapnies and Freddie and Fannie, much in open testimony before Congress!

Why was nothing done? Because those that could change things most easily--the U.S. Congress--was caught in the crosshairs of huge amounts of contributions from the companies who would suffer from a tightening of regulations and their habit of pandering for votes for re-election. We've all seen the disgusting statistics showing that the six members of Congress who initially lead the response to the current crisis had accepted a total of $24 million from the very companies they were supposed to regulate. That's a good example of the influence of special interests. Even our own congresswoman for Florida's 5th District has accepted almost $600,000, the majority from banks, insurance companies and real estate companies. For what? She was the owner of a donut shop before her election to the House. Why are companies throwing hundreds of thousands of dollars at her, because she's such a nice lady? Yeah, right!

We've all seen the YouTube videos of members of Congress defending the CRA and Fannie and Freddie. In fact the video is linked to your initial entry, Cabo. But those shown in the video were all minority members of the Congress in 2004. Why didn't the members of the majority party modify the laws or regulations when they clearly could have done so? Because of that pandering for the votes of the low income people who were enjoying the largesse being able to get loans they couldn't possibly repay. I guess the Congress thought that the music would never stop and not havie enough chairs for them to hide behind.

We ought to throw out all the incumbent members of Congress and start over. That's the way I'm voting.