I am going to ask for help from some of our scholars and ex bankers on this one !

I have been trying to figure out in simple terms how this country got here relative to the financial crisis and bad loans which everyone says is at the root of the problem

An old friend of mine called today..someone who I have always respected and of course the conversation got to the BAIL OUT. I told him I was still confused on how this happened. This is what he told me, and a note to my Democrat friends....the guy who told me this is a Democrat

Okay...he says it all started with the Community Revinvestment Act from the 70's, changed by the Clinton adminstration in mid 90's and reviewed by law by the Bush administration in 2003 where they suggested more government oversight, and it was opposed by the Democrats in congress at the time saying there was no problem and thus it was not necessary.

Guys and Gals who know....is it this simple....does this have truth ?

I don't think there is any doubt that the Community Reinvestment Act was a major contributory to the current fiasco. See a fairly succinct write-up at http://en.wikipedia.org/wiki/Community_Reinvestment_Act Bear in mind that this is Wikipedia. There are likely more definitive (& more confusing) explanations elsewhere. But this does show Barney Franks at his best.

Originally Posted by Bucco

I am going to ask for help from some of our scholars and ex bankers on this one !

I have been trying to figure out in simple terms how this country got here relative to the financial crisis and bad loans which everyone says is at the root of the problem

An old friend of mine called today..someone who I have always respected and of course the conversation got to the BAIL OUT. I told him I was still confused on how this happened. This is what he told me, and a note to my Democrat friends....the guy who told me this is a Democrat

Okay...he says it all started with the Community Revinvestment Act from the 70's, changed by the Clinton adminstration in mid 90's and reviewed by law by the Bush administration in 2003 where they suggested more government oversight, and it was opposed by the Democrats in congress at the time saying there was no problem and thus it was not necessary.

Guys and Gals who know....is it this simple....does this have truth ?

Now let me get this straight...The Community Reinvestment Act was passed in 1977...so it took 31 years to get to a crisis?

Didn't the Repubs have total control in 2003? I believe they did.

There is plenty of blame to go around.

party lines doesn't it? 30 years to take note. That's not bad by Washington standards. Take a look at the energy crisis....more than 30 years...several administrations of both parties....some even vowing to fix the energy problem....still today....NOTHING!!!!
If we think the current banking/financial crisis is a problem for our so called fragile economy.....just wait till the energy problem blows up around the world. When the oil stops flowing I assume we will have both parties working together to try to pull a rabbit out of the hat. That may work for the financials.....but it ain't no quick fix for no oil.

Politicians doing nothing for we the people for years and years and years.....we the people a bygone concept.....at least in Washington, DC.

BTK

Originally Posted by cologal

Now let me get this straight...The Community Reinvestment Act was passed in 1977...so it took 31 years to get to a crisis?

Didn't the Repubs have total control in 2003? I believe they did.

There is plenty of blame to go around.

Did you do ANY research at all ? Original bill passed in 70's....revised by President Clinton in 1995...reviewed by law since President Clinton's revision was very controversial...and in that reveiw President Bush tried to tighten the oversight...it was laughed out by the Democrats ! And I mean what I read tonight....Barney Frank even made fun of the President !

I believe Bush proposed some banking oversight early in his first term when Republicans were in control and they put it in committee and it never came out for a vote. Bucco - please do YOUR research.

Originally Posted by conn8757

I believe Bush proposed some banking oversight early in his first term when Republicans were in control and they put it in committee and it never came out for a vote. Bucco - please do YOUR research.

As I said when I began this thread I totally agree to not being up to speed on this subject, and will take your a advice and continue to research. Nobody as of yet has showed me where what I posted was incorrect. I will surely listen to that....I want to know !!!

I just watched a video posted under "Video unearthed-shocking" and realize that it was edited, but it is shocking to hear the comments. Important to me was President Clinton's comments at the end when he specifically mentioned the political divide on oversight.

I dont give a $%^&&* what party was at fault, but if it was party politics that got us where we are I want to know that...I cant understand the dismissal of all of this along party lines. If we truely dont want party poltics to ruin us, then we have to open up and find out what happened. I think as has been said, that there is blame on both sides, but no matter...this is serious stuff and I, for one, want to know about how this happened. I dont want spin from either side.

I promise to Conn8757 to continue to research and invite he/she to join me...give me some links or some concrete information that will help to educate me if you feel I am off base. I am trying to find out...are you?

Please remember Republicans controlled both the House and Senate in 2003.

Republican Congress Talked About Financial Reform, But Did Nothing
Thursday September 18, 2008
According to the New York Times, in September 2003 the Bush Administration "recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago." (tip)
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates...

After the hearing, Representative Michael G. Oxley, chairman of the Financial Services Committee, and Senator Richard Shelby, chairman of the Senate Banking Committee, announced their intention to draft legislation based on the administration's proposal. Industry executives said Congress could complete action on legislation before leaving for recess in the fall.
The President's call came after "a Freddie Mac accounting scandal" in July.

"It seems that Congress doesn't have the stomach to do anything substantial,'' said Marshall Front, president of Front Barnett Associates LLC, which manages $1.5 billion in Chicago, including shares of Fannie Mae. (quote from July 2003)
It seems Mr. Front was correct.

In 2003, Republicans controlled both branches of Congress (108th) and the White House. What happened to Fannie Mae and Freddie Mac regulatory reform under Republican leadership? Nothing.

Here's what I found when I searched THOMAS for the phrase Fannie Mae for the 108th Congress (2003-2004): eight bills .... but only six appear to relate to this topic, per their title. Of those six, only one was introduced after the White House weighed in (at least rhetorically) in September ... and the prime sponsor of that bill was a Democrat. The other bills seem to have resulted from the July scandal. No bill moved out of committee.

H.R.2022 introduced on 7 May 2003 by Rep. Christopher Shays (R-CT,4).
Title: To extend the registration and reporting requirements of the Federal securities laws to certain housing-related Government-sponsored enterprises, and for other purposes.
Latest Major Action: 5/23/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.
H.R.2117 introduced 23 May 2003 by Rep. Pete Fortney (D-CA,13).
Title: To amend the Federal National Mortgage Association Charter Act and the Federal Home Loan Mortgage Corporation Act to remove certain competitive advantages granted to the housing-related government-sponsored enterprises relative to other secondary mortgage market enterprises, and for other purposes.
Latest Major Action: 5/23/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.
H.R.2575 introduced on 24 June 2003 by Rep. Richard H Baker (R-LA,6).
Title: To reform the regulation of certain housing-related Government-sponsored enterprises, and for other purposes.
Latest Major Action: 9/25/2003 House committee/subcommittee actions. Status: Committee Hearings Held.
H.R.2803 introduced on 21 July 2003 by Rep. Edward R Royce (R-CA,40).
Title: To establish the Office of Housing Finance Oversight in the Department of the Treasury to ensure the financial safety and soundness of Fannie Mae, Freddie Mac, and the Federal home loan banks.
Latest Major Action: 8/4/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.
H.R.2897 introduced on 25 July 2003 by Rep. Julia Carson (D-IN,7)
Title: To end homelessness in the United States.
Latest Major Action: 8/25/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on Housing and Community Opportunity.
S.1508, introduced 31 July 2003 by Sen Chuck Hagel (R-NE).
Title: A bill to address regulation of secondary mortgage market enterprises, and for other purposes.
Latest Major Action: 4/1/2004 Senate committee/subcommittee actions. Status: Committee on Banking, Housing, and Urban Affairs. Ordered to be reported with an amendment in the nature of a substitute favorably.
S.1656, introduced 23 September 2003 by Sen Jon S. Corzine (D-NJ).
Title: A bill to address regulation of secondary mortgage market enterprises, and for other purposes.
Latest Major Action: 9/25/2003 Referred to Senate committee. Status: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
H.R.3507 introduced 18 November 2003 by Rep. Brad Sherman (D-CA,27).
Title: To expand homeownership opportunities in States having high housing costs.
Latest Major Action: 1/2/2004 Referred to House subcommittee. Status: Referred to the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.
Clearly, in 2003 and 2004 the issue of finance reform was not a priority of the White House or Congressional Republicans.

In the 109th Congress (2005-2006), the House overwhelmingly approved (331 to 90) HR 1461, The Federal Housing Finance Reform Act, designed "to create a stronger regulator for Fannie Mae and Freddie Mac." The Senate, still controlled by Republicans lagged the House in taking action. It is not clear if this was a lack of Republican leadership or blockage by Democratic leadership (filibuster threats). (Shout if you have links to illustrate this impasse.)

HR 1461 remained stalled in the Senate: last action, 31 October 2005, referred to the Committee on Banking, Housing, and Urban Affairs.

On 31 July 2007, after the Democrats obtained control of the Congress in the November 2006 election, House Speaker Nancy Pelosi introduced HR 3221, a "bill to provide needed housing reform and for other purposes." Among other things, the bill granted the newly formed Federal Housing Finance Agency "supervisory and regulatory authority over Fannie Mae, Freddie Mac, and the federal home loan banks (enterprises)" (per CRS analysis).

Pelosi's bill became Public Law 110-140 on 19 December 2007.

Conn8757...thanks for all the information...I will research all of it as I can...but is this related to the Community Reinvestment act...and....what I saw on the video are you saying is not true ? Do you know the makeup of the committees where they never left ?

I am not concerned about whether it began in the WH....the President was required by law to look at the Community Reinvestment act thus no credit there..he had to do it. I have to look at the makeup of those committees that stalled.

Once again..thanks

Sorry Bucco - I was responding to the post above of yours -

"Did you do ANY research at all ? Original bill passed in 70's....revised by President Clinton in 1995...reviewed by law since President Clinton's revision was very controversial...and in that reveiw President Bush tried to tighten the oversight...it was laughed out by the Democrats ! And I mean what I read tonight....Barney Frank even made fun of the President !"

As you can see, the Democrats were not in majority when Bush proposed this - his own party put it in committee. It wasn't laughed out by the Democrats.

I found this very interesting....

http://www.newsweek.com/id/161199

Originally Posted by cologal

I found this very interesting....

http://www.newsweek.com/id/161199

Good article discussing one of the elements involved. The more I read the angrier I get that we are doing this bail out. SOMEHOW, we must return to the day when you EARNED your home....EARNED your education....and so many other things. Of course it is a different time,but the GIVING has got to stop...we are eating ourselves alive.

AND YES...folks are getting rich on this...Why do we HAVE to give mortgages to folks who cannot afford them.....there is another thread on here about suing citi card on mortgages...I am so tired of it.

You know as we talk about all the folks getting rich on this, we dont even mention they are getting rich because we insist on giving people things that have not earned....that is the source !