Like many of you, I have been trying to figure out what happened to our economy. In pursuit of the truth, I have traveled to the far corners of the earth, meditating with Buddhist monks in Nepal, studied the question with Zen masters in China, paid a gypsy fortuneteller in Romania, and talked to my barber. Through this journey of enlightenment I have concluded that:

The source of the meltdown was the unbridled pursuit of a liberal, big government initiative to fulfill every one's American dream of home ownership.

Factor in banking industry greed, corruption of a Congress, with a minority of exception, who sold their votes for campaign contributions and worse, and millions of takers who were neither qualified or prepared for the responsibilities of home ownership.

During an extremely spirtual connection through my first Dharma talk in China, I was led through a mystical and sensual mist to a great awakening by the embodiment of a deity like spirit in an earthly form called........the UTube.

If you have the courage and patience to view this 2004 UTube video to the end, you will see the height of hypocrisy by an assortment of cowardly Congressional leaders who are now holding hearings blaming everyone but themselves. Listen to the wisdom of Maxine Waters, Frank Raines and other Congressional tools. Persist viewing to the end and you will be thrilled to hear the brilliant Barney Frank reassuring America there is no problem with Fanny Mae and Freddy Mac and treated to President Bill Clinton agreeing with the Republicans. Warning...viewing the video in its entirety may really p**** you off.

http://www.youtube.com/watch?v=PmcGKbvTLSM

My Zen master and my barber agreed that this UTube tape of a 2004 congressional hearing is historically profound as it captures the essence of the meltdown. The villains are exposed with their pants and skirts down and in their own damning words. It has appeared on TOTV before but not in the context of where we are today. It is profound in its implications for those that really want the truth so that it may never happen again.

Cabo.
I agree with you totally. I am at work right now and several of my friends do NOT have an idea what Freddy and Fanny were forced to do. I don't have to tell you they are Liberals. Some friends eh

Our biggest commodity and costliest in this country is ignorance.

TallerTrees.....amen.

to the partisan bias...the incredible dishonesty...of those that supposedly represent we the people.

What will come forth with an Obama Presidency and this kind of Congress should cause those still trying to decide.....TO DO THEIR HOMEWORK...

I don't usually partake of looking back over my shoulder, unless it can provide profound insight to help avoid a tragedy.

There is no doubt the sheeple will defend the positions taken as appropriate for the point in time 2004 to which I must say....bull honkey.

It is totally and completely in concert with the mission and objectives of ACORN which is the here and now exploiters of getting the undeserved the loans...legally coached and trained by Obama....not a slam...just a known truth.

BTK

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.

Accomplished Googlers can probably find the original talking points off which dozens of conservatives made essentially the same case: The Community Reinvestment Act of 1977 caused the financial crisis. For example, a Wall Street Journal editorial lumped CRA together with far more plausible causes of the meltdown. This liberal-inspired law, it complained, "compels banks to make loans to poor borrowers who often cannot repay them."

In fact, the CRA had about zero to do with today's problems. Its accusers are "know-nothings," Aaron Pressman writes on BusinessWeek.com. He says the law "was actually weakened by the Bush administration just as the worst lending wave began."

The Community Reinvestment Act requires federally insured banks and thrifts to lend in the low-income neighborhoods where they take deposits, but consistent with safe banking practices. It was created to stop redlining, the practice whereby banks refused to lend money in certain areas -- read minority neighborhoods -- regardless of their residents' credit histories.

The most obvious clue that CRA did not cause the mess is its date. The musical "Annie" opened in 1977, and the Eagles' "Hotel California" was the No. 1 song. That was a long time ago, 31 years to be precise. If the CRA created this time bomb of lousy loans, why didn't it go off in 1980 or 1996?

The writing of crazy mortgages for low-income people -- loans with exploding interest rates, brutal fees and no demands for documentation -- was a post-2003 phenomenon. In 2004, the Bush administration actually slashed CRA regulation, freeing small banks and thrifts from its toughest standards.

"These institutions no longer had to make subprime loans to low-income people," Mark Thoma, an economist at the University of Oregon told me. "That should have reduced the volume if the CRA was driving it." On the contrary, subprime lending increased.

CRA was a minor player in the mortgage orgy. Since the late '90s, half of subprime loans have been made by independent mortgage companies not subject to CRA rules, University of Michigan Law School professor Michael Barr told Congress in February. Another 30 percent came from affiliates of banks or thrifts with little CRA supervision. That left only one in five subprime loans fully governed by CRA.

Furthermore, companies not covered by CRA made subprime loans at more than twice the rate of lenders that were, according to Janet Yellin, president of the San Francisco Federal Reserve Bank. The idea that CRA brought the banks down is "just ridiculous," Thoma said.

The ugly truth is this: The redlining that led to the passage of CRA has been replaced by reverse-redlining. Lenders didn't have to be dragged into low-income neighborhoods. They rushed in. It was there that they could push their complicated mortgages onto the elderly, blacks and Hispanics, and then sell the loans to somebody else. At least 40 percent of the holders of subprime mortgages could have qualified for cheaper prime mortgages, according to one study.

Far from being spurned by financiers, low-income Americans have become their cash cow. Payday lenders are listed on the New York Stock Exchange. Operators go into poor neighborhoods pretending to be retailers. The product they "sell" -- be it a used car or new sofa -- is just a hook to saddle the trusting buyer with a loan that eventually costs them several times the ticketed price.

Yes, low-income people can be credit risks. That cannot be ignored. But this financial scandal is the work of fat cats, enabled by a permissive government. There's something highly indecent about blaming it on an innocuous law meant to remove some of the unfairness in the lives of the working poor.

-The Detroit News-

Many believe that legislation written primarily by Phil Gramm in 1999 (signed into law by Clinton), is in large part to blame for leading to the 2008 mortgage crisis. The Gramm-Leach-Bliley Act is perhaps most famous for repealing the Glass-Steagall Act which regulated the financial services industry. The legislation allowed Swiss Bank UBS to purchase several American institutions. Gramm later became a lobbyist for UBS, collecting over 750,000 USD in fees. UBS alone issues over 18 Billion USD in subprime mortgages. He was John McCain’s presidential campaign co-chair and his most senior economic adviser from summer 2007 to July 18, 2008.
In a July 9, 2008 interview explaining McCain's plans in reforming the U.S. economy, Gramm explained the nation was not in a recession, stating, "You've heard of mental depression; this is a mental recession," and "We have sort of become a nation of whiners, you just hear this constant whining, complaining about a loss of competitiveness, America in decline." Gramm's comments immediately became a campaign issue. "McCain strongly denounced Gramm's comments. On July 18, 2008 Gramm stepped down from his position with the McCain campaign. However, he often accompanies McCain during the campaign, and continues to be an unofficial adviser on economic and financial matters.

The biggest bank in Switzerland, UBS, is expected to announce a further round of job cuts on Thursday, axing about 1,900 in its various departments like investment banking, equities and fixed income units. The UBS has suffered the biggest losses from the credit crisis among all the European banks. The cuts which are likely to be announced at a shareholders’ meet are said to represent about 10 per cent of the group's total investment banking staff and would also hit support staff jobs according to experts. So far UBS had to write down $44.2 billion dollar, the biggest amount for any European bank.

Gramm continues to be employed as a UBS vice chairman regarding investment banking.

the special interest groups or minorities like it or not is get back to basics.
If one can afford, what ever, either out right paid for or loaned $$$ then they are entitled.

For those that CAN NOT....tough....too bad. Wait until one can afford it or forget it.

That is what I had to grow up with. There were no hand outs.

Of course there wasn't a permissive, special interest, minority driven every gets what they want society back then either.

Some how we have managed to move away from the tried and true method of the good of the many out weighs the few....majority rules....please bring it back!!!!

BTK

I agree that if we know the history of our economy we can better understand how we got to where we are today, BUT it's a waste of time and energy to try and place blame on either political party, the banks and mortgage companies, the Realtors, wallstreet, etc., etc.. Ultimately, we, you and me, are responsible for this economic mess. Did we question what wallstreet, the banks, mortgage companies, Congress, etc. were doing? No, we didn't! We were happy as a puppy with a dog treat to see the market value of our home rise beyond what we knew in good conscience it was worth. In fact, some of us may have jumped in on the home speculation market. Did we ever question what the company we held stock in was doing to make such huge profits when their product market was decreasing? No, we didn't! We cashed the big interest or dividend check with a smile on our face, a song in our heart and congratulated ourselves on what smart investors we are. I could go on, but the bottom line is that we caused this mess by our own greed, and ignoring our responsibility to make sure honest and knowledgeable people represent us at all levels of government. Now we have the opportunity to elect people whom we believe can get us out of this mess and will take whatever steps are necessary to prevent it from reoccurring. If we allow ourselves to fall victim to believing all the wild personal, meaningless accusations of the political candidates, and ignore the real issues and how they want to deal with them, then we will again be responsible for our irresponsible behavior. Isn't this a great country? In what other country could you step in your own shxx and blame someone else for it being there.

As the old saying goes, when you point a finger at someone else, four more are pointed at you.

WE are responsible because of our inattentiveness and desire to accumulate money and "things" even though the means for doing so clearly didn't make any economic sense. We can criticize our own willingness to accept nonsensical statements and claims made to us by our political leaders, a lot easier thing to do than to take the time to think through what's right and wrong...and then DO something about it.

1. Originally Posted by mrhetzel

   I agree that if we know the history of our economy we can better understand how we got to where we are today, BUT it's a waste of time and energy to try and place blame on either political party, the banks and mortgage companies, the Realtors, wallstreet, etc., etc.. Ultimately, we, you and me, are responsible for this economic mess. Did we question what wallstreet, the banks, mortgage companies, Congress, etc. were doing? No, we didn't! We were happy as a puppy with a dog treat to see the market value of our home rise beyond what we knew in good conscience it was worth. In fact, some of us may have jumped in on the home speculation market. Did we ever question what the company we held stock in was doing to make such huge profits when their product market was decreasing? No, we didn't! We cashed the big interest or dividend check with a smile on our face, a song in our heart and congratulated ourselves on what smart investors we are. I could go on, but the bottom line is that we caused this mess by our own greed, and ignoring our responsibility to make sure honest and knowledgeable people represent us at all levels of government. Now we have the opportunity to elect people whom we believe can get us out of this mess and will take whatever steps are necessary to prevent it from reoccurring. If we allow ourselves to fall victim to believing all the wild personal, meaningless accusations of the political candidates, and ignore the real issues and how they want to deal with them, then we will again be responsible for our irresponsible behavior. Isn't this a great country? In what other country could you step in your own shxx and blame someone else for it being there.

To solve any problem, you first get to the root cause. We as taxpayers were not directly reponsible and should not be. Our mistake was continually voting in these thieves. The bailout was the biggest scam and abuse of the Bill of Rights and our Constitution to date. Let Wall Street work itself out. Yes, Cox should keep a more vigilant watch to enforce the rules that are already and have been in place. Companies poorly run come and go. So do banks.

The Fanny Fredie debacle crept into Wall Street, there were greedy people all around. BUT--- the crux or root cause of this problem was Congress. The video and audio tapes are numerous and you can find them for yourself that clearly show Barney Frank, Christopher Dodd, Chuck Schumer, Nancy Pelosi and the rest of the socialist theives saying everything was just find and the regulators should leave it alone. Look folks, people who cannot afford to pay for a home mortgage SHOULD NOT BE ENTICED with zero downpayment to buy. I worked for many years to buy my first home. I pay my taxes and do the right thing. But when you have the calibre of people in Congress riding the gravy train of Fannie and Freddie and getting hugh sums of money for their piggy banks, it's time to act. Obama will be the wrong President in this perfect storm on our shores.

I have absentee voted already, but I feel duty bound to at least try to get through to fellow Americans to do the right thing and not be fooled.

TVQueen....."Our mistake was continually voting in these thieves". Well, we voted them in so I still say WE are the cause by allowing it to happen. How many times did you write your representative and express your thoughts about what was happening?

Btw, do you know what a socialist is? Or, a Liberalist? Or, a Conservatist? I really doubt it!