WND ANALYSIS: Obama suffers amnesia blaming Bush for economy
Democrats pumped subprime mortgage market, triggering banking collapse
In the current narrative presented by Democratic Party operatives, the banking industry collapse of September 2008 was caused by tax cuts under George W. Bush and supply-side economics tracing back to the era of Ronald Reagan.
The narrative, however, ignores the personal responsibility Barack Obama and Democratic Party operatives played in creating the subprime mortgage market, beginning with the passage of the Community Reinvestment Act of 1977.
The 2008 banking collapse was triggered by a series of failures in the mortgage-backed securities market resulting from massive defaults in the subprime mortgage market and derivatives supporting the mortgage market that caused Lehman Brothers and Bear Stearns to go bankrupt. Financial giants such as Freddie Mac, Fannie Mae, Merrill Lynch and AIG threatened to follow suit, as detailed by the Guardian of London.
As WND reported in May 2009, Obama himself played a role as an activist lawyer in Chicago, representing ACORN in the 1994 case Buycks-Roberson v. Citibank Federal Savings Bank. In the case, ACORN pressed Citibank to make more loans to marginally qualified African-American applicants “in a race neutral way.”
ACORN Housing, then a nationwide organization with offices in more than 30 cities, used the Citibank litigation to push the group’s radical agenda to get subprime homebuyers mortgages under the most favorable terms available.
Community Reinvestment Act of 1977
The Community Reinvestment Act, or CRA, was signed into law by President Jimmy Carter in 1977 with the goal of forcing banks to provide credit to businesses and homeowners with poor credit.
The CRA’s purpose was to stop banks from “red-lining,” or refusing to lend to people in low-income areas because the risk of the loan not being repaid was too high.
Even though lending to people with poor credit is inherently risky, the Carter administration was intent on forcing banks to accept a social responsibility to provide credit to homeowners and businesses in low-income neighborhoods. >>>> PLEASE see my comment below – “X” <<<<
The CRA was super-charged during the Clinton administration with a set of new rules that allowed subprime mortgages to be securitized.
Federal Reserve Chairman Ben Bernanke, in a speech to the Community Affairs Research Conference in Washington, D.C., on March 30, 2007, noted a 1992 law passed during the Clinton administration expanded the CRA market by requiring the government-sponsored enterprises Fannie Mae and Freddie Mac to securitize “affordable housing loans,” a euphemism widely understood to mean low-income housing loans.
MUCH MORE AT http://www.wnd.com/2012/09/obama-suffers-amnesia-blaming-bush-for-economy/
While WND has a point, the -admittedly lengthy- explanation of the Community Reinvestment Act is another reason for the expression “the road to hell is paved with good intentions” . Without going to the site, here is an excerpt from the Enforcement section of this act, that appears to have been neglected, let alone the many changes made after its enactment: (underline my emphasis)
“The law, however, emphasizes that an institution’s CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution. An institution’s CRA compliance record is taken into account by the banking regulatory agencies when the institution seeks to expand through merger, acquisition or branching. The law does not mandate any other penalties for non-compliance with the CRA.“