There are two sides to every story. Here's one for those Bush bashers on here:
President Carter, though opposed by the banking industry, signed into law the Community Reinvestment Act (CRA). To boost community development laws, CRA was a provision designed to stem bank "redlining," the practice of drawing a red line around low-income communities and denying lending in these areas. The original intent of CRA was to encourage banks to foster homeownership opportunities in underserved communities.
Republicans had won control of Congress in mid-90's and planned CRA reforms. The Clinton Administration, however, allied with Rep. Barney Frank, Sen. Kennedy (D-Massachusetts) and Rep. Waters (D-California), did an end-around by directing HUD Secretary Andrew Cuomo to inject GSEs (Fannie/Freddie) into the subprime mortgage market.
Urged on by ACORN, congressional Democrats and the Clinton administration helped push tolerance for high-risk loans through every sector of the banking system -- far beyond the sort of banks originally subject to the CRA. So it was the efforts of ACORN and its Democratic allies that first spread the subprime virus from the CRA to Fannie and Freddie and thence to the entire financial system. Soon, Democratic politicians and regulators actually began to take pride in lowered credit standards as a sign of âfairness'
ACORN had come to Congress not only to protect the CRA from GOP reforms but also to expand the reach of quota-based lending to Fannie, Freddie and beyond." What resulted was the broadening of the "acceptability of risky subprime loans throughout the financial system". Initially the GSEs (Fannie/Freddie) resisted purchasing these risky mortgages but eventually the Clinton Administration instructed them to substantially increase the percentage of these mortgages in their portfolios.
An article in the Los Angeles Times from the late â90s praised the sudden surge in homeownership among minorities, calling it âone of the hidden success stories of the Clinton era.â A New York Times article from Sept. 1999 states that Fannie Mae had been under increasing pressure from the Clinton administration to expand mortgage loans among low- and moderate-income people and that the corporation loosened its lending requirements to comply.
Repeal of Glass Steagall by Clinton
Since repeal of Glass Steagall in 1999, after more than a decade of de facto inroads, super-banks have been able to re-enact the same kinds of structural conflicts of interest that were endemic in the 1920s â lending to speculators, packaging and securitizing credits and then selling them off, wholesale or retail, and extracting fees at every step along the way. And, much of this paper is even more opaque to bank examiners than its counterparts were in the 1920s. Much of it isnât paper at all, and the whole process is supercharged by computers and automated formulas.
After signing the bill to repeal this act, the pen used was presented by Pres. Clinton to Sandy Weill, the 'creator' of Citigroup. No wonder they feel responsible to bail them out?
Bill Clinton admitted on Good Morning America, Thursday September 25, 2008 that Democrats are the blame for the current crisis and the need for a government bailout.
