1. The root cause dates back to:the Community Reinvestment Act of 1977 (CRA) under the Carter Administration mandated that banks loan to both neighborhoods that were risky investments as well as home buyers with poor to bad credit in an attempt to spread home ownership.

2. In 1995 under the Clinton Administration the scope and parameters of the CRA were greatly expanded. Then Attorney General Janet Reno threatened criminal prosecution to those institutions who were not expanding their portfolio of loans to those who did not meet the credit standards of conventional mortgages. Also, Andrew Cuomo, the then Secratary of HUD expanded the percentage of said mortgages that Fannie Mae and Freddie Mac (both are GSE's or Government Sponsored Entities) MUST purchase in the open market. This provided the liquidity necessary for lenders to comply with the CMA and its expansion under the full force of the United States Justice Department. Thus the “Sub-Prime” mortgage market was born. Groups like ACORN were given the ability to block any proposed bank merger or opening of a new branch by merely accusing the bank of not complying with the CRA. The CRA carries with it no gauge by which to measure compliance or non compliance. therefore, if a bank needed to do a merger or wanted to open a branch, they had to give a large donation to ACORN and/or loan more money to people who could not pay it back.

3. In 2003 the Bush Administration under the leadership of then Secretary of the Treasury John Snow introduced legislation to reign in Fannie Mae and Freddie Mac. Secretary Snow proposed that there be established a new regulatory agency to oversee these two GSE's. He warned in congressional hearings of a possible impending financial crisis if Fannie and Freddie continued to take on so much financial risk in the form of sub-prime mortgages and overall lowered credit standards. Secretary Snow and the Bush Administration pushed hard for these and other reforms but they were ultimately killed by Rep. Barney Frank (D) who said during a hearing with Secretary Snow that, “There is no crisis. These institutions are financially sound.” As well as Sen. Chris Dodd (D) who repeatedly made similar comments. Keep in mind, Barney Frank's live in boyfriend, Herb Moses, was Fannie Mae's assistant director for product initiatives from 1991-1998 while Frank was on the House Banking Committee with jurisdiction over Fannie Mae (nope – no conflict there).

4. In 2005 John McCain, that's correct, John McCain co-sponsored legislation in the US Senate to reign in Fannie and Freddie through essentially the same approach as Sec. Snow: to create a separate government agency to oversee the two GSE's. I heard with my own two ears Sen. McCain speak on the Senate floor in support of his legislation warning of “a systemic risk” Fannie and Freddie posed to the financial system if they were not reigned in. Regrettably, this legislation too was killed by none other than Chris Dodd (D) who lead like minded Democrats who believed this was a civil rights issue, not a financial one.

Which brings us to the present day and the mess we are now in. By the way are you aware that the largest recipient of campaign contributions from Fannie Mae was Sen. Chris Dodd. You'll never guess who number 2 was. That's right, Sen. Barack Obama. Now I ask you, who is responsible for this debacle? You don't have to believe me, but would you believe one of America's preeminent economists who just happens to be an African America? Thomas Sowell wrote the following article entitled: “Do Facts Matter?”
http://townhall.com/columnists/ThomasSowell/200...

1. The root cause dates back to:the Community Reinvestment Act of 1977 (CRA) under the Carter Administration mandated that banks loan to both neighborhoods that were risky investments as well as home buyers with poor to bad credit in an attempt to spread home ownership.

2. In 1995 under the Clinton Administration the scope and parameters of the CRA were greatly expanded. Then Attorney General Janet Reno threatened criminal prosecution to those institutions who were not expanding their portfolio of loans to those who did not meet the credit standards of conventional mortgages. Also, Andrew Cuomo, the then Secratary of HUD expanded the percentage of said mortgages that Fannie Mae and Freddie Mac (both are GSE's or Government Sponsored Entities) MUST purchase in the open market. This provided the liquidity necessary for lenders to comply with the CMA and its expansion under the full force of the United States Justice Department. Thus the “Sub-Prime” mortgage market was born. Groups like ACORN were given the ability to block any proposed bank merger or opening of a new branch by merely accusing the bank of not complying with the CRA. The CRA carries with it no gauge by which to measure compliance or non compliance. therefore, if a bank needed to do a merger or wanted to open a branch, they had to give a large donation to ACORN and/or loan more money to people who could not pay it back.

3. In 2003 the Bush Administration under the leadership of then Secretary of the Treasury John Snow introduced legislation to reign in Fannie Mae and Freddie Mac. Secretary Snow proposed that there be established a new regulatory agency to oversee these two GSE's. He warned in congressional hearings of a possible impending financial crisis if Fannie and Freddie continued to take on so much financial risk in the form of sub-prime mortgages and overall lowered credit standards. Secretary Snow and the Bush Administration pushed hard for these and other reforms but they were ultimately killed by Rep. Barney Frank (D) who said during a hearing with Secretary Snow that, “There is no crisis. These institutions are financially sound.” As well as Sen. Chris Dodd (D) who repeatedly made similar comments. Keep in mind, Barney Frank's live in boyfriend, Herb Moses, was Fannie Mae's assistant director for product initiatives from 1991-1998 while Frank was on the House Banking Committee with jurisdiction over Fannie Mae (nope – no conflict there).

4. In 2005 John McCain, that's correct, John McCain co-sponsored legislation in the US Senate to reign in Fannie and Freddie through essentially the same approach as Sec. Snow: to create a separate government agency to oversee the two GSE's. I heard with my own two ears Sen. McCain speak on the Senate floor in support of his legislation warning of “a systemic risk” Fannie and Freddie posed to the financial system if they were not reigned in. Regrettably, this legislation too was killed by none other than Chris Dodd (D) who lead like minded Democrats who believed this was a civil rights issue, not a financial one.

Which brings us to the present day and the mess we are now in. By the way are you aware that the largest recipient of campaign contributions from Fannie Mae was Sen. Chris Dodd. You'll never guess who number 2 was. That's right, Sen. Barack Obama. Now I ask you, who is responsible for this debacle? You don't have to believe me, but would you believe one of America's preeminent economists who just happens to be an African America? Thomas Sowell wrote the following article entitled: “Do Facts Matter?”
http://townhall.com/columnists/ThomasSowell/200...