Crisis Timeline, an Indictment

• 1977 - Community Reinvestment Act
  
  In 1977 a Democratic majority in both the House and Senate pass the Community Reinvestment Act which is signed into law by then President Jimmy Carter. This act is passed with the assumption it will help low income citizens and business people receive equal treatment by banks. The Law for the most part is not enforced and/or ignored until the 90's.
  
  

  http://en.wikipedia.org/wiki/Community_ ... Bernanke-1
  ...law that requires banks and savings and loan associations to offer credit throughout their entire market area.[1] The act prohibits financial institutions from targeting only wealthier neighborhoods with their services, a practice known as "redlining." The purpose of the CRA is to provide credit, including home ownership opportunities, to under-served populations, and commercial loans to small businesses.........
  
  .........The CRA mandates that each banking institution be evaluated to determine if it has met the credit needs of its entire community. That record is taken into account when the federal government considers an institution's application for deposit facilities, including mergers and acquisitions.........
  

  
  
  
  
• 1992 - The Federal Housing Enterprises Financial Safety and Soundness Act of 1992
  
  The Federal Housing Enterprises Financial Safety and Soundness is passed in 1992 by a majority Democratic Congress in both the house and the Senate. Outgoing President George H. Bush signs the bill.
  
  Will let good ole Fannie speak for herself:
  

  http://www.fanniemae.com/aboutfm/charter.jhtml
  The Federal Housing Enterprises Financial Safety and Soundness Act ("FHEFSSA") of 1992 modernized the regulatory oversight of Fannie Mae and Freddie Mac. It created the Office of Federal Housing Enterprise Oversight ("OFHEO") as a new regulatory office within HUD with the responsibility to "ensure that Fannie Mae and Freddie Mac are adequately capitalized and operating safely." OFHEO is funded by assessments on Fannie Mae and Freddie Mac and is authorized to act without HUD oversight on a range of regulatory issues enumerated in the statute. FHEFSSA established risk-based and minimum capital standards for Fannie Mae and Freddie Mac. And, it established HUD-imposed housing goals for financing of affordable housing and housing in central cities and other rural and underserved areas.

  
  
  
• 1993 - White House Press Briefing
  
  Announcement by Clinton Staff of his intentions to reform the Community Reinvestment Act.
  
  

  http://clinton6.nara.gov/1993/12/1993-1 ... .text.html
  Hi. I'm Bob Rubin, the Assistant to the President for Economic Policy, and I'm going to introduce today's topic.
  
  The President, as you know, has a broad, comprehensive strategy for dealing with the economic problems of the country for putting the country back on the right track for the long-term. A lot of the legislative and executive actions that have taken place in 1993 have been pursuant to that long-term economic strategy of the President's.
  
  An important component of that strategy is to deal with the problems of the inner city and distressed rural communities -- pursuant to his belief that we must make real progress in those areas if this country is going to be successful in the future for all of us. The reform of the Community Reinvestment Act is an essential building block in the efforts I've just mentioned.
  
  In July the President asked the four banking regulators to reform CRA, to reduce paperwork in process and reward performance, and to get that done by January 1, 1994. We're delighted to report that that has been accomplished on schedule. And in conjunction with the President's Community Development Bank and financial institution legislation, which recently passed the House of Representatives, CRA reform will generate billions of dollars in new lending and extend basic banking services to the inner cities and to distressed rural communities around the country.

  
  
• 1995 - Clinton Does End Run Around Congress
  
  

  • http://www.federalreserve.gov/newsevent ... 80213a.htm
    
    Sandra F. Braunstein, Director, Division of Consumer and Community Affairs
    The Community Reinvestment Act
    Before the Committee on Financial Services, U.S. House of Representatives
    February 13, 2008
    
    The CRA regulations were substantially revised again in 1995, in response to a directive to the agencies from President Clinton to review and revise the CRA regulations to make them more performance-based, and to make examinations more consistent, clarify performance standards, and reduce cost and compliance burden. This directive addressed criticisms that the regulations, and the agencies' implementation of them through the examination process, were too process-oriented, burdensome, and not sufficiently focused on actual results. The agencies also changed the CRA examination process to incorporate these revisions.

    
    
    The new regulations make it harder for banks to get CRA unless they're giving loans... This is time when the banking industry is going through a time when mergers are at a high. Banks will also have to answer to groups like the NCRC and Acorn, both institutions at this point are demanding help for the people in foreclosure... like they are going to be able to pay it now. Sure can't pay for that house? we'll buy it for you,
    
    These Consumer Advocacy groups hold enormous power over banks and is some cases decided who was going to get loans:
    

  • The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities Winter 2000
    
    http://www.city-journal.org/html/10_1_t ... ollar.html
    The Clinton administration's get-tough regulatory regime mattered so crucially because bank deregulation had set off a wave of mega-mergers, including the acquisition of the Bank of America by NationsBank, BankBoston by Fleet Financial, and Bankers Trust by Deutsche Bank. Regulatory approval of such mergers depended, in part, on positive CRA ratings. "To avoid the possibility of a denied or delayed application," advises the NCRC in its deadpan tone, "lending institutions have an incentive to make formal agreements with community organizations." By intervening—even just threatening to intervene—in the CRA review process, left-wing nonprofit groups have been able to gain control over eye-popping pools of bank capital, which they in turn parcel out to individual low-income mortgage seekers. A radical group called ACORN Housing has a $760 million commitment from the Bank of New York; the Boston-based Neighborhood Assistance Corporation of America has a $3-billion agreement with the Bank of America; a coalition of groups headed by New Jersey Citizen Action has a five-year, $13-billion agreement with First Union Corporation. Similar deals operate in almost every major U.S. city. Observes Tom Callahan, executive director of the Massachusetts Affordable Housing Alliance, which has $220 million in bank mortgage money to parcel out, "CRA is the backbone of everything we do."
    
    In addition to providing the nonprofits with mortgage money to disburse, CRA allows those organizations to collect a fee from the banks for their services in marketing the loans. The Senate Banking Committee has estimated that, as a result of CRA, $9.5 billion so far has gone to pay for services and salaries of the nonprofit groups involved. To deal with such groups and to produce CRA compliance data for regulators, banks routinely establish separate CRA departments. A CRA consultant industry has sprung up to assist them. New financial-services firms offer to help banks that think they have a CRA problem make quick "investments" in packaged portfolios of CRA loans to get into compliance.

    
    
    The excerpt is from and article with another excerpt that is hauntingly accurate:
    
    

    Looking into the future gives further cause for concern: "The bulk of these loans," notes a Federal Reserve economist, "have been made during a period in which we have not experienced an economic downturn." The Neighborhood Assistance Corporation of America's own success stories make you wonder how much CRA-related carnage will result when the economy cools.

    
    
    
  • Freddie Mac and Fannie Mae are required to provide mortgages to people that in some cases can't get a credit card.
• 1999 - Gramm-Leach-Bliley Financial Services Modernization Act
  
  This Republican sponsored act would be a major overhaul of the Banking industry and allow for the commercial and investment banks and other financial institutions to consolidate. The main sticking point between the bill as presented by the Republicans is the CRA .
  
  

  
  http://partners.nytimes.com/library/fin ... gress.html
  
  Gramm had maintained that he did not want anything in the bill that would expand the application of the Community Reinvestment Act because it was, he said, unnecessarily burdensome to banks. He had sought a provision that would exempt thousands of smaller banks from the law. He also wanted a provision that would expose what he has described as the "extortion" committed by community groups against banks by requiring the groups to disclose any special financial deals the groups extract from the banks.
  
  But the White House found that provision unacceptable and had its own ideas about community lending. It wanted the legislation to prevent any bank with an unsatisfactory record of making loans to the disadvantaged from expanding into new areas, like insurance or securities.
  
  The White House had insisted that the President would veto any legislation that would scale back minority-lending requirements. Four days of intense negotiations between Summers, Gene Sperling, the President's top economic policy adviser, and Gramm, while moving the two sides closer, failed to resolve the differences.
  
  Such was the state of play Thursday evening when Gramm decided to force the issue by having the House-Senate conference committee vote on his proposed compromise, which the White House had already rejected for failing to block banks with bad lending records from expanding to new businesses.
  
  When Gramm's measure was defeated by one vote, it quickly became clear that there would be no law unless Gramm could get some Democrats to break from the White House.
  
  But Administration officials had spent all day making sure that the Democrats remained solidly against the measure until their concerns about the Community Reinvestment Act could be worked out.

  
  
  
  As early as 1999 the Republicans had introduced legislation that very may well have stopped this mess we are in now however the bill did not pass pass without the following amendments:
  
  

  Banks will not be able to move into new lines of business unless they have satisfactory lending records.
  
  Community groups will have to make disclosures to regulators about certain kinds of financial deals with banks that they have pressed to make loans under the Community Reinvestment Act.
  
  Wholesale financial institutions, a new kind of business that takes large, uninsured bank deposits, cannot be affiliated with commercial banks.
  
  Small banks with satisfactory or excellent track records of lending to the underserved would be reviewed less frequently under the Community Reinvestment Act. As a practical matter smaller banks are reviewed about every three years. The deal struck today allows all rural banks and banks with less than $250 million in assets to undergo examination once every five years if their last exam resulted in an "outstanding" grade and every four years if they last scored "satisfactory."

  
  
  
• 2003 - New Agency Proposed to Oversee Freddie Mac and Fannie Mae
  
  President Bush proposes new new agency to oversee Fannie and Freddie Mac 2 years into his first term. Opposed by Democrats the new oversight never materialized.
  
  

  
  http://query.nytimes.com/gst/fullpage.h ... nted=print
  The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
  
  Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
  
  The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
  
  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.

  
  
  
  

  Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
  
  ''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''
  
  Representative Melvin L. Watt, Democrat of North Carolina, agreed.
  
  ''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.

  
  
• 2004 - Former president Clinton Gets His Wish
  
  3 years later than he wanted fueled by questionable loans homeownership hits a record high.
  
  Various scandals and other issues are unearthed about Freddie and Frannie....
  
• 2005 - POP

Sen. John McCain [R-AZ]: Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were "illusions deliberately and systematically created" by the company's senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight's report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae's former chief executive officer, OFHEO's report shows that over half of Mr. Raines' compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator's examination of the company's accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac--known as Government-sponsored entities or GSEs--and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay.
Quick Info
S. 190 [109th]: Federal Housing Enterprise Regulatory Reform Act of 2005
Last Action: Committee on Banking, Housing, and Urban Affairs. Ordered to be reported with an amendment in the nature of a substitute favorably.
Status: Dead

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I urge my colleagues to support swift action on this GSE reform legislation.

Devil505 wrote:Well....I guess you'll just have to cuddle up with these "fairy tales" on the night of 11/4 when the Republicans suffer a humiliating defeat at the polls

Devil505 wrote:Well....I guess you'll just have to cuddle up with these "fairy tales" on the night of 11/4 when the Republicans suffer a humiliating defeat at the polls. (I'll go out on a limb here & predict the largest election defeat of any party in the history of U.S. elections)

This will be the headline on the morning of 11/5:


" Republican Party Suffers Worst Defeat In Their History"

AP: In a shocking rebuke of their party by the American voter, The Republican Party..........etc...etc...etc.
(your read it here first!)

Richard S. wrote:Devil unless you have an argument stay out of my thread if you're going to post rubbish . I find it suprising anyone would support the Democratic party after reading the above. It's no fairy tale but all facts put down long before this happened.

Devil505 wrote:I'm no going to attempt to refute every cherry-picked speech

Richard S. wrote:Turn a blind eye to it if you wish but it's still a matter of record no matter how hard you wish it away.

Devil505 wrote:This will be the headline on the morning of 11/5:


" Republican Party Suffers Worst Defeat In Their History"

coaledsweat wrote:Don't bet your coal pile on it, remember "Dewey beats Truman" was a headline too.