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From the beginning of the financial meltdown there has been a concerted effort by Republican types to divert the public's attention away from accusations that excessive deregulation created the mess we're now in.
These Republicans don't want to own up to their failed economic policies in the Congress the past 14 years, or their failed Republican presidental leadership in the field of economics, the presidency they have held 20 out of the last 28 years. Instead, they seek to blame....you guessed it....Democrats. The dynamic is perfectly understandable.
The phony viral meme to counter the truth of Republican deregulation goes like this:
Democrats, the alleged 'white guilt party', created our current financial meltdown by forcing financial institutions to give loans to poor minorities who weren't qualified. In this faux-version of reality, banks and lenders didn't want to give out trick, inflated interest rate and gimmick loans to non-qualifying applicants...but the government forced them into doing so. In the extreme version, by that I mean FOX news and various and sundry wingnut "reporters", Barack Obama and ACORN have been busy behind the scenes for years intentionally wrecking financial institutions by using 'white guilt' on their way to ushering in an age dominated by black liberation theology.
From this racist viewpoint, the fact that 60% of current foreclosures are coming from speculated homes whose loans were taken out by middle and upper middle class Americans looking to make a quick buck.....doesn't enter into the equation.
But what's the truth?
Partisan Republicans are trying to direct attention to Jimmy Carter's 1977 Community Reinvestment Act(CRA) as the culprit of our current problems. These same partisan Republicans point to Fannie Mae and Freddie Mac, government sponsored enterprises (GSE's), as also being the cause of our current problems.
This article should be read by those touting F & F or CRA as the source of our current problems.
Here are a few questions from that article...
1) Did the CRA legislation of 1977, or any legislation since, require banks to not verify income or payment history of mortgage applicants?
2) Were 'no money down' mortgages required by the CRA or Freddy and Fannie?
3) Did any federal legislation require real estate agents and mortgage writers to use the same corrupt appraisers again and again? How did these appraisers manage to always come in at exactly the purchase price, no matter what?
4) How exactly did legislation force Moody's, S&P's and Fitch to rate junk paper as Triple AAA?
5) Were banks required by Congress to do piggy back loans, one for the house, one for the downpayment, at the same time?
6) Internal bank memos showed employees how to cheat the system to get poor mortgage prospects approved that shouldn't have been, titled: "How to Get an Iffy loan approved at JPM Chase." Was this required by Congressional legislation?
7) The four biggest problem areas for housing are: Phoenix, Las Vegas, Miami, and San Diego. Explain how these affluent, non-minority regions were impacted by the Community Reinvestment Act?
8) Did Fannie and Freddie require banks to not check credit scores? Assets? Income?
Obviously, federal legislation doen't explain or answer any of those questions. Instead, it certainly appears that unfettered and unregulated financial institutions created their own problems.
The root legislative cause of the credit crisis was excessive deregulation. From exempting deriviatives from regulation (2000 Commodities Futures Modernization Act) to failing to adequately oversee ratings agencies that slapped a triple AAA on junk paper, the pendulum swung too far away from reasonable oversight. By taking the refs off the field and erroneously expecting market participants could self-regulate, the powers that be in D.C. gave the players on Wall Street enough rope to hang themselves with.....which they promptly did.
If you really want to understand how this meltdown happened and why, take a few minutes to read the following links.
Examples of wingnut racism and homophobia over the meltdown....