To the editor:
I would like to respond to XXX "Time for Change in November." I want to focus on some root causes of the financial crisis and point out that 8 years of Bush in office is not the main reason behind the housing crisis and the current bank implosion.
While Obama might have done something to avert the crisis in 2006, his mantra of hope and change turns out to be thin and empty when we look into the actual solutions he has proposed. "Above my pay grade" and voting "present" do not reflect a good decision maker. The executive office requires decisions.
The bank meltdown was caused by the housing bubble primarily due to the subprime lending by banks to people who should never have been approved for their loan in the first place. The mortgages were risky, and now we as a nation are paying the price. The seed for the crisis was sown with the "Community Reinvestment Act" that was passed by Jimmy Carter and other Democrats. The act gave incentives to help low income borrowers. It helped some and was a noble idea. In 1995, Clinton added new provisions to the act in which forced banks to issue $1 trillion in new subprime loans. As a result, lenders did not mitigate the loan risk. The revisions made during the Clinton Administration allowed the securitization of the Community Reinvestment Act loans containing the subprime loans, which created subprime mortgage securities.
Companies such as Countrywide, Fanny Mae, and Freddy Mac all contributed to these subprime loans as housing prices increased. The selling of these mortgages to banks went on, and Fannie Mae later moving down the income ladder, offering attractive options to people who would not normally qualify for a mortgage loan. About 92% of Fannie Mae's subprime loans were variable rate and banks faced penalties for not supporting a certain percentage of those subprime loans. Fannie Mae's claim to guarantee these loans allowed the situation to continue. With interest rates, gas prices, and everything else up, low income borrowers were impacted and stopped paying off loans and banks stopped loaning. This resulted in the collapse of the subprime market, and those Fannie Mae "guarantees" became worthless because they kept overstating their assets. Banks collapsed due to government-sponsored securities issued by Fannie Mae.
Before the Community Reinvestment Act (CRA), home prices increased with inflation and the CRA allowed prices to skyrocket out of control. Economic fundamentals did not support this raise (or bubble), but regulation-mandated credit did. In 2003, the Bush Administration recommended oversight and a regulatory overhaul of Freddie Mac and Fannie Mae, but the Democrats stopped it because regulation diminished the ability to finance loans to lower-income families (Barney Frank & Melvin Watt-Democrats).
In addition, John McCain warned of a mortgage collapse in 2005 and co-sponsored "The Housing Enterprise Regulatory Act of 2005", which would have regulated Freddie Mac and Fannie Mae. This legislative act was blocked twice by Democrats, including Chris Dodd and Barak Obama. Also, please read about Jim Johnson (former chairman of Fannie Mae) and Franklin Raines about their involvement with Barak Obama, who is #2 in receiving campaign contributions from Freddie Mac and Fannie Mae, 49 times the amount John McCain received. In addition, Obama represented the law firm that sued banks for not issuing enough subprime loans (Miner, Barnhill, & Galland versus Citibank).
There is evidence to demonstrate that Obama is 'more of the same' and his accusations towards McCain are baseless when his hands are just as dirty as everyone else involved in this debacle that started back in 1995. I really wanted to cut Obama some slack because the Rezko, Ayers, and Wright associations were shady, but no different from many other politicians. Bill Clinton sure had his issues, but he still got my vote in 1992.
When I read about the $700 Billion Bailout included $100 million earmark for ACORN, a federally funded organization which he is associated with, that changed my opinion of Obama. ACORN (Association of Community Organizations for Reform Now) has its issues of federal indictments of voter fraud is the organization that he worked with in his "community organizer" days. Obama opposed and demonized McCain about earmarks didn't he? Obama is just more of the same. While I am NO fan of the Bush Administration, McCain seems to be the most honest of the lot. Also, the extreme bias and contempt exhibited by the media towards Palin has not helped in maintaining an objective opinion of the Obama campaign.
On a side note, I won't discount some parts of deregulation leading to negative consumer rights consequences, but I wanted to make note that MANY of these consumer protections have been brought to us by Ralph Nader…also running for President.
I support John McCain. Barak Obama can keep his version of "change"!
Sources:
http://www.nypost.com/video/?vxSiteId=0db7b365-a288-4708-857b-8bdb545cbd0f&vxChannel=PostUs&vxClipId=1458_386235&vxBitrate=300
http://www.kmbc.com/politics/10214492/detail.html
http://bartonbulletin.wordpress.com/2008/09/26/democrats-loading-bailout-with-special-interest-cash-100-million-for-acorn/
http://www.youtube.com/watch?v=H5tZc8oH--o
http://en.wikipedia.org/wiki/Community_Reinvestment_Act
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0
