The Domino Effect of our Banking System

As we know our Financial System took a major hit last year. Let’s take a little look see at how this played out, shall we…

The Community Reinvestment Act is a federal law that was passed in 1977 to “encourage” banks and savings associations to meet the needs of borrowers in ALL segments of their communities, which included low and moderate-income neighborhoods. Congress “felt” this law needed to be passed in order to prevent discrimination against low-income and minority borrowers.

There were Legislative changes made to the CRA over the years, but the most pertinent one, in my opinion, was the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, which required Freddie Mac and Fannie Mae to devote a percentage of their lending to support affordable housing. Basically this Act instructed Freddie and Fannie to divide its business into three categories: low and moderate-income, underserved, and special affordable. The goal was to increase home-ownership among minorities and the poor in rural and urban areas.


In November of 1999, a part of the Glass-Steagall Act of 1933 was repealed with the Gramm-Leach-Bliley Act of 1993 which permitted commercial banks, investment banks and insurance companies to consolidate. While The Gramm-Leach-Bliley Act was a Republican backed bill, President Clinton said he would veto it unless it contained verbiage that would ensure banks wouldn’t cut back on mortgages to low income and minority borrowers.


Due to pressure from the Clinton Administration, in 1999 Fannie began issuing subprime loans, which increased the number of minority and low income home owners. The expansion of “easy credit” to home buyers with lesser ability to pay it back and then bundling them as securities made the CEO’s of Fannie and Freddie and many others on Wall Street a lot of money, but also made our market quite unstable.

In 2000 Fannie Mae launched the American Dream Commitment, a ten year pledge to provide $2 trillion dollars in low-income and minority home financing. By March 2003 Fannie and their lending partners had fulfilled over half of their goal. Other lending partners included: Bank of America; Bank One Corporation; Charter One Bank; Countrywide Financial Corporation; Doral Financial Corporation; First Horizon Home Loan Corporation; Fleet Boston Bank; Huntington Mortgage Company; Irwin Mortgage; J.P. Morgan Chase & Co.; and Standard Mortgage Corporation and they were “applauded” for surpassing the halfway mark so quickly. Together they led the market in narrowing the homeownership gaps, increasing the availability of affordable housing and serving Americans of color and low-income.

The 2000 plan included $420 billion to help minority home financing but in 2002 it was increased to $700 billion in an “effort” to help “advance” the Bush Administration’s minority homeownership proposals. Fannie also met or exceeded HUD’s affordable goals for 9 consecutive years which included 52% of their business derived from low-income families; 33% derived from underserved families; and over 21% derived from very low-income families.


Fannie and Freddie loaned at first because they were pressured from HUD (Department of Housing and Urban Development) who was under pressure from Congress. With repeal of part of the Glass-Steagall Act it gave financial institutions and insurance companies free reign without any over-sight to basically sell debt onto our market, and make large bonuses to boot, and now we Taxpayers are left holding the tab. In my opinion, the CRA and the Gramm-Leach-Bliley Act were two big factors in the downfall of our financial system.


I am in NO way suggesting that any bank, investment company or insurance company discriminate due to skin color or ethnicity; however, I do NOT condone giving anyone a home loan, a credit card or a car loan if they are NOT able to pay it back. The desire to increase home ownership in low-income and minority neighborhoods is a noble cause, but it may not be a feasible one, considering the outcome of many of these “loans”. I believe everyone should have a place to live—a home; but I do NOT believe everyone is ENTITLED to OWN a house. The two are completely separate from one another.

I believe if Congress hadn’t pressured HUD and HUD hadn’t pressured the banking institutions and if the CRA wasn’t abused AND if Gramm-Leach-Bliley hadn’t repealed part of Glass-Steagall we wouldn’t be sitting with this current banking mess. There is enough blame to go around, but I think it all began with Congress wanting to give something that wasn’t earned, i.e. the CRA.

A person must “earn” a good credit score, regardless of skin color or ethnicity. Neither of which can be used against you on a credit application, by the way. HOWEVER your lack of a job; adequate funds; time with your employer; and past credit history MOST certainly do and those issues are NOT discriminatory. It’s time we stood on the facts and stopped being afraid of being called “prejudiced” when the FACTS prove otherwise; because as we can see, the results can be devastating.

I also don’t think that Government should be involved in every aspect of our lives, BUT over-sight IS important in certain areas, especially when large sums of money are involved. These Institutions, like AIG and JP Morgan should’ve had some kind of Clearing House. As it stands they did not and they got away with Billions.

And last, but certainly NOT least, when we Taxpayers bailed-out all these lame companies that placed us in this precarious situation there should’ve been stipulations on OUR money. It should NOT have been handed to them willy-nilly. As it stands we don’t know where it went and we don’t know why these banks aren’t lending. They SHOULD be lending and we should demand that they follow some rules. However, those decisions don’t seem to be up to us, although it’s our money.

Hopefully our Representatives on The Hill have LEARNED something! And they will begin to institute some REAL change. Change that will stop the corruption, not just on Wall Street and in Banking and Insurance Institutions, but in Congress, as well.

Crossed posted at Progressive Eruptions.

AIG -The 1st to be Nationalized

It was announced Monday that AIG, the insurance giant that was TOO big to fail, needs another 30 billion dollars or it will go under. This will take AIG’s total bailout to 180 billion in taxpayers money since last fall. Why are we still sinking money into this failing company? Isn’t is obvious that this company is in fact NOT too big and has already FAILED and should be allowed to do so? Why are the American people responsible for greed, corruption and the failings of bad decisions of a company who's time is just plain over?

I have my own theory on this AIG bailout. I believe that this Administration WANTS AIG to NEED more and more money so it can continue to bail it out until it becomes 100% owned by the government. Oh, I’ve heard all the arguments that if AIG goes under thousands of jobs will be lost and teachers all over the country will lose their 401k’s. (But never mind the average American’s 401k!) Oh yeah, and the sky is falling again today! To save AIG, it needs some serious money- like 500 billion. Obama and his genius economic team know this. So, why are they messing around with 20 billon here and 30 billion there? Just hand AIG the whole kit and caboodle and get it over with already! But they won’t; because their agenda is so much larger and they want the American people to THINK they are helping.

Obama’s agenda is to nationalize AIG. He wants AIG to fail. Just like he wants banks to fail. He wants to pass a law to give judges power to change mortgage contracts so when people file bankruptcy the judge can change the principle on the mortgage. He also wants to bail out deadbeats that shouldn’t have gotten mortgages to begin with. Why? Because he wants to give banks money so the government has an investment in the banks until it has 100% ownership then it can be Nationalized. And don’t forget The Big 3. He intends to give them enough money so he can nationalize them, too.

What it boils down to is this. Our Banking, Insurance, Housing and Automobile Industries will be owned by the government. They will be Nationalized and run by the government. Obama’s agenda is to Socialize this nation and what better way to get his scheme going than to pretend he’s helping? By the time the public sees Obama for what he truly is, a Socialist-Marxist, it’ll be too late. Obama ran his campaign on Change, and that’s EXACTLY what we’re getting. Change from Capitalism to Socialism. Obama plans on destroying this country one piece at a time. Look what he’s done in a little over 40 days. I can’t even imagine what he’ll do in the next 4 years.

Obama’s Socialistic Spending Spree

What’s the speedy-quick hurry to sign the largest Governmental spending package in the history of our Nation? Why couldn’t our Congress and Senate have the proper time to read this thousand page, 800 trillion dollar spending spree? Why did taxpayers foot the tab to fly Ohio Senator Sherrod Brown back to Washington from his mother’s funeral to sign this bill? And most importantly, why did all this happen 3 ½ weeks after Obama took the Oath of Office?

My guess is this so-called stimulus bill isn’t a stimulus bill at all, as Obama and Pelosi would like us to believe; but an avenue to transform our Capitalistic Country into a Socialistic one using our current economic crisis as a foot stool.

When a President uses phrases such as:

“Only Government can fix what ails us.”
“Only Government can preserve jobs.”
“Government is the only solution.”
And “I’ve won.” As he told House Republicans after listening to and ignoring their concerns regarding the stimulus plan; you have a President that’s more concerned with power than with the very people he’s supposed to represent and protect.

When a President says he’s going to “Use this crisis to transform our country” there is reason to be very, very frightened. Because he means transformation from freedom to chains.

Obama said, referring to the spending bill, “It's not just another public works program.” and “That's why the overwhelming majority of the jobs created will be in the private sector.” Pelosi said, “This package can be summed up in one word. Jobs.”

I’d like to sum up one item in this Pelosi Pork Package. You be the judge as to whether the overwhelming majority of the jobs created will be in the private sector and if it will create JOBS.

Take a look at the Department of Energy for 18.5 billion dollars:

2 billion dollars are for expenses to develop technologies; 500 million dollars are for expenses to implement the program; 1 billion dollars are for grants to Institutional Entities for sustainability and efficiency; 6.2 billion dollars are for weatherization assistance programs; 3.5 billion dollars are for energy efficiency and conservation block grants for implementation of the program; 3.4 billion dollars are for state energy programs authorized under the energy policy & conservation act; 200 million dollars are for the expenses necessary to implement the programs under section 124; 300 million dollars are for expenses under section 124 of the energy policy act of 2005; 400 million dollars are for expenses under section 721; and 1 billion dollars are for expenses under section 135(b)(B)(1).

Out of that 18.5 billion dollars, 4.4 billion dollars are for EXPENSES! Where in this bill is the opportunity for private sector jobs? Especially when the bill specifically states:

Secretary of Energy may, upon determination that there is a severe shortage of candidates or a critical hiring need for particular positions, recruit and directly appoint highly qualified individuals into the competitive service.

So, if I’m reading this correctly, people will get jobs IF the Secretary of Energy DETERMINES there is a shortage of people at the Department of Energy. Once the Secretary of Energy determines there is a shortage, the Secretary of Energy then has the ability to RECRUIT or DIRECTLY APPOINT HIGHLY QUALIFIED individuals for this competitive service. How many people in the private sector are HIGHLY QUALIFIED to work at the Department of Energy?

That little paragraph puts a huge wrench into Obama and Pelosi’s private sector job creation program, don’t you think? What other paragraphs are hidden within this enormous bill that allow Secretaries, Senators, Inspector Generals and other people, who owe this administration an arm and a leg, the power to APPOINT whomever THEY deem necessary and overlook the private sector altogether? It’s no wonder Obama, Pelosi and their comrades want it signed, sealed and delivered by President’s Day.

Once this Socialistic Shackle Plan is signed, there’s no going back. We the People are stuck with the spending, the interest and the largest government in American History. The Left was in an uproar over the PATRIOT Act. But this government intervention is A-OK, right? Not a peep from the Left on this gigantic government encroachment.

Obama preached Change. Well we’re getting it! Get ready for the government to be next to you at your dinner table, holding your kid’s hand at school, sitting with you and your doctor and lying next to you in bed at night. And it’s all coming with one big Trillion Dollar Price Tag.

Life’s Not Fair

We’ve bailed out banks, insurance companies, people with mortgages who shouldn’t have gotten them and The Big 3. So, now those people who were scammed by Madoff want a bailout. Since when do we the people bail out those who made bad investment decisions? I’m sorry they invested their money with a thief. I’m sorry some of them lost their entire life savings. I’m sorry that life is unfair and bad things happen to good people. But since when is it our responsibility to bail out people when life happens? What’s next? A spouse dies and leaves behind a family with no life insurance, a mortgage, a car payment, credit card bills and no savings…are we supposed to bail them out too? Sure it’s sad. Sure it would be benevolent and possibly the right thing to do; but is it our responsibility to bail them out? Heck, I lost a lot of money in the stock market last year. Is the government going to bail me out? My husband’s company is really slow. He didn’t work 2 weeks right before Christmas, with NO PAY. This scenario may happen again if the economy doesn’t pick up. Are the taxpayers going to send me a check? What is up with people who think they are entitled to something because they were screwed? I’ve been screwed over in my life; but never once did I think that someone was going to pick up the damn tab for it. I chalked it up to being stupid and moved on. Some lessons in life are expensive. This entitlement attitude is really ticking me off. Where did it come from? When the hell did it start? And how do we get it to stop? If it were up to me, I’d tell these Madoff clients to take a hike. Well, actually, I’d tell them what I tell my kids, “Life’s not fair; I guess you better get used to it.”

Money Tree

A secret source has revealed that Horticulturists have been secretly cultivating a special species of tree and it’s official. The Deciduous Wampum Contumacious is complete. The Green Team, a top secret team hired by Congress, has been working 24/7 and finally completed its creation well before schedule.

Thankfully, and not a moment too soon, because this 2nd bailout is costing taxpayers another 800 billion dollars. The only glitch in this miraculous situation is who is going to pluck the greenbacks from the branches. It’s been reported that top Horticulturists have been fighting amongst themselves, even resorting to calling one another names such as dirt bag, dandelion and even petunia! If this childish fighting doesn’t stop, and soon, there’s no telling when the bills will be plucked and if the fresh dollars will be delivered in time to save the Big Three.

When reporters questioned senior staff members about the deciduous factor of the trees they were told, “The Wampum trees bud and grow faster than Congress can spend or even print money. When the trees shed their greenbacks they fall to the ground and wrinkle, then we have to press them. Plucking the greenbacks from the branches is better because the bills look fresh. Like they were printed from the printing press.”


With Wampum Trees we can ditch the toilet paper and start using our money in the bathroom-at least it will be good for something.