Politics: September 2008 Archives

Don Danz traces the roots of the current upheaval in the mortgage industry back to Jimmy Carter's Community Reinvestment Act ("it wasn't the worst piece of needless economic legislation the Democrats had ever hobbled the American people with but, rather, simply a foundation on which bad policy could be built"), CRA changes approved by Bill Clinton and the Democrat-controlled 103rd Congress, requiring lenders to loosen their mortgage underwriting criteria, and Democratic resistance to mortgage industry reforms proposed by George W. Bush in 2003 and John McCain in 2005.

Don also explains why Barack Obama was one of the politicians most generously funded by Fannie Mae and Freddie Mac -- second only to Sen. Christopher "Countrywide" Dodd (D-ConnMan).

Now, why would these lending institutions spend such a disproportionate amount of money on a baby Senator? Because they knew it was money well spent and it all goes back to Obama's days as a community rabble-rouser, I mean, "organizer." The original lobbyists for passage of the CRA were hardcore leftists who supported the Carter administration and were often rewarded for their support with government grants and programs like the CRA that they personally benefited from. These included various "community organizations" such as "ACORN" (Association of Community Organizations for Reform Now). As mentioned above, it is groups like ACORN which, for a handsome fee, provide the bogus "credit-counseling" to poor borrowers to qualify for loans instead of actually having a way of paying back the loan.

Neighborhood organizations, like ACORN, also benefit themselves from the CRA through a process of legalized extortion. The CRA is enforced by four different federal government bureaucracies: the Federal Reserve, the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation. The law is set up so that any new branch creation, branch expansion or bank merger can be postponed or prohibited by any of these four bureaucracies if a CRA "protest" is issued by a community organization. The delays and expenses associated with such a protest can cost banks huge sums of money, and the community organization not only understand this perfectly well, but count on it. The community organizations use the threat of protests to get the banks to give them millions of dollars in "donations" (read that as bribes) as well as promising to make a certain amount of bad loans in their communities. With his history as a "community organizer," the lobbyists for Fannie Mae and Freddie Mac knew Senator Obama was a good buy for their money.