All To Blame

All To Blame

October 08, 2008

The work that is being done by our government this past week has been in the making since the 1980s.  Starting with the regulatory repeal of the Glass-Steagll Act in the early 1980s the separation of investment banking and credit banking were weakened.  The act was put in place in the 1930s to prevent a major contributing dynamic of the Depression.  With President Clinton and Andrew Commo’s creation of the Community Reinvestment Act, the dominoes began to fall towards today’s economic demise.  That bill completely de-regulated the mortgage industry to allow the types of mortgages that have resulted in the current banking crisis.  The CRA not only set up the opportunities for mortgages to people who could not really afford them, but actually required the banks to make such lending.  In fact, under the act, if a lender did not provide the sub-prime loans to those who qualify, the lender faced charges of discrimination.

So who’s to blame?  Everyone tied to the whole system. First, President Clinton, his administration and the congress and senate at the time for passing the CRA.  Secondly, the Federal Reserve Bank for the low interest rates to make lending deals easier.  Next, Barney Frank, Chairman of the House Financial Services Committee and the Senate Banking Committee headed by Christopher Dodd and their members - the two governmental agencies charged with oversight and regulatory authority to make sure something like this does not happen.  A number of initiatives were taken to stop the lending practices. On May 23, 2006 the Office of Federal Housing Enterprise Oversight (OFHEO) released the “Report of the Special Examination of Fannie Mae” which outlined the abuses and corruption going on.  A few elected officials attempted to bring this to the attention of the Congress and Senate.  But given how most of them were receiving campaign funds from these institutions, nothing was done.  Then there was the Bush administration.  While they did get behind the OFHEO report initially, they did not pursue the issue.  Finally, the bank executives, mortgage agents and those taking the loans they knew or should have known they could not afford.  Finally “We The People”.  We have forgotten that we are the power and do not exercise that power as we should.  If we were paying more attention, maybe we could have had some influence on our representatives.  Maybe.

So here we are with a multi-billion dollar bail out bill.  And the abuses of spending don’t stop regardless of the will of the people.   Last Thursday, Congress passed a $35 billion spending bill to bail out the auto industry.  The media failed to report this to the people.  I suppose the media should be added to the list of who’s to blame.  But thankfully, CSPAN is uncorrupted for now, and they reported it.  Then Congress attached another $6.6 billion for 2,321 earmarks unrelated to the crisis to the bail out bill.  Socialism is on the march.

And the finger pointing continues.  Everyone but themselves are to blame.  But in the end, We The People only have ourselves to blame.  We keep electing the irresponsible and corrupt.  We keep ignoring what they are doing and refuse to hold them accountable.  We fall into the same partisan finger pointing and sound bites, never once asking ourselves if we are being spoon feed the truth or not.  The words of Abraham Lincoln are pertinent here: “The government that can do everything for us is the government that can take everything from us.”