How the Democrats crashed the banks. Part I
By Ken Brinzer
Those who buy into the so politically-convenient disinformation that blames Wall Street greed for our economic woes are likely to overlook the real culprits in the economic plunge story that has taken place from Wall Street to Main Street, coast to coast, and far beyond. That’s because the real culprits are in the United States Congress, not on Wall Street. And to be sure, it may be a matter of greed, but it would be of political greed and or myopia.
For example, take a look at the devolution in the Freddie Fannie debacle. It all began with a reasonable idea that was enacted into law under President Carter in 1977. Known as the Community Reinvestment Act (CRA), it caused little harm and surely did some good, until it was morphed into something quite different, quite insidious and pernicious during the Clinton years.
In 1995 under the version of the act revised by the Clinton administration, lenders were told that proof of income, source of down payment and credit history of a loan applicant would no longer be required as qualifying criteria. In addition to this revision of the CRA, the lending community was threatened by Clinton’s Attorney General Janet Reno, who promised to prosecute to the full extent of the law those who violated the 1995 lowered standards for lending. The die had been cast under Clinton and the situation was such a mess that in 1999, then Clinton Treasury Secretary Lawrence Summers warned that reform of Freddie and Fannie was essential. His warnings fell on the deaf ears of those at Fannie and Freddie and over in congress who should have pushed for reform following Secretary Summers’ call for it, but instead promulgated the expansion of their powers.
Then during the Bush years, there were 18 further calls for congress to reform Freddie and Fannie and all were ignored. Most notable among those who issued calls for reform of Freddie and Fannie during the Bush years were Treasury Secretary Snow, then Fed Chairman Alan Greenspan, and even President Bush himself. All calls for reform were ignored or blocked by those members of congress who had their own agenda and did not hesitate to belittle and demagogue against these legitimate calls for reform. One such belittlement came from the mouth of Representative Barney Frank who characterized the calls for reform as “inane”; but they weren’t, they were really needed and that became obvious when information surfaced that 5 million home loans had been made to illegal aliens alone, many without income or asset verifications, and all without citizenship papers.
Clearly those in congress had a responsibility to reform the financial nonsense that became public policy under Clinton and went unreformed throughout the Bush years despite abundant calls for reform from both inside and outside of the executive branch.
(to be continued)
Ken Brinzer is 62 years old, and lives with his wife, a high school chemistry teacher, in Penn Hills, PA. The Brinzers have been married 34 years and have 3 adult children. He is a financial services professional, licensed both as a life insurance agent and a registered representative series 6. He holds a BA degree in Spanish from Rutgers (1968). He served in the USAF for 4 years 1968-1972 and attained the rank of captain. He is a practicing Catholic, reads at church, and loves God, Family, and Country and the splendor of truth.
Making Kids Worthless: Social Security’s Contribution to the Fertility Crisis
Daily Article by Oskari Juurikkala | Posted on 1/24/2007
“Kinder haben die Leute immer – People will always have children,” assured Konrad Adenauer, the German Chancellor, in 1957. He was convinced that the future of the brave new pay-as-you-go social security system would not be undermined by demographic changes.
Adenauer was as wrong as ever. Social security schemes around the developed world are facing a major crisis due to greater longevity, declining retirement ages and – lo and behold – below-replacement fertility rates.
What the good statesman did not realize is how the new system would affect the incentives of individuals to work, to save, and to have children. Labor force participation rates among older workers have declined dramatically since the 1960s throughout the Western world. The rules of social security benefits in most countries mean that working just does not pay off. In this way, pay-as-you-go social security schemes contribute to their own bankruptcy.
Read more here.
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