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Everyday We Learn More About The Community Reinvestment Act of 1977 (Updated 11/20/10) (Please Scroll Down For New Articles As This Article Always Stays On The First Page) September 29, 2008

In August of 2008 my cousin sent me this video. Like most Utube videos I didn’t give it much thought to really watch it. But for some reason I sat through the whole 11 minutes and began to think. I said this can’t be true. This has to be someone’s mean spirited video against Bill Clinton and the Democrats. But at almost the end the frame kept coming up saying “If you don’t believe it Google it yourself.” I took that to task and did about a months research to see if this could have happened. Did Monica Lewinsky really upstage the the biggest travesty in the economic history of the United States? What you are about to read will make you think. My goal here is not to change anyone’s mind. It is rather to get people to think and perform their due diligence to research the past track record and core beliefs of the party and candidate that they are going to vote for.

Please read, enjoy and just do some research instead of listening to popularity polls and who your friend is going to vote for.

Here is an updated version (With a much better sound track).

Slowly Bill Clinton’s 1997 Expansion of the CRA started to create financial discrepancies in Fannie Mae and Freddy Mac.  Later on I will go into detail about the original Community Reinvestment Act of 1977 that was created by Jimmy Carter. The Democrats have been lying to us since 2004 stating there are no problems with Fannie Mae or Freddy Mac.  The Democrats blocked Republicans that saw a future melt down of the United States economy and wanted to regulate or at least oversee these financial institutions.  The Democrats said no.  You don’t believe me? Watch this video of real conversations in the United States Congress, not a commercial or program that was created to change the minds of the public.

In this video we see Maxine Waters stating that Fannie Mae and Freddi Mac are not broken.   As of today 3/15/09 we are discovering why the Democrats especially Maxine Waters did not want to interfere with the lending practices that was eventually going to cause Fannie Mae and Freddie Mac to collapse. Here is a news story that is developing today 3/15/09

http://www.knx1070.com/play_window.php?audioType=Episode&audioId=3566977

As this story unfolds I have been doing the research to understand the connection from when Maxine Waters stated to Congress in early 2004 that Fannie Mae and Freddie Mac did not have to be fixed and “there is not crisis at Fannie Mae and Freddie Mac.” The reason that Ms. Waters did not want any regulation for Fannie Mae and Freddie Mac was that Ms Waters and her husband Sidney Williams were investors in OneUnited Bank in Massachusetts.  In fact, Sidney Williams joined the Board of Directors of the minority owned OneUnited Bank in early 2004. The video above from the congressional hearings were conducted in late 2004 after Sidney Williams joined the Board of Directors for the minority owned OneUnited Bank.

Here is an article written by Susan Schmidt at the Wall Street Journal going into detail on what I just discussed in the previous paragraph.

http://online.wsj.com/article/SB123705585093130641.html

Maxine Waters released this statement on 3/15/09

http://www.house.gov/apps/list/press/ca35_waters/PR090313_fallout.html

Ms. Waters states the following:

“My husband Ambassador Sidney Williams, who has represented the United States as an Ambassador and has been a respected and active member of the Los Angeles community for many years, was asked to sit on the board of OneUnited Bank. This bank services our community and was the successor to the bank of which we had been customers at for many years.  He accepted the position and did not accept any director’s compensation for his work on behalf of the bank and the community it serves.”

“Despite suggestions to the contrary, I have fully disclosed all of my financial interests in official filings.  These filings included the stock my husband purchased upon joining OneUnited’s board (it is required under Massachusetts law, where OneUnited is headquartered, that individuals hold stock in a bank before joining its board).  Furthermore, Ambassador Williams is proud to be invested in a minority owned community bank that was given an “outstanding” lending rating from its regulator for its lending activity in underserved communities in Los Angeles, where traditional banks have refused to lend. I even took additional steps beyond what is required of Members of Congress when I voluntarily and publicly disclosed my husband’s relationship with OneUnited during an October 30, 2007 Financial Services Committee hearing entitled “Preserving and Expanding Minority Banks.”(3) Both the Federal Deposit Insurance Corporation and the Office of Thrift Supervision were present at this hearing.”

However Ms. Waters doesn’t mention anything about the dollar amount in investment positions that Ms Waters and her husband had in OneUnited Bank.

This is from Ms Schmidt’s Wall Street Journal article:

“Ms. Waters and her husband, Sidney Williams, were investors in two African-American owned California banks that merged with other lenders in 2002 to form OneUnited. Congressional financial-disclosure forms show Ms. Waters acquired OneUnited stock worth between $250,000 and $500,000 in March 2004, as did Mr. Williams. Mr. Williams joined the board of OneUnited that year. Each sold shares in September 2004–including Ms. Waters’s entire stake–but Mr. Williams continued to hold varying amounts of the company’s stock. On the lawmaker’s most recent financial-disclosure form, dated May 2008 and covering the prior year, Ms. Waters reported that her husband held between $250,000 and $500,000 worth of the bank’s stock.”

OK so how does this all get connected?

It appears that Ms. Waters and her husband Sidney Williams were financially involved with a minority owned lending institution called OneUnited Bank. During the course of Ms. Waters and Mr Williams involvement with OneUnited Bank, sub-prime loans were being made to minorities that could not afford to pay back the loans that were being made. This of course was a derivative of William Clinton’s mandated 1997 expansion of the Community Reinvestment Act of 1977.  Ms. Waters did not want any regulation against Freddie Mac and Fannie Mae because Ms. Waters and Mr. Williams were making a lot of money off of their investments in OneUnited Bank. In turn I would imagine that OneUnited Bank sold these loans maybe to Fannie Mae or Freddie Mac or both and did not service or carry the loan debt of the sub-prime loans.  So why would Maxine Waters want any kind of regulation for Fannie Mae or Freddie Mac as the Republicans asked for in the the above video that I have re-linked here.

Here is were this gets real interesting.

Austin Tighe who represents the NAACP has filed a lawsuit on March 13th, 2009 against HSBC and Wells Fargo banks for discrimination and predatory lending practices towards minorities in particular Afro Americans. Mr. Tighe states that the two aforementioned banks “Discriminated” against poor Afro Americans for writing bad loans to that group of people. How strange that Mr. Tighe would never bring these charges against OneUnited Bank that I’m sure did the same thing for years.

http://news.yahoo.com/s/ap/20090313/ap_on_re_us/naacp_mortgage_discrimination

And even more interesting:

Barack Obama was an associate attorney from 1993 to 1996  at the following law firm:

http://www.lawmbg.com/

While Barack Obama was employed buy Minor, Barnhill & Galland, Barack Obama represented ACORN in a lawsuit against CitiBank for not writting enough Sub-Prime Loans to Afro-Americans.

http://www.allbusiness.com/finance/529735-1.html

So now let’s look at the origins of the Community Reinvestment Act of 1977

The CRA was devised by Jimmy Carter (D) in 1977 when he was in office. I have to admit that President Carter’s intention was very good. Lending Institutions were practicing something called “Redlining.” Lending Institutions were refusing to write loans in any way or form in predetermined zip codes usually in inner cities or blighted areas of a city like for instance Brooklyn, NY.

Here is an article in the NY Times dated December 25, 1989

http://www.nytimes.com/1989/12/25/nyregion/bank-redlining-still-prevalent-loan-critics-say.html?n=Top/Reference/Times%20Topics/Subjects/B/Black%20Culture%20and%20History

Jimmy Carter’s goal in mandating the CRA in 1977 was a good thing because as you know there were people in those zip codes that could easily qualify for a traditional 30 year loan.  In addition there were landlords that wanted to do improvements to their properties but they couldn’t get a loan to do that.

http://www.answers.com/topic/community-reinvestment-act-of-1977

This all went horribly and tragically wrong when in 1997 Bill Clinton went beyond the original intention of Jimmy Carter’s 1977 CRA and mandated that banks should make loans to people that could not qualify for a traditional 30 year loan. If Bill Clinton hadn’t created this mandate. Then bank’s and third party lending institutions would have not ventured into creative lending practices like the 5/25, 2/28, No Down Payment and Interest Only loans. When the banks and lending institutions created these creative lending practices they created an artificially high number of home buyers that would have not qualified for a traditional, secured 30 year loan. The result of the number of people that could now qualify for a mortgage loan created a “Sellers Market.” Buy the nature of “Supply and Demand” and “What the market will bear”, sellers of both new and pre-owned houses were allowed to inflate the prices in the housing market otherwise know as the “Housing Bubble.” This was exacerbated by the fact that a person that could have qualified for a $150,000.00 traditional 30 year loan could now qualify for a $250,000.00 home with creative financing like a 5/25, 2/ 28, No Down Payment, or interest only loan. This led to people qualifying, borrowing and buying a house way beyond their fiscal capabilities. Eventually these new homeowners could not support the bubble payment that was in their mortgage contract and the housing bubble collapsed. This in turn eventually affected the people that had good 30 year loans and were able to pay the mortgage back. This phenomena proceeded to fester like a cancer throughout the financial markets all over the world for one simple reason:  The Devaluation of the American Dollar. Now we fear that China will not buy our debt as they have in the past. I’m sure there is a lot more that I don’t know pertaining to how far this line of falling dominos goes.

“Clinton Administration Changes of 1995”

In early 1993 President Bill Clinton ordered new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities.[6] The new rules January 31, 1995 and featured: requiring strictly numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to target to groups to collect a fee from the banks.[4][7] The new rules, during a time when many banks were merging and needed to pass the CRA review process to do so, substantially increased the number and aggregate amount of loans to low- and moderate-income borrowers for home loans, some of which were “risky mortgages.” Banks set up CRA departments, a CRA consultant industry was created and new financial-services firms helped banks invest in packaged portfolios of CRA loans to ensure compliance. Established and new community groups began marketing such mortgages. The Senate Banking Committee estimated that as of 2000, as a result of CRA, such groups had received $9.5 billion in services and salaries. As of that time such groups also had received tens of billions of dollars in multi-year commitments from banks, including ACORN Housing $760 million; Boston-based Neighborhood Assistance Corporation of America $3 billion; a New Jersey Citizen Action-led coalition $13 billion; the Massachusetts Affordable Housing Alliance $220 million.[4] The number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent.[8][9] Related rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks. By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market.[5] Due to massive financial losses, on September 7, 2008 the Federal Housing Finance Agency (FHFA) put Fannie Mae and Freddie Mac under the conservatorship of the FHFA.[10]”

Here is a detailed description of 1995 CRA Rule 60 FR 22156 (May 4, 1995) (1995 Rule) from the Federal Register.

http://edocket.access.gpo.gov/2005/pdf/05-4016.pdf

Please read Sections C & D on page 10024

“C. Experience With the 1978 Rule The experience with the 1978 rule was summarized in the http://edocket.access.gpo.gov/2005/pdf/05-4016.pdf to the Agencies’ 1995 CRA rule. 60 FR 22156 (May 4, 1995) (1995 rule).

It stated: The CRA has come to play an increasingly important role in improving access to credit in communities—both rural and urban— across the country. Under the impetus of the CRA, many banks and thrifts opened new branches, provided expanded services, and made substantial commitments to increase lending to all segments of society. Despite these successes, the CRA examination system has been criticized. Financial institutions have indicated that policy guidance from the agencies on the CRA is unclear and that examination standards are applied inconsistently. Financial institutions have also stated that the CRA examination process encourages them to generate excessive paperwork at the expense of providing loans, services, and investments to their communities. Community, consumer, and other groups have agreed with the industry that there are inconsistencies in CRA evaluations and that current examinations overemphasize process and underemphasize performance. Community and consumer groups also have criticized the agencies for failing aggressively to penalize banks and thrifts for poor performance. Noting that the CRA examination process could be improved, President Clinton requested in July 1993 that the Federal financial supervisory agencies reform the CRA regulatory system. The President asked the agencies to consult with the banking and thrift industries, Congressional leaders, and leaders of community-based organizations across the country to develop new CRA regulations and examination procedures that ‘‘replace paperwork and uncertainty with greater performance, clarity, and objectivity.’’ Specifically, the President asked the agencies to refocus the CRA examination system on more objective, performance-based assessment standards that minimize compliance burden while stimulating improved performance. He also asked the agencies to develop a well-trained corps of examiners who would specialize in CRA examinations. The President requested that the agencies promote consistency and evenhandedness, improve CRA performance evaluations, and institute more effective sanctions against institutions with consistently poor performance.

D. The 1995 Rule and Subsequent Guidance

The experience with the 1978 rule led the Agencies to replace it in 1995 with a rule designed to emphasize performance (Quantity of loans) rather than process (Quality of Loans), promote consistency in evaluations, and eliminate unnecessary burden. 60 FR 22156. Among other things, it established a large retail institution test comprised of three tests: one for lending, one for investment, and one for service.”

If you notice that this mandate created a “TEST” for the banks.  Does this sound familiar to what Timothy Geitner is doing right now.

And then came the unregulated start up third party lenders (Countrywide, New Century Mortgage) that thrived under the auspices of the CRA and started issuing loans to people with no income or little income and no money down.  For the most part these third party lenders had no intention of servicing these loans. These third party lenders had the intentions of making a lot of money on the sales commissions then they would sell the loans to Ginnie Mae to be issued as “MBS’s that in turn were issued to various investment groups as an investment vehicle. The next thing to happen is that as these very bad mortgage loans started to sour so did the Mortgage Backed Securities that were in 401 Ks, IRAs an any other type of investment portfolios became worthless. Banks, Brokerage firms, pension plans, and anyone or any company that had bought and sold these worthless MBSs began to fail.  And now the picture is a little clearer as to how we got to where we are today June 15, 2009

http://www.sec.gov/answers/mortgagesecurities.htm

All of this was done by third party lenders with the mandated Bill Clinton’s 1997 expansion of the CRA as its mantra.

This is from Wikipedia Community Reinvestment Act

“Congressman and 2008 Republican presidential candidate Ron Paul has partially attributed the ongoing subprime mortgage crisis to legislation such as the CRA.[16] Economist Stan Liebowitz has also expressed his opinion that banks were forced to loan to un-credit worthy consumers with “no verification of income or assets; little consideration of the applicant’s ability to make payments; no down payment.” However, the chief executive of Countrywide Financial, the nation’s largest mortgage lender, is said to have “bragged” that to approve minority applications “lenders have had to stretch the rules a bit”, suggesting that Countrywide was responsible for relaxing its standards rather than the other way around.[17]”

Yes, they were unregulated but the democrats blocked any reform as they were on the take like old business as usual. And so wealth and prosperity of bankers and third party loan companies grew through the both of the Bush administrations.  But there was danger ahead and during the years there were various people including John Mc Cain that saw a problem in the works.  He was defeated by democratic stonewalling as any change would not allow poor people to continue to get loans under the CRA that they could not afford . These third party lenders were not regulated and would not be regulated or the Democrats would be defeating themselves in the quest to take from the rich and give to the poor.  The poor did not have a way to pay for the bad loans that could not be paid by the people that took out these loans that they were “Entitled” to by the CRA. Now that being said there were a lot of things that the Bush Administration could have done but those pesky Democrats that were on the take from “Wealthy Banks” would not allow their (Democrats) cash cow to die.  Finally now all those bad loans that were mandated by the CRA came to a head.

Now again the Democrats want to protect all the irresponsible people that took out these loans that the government said they were “Entitled” to according to Jimmy Carter’s CRA.  As it may happen shrewd businessmen both Republican and Democrat capitalized on an extremely flawed mandate called the CRA. No matter what they did, the federal law said that now people who didn’t have the resources to pay back the loans should be given an easier way to qualify for a loan. Enter the Clinton administration that created a mandate that led to the birth of sub-prime loans.  The third party lenders (unregulated, non banks) then exploded over the years.  These third party lenders then packaged these very bad, risky loans as an investment that the likes of Freddie and Fannie who bought them without qualifying their credibility.  Housing prices exploded. Why, Because of sub-prime loan, people that could not only not afford homes but they could afford more expensive homes.   But guess what? They qualified for risky no down payment, interest only loans to pay for inflated housing prices.  Enter the person who takes the 2/28 loan because he or she is going to “FLIP” the house and make a lot of money by artificially pumping up the price of that some poor person can qualify for a loan for.  Thank you CRA. What makes it worse it that now the Democrats are turning like rabid dogs on all the CEOs that made big profits off of the CRA.  The democrats provided a vehicle for CEOs to make a lot of money off of the CRA and like all people both democrat and republican who are in the business to make money did exactly that.  Now The Democrats call them “RICH BASTARDS” and do not want to reward them for making good on a law (CRA) that they (Democrats) passed.

I do not see good things with Obama as he profited from this situation also.  More than likely if Obama gets into office he will go back on his word and with the power of the Democratic Majority will seek to raise taxes to payback up to 700 Billion dollars. For the next 4 years Obama and the Democratic Party will blame this on the Bush Administration who were only partial responsible for the sub-prime debacle. I think Obama has a hidden agenda that no one knows about, not even Joe Biden.  It scares the manure out of me. Yes, he wants change……..but change to what is what no one really knows.  Billy Carter wanted change too and he got his change 31 years later with the change of a destroyed American economy. He wanted all poor people to own a home. But how were those poor people going to pay for the loans?  Fast forward to 1995 Bill Clinton mandates that it should be even easier to for poor people to get mortgages and the sub-prime era begins. Fast forward to 2008.  700 Billion tax dollars to pay for the bad loans that were written in the past under the command of Bill Clinton, Jimmy Carter and the CRA. That is how poor people were able to buy and then loose their houses.  And yes, I realize that Obama has sold a lot of uneducated people bill of goods, but we all pay the price if he gets elected. Far worse than what we have now.

Ultimately this has come full circle now that the tax payers are now paying for bad debt that was started in 1977 and built up over the years.  The mantra of the Democratic party is Tax and Spend. Taxpayers are now buying houses for poor people. Sounds a little like Social Communism.  The more and more I look at what is going on I am coming to this decision: If Barack Obama and Nancy Pelosi get control of this government they could destroy Wall Street and the RICH BASTARDS.  If this happens and everyone’s savings and investments are lost and have to rely on the Government then this will be the beginning of Marxist Socialism in the United States.  The Democrats are constantly complaining about the deficit. Why is that? Again the Democrats mantra is TAX & SPEND. Well, it is obvious. The Democrats want a huge surplus of money in the coffers to be a socialist government. The Democrats want the US Government to have all the money and power to do what ever they want to do.

Remember, if the Democrats can keep people poor, uneducated, unemployed and desperate they will always have a voter base.

I am not sold on Mc Cain and I will now probably vote third party (undecided as of this time) for the first time in my life. There will be no change as long as we keep re-electing a Democrat or a Republican.

1/4/2010

Fast Forward to September 16, 2009. Barney Franks still lives in a state of denial and authors H.R. 1479.

I found this new revelation when I read this article in the Washington Examiner online.

CRA 2009

“This morning House Financial Services Committee chairman Rep. Barney Frank held a hearing on H.R. 1479, the “Community Reinvestment Modernization Act of 2009.” The bill’s purpose is “to close the wealth gap in the United States” by increasing “home ownership and small business ownership for low- and moderate-income borrowers and persons of color.” It would extend CRA’s strict lending requirements to non-bank institutions like credit unions, insurance companies, and mortgage lenders. It would also make CRA more explicitly race-based by requiring CRA standards to be applied to minorities, regardless of income, going beyond earlier requirements that applied solely to low- and moderate-income areas.”

This my friends is the same thing all over again that Bill Clinton did in 1997 mandating that banks continue to issue Home Mortgage loans to people  that cannot afford to qualify or make the payments. This again put the banks and lending institutions in a perilous situation that will cause the further collapse of our US Economy.  Barney Franks and the Pelosians keep coming up with Marxist Socialist Entitlement programs that are unsustainable with the available tax dollars given the high unemployment and the lack of income that allows an individual to sustain mortgage loan payments.  If this H.R. 1479 becomes law it will mean more banks will close, More people will lose their jobs as the real estate market disintegrates due to an ever increasing number of foreclosed home loans.

OK so now you ask yourself what else could possible go wrong.  Who would provide the Mortgage Back Securities comprised of bad loans that were bought from the banks?

Fannie Mae and Freddie Mac Receive Unlimited Future Funds To Stay Afloat.

While you were enjoying your Christmas Eve Dinner (1/24/09), The US mortgage security entities became “nationalized” with US Tax Dollars. This simply means that for years to come the US taxpayer will pay for all the bad loans that Jimmy Carter, Bill Clinton and Barack Obama mandated with the creator being Barney Franks.

“The government has handed its ATM card to beleaguered mortgage giants Fannie Mae and Freddie Mac.

The Treasury Department said Thursday it removed the US$400-billion financial cap on the money it will provide to keep the companies afloat. Already, taxpayers have shelled out $111 billion to the pair, and a senior Treasury official said losses are not expected to exceed the government’s estimate this summer of $170 billion over 10 years.

Treasury Department officials said it will now use a flexible formula to ensure the two agencies can stand behind the billions of dollars in mortgage-backed securities they sell to investors. Under the formula, financial support would increase according to how much each firm loses in a quarter. The cap in place at the end of 2012 would apply thereafter.

By making the change before year-end, Treasury sidestepped the need for an OK from a bailout-weary Congress.”

OK do you see what this Marxist Socialist Democratic Party is doing so far?  There is no change. This is a repeat of Jimmy Carter (D) (1977 to 1981), Bill Clinton (D) (1993 to 2001) and now Barack Obama (D) (2008-2012).

ST Marie