Setting the record straight

I am getting quite tired of watching and hearing the Democratists play the saint when it comes to the current economic problems. 1977: Pres. Jimmy Carter signs the Community Reinvestment Act into Law. The law pressured financial institutions to extend home loans to those who would otherwise not qualify. 1992: Despite warnings from GOP members of Congress in 1992, Clinton uses Carter's Community Reinvestment Act to push through extensive changes, which included harsh new regulations, that require lenders to make questionable loans that they previously would not have. 1995: Robt. Rubin’s Treasury (Clinton administration) reworked rules, forcing banks to satisfy quotas for sub-prime and minority loans to get a satisfactory Community Reinvestment Act rating. 2003: Rep. Barney Frank (D-Mass.), at a hearing in 2003, “I do not think we are facing any kind of a crisis. That is, in my view, the two government sponsored enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis”. 2004: Rep. Frank ignores the warnings, accusing the Bush Administration of creating an "artificial issue." 2005: the Senate Banking Committee, then chaired by Republican Richard Shelby, tried to rein in the two organizations by passing some strong new regulations. Democrat Senator Chris Dodd of Connecticut successfully threatened a filibuster. Barney Frank continued to defend Fannie and Freddie as "fundamentally sound" and labeled President Bush's proposals as "insane". All the Democrats, including the current chairman, Senator Chris Dodd, voted against it. Both he and Frank blocked the Housing Reform Act, which would have forced oversight and audits of Fannie Mae and Freddie Mac. 2007: Senate Committee on Banking, Housing and Urban Affairs Chairman Democrat Christopher Dodd ignores the President's warnings and calls on President Bush to "immediately reconsider his ill-advised" position. 2008: President Bush urges Congress to pass the much needed legislation and "modernize Fannie Mae and Freddie Mac. 2008: Democrats in Congress forget their previous objections to reforms, as Senator Dodd questions "why weren't we doing more, why did we wait almost a year before there were any significant steps taken to try to deal with this problem? Now, two questions for you to ponder. When demand exceeds supply what happens to prices? They increase. When demand is less than supply what happens to prices? They decrease.

1. Forcing lending institutions to give questionable loans increased the demand for house purchases and therefore stimulates increasing prices.
2. When the prices get so high that the demand equals supply prices become stable.
3. When more housing is built on the premise that demand is still strong then the scale tips to supply exceeding demand and prices fall.
4. About the time prices started falling, adjustable rate mortgage balloons come due. Since the house is now worth less than size of the loan, there are a limited number of possibilities,and here are two of them. (1) Defaulting on the loan and (2) the inability to refinance, both of which bring more housing into the market and driving prices lower.
5. Recycle to point 4 and keep repeating the cycle.

What is ironic, and sad, is that the persons who have been put in charge of remedying the problem are; drum role ....................... Barney Frank and Chris Dodd who both played a large in creating the problem.

Are you having fun yet? If you want an eye full go to http://www.youtube.com/watch?v=9HQWk1Wp3L4 Datadiver08