Political Editorial

June 06, 2013

 

Hindsight 20/20

THE COMMUNITY REINVESTMENT ACT

By Bruce Wiseman Thursday, March 19, 2009

 

Greenspan had been the Fed Chairman for seven years when, in 1994, a bill called the Community Reinvestment Act (CRA) was rewritten by Congress. The new version had the purpose of providing loans to help deserving minorities afford homes. Nice thought, but the new legislation opened the door to loans that set aside certain lending criteria: little things like a down payment, enough income to service the mortgage and a good credit record.

With CRA’s facelift, we have in place two of the five elements of the perfect financial storm: Alan (Easy Money) Greenspan at the helm of the Fed and a piece of legislation that turned mortgage lenders into a division of the Salvation Army.

Perhaps you can see the pot beginning to boil here. But the real fuel to the fire was yet to come.

GLASS-STEAGALL

To understand the third element of the storm, we travel back in time to the Great Depression and the 1933 passage of a federal law called the Glass-Steagall Act. As excess speculation by banks was one of the key factors of the banking collapse of 1929, this law forbade commercial banks from underwriting (promoting and selling) stocks and bonds.

That activity was left to the purview of “Investment Banks” (names of major investment banks you might recognize include Goldman Sachs, Morgan Stanley and the recently deceased Lehman Brothers).

Commercial banks could take deposits and make loans to people.

Investment banks underwrote (facilitated the issuing of) stocks and bonds.

To repeat, this law was put in place to prevent the banking speculation that caused the Great Depression. Among other regulations, Glass-Steagall kept commercial banks out of the securities.

Greenspan’s role in our not-so-little drama is made clear in one of his first speeches before Congress in 1987 in which he calls for the repeal of the Glass-Steagall Act. In other words, he’s trying to get rid of the legislation that kept a lid on banks speculating in financial markets with securities.

He continued to push for the repeal until 1999 when New York banks successfully lobbied Congress to repeal the Glass-Steagall Act. Easy-Money Alan hailed the repeal as a revolution in finance.

Yeah, Baby!

A revolution was coming.

With Glass-Steagall gone, and the permissible mergers of commercial banks with investment banks, there was nothing to prevent these combined financial institutions from packaging up the subprime CRA mortgages with normal prime loans and selling them off as mortgage-backed securities through a different arm of the same financial institution. No external due diligence required.

You now have three of the five Horsemen of the Fiscal Apocalypse: Greenspan, CRA mortgages and repeal of Glass-Steagall.

That was a short time ago.

What now?

Ship American jobs overseas.

Encourage more debt and larger homes and unlimited credit card use. In three years when the jobs are lost, foreclose on real property bought with worthless printing press “bail-out money” so that the elite dictators can eat out the substance of the people.

Attire the apathetic in designer clothing. Take IN GOD WE TRUST off the paper money and in the pledge of allegiance.

There can now be no “wrath of god”. Tornado, hurricanes, volcanos, natural disasters and mass murder are all normal behavior, not manufactured crisis for enslavement. We ascended from animals. Situation ethics is to be worshiped. Who cares?

A slave culture will be complete when there arises a champion liar, Marxist leaning leader.

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