Victims of an agenda

Many of you will have read recent protestations made by politicians, and high ranking individuals in the finance industry, insisting that there is no connection between the Community Reinvestment Act, a piece of US government legislation which primarily required lending institutions to extend credit to minority and immigrant groups and people with poor or non existent credit ratings, and the current global financial crisis, a phenomenon originating initially from the USA and caused primarily by extending lending to minority and immigrant groups and people with poor or non-existent credit ratings.

I have written about this before, however, as with the wider media, it seems there is a widespread desire to pin the blame for the situation we are now in on those convenient greedy, rich, bankers, and, for some, to applaud the gesture politics of our leaders when they announce that they will curb the earnings of the captains of Industry or claw back legally agreed pension arrangements, as if this will have any impact whatsoever on the enormity of the challenge facing us.

I, however, take the view that, although many bankers and financiers are guilty, their crimes amount mainly to playing money launderers to the real criminals, namely agenda driven politicians intent on social engineering.

Bill Anderson at Lew Rockwell has made a fascinating discovery in the form of an article published in the New York Times in September 1999, the following exert from which, I hope he will not mind me quoting in full:

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. (emphasis mine)

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called sub prime market.''

As Bill says in his posting, isn't it strange how smart people can forget stuff so easily?.

I know I am still in a minority in not heaping all the blame on the greedy bankers, but my guess is that in years to come, historians and economist will admit that what we are living through today, was not caused by speculators, loan sharks and bankers, nut by politicians with an agenda.
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Note: If you agree with Bill's article "Fannie's Smoking Gun" or think it deserves wider readership, please forward it on.

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