Why didn’t congress stop banks from giving home loans to people who couldn’t afford them in the first place,?
The Cult of Personality asked:
thus ruining our economy. The President doesn’t have that power, only congress does. So why didn’t they (Democrat controlled congress).
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thus ruining our economy. The President doesn’t have that power, only congress does. So why didn’t they (Democrat controlled congress).
Don’t give me any of the BS answers of “It’s all Bush’s fault”. It’s clear that it’s not. Although, he could have petitioned congress to regulate the banks, so it may indirectly be his fault.
October 1st, 2009 at 4:52 pm
They did. UNder clinton they were threatened with retributive investigations if they didnt make more loans to people who couldnt pay them back. THey were forced to abandon all standards in loans and in return clinton set up a way to insure that the banks were covered for these stupid loans by your tax dollars.
October 2nd, 2009 at 4:12 pm
Facts don’t impress the Dems. They let their emotions rule the way they think.
Bawny Franks fault
October 5th, 2009 at 8:34 pm
The laws requiring banks to lend money to people unable to pay it back were passed by Congress, and signed by Carter and Clinton into law. Even after the panic, the dumb laws are still on the books.
October 9th, 2009 at 3:51 am
Democrats pushed this= so they can remake America. The only way to socialize America is too destroy Capitalism. They are EVIL!
Barney Frank stopped the republicans from investigating Fannie and Freddie- they bought all the bad loans and ACORN worked with Fannie and Freddie- They were the evil gremlins who intimidated banks while Obama sued the banks for ACORN that would not give the loans to people who couldnt pay..
This has been planned for YEARS! So these radicals can RUIN AMERICA!
October 11th, 2009 at 9:08 pm
And frankly, I don’t think they should have done anything. Lassai faire, and all that.
October 12th, 2009 at 4:17 pm
Congress was responsible for MAKING the banks offer such loans. It was due to pressure from community organizers – like Obama – among other things that complicated the toxic asset issue.
Edit: And Bush did try to warn congress about the emerging crisis …
October 13th, 2009 at 3:37 am
Congress passed a Clinton bill that made it illegal to refuse loans to many who couldn’t afford it. The House Banking Committee and the senate Finance Committee were both repeatedly warned that this would cause a problem. Both Senator Chris Dodd, and Rep Barney Frank (the respective chairs) ignored the warnings.
October 14th, 2009 at 9:53 pm
Bush tried to regulate Fannie Mae and Freddie Mac only to be told by Chris Dodds and Barney Franks that everything was OK.
The lack of oversight provided by Chris Dodd and Barney Frank of the Banking and Financial Services subcommittee is unprecedented and should require the immediate dismissal of both men. Their decisions, which have in large part brought about the current market crisis, make the decisions made during Hurricane Katrina look like sheer genius.
October 15th, 2009 at 4:02 am
Ever get the feeling that we were set up? Perhaps that is just what the democrats wanted to happen? It wasn’t a matter of turning a blind eye, it was a matter of applying pressure to lending institutions to make those loans.
October 17th, 2009 at 12:57 am
Because the Republican Congress passed the Financial Modernization Act, aka the Gramm Leach Bliley Act of 1999, which did a lot more damage than Fannie May and Freddy Mac. That bill allowed investment banks to mangle the bundled securities market and to set up massive gaming parlors with Credit Default Swaps. So are you saying it’s all Democrats’ fault for not overturning Republican legislation? That’s a real stretch.
October 17th, 2009 at 9:05 pm
You would have to ask Barney Frank and Chris Dodd and actually 0bama was on a legal team before being senator sueing one of the banks to make sub prime loans………ACORN.
Ultimately, Citibank settled with Obama’s firm rather than incur the expense of a protracted litigation. I haven’t been able to locate a copy of the settlement agreement (it’s likely sealed), but we can surmise as to what hoops it required Citibank to jump through going forward. The net result of this sort of litigation was, of course, that banks like Citibank started approving more subprime loans in the 1990s in order to avoid frivolous litigation brought by activists like Barack H. Obama.
The ultimate result of Obama’s litigation and the banks’ “litigation-avoidance” behavior is now reflected in your declining stock portfolio.
And no, you probably won’t hear much about this in the mainstream media.
Case Name
Buycks-Roberson v. Citibank Fed. Sav. Bank Fair Housing/Lending/Insurance
Docket / Court 94 C 4094 ( N.D. Ill. ) FH-IL-0011
State/Territory Illinois
Case Summary
Plaintiffs filed their class action lawsuit on July 6, 1994, alleging that Citibank had engaged in redlining practices in the Chicago metropolitan area in violation of the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691; the Fair Housing Act, 42 U.S.C. 3601-3619; the Thirteenth Amendment to the U.S. Constitution; and 42 U.S.C. 1981, 1982. Plaintiffs alleged that the Defendant-bank rejected loan applications of minority applicants while approving loan applications filed by white applicants with similar financial characteristics and credit histories. Plaintiffs sought injunctiverelief, actual damages, and punitive damages.
U.S. District Court Judge Ruben Castillo certified the Plaintiffs’ suit as a class action on June 30, 1995. Buycks-Roberson v. Citibank Fed. Sav. Bank, 162 F.R.D. 322 (N.D. Ill. 1995). Also on June 30, Judge Castillo granted Plaintiffs’ motion to compel discovery of a sample of Defendant-bank’s loan application files. Buycks-Roberson v. Citibank Fed. Sav. Bank, 162 F.R.D. 338 (N.D. Ill. 1995).
The parties voluntarily dismissed the case on May 12, 1998, pursuant to a settlement agreement.
Plaintiff’s Lawyers Alexis, Hilary I. (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Childers, Michael Allen (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Clayton, Fay (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Cummings, Jeffrey Irvine (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Love, Sara Norris (Virginia)
FH-IL-0011-9000
Miner, Judson Hirsch (Illinois)
FH-IL-0011-7500 | FH-IL-0011-9000
Obama, Barack H. (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Wickert, John Henry (Illinois)
FH-IL-0011-9000
October 18th, 2009 at 9:37 pm
Actually they have for decades been applying pressure to banks to loan to higher risk people. That is not all bad but when the economy dives then these people are forced to default. Then you had A.R.M.s and Balloons that were just predatory in nature.
Congress was pushing for this not against it.
October 21st, 2009 at 1:56 am
The Bush Administration tried 18 times to put more regulations on Fannie Mae who were buying, packaging and re-selling subprime mortgages to wall street. Bush heeded Alan Greenspan’s and many others warning that a Fannie Mae failure would be disastrous for the US Economy.
The Democrats did not
18 Times Democrats blocked the proposed plan in the Senate Financial Services Committee. Even defending Franklin Raines, who in the video below actually testifies that”
” These loans are so riskless, that the required capital to hold them should be under 2%”
You MUST see this video. CSPAN coverage of hearing. it explains all. 8 minutes of truth that if shown on the news last fall.. The Democrats would not have won congress or the White House.
October 24th, 2009 at 9:29 am
This is the natural order of things.
It seems like there are more irresponsible people taking loans than responsible people. Responsible people try to avoid loans at all costs, because it forces them into debt, which leaves most the banks lending to irresponsible people.
It’s really a lose, lose situation for the taxpayer and the banks.
October 26th, 2009 at 10:21 pm
Some members tried.
In 2006 Senator John McCain cosponsored legislation that would reign in Fannie and Freddie but it was blocked by members of the Committee like Chris Dodd whom were receiving large donations from the banking industry.
In McCain’s own words:
“If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.”
Congressman Ed Royce, CA 40th, tried to support OFHEO’s director, Armando Falcon when he reported that Fannie in particular needed a major overhall back in 2004. Efforts were blocked by Barney Frank, Maxine Waters, Clay, Meeks, etc… All the folks that were getting heavy campaign contributions from the banking industry. Watch the Youtube video:
In the beginning…
FDR saw that one of the major factors for the crash of ’29 was the free access between commercial banking and investment banking. He signed legislation barring those two sectors from working together. (Glass-Stegall Act)
In 1976, concerned about Red Lining practices (banks moving into blighted neighborhoods, receiving deposits then lending it to less risky neighborhoods) Jimmy Carter enacted the Community Reinvestment Act. (CRA) This was actually working.
In 1991, Bill Clinton decided we needed CRA on steroids. When he was done re-writing it, ACORN could sue banks that didn’t loan to underqualified buyers.
Iris is correct, but she left out a couple important facts. Bill Clinton signed the Republican legislation into law and most Democrats, including Barney Frank and our Vice President voted for it. It was called the Gramm-Leach-Bliley Bill and it’s primary focus was to cancel the limitations FDR placed on the investment and commercial banking industries.
This law is still on the books because essentially, commercial and investment banking paid to get Obama elected. They were his biggest contributers as a single group.
What is good for the people? Obviously, when commercial and investment bankers are allowed to play together, we have depressions and severe rescessions. We should demand that Congress and Obama scuttle Gramm-Leach-Bliley. This will be hard because people like Chris Dodd and Barney Frank are in powerful positions and they are ******* off the teet of banking.
EDIT
When your banker or real estate friend tells you there is nothing wrong with the current CRA or the Gramm-Leach-Bliley bill, they are wrong. They are speaking purly for their own best interests, not yours or mine.
October 29th, 2009 at 1:56 pm
Because Congress doesn’t control big business, big business controls Congress. Who approves the loans that the banks make? A loan officer. These loan officers could look at the rate of pay and know that when the interest rate on the adjustable rate mortgages went up that the home owners would not be able to afford the increase. That didn’t stop them from making the loans. After all, from a business stand point it makes sense to sell something twice if you can.
October 30th, 2009 at 3:10 am
You use the term ‘banks’ rather loosely. Your local, independently owned home town bank did not get involved in those type of loans. It was primarily the large investment banks and large quasi bank/insurance companies (i.e. AIG, and the like) that were. Because of the deregulation that began under Reagan, continued under Clinton, and reach a height under Bush Jr., the second mortgage and speculatory mortgage industry boomed. And in that background not even Congress had the power to stop these companies, what they were doing was legal under the deregulated rules.
November 1st, 2009 at 4:00 am
The president has the power to regulate and Obama as a Senator failed to do the right thing. And now he continues to look the other way. The executives primary responsibility is to regulate and enforce all existing laws and regulations currently on the books. He has failed miserably to do any of it.
November 3rd, 2009 at 6:39 pm
Congress doesn’t keep track of their boondoggles. They pass great, high-sounding laws & then blame the negative consequences on anybody or anything but themselves.
November 7th, 2009 at 6:12 am
Because those bankers wanted to make a quick buck, and were enabled by their employers…who didn’t think of long-term consequences.