What surprises me most about this quagmire, is that most of our working professionals in Washington and on Wall Street, whose opinions we value so dearly, insist on claiming that the breakdown of the housing market was essentially unforeseeable. We're hearing on a daily basis that this financial crisis is being called the "U.S.'s worst since the Great Depression." However today, it is not as though we are working with the limited technology of 1929. Even then anyone with half a brain could told you that money that doesn't exist is money that can't be collected. Yet, we continue to solely blame the banks rather than sharing the burden of responsibility amongst the unqualified loan applicants as well. Instead, foreclosures are refereed to as "woeful victims" of a shaky economy.

We have had warnings since 1988, 20 years ago, forecasting the risks of lending to those whom cannot afford to repay the loans in the first place. An article in the Atlanta Journal Constitution, 1988, community activists sought out banks to invest in blighted areas but were rejected. "We held up those lobbies for hours exchanging pennies for dollars and back again," said one community activist. "Later that afternoon we were met by the board who approved $4 million in loans." Simply so that the "community activists" would go away and the bank could continue operations.

March 14, 1992 NY Times, the article "Fading Red Line; A special report; New Hope in Inner Cities: Banks Offering Mortgages." The first paragraphs, "In blighted North Philadelphia, the banking industry is meeting the inner city. Prodded by Federal laws and an aggressive community-action group called Acorn, banks here and in other cities across the country have started making mortgage loans in neighborhoods they have traditionally avoided. So far, $60 million has been lent in a widely watched program. It matters little if an applicant has a small income, an irregular job pattern or collects welfare or food stamps." Acorn, one of Obama's preferred pet projects.

Another NY Times article, "Don't Let Banks Turn Their Backs on the Poor," December 4, 2004, which reads,"Congress passed the Community Reinvestment Act in 1977 as a response to the practice of redlining -- the refusal by banks to extend loans or banking services in poor, urban areas and distressed rural communities. Under the act, regulators consider reinvestment performance when a bank seeks permission to expand or merge. Since its inception, the law has prompted banks to channel more than $1 trillion into reinvestment projects -- without requiring a single dollar of Congressional spending ... Now (2004), the Federal Deposit Insurance Corporation (FDIC), one of four agencies responsible for enforcing the act, is proposing to relax enforcement of the law at almost 1,000 banks. The Federal Office of Thrift Supervision, another overseer of the law, has already finalized a similar proposal for savings and loans institutions. These new rules may be the first step in an effort -- long pursued by some in Congress -- to dismantle the act, piece by piece ... And communities will suffer if enforcement is curtailed, because the act has been working. A Treasury report presented in 2000 to the Congress concludes that mortgage lending to low- and moderate-income borrowers and areas rose substantially in the 1990's." It can be interpreted from these statements by the NY Times that additional cutbacks on regulations will encourage lenders to write loans to unbefitting (poor) borrowers at an exponential rate in the years to come.

Instead, Nancy Peloci just last week made the bold statement that, "Democrats hold no culpability for what is occurring in the current financial markets." Did we forget that the Democrats have had control of Congress for the past 2 years? Congress: the law making body of the federal government. And what have they done to avoid this turmoil -- nothing. Americans don't care that July 2007 was made National Watermelon month or who the newest post office is named after. The Democratic revolution of 2006 was brought around by "change," and all we got were more tax burdens. Even John McCain, who had been muttering and puttering around Capitol Hill with Senate Bill 190: "Federal Housing Enterprise Regulatory Reform Act" in 2005 was complaining about financial turmoil and warned about this scenario. But I guess no one was listening there either. Party line votes were more important.

The Bush Administration feels it has found the perfect solution to repair the crumbling housing market: A $700 billion purchase of devalued mortgage loans from overextended lenders. Basically, a reimbursement for unqualified home buyers who cosigned with an I.O.U.

Perusing one Bloomberg article in particular, "Dodd Proposes Giving U.S. Equity Stake for Bad Debt (Septet. 22, 2008)," today, I found myself agreeing with Senator Chris Dodd; odd since this is something that has never happened before. I had to pinch myself repeatedly when I reached a period, just to ensure I wasn't dreaming. Dodd's measure to create a 5-member oversight panel sounded pretty good, however by the third paragraph I remembered why I dislike him so.

Dodd's proposed oversight structure would seek to "limit the compensation of executives at the companies benefiting from the rescue and provide mortgage relief for struggling borrowers." Granted this sounds legitimate, but it is government tampering in the affairs of a private business and reminds me of Sen. Clinton insisting that we [the government] need to seize profits from oil companies. Over time, this plan would bleed over into every corner of the private sector.

When experiencing the result of your own foolish actions, this administration's policy is registering that the federal government will always be there to hold your hand and wipe your tears when times are rough.

Whereas, if you worked all your life for Enron, Adelphia or Global Crossing; investing in your retirement account and lost everything in their accounting scandals -- the federal government can't be bothered to save your nest-egg.

Double standards galore.

"Treasury Secretary Henry Paulson has urged Congress to pass (bailout) legislation without delay and without linking it to new programs." Jump to a direct quote from Section 8 of the "Treasury’s Financial-Bailout Proposal to Congress" legislation: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." A bit authoritarian and unconstitutional, yes? While speaking with ABC News, Paulson adds that, "We need this (the legislative process) to be clean and quick, and we need to get it in place."

Dodd is also proposing to "penalize" executives who take "inappropriate or excessive" risks. The executive compensation and severance packages could be reduced if that is "in the public interest," the proposal says. Further government tampering. Why should the government be making determinations as to the appropriateness of risks made by a private company? "Risk" is a given in the business world.

Dodd's proposal would also "force executives to give back profits they earned that were based on company accounting measures that are later found to be inaccurate." The Clinton administration’s White House Budget Director Franklin Raines ran Fannie and collected $50 million. Jamie Gurilli, Clinton Justice Department Official, worked for Fannie and took home $26 million. Will they be giving back their profits?

McCain made a valid point in saying that, "The senior executives of any firm that is bailed out by [the] Treasury should not be making more than the highest paid government official." The highest paid government official would be the President at $400,000. McCain's plan is to employ oversight over those who have declared bankruptcy, whereas Dodd's plan is to employ oversight over healthy companies. Unfortunately, even Republican Congressmen like John Campbell (CA) are in favor of Dodd's oversight board and executive-pay limitations. "I don't think we have a lot of choice," Campbell said. As a U.S. Representative, you can choose not to go along with a foolish plan Mr. Campbell.

Switching gears -- Senator Obama may talk a tough game when addressing issues concerning the markets, but according to the Center for Responsive Politics, this doesn't deny the fact that Obama received $12,349 in campaign contributions from Fannie Mae and Freddie Mac; second only to our Senate Banking Committee Chairman: Chris Dodd. On the same note, Obama put Fannie Mae’s CEO Jim Johnson in charge of his VP search committee, who also collected millions during his executive role. Obama has also selected Fannie’s former General Counsel as a senior advisor to his campaign.

Dodd caps his comments with, "We cannot just turn over $700 billion in taxpayer money and not insist that that taxpayer is going to be protected in this,'' Dodd told reporters yesterday.

No matter who's elected president in November, Democrats are poised to expand their congressional majority. And that means they will have a leading role in pushing through tough new regulation of U.S. financial markets. That would put the Democrats in the driver's seat next year, as the U.S. carries out the biggest expansion of federal power over the financial system since the Great Depression. For instance, ensuring the employment of lawmakers such as House Financial Services Committee Chairman Barney Frank (MA), who last week proposed the creation of a new federal agency to buy bad debt from private institutions.

So answer me this, do Dodd and Frank understand where this magical piggy bank of $700 billion in bailout funds are coming from? Do you now understand why Obama and the other Democrats want to raise your taxes?

They are counting on you to just play along even though you won't benefit a dime.

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(alexander koby. kreport.org. 09.22.08)