Marcus Aurelius <a...@h...com> wrote without
thinking...:

>The purpose of the "Bail Out" is to formally give governmental
>backing,recognition, and protection to those "Monopoly Capitalistic"
>individuals, institutions, and practices which have caused in the
>current financial crises. It is not to solve the current problem by
>addressing and correcting those individuals, institutions, and
>practices which caused the problem. That is what our elective
>officials vehemently refuse to do as to do the same would be destroy
>the current concentration of both economic and political power which
>have proven so profitable to the "monopoly capitalists" which is and
>has resulted in the impoverishment and political disenfanchisement of
>the American electorate.

The financial crisis was due to government social engineering through
the auspices of the Community Reinvestment Act (CRA) of 1977 and
enhanced by Bill Clinton in 1995.

In 1995, as a result of interest from President Bill Clinton's
administration, the implementing regulations for the CRA were
strengthened by focusing the financial regulators' attention on
institutions' performance in helping to meet community credit needs.

These revisions with an effective starting date of January 31, 1995
were credited with substantially increasing the number and aggregate
amount of loans to small businesses and to low- and moderate-income
borrowers for home loans. These changes were very controversial and as
a result, the regulators agreed to revisit the rule after it had been
fully implemented for seven years. Thus in 2002, the regulators opened
up the regulation for review and potential revision.

Part of the increase in home loans was due to increased efficiency and
the genesis of lenders, like Countrywide, that do not mitigate loan
risk with savings deposits as do traditional banks using the new
subprime authorization. This is known as the secondary market for
mortgage loans. The revisions allowed the securitization of CRA loans
containing subprime mortgages. The first public securitization of CRA
loans started in 1997 by Bear Stearns. The number of CRA mortgage
loans increased by 39 percent between 1993 and 1998, while other loans
increased by only 17 percent.

Other rule changes gave Fannie and Freddie extraordinary leverage,
allowing them to hold just 2.5% of capital to back their investments,
vs. 10% for banks. By 2007, Fannie and Freddie owned or guaranteed
nearly half of the $12 trillion U.S. mortgage market. Thus leading us
to the problems of today.

For many years President GW Bush and his Administration have not only
warned of the systemic consequences of financial turmoil at a housing
government-sponsored enterprise (GSE) but also put forward thoughtful
plans to reduce the risk that either Fannie Mae or Freddie Mac would
encounter such difficulties. President Bush publicly called for GSE
reform 17 times in 2008 alone before Congress acted. Unfortunately,
these warnings went unheeded, as the President’s repeated attempts to
reform the supervision of these entities were thwarted by the
legislative maneuvering of those who emphatically denied there were
problems.

Bush's warnings started in 2001. The Bush Administration’s FY02 budget
declares that the size of Fannie Mae and Freddie Mac is “a potential
problem,” because “financial trouble of a large GSE could cause strong
repercussions in financial markets, affecting Federally insured
entities and economic activity.”

Republican Congressmen wanted new oversight rules of the GSEs, but
Fannie Mae and Freddie Mac were extensions of the Democratic Party so
any new law to regulate them were held up in committees and
subcommittees with a strict Democratic party line vote.

Just like broadcasters have to petition the FCC for renewal of the
license by showing they did some broadcasting for the community, banks
had to have a good rating by the CRA if they had to do business that
required banking regulator's approval such as a merger. To get that
good CRA rating they took on risky loans.

===USA===

Justice will be served
And the battle will rage
This big dog will fight
When you rattle his cage
And youll be sorry that you messed with
The U.S. of A.
cause well put a boot in your ass
Its the American way

-Toby Keith, "Courtesy Of The Red, White & Blue"