We've all seen the bumper sticker....."Guns don't kill people, people do!!" The Left in this country has been desperately trying to ban private firearm ownership for years and their number one tactic has been to blame an inanimate object for human misbehavior. It's a means to an end. I've seen this same strategy (by both sides of the political aisle) employed to explain the economic collapse that we are experiencing right now. It is a naked attempt to shift the blame away from the actual living, breathing people responsible for this mess to words written into legislation. The deregulation of our financial markets may have opened the door for fiscal impropriety but the people responsible for this had to actually walk through that open door. Since the "watchdogs" of our democracy have chosen to not really dig into and explain this to the American people, I have done research on my own to try to understand how we have arrived at this mess. Here are the steps that have led to this crisis according to what I have been able to ascertain. I will provide links that I have found to be helpful but you can easily research this on your own. Please feel free to add to this. I am certainly not an expert, just a curious citizen wondering how those we elected to "protect" us allowed this to happen.
1) The Community Reinvestment Act: This law passed in 1977 under Carter forced banks to prove that they were making efforts to make mortgage loans in low income neighborhoods to people that normally wouldn't qualify (redlining) for those loans. Many on the Right point to this as the main cause of the mortgage meltdown. Since the meltdown didn't occur until almost 30 years after it's inception, it's a pretty weak argument. I would argue that because of it's loose enforcement, it was more of an annoyance to the banking industry than anything else. What it did accomplish though was to set the stage for future problems.
2) Financial Services Modernization Act: This bi-partisan bill was signed by Clinton in 1999 and deregulated and "opened up" Fannie and Freddie. This is chronicled by The New York Times (a Clinton propaganda ally at the time). This article is extremely important for you to read. It clearly states that it was the Clinton Administration that was applying the pressure on banks to make risky loans and is almost prophetic in explaining the dangers of this practice in case of an economic downturn. It's a must read.
3) The Commodity Futures Modernization Act of 2000: Another bi-partisan bill signed by Clinton in 2000 on his way out of office. This was his "gift" to the incoming Bush Administration. This Act removed many of the regulations enacted in the 1930's that were intended to prevent another stock market crash like the one that had just occurred back then. It also deregulated the accounting practices used by corporations and included the famous "Enron Loophole".
In my humble opinion it was these 3 Acts that "opened the door" to our current problems. If you are someone that simply wants to blame deregulation for our economic problems than you must place the blame on Jimmy Carter, Bill Clinton and Phil Gramm (the architect of the 2 bills passed under Clinton). I tend to believe that if we had honest, responsible people in government and corporate America, these regulations would have been a boon for the economy and the country. That wasn't the case though.
So, who were the actual people that "walked" through that open door? There are too many to list but here are my main culprits.
1) Franklin Raines: Clinton's former budget director that was appointed to run Fannie Mae in the late 1990's. He cooked the books at Fannie and put enormous pressure on private lenders to make risky loans. Why? So that Fannie could buy those loans on the secondary market thus inflating Fannie's portfolio and thereby inflating his outrageous bonuses. This practice completely distorted the free market and directly led to the housing pricing bubble. He was removed in 2004 for this activity and really should be in jail for a long, long time. He is not in jail and only had to pay a fine for his crimes. Why? He is an established member of the Oligarchy and therefore immune to real punishment.
2) Greedy CEOs: I truly believe that most corporate leaders are responsible and keep the best interests of their companies and stock holders at heart. There were enough irresponsible and greedy CEOs though that took advantage of the deregulation to explode their personal wealth and destroy the corporations that they were entrusted to protect. Need I say more?
3) The Bush Administration: George Bush either willingly or incompetently turned a blind eye to all that was occurring in the financial markets during his term of office. Although the President has less to do with government oversight than the Congress, the buck must stop somewhere. He came into office promoting an "Ownership Society" and I believe he agreed with most of what was happening. His appointment of Chris Cox to head the SEC was a disaster and Cox is another official that deserves to be in jail for a long, long time. He is not. Why? He is an established member of the Oligarchy and immune to real punishment.
4) Bill Frist, Chris Dodd, Barney Frank: Bill Frist as the leader of the Senate blocked a critical bill that would have reformed Fannie and Freddie back in 2004 (a). This bill may have helped to avert our current crisis or at least, lessened it's impact. Dodd and Frank fought regulation tooth and nail during this time and voted in lock step with Democrats to block any reform of Fannie and Freddie's practices. Once in the majority (2006) these two men assumed the chairmanships of the Banking Committees in the Senate and House and continued to ignore the problem. Barney Frank is actually on television on CNBC in the summer of 2008, in the middle of the meltdown, telling the American people that Fannie is just fine. (b). At minimum he should have resigned in disgrace for his behavior. At most (my preference), he should be in jail for a long, long time. He is not. Why? He is an established member of the Oligarchy and immune to real punishment.
We are all free to determine for ourselves what happened and who is to blame. One thing is clear to me though. The roosters are watching the hen house and we as voters continue to put them there year after year. Maybe, at the end of the day, we have to take a hard look at ourselves. I think it's time to stop being sheep and start being real Americans, ready and willing to step up and take charge of our country.
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