Silver Bullets: Legislation Pending in the House to Kill Fannie and Freddie and the CRA

by: Bill Dupray   posted: 2008-11-30 18:18:00
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IBD has a terrific editorial pinning the economic meltdown squarely on Fannie and Freddie and their enabling legislation, the Community Reinvestment Act. It is worth a full read.

The Community Reinvestment Act is to blame for the financial crisis, but it so powerfully serves Democrats' interests that they'll do anything to protect it — including revising history.

The CRA coerces banks into making loans based on political correctness, and little else, to people who can't afford them. Enforced like never before by the Clinton administration, the regulation destroyed credit standards across the mortgage industry, created the subprime market, and caused the housing bubble that has now burst and left us with the worst housing and banking crises since the Great Depression.

The CRA should be abolished, along with the government-sponsored enterprises that fueled the secondary market for subprimes — under pressure from Clinton, who ordered HUD to set quotas for "affirmative action" lending at Fannie Mae and Freddie Mac.

But powerful Democrats in Washington want to protect the act — along with Fannie and Freddie — and spin the subprime scandal as the result of too little regulation, not too much.

"Repealing or weakening the CRA would be a mistake," warns Senate Banking Committee Chairman Chris Dodd, D-Conn., who argues that the CRA should be strengthened.

Dodd, the top recipient of Fannie donations and himself a beneficiary of a sweetheart mortgage brokered by a subprime lender, recently invited one of Clinton's top enforcers of the CRA to testify.

"The notion that CRA has caused this problem is a pernicious thought," said former Comptroller of the Currency Gene Ludwig. "These are not truthful statements. The CRA has helped to create a better and sounder world for finance, not the opposite."

Dead wrong. But the mainstream media believe it, and have attacked those, including this paper, who dare to tell the truth about the crisis. Already the debacle has erased $13 trillion in wealth, while putting taxpayers on the hook for up to $8 trillion in bailouts.

They go through, one by one, each myth floated by the Democrats and the MSM and explode them with the facts. It is a good article to bookmark for future reference.

Republicans in Congress are not standing idly by.

Two bills in the House would be a good place to start. HR 7264, which has nine co-sponsors, would repeal the CRA. And HR 7094, with 17 co-sponsors, would dissolve Fannie Mae and Freddie Mac.

Here is the link to HR 7264, with the money provision.

SEC. 105. REPEAL OF COMMUNITY REINVESTMENT ACT.

The Community Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.) is hereby repealed.

The hatchet for Fannie and Freddie is here.

SEC. 3. TERMINATION OF CURRENT CONSERVATORSHIP.

(a) In General- Upon the expiration of the period referred to in subsection (b), the Director of the Federal Housing Finance Agency shall determine, with respect to each enterprise [Fannie Mae and Fredie Mac], if the enterprise is financially viable at that time and--

(1) if the Director determines that the enterprise is financially viable, immediately take all actions necessary to terminate the conservatorship for each of the enterprises; or

(2) if the Director determines that the enterprise is not financially viable, immediately appoint the Federal Housing Finance Agency as receiver under section 1367 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 and carry out such receivership under the authority of such section.

While the Republicans may be a little . . . shorthanded in the 111th Congress, it doesn't mean we shouldn't bring things like this to light so people can contact their members of congress and push hard for this critical legislation. To allow the Democrats to whitewash this debacle and ignore the root problem is simply setting ourselves up to fail again.

Tags: Community Reinvestment Act, Congress, CRA, Fannie Mae, Fredie Mac, legislation, 

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