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"With the economic in turmoil, is political expediency really what the American people expect from their leaders in Washington?"
                                                -House Minority Leaders John Boehner

Minority Leader Boehner also went on to say that liberals "calling the shots on Capitol Hill instead are more concerned with shielding themselves politically, resisting necessary hearings that would lead to long-overdue reform, and cheating the American people of quick access to facts about the misdeeds of those who ran Fannie and Freddie."

It's becoming painfully apparent that some Members of Congress, with re-election looming in 30 days, are more concerned about being seen to do something to cover their rears than actually doing something about our nation's economic woes.

          Look at it this way:

Last week Congress passed a $700 billion measure that Senator John McCain called a "tourniquet to stop the bleeding" and President Bush called a "first step."

          Since then... NOTHING.

On Monday, the Dow Jones Industrial average fell another 508 points, Blue Chips have dropped over 1400 points in a week and the market has fallen over 33 percent from its high of 14,164.53 over the last 12 months.

To take McCain's "tourniquet" analogy a step further; if you went to an Emergency Room and the attending physician applied a tourniquet to your hemorrhaging wound and then simply went home, would you be angry?

          You bet you would.

What if the physician in question was the very person who inflicted the wound upon you in the first place? Would you call his lack of substantive action malpractice?

          You bet you would.

          And yet, that's EXACTLY what some Members of Congress are trying to do!

At best, they applied a band-aid to a hemorrhaging wound before going home to get reelected! It was more important to be seen doing something than to actually solve the problems -- problems THEY CAUSED -- that got us in this economic mess. The unmitigated gall should make your blood boil!

It's up to us to let them know they can't get away with it and it's up to us to send them that message right now!

We hate to point fingers, but in this case it is vitally important to understand just how we got into this mess if we are going to understand how to get out of this mess.

Let us NOT lose sight of who bears the majority of the blame for this mess. Let us not lose sight of what caused this financial meltdown in the mortgage market!

In 1977, a liberal Congress under President Jimmy Carter established the Community Reinvestment Act (CRA) to encourage those earning low incomes to obtain mortgages.

In principal... not a bad idea... but then in 1995, President Bill Clinton - with the help of liberals in Congress - added massive new provisions to CRA that forced banks to issue $1 trillion dollars in bad loans and indirectly fund the work of radical left-wing organizations!

You read that right. You can go all the way back to an article titled "The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities" by Howard Husock, which appeared in City Journal back in the winter of 2000 - 8 years ago - to get the low-down.

          It's rather lengthy but read it carefully:

"The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities and, as Senate Banking Committee Chairman Phil Gramm memorably put it, a vast extortion scheme against the nation's banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups..."

          More specifically:

"Crucially, the new CRA regulations also instructed bank examiners to take into account how well banks responded to complaints. The old CRA evaluation process had allowed advocacy groups a chance to express their views on individual banks, and publicly available data on the lending patterns of individual banks allowed activist groups to target institutions considered vulnerable to protest. But for advocacy groups that were in the complaint business, the Clinton administration regulations offered a formal invitation. The National Community Reinvestment Coalition, a foundation-funded umbrella group for community activist groups that profit from the CRA, issued a clarion call to its members in a leaflet entitled 'The New CRA Regulations: How Community Groups Can Get Involved.' 'Timely comments,' the NCRC observed with a certain understatement, 'can have a strong influence on a bank's CRA rating.'"

"'To avoid the possibility of a denied or delayed application,' advises the NCRC in its deadpan tone, 'lending institutions have an incentive to make formal agreements with community organizations.' By intervening, even just threatening to intervene, in the CRA review process, left-wing nonprofit groups have been able to gain control over eye-popping pools of bank capital, which they in turn parcel out to individual low-income mortgage seekers. A radical group called ACORN Housing has a $760 million commitment from the Bank of New York; the Boston-based Neighborhood Assistance Corporation of America has a $3-billion agreement with the Bank of America; a coalition of groups headed by New Jersey Citizen Action has a five-year, $13-billion agreement with First Union Corporation. Similar deals operate in almost every major U.S. city. Observes Tom Callahan, executive director of the Massachusetts Affordable Housing Alliance, which has $220 million in bank mortgage money to parcel out, "CRA is the backbone of everything we do."

In other words, Congress is the problem. Liberals in Congress essentially forced financial institutions to make bad loans and fund radical organizations dedicated to the destruction of the American way of life.

And liberals in Congress also empowered Fannie Mae to buy those bad loans. In fact, the more loans Fannie Mae bought, the more money Fannie Mae made; so Fannie Mae simply leaned on financial institutions to make even more bad loans.

Lenders in turn, denied the opportunity to operate in a truly free market, found more creative ways to make money and engaged in risky speculation... and liberals in Congress - flush with campaign contributions from these institutions -- turned a blind eye.

          It was a vicious circle.

          Congress encouraged financial institutions to make bad loans.

These financial institutions gave campaign contributions to liberals in Congress and paid extortion money to the pet radical left-wing causes of these liberals in Congress.

Fannie Mae backed these bad loans and encouraged the financial institutions to write more bad paper and as more money flowed into the campaign coffers of liberals and radical organizations.

The cycle continually repeated itself and as long as the money flowed, liberals in Congress turned a blind eye.

Yours In Freedom,

Jeff Mazzella
President
www.cfif.org