Remember the Community Reinvestment Act of 1977? That's the wizard wheeze behind the housing bubble.
Back in 1977 there was a problem. Low income people and people living in run-down neighborhoods couldn't get mortgages. Red-lining, it was called. And the banks were to blame.
So the Dems came up with a cool idea. Why not force the banks to lend in low-income areas by imposing government regulation, and why not sicc non-partisan activist groups with no ties to unions or to the Democratic Party, i.e. ACORN, on the banks to apply a little encouragement?
Why is it that the only thing that politicians deal in is force?
Then in the 1990s they updated the act and made it tougher. Pretty soon, a bank couldn't open bank branches or do a merger without a signoff from a non-partisan activist group. Usually this signoff could only be obtained with a bit of a non-partisan contribution to the activist group, i.e. ACORN.
Well, we know what happened next. By the peak of the housing bubble, Fannie and Freddie were issuing so many "sub-prime" mortgages that they amounted to over 40 percent of all mortgages bought and securitized by the mortgage giants. The banks were making sub-prime mortgages, as required by the Community Reinvestment Act, and they were selling the mortgages to Fannie and Freddie.
And now, according to reports, Barney Frank (D-MA) wants to extend the powers of the government to meddle in consumer lending with the Community Reinvestment Modernization Act of 2009. Writes Byron York:
It would extend CRA's strict lending requirements to non-bank institutions like credit unions, insurance companies, and mortgage lenders.
Oh great. Back in the Oughties, Democrats were unanimous in sneering at the stupidity of President George W. Bush. All that Bush wanted to do was to restart the economy and fight against Islamofascism. But this takes the cake.
However. I do not think that Barney Frank is stupid. I think he is very clever. But I think that he just doesn't care if he wrecks the whole credit system with his handouts and his subsidies. For him, it's all about power. The only thing that matters to him is helping his friends and supporters with other peoples' money. Because that's what liberal politicians do. They call it compassion.
At least these people aren't fooled by Barney Frank.