ON THE OTHER HAND - Do enough Americans truly understand the seriousness of the situation we find ourselves in? Do "Main Street Americans" understand the possible impact of the current credit freeze on their lives and their livelihoods? Here's a Washington Post column, "They Just Don't Get It," that does a pretty good job of summing up the situation.
SUBPRIME PRIMER - Here it is with names removed, not to protect the innocent, but in an attempt to be nonpartisan!
- In 1971 Congress created a worthy project with noble intentions the Community Reinvestment Act (CRA). Over strong industry objections, it mandated that all banks meet the credit needs of their entire communities.
- 1995 saw stronger regulations and performance tests that coerced banks to substantially increase loans to low-income, poverty-area borrowers or face fines or possible restrictions on expansion. These revisions allowed for secularization of CRA loans containing subprime mortgages.
- By 1997, greedy bankers started bundling good loans with poor ones and sold them as prime packages to institutions here and abroad. That shifted risk from the loan originators, freeing banks to begin pyramiding and make more of these profitable subprime products.
- Fannie Mae and Freddie Mac joined in the "greed fest."
- By 2003, these "quasi-governmental agencies had $1.5 trillion in outstanding debt and a bill was proposed to "rein" things in.
- In 2005, a bill was proposed to "bring some oversight to Fannie and Freddie." Google the words inside the quotation marks if you are curious as to who proposed such a bill and who defeated it.
- These subprime products have now permeated the entire world economy.
- Of course, it doesn't help that our politicians have spent like "drunken sailors," refused to move toward energy independence and terribly divided this nation by politicizing the "war on terror."
OTHER RECENT BAILOUTS - Many said this was a slippery slope and maybe it is.