Blame The Banks

It has become very popular for the Democrat party to find people, businesses, and financial institutions to blame for the problems that where ultimately caused by bad government policies. For his entire presidency Obama has blamed the current economic problems not only on President Bush, but also on the banks and Wall Street. In a speech he gave recently he basically blamed the banks for the meltdown of the housing market. That is downright dishonest.

Now don't get me wrong, I am not saying that banks weren't a part of it. Some banks did use the bubble to partake in some very shady behavior. That being said, the banks would not have had the opportunity to, or been forced to, give out all the bad loans that caused the current problem had it not been for two pieces of legislation: The Community Reinvestment Act and The Commodity Futures Modernization Act.

The Community Reinvestment Act was originally passed by Congress and signed by Jimmy Carter in 1977. It urged banks to give out loans to low income families who would not normally have been able to qualify for those programs. Most banks at the time didn't really pay attention to the bill so in 1995, during the Clinton administration, the bill was changed so that there would be more oversight on the banks to make sure that they where giving out loans to low income families, particularly to african americans. Clinton also signed the Commodity Futures Modernization Act which deregulated over-the-counter derivatives. Financial institutions started bundling up high risk loans with low risk loans and trading portions of them to other financial institutions, such as Fannie May and Freddie Mac, to hedge against future forclosures of the high risk loans. When the bubble burst in 2008 and we had a record number of home forclosures, the hedge funds couldn't hold up and the whole system unraveled.

Now, instead of telling the truth, the Obama administration wants to leave the banks holding the smoking gun.