Protests against corporate greed and economic inequality spread across America.
Spreading unrest: Protesters gather on the front steps of the Idaho Capitol in Boise, Idaho.
The Occupy Wall Street movement, that began in New York last month with a few people, has now swelled to protests in more than a dozen cities.
They included Tampa, Florida; Trenton and Jersey City, New Jersey, Philadelphia, and Norfolk, Virginia in the East; to Chicago and St. Louis in the Midwest; Houston, San Antonio and Austin in Texas; Nashville, Tennessee; and Portland, Oregon, Seattle and Los Angeles in the West.
To understand how we got to this, we need to take a short look at history.
The Time Line of Events
This televised report aired in September 2004 and can be viewed here. In the space of four minutes, it attempts to time line the events leading to the greatest economic failure since the Great Depression.
A significant portion of the events leading up to the Fannie Mae and Freddy Mac debacle begins in – believe it or not – 1977
The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining. The Act requires the appropriate federal financial supervisory agencies to encourage regulated financial institutions to meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation. To enforce the statute, federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches or for mergers or acquisitions.
And who signed this beautiful piece of legislation into law? The original Act was passed by the 95th United States Congress and signed into law by President Jimmy Carter in 1977.
In 1995 Clinton loosened housing rules by rewriting the Community Reinvestment Act, which put added pressure on banks to lend in low-income neighborhoods. It is the subject of heated political and scholarly debate whether any of these moves are to blame for our troubles, but they certainly played a role in creating a permissive lending environment. He also signed the Commodity Futures Modernization Act, which exempted credit-default swaps from regulation.
Clinton admitted that his Administration could have done more to “set in motion some more formal regulation of the derivatives market,” but he vehemently denied that the repeal of Glass-Steagall or his Administration’s housing policies helped spur the financial crisis.
September In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
November: Clinton signs banking overhaul measure. Congress passed the bipartisan measure November 5, opening the way for a blossoming of financial “supermarkets” selling loans, investments and insurance. Proponents had pushed the legislation in Congress for two decades, and Wall Street and the banking and insurance industries had poured millions of dollars into lobbying for it in the past few years. “It was sweaty, it was tense, but it had momentum,” Sen. Charles Schumer (D-New York) said of the final bargaining session. He and Sen. Christopher Dodd (D-Connecticut) whose states are home to Wall Street and the banking industry (New York) and the insurance industry (Connecticut), helped broker the agreement.
Scandal at Fannie Mae
Corrupted political leaders contributed to the debacle we now wake up to every morning. In a Wall Street Journal analysis, the failure of the GSE’s began shortly after their 2003 and 2004 accounting scandals. Senior executives at Fannie Mae manipulated accounting to collect millions of dollars in undeserved bonuses and to deceive investors. The government-sponsored mortgage company was fined $400 million.
Franklin Delano Raines once a prominent Democrat and CEO of Fannie Mae, and Leland Brendsel, the CEO of Freddie Mac were removed from their assigned office in the wake of the multibillion-dollar accounting scandal. Source:The Fall of Fannie Mae
Many Warnings Ignored
Spanning a period of 6 years, President Bush and his Administration have not only warned of the systemic consequences of failure to reform GSEs but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties.
Beginning as early as 2001, the President made repeated attempts to reform the supervision of these entities but was thwarted by the legislative maneuvering of those who emphatically denied there were problems with the GSEs.
The mounting and overwhelming evidence points to the fact many Democrats chose to drive while their eyes were closed, ignoring call after call to fix the problem and in some cases, belligerently and arrogantly denying any problem existed with their policies.
Fast Forward — October, 2011
Now, three years after the meltdown of 2008, we watch in amazement as the disillusioned take to the streets to protest against Wall Street and the banks.
It’s a bit ironic once you realize that the failed policies designed to give them what they want – easier access to housing being among them – turns out to be the catalyst to send them out into the streets in protest. Too self-centered to see it, or too stupid to understand, they are actually protesting against their own principles and philosophies, the outcome of which they apparently don’t like.
Cry Baby, cry.