Our Government Created this Mess...

Statement

Democrats AND Republicans have had Their Hand in it...Now, They want US to Pay!

I am opposed to the federal government's plan to use citizen tax dollars, increasing the national debt that our citizens will have to repay with interest, to bail out AIG to the tune of $700 billion.

The root cause of this entire mess rests with Congress, who in 1977 passed the Community Reinvestment Act that required banks and thrifts to make loans to low and moderate income households and small businesses in the areas they operated, and to discontinue the use of "redlining" (avoiding making loans in credit-risky areas). Failure to meet the obligations as set forth in the act would result in the loss of federal deposit insurance protection and access to the Federal Reserve's discount window.

That legislation was drafted and promoted by Democrats, and William
Proxmire sponsored the Senate legislation during the term of president Jimmy
Carter.

As these member banks began operating under the CRA, they wrote many risky loans to people that might not have the ability to pay for them. Many of these loans included ARMs (Adjustable Rate Mortgages) that, when increased, made it impossible for customers to stay current.

Foreclosures began, and continued through the failure of the thrifts (Savings and Loans) during the 1990s.

In 1995, under the leadership of Bill Clinton, the Democrats once again
addressed CRA, and broadened the scope to include more no-creditworthy
individuals.

More and more banks began to compete for the business, and soon, loan officers were paid on commission for the loans they wrote, and they took more risk to close more
loans.

In 2002, president George Bush tried to get some reforms through Congress as he believed there were critical problems with both the CRA and with the system. Congress shut him out, and refused to pass any reform legislation.

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