What Matt Damon is not Smart Enough to Understand

At the MIT Commencement, Matt Damon, actor (not economist) stated that it was the banks and Wall Street that caused the economic collapse, further stating they committed theft and fraud.

I'll get to the specifics that show Mr Damon's ignorance shortly, but for now I will state unequivically (and will prove) that it was not the banks and Wall Street (though they may, indeed, be corrupt). The only theft and fraud was when the government, ruled by a Democrat majority, bailed them out, and when Obama stole the money from GM stockholders and gave it to his donor buddies in the unions. THAT was the theft and fraud. The banks and Wall Street were mere beneficiaries of Democrats giving away taxpayer money to their cronies and donors.

So, just exactly what DID cause the crash? Would you beleive it was 60 years of Democrat bills? And Mr Obama, himself? Did you know it was Obama, as a lawyer in the 80's, who sued to force banks to issue bad mortgages to people who could not afford them? And that forced banks, in order to protect their depositors, to reduce the risks by "bundling" those sub-prime mortgages, creating the derivatives that brought down Fanny Mae and Freddie Mac?

All economic experts and studies agree on a couple of points - the meltdown was triggered (not caused by) the selling of "derivatives" and the foolishness and mismanagement of Fannie Mae and Freddie Mac, which in turn caused the housing industry to fold up like a cheap suit. This resulted in foreclosures, bankruptcies and further resulted in products not being purchased, as people are not furnishing or remodeling homes, or they simply do not have the money, as their recent home equity loans put them under water. Like the ripples when you toss a stone into a pond, the devastation spread outward, touching even the furthest shore.

So, why did this happen? The answer is complex, but I will attempt to simplify it a bit.

The infamous derivatives, the main trigger, are nothing more than a bunch of risky mortgages bundled together, then shares of that bundle are sold off to investors - because of the risk, most were purchased by Fannie Mae and Freddie Mac. So the question now is, "Why were there so many risky mortgages? It sounds like the banks are responsible, just as the Democrats say. Those nasty banks made bad loans, which were bundled by that greedy Wall Street  bunch, and sold off to the mismanaged Fannie & Freddie. Right?"

Not quite. It LOOKS that way, and that is what Democrats want you to believe - they need to have voters hate all the appropriate "straw men". And, since the trigger was pulled while Bush was in office, they claim it is therefore "Bush's fault."

But things are rarely as they appear. Let's dig a bit deeper.

Barney Frank (D) and Chris Dodd (D) were the guys who were supposed to be overseeing Fannie Mae. When George Bush and John McCain saw problems arising in 2003-04, they attempted to push through a bill that would regulate them better. Frank & Dodd killed the bill, convincing Congress that "Fannie Mae is fine - there are no problems."

So, in the final stages, it was Democrats who not only fell asleep at the wheel, but convinced Congress not to take action. Now we go deeper.

Why were derivatives even necessary? Why were those risky mortgages being created? And this is where it begins to get meaty. It actually starts back in the '70's, under Jimmy Carter (D). Democrats believed that every American - even the poor - should be able to own their own home. But banks did not want to make such risky loans in areas known as "redline districts" - areas that were in decline and/or populated by the poor. In other words, since banks are in the business of making money, not losing it, they were reluctant to loan money to people who could not repay.

In come the Democrats, led by "community organizing" groups like ACORN. Together they pass a law in Congress known as CRA - the Community Reinvestment Act. This bill REQUIRED banks to make the risky loans. Banks were no longer permitted to use "redlining" to refuse mortgage applications. This was the beginning for what would later force the creation of derivatives.

Banks could still refuse mortgages to those who could not qualify based on income and credit history, however, so the problem at this point was relatively minor. But then along comes ACORN again. ACORN sued the banks through their attorney, community organizer Barack Obama (D)*. The lawsuit forced stronger changes to the CRA. Under Bill Clinton (D), the Bliley bill was passed which strengthened the CRA of the '70's and literally forced banks to make even riskier loans. And the bubble of risky notes grows out of control.

Under the Clinton administration, federal regulators began using the act to combat “red-lining,” a practice by which banks loaned money to some communities but not to others, based on economic status. “No loan is exempt, no bank is immune,” warned then-Attorney General Janet Reno. “For those who thumb their nose at us, I promise vigorous enforcement.”

The Clinton-Reno threat of “vigorous enforcement” pushed banks to make the now infamous loans that many blame for the current meltdown. “Banks, in order to not get in trouble with the regulators, had to make loans to people who shouldn’t have been getting mortgage loans.”

Now, as I said, banks have to make, not lose, money. Otherwise they would not survive. So it became necessary for them to "spread the risk" by bundling the risky notes - if a few defaulted, the rest would cover the losses. This bundling was the creation of derivatives. Banks were forced into this by the CRA and the Bliley bill, both signed into law by Democrats.

So now we have Fannie Mae under Frank (D) and Dodd (D) buying up risky notes that the Bliley Bill and CRA required banks to make, under Carter (D) and Clinton (D), and forced by Obama (D).

As you can see, Bush had nothing to do with all this - in fact, this mess is what HE "inherited" from Clinton. But it actually goes back further.

In the 1930's, FDR (D) created Fannie Mae. And in the '60's, Lyndon Johnson (D) privatized Fannie Mae, giving it the ability to grow out of control, nearly unrestricted.

Everyone involved in the creation of the meltdown was a liberal Democrat - FDR, Johnson, ACORN, Carter, Obama, Clinton, Frank, Dodd.

One more thing to consider - the meltdown began in July 2007. Democrats controlled Congress since January 2007. Since it is Congress that makes law, they bear some responsibility.

I have been posting this true history for almost 5 years. Still, liberals like Damon, Whoopie, Sarandon, Sanders, Clinton & Obama are still blaming Bush, banks and Wall Street, and Republicans are just too stupid to dispute them by using these facts taken from government agencies and the Congressional Record.

If more people were less ignorant and more willing to at least check out the facts, Democrats would not get a single vote come November. It they and their cronies who are responsible for bringing America to its knees.

*
Buycks-Roberson v. Citibank Fed. Sav. Bank Fair Housing/Lending/Insurance

Docket / Court 94 C 4094 ( N.D. Ill. ) FH-IL-0011

State/Territory Illinois