Published: October 02, 2008 03:33 pm            

Readers' Forum: Oct. 3, 2008

Concentrate on finding solutions, not laying blame

The reader who wants to blame the current financial crisis on the Community Reinvestment Act, and therefore on liberal Democrats, could have told us how the Act caused the current financial crisis. He could at least have told us what the Act required or prohibited.

The Act itself tells federal regulators “to encourage such institutions to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions.”

I am not a lawyer, a bank examiner, or an economist, but I don’t see that the act required banks, mortgage companies, or other lenders to push subprime mortgages on customers who would not be able to pay the higher rates. I don’t see that it required lenders to give no-money-down loans to buyers of half-million dollar homes in inflated real estate markets. I don’t see that it required lenders to hook customers into running big credit card balances with low introductory rates followed by much higher rates (as specified in six-point type on the back of the application).

None of those activities seem to be in line with “safe and sound” banking. Maybe the way the act was enforced encouraged risky banking practices, but to believe that I’d like to see some research.

I do see an act that discouraged banks from refusing to lend to qualified borrowers because their neighbors were poor. I do see an act that encouraged banks to lend their own depositors’ money back to those depositors’ neighbors. I do see an act that encouraged banks to keep branches in poor neighborhoods, so that people there could easily have accounts.

Proving that the Republican Party issued warnings does not prove that the Act caused the current problems. It’s only evidence that the Republican Party said the Act would cause problems of some kind.

They say that about most bills they oppose. So does the Democratic Party. The financial crisis is too big to blame on one law or one party or one group of people.

The lenders, the borrowers, the regulators, the DE-regulators all have a part in this. Both parties probably do, too.

The point now is not to blame, but to figure out how to prevent the crisis from hurting too many people too much, and how to keep credit from drying up, retirees from going broke, and production from shutting down. How to share out the inevitable harm among all the people responsible — not just the borrowers, not just the lenders.

About as many liberals as conservatives know how to do the research to figure that out.

— Samuel J. Martland

A liberal Democrat who knows how to do research

Terre Haute



Don’t bail out our financial institutions

I have read in several news sources that the Bush administration is still asking for $700 billion to bail out the troubled financial institutions.

Whatever happened to the free enterprise system that we once had in this country? Are large companies not allowed to fail in our world today? Why not let the people who created this mess fix it or just let them go down with the ship the way any middle class American citizen would do if he ran a failing company?

Success is not guaranteed in any endeavor and failure is a part of the equation. You take certain risks when you make decisions and you should be willing to accept the consequences.

I’m of the opinion that we should give the Bush Administration the $700 billion they requested, but not to bail out the financial institutions but to help fix the Social Security system that our government has allowed to sink into such a chaotic dilemma.

— Edwin T. Story

Marshall, Ill.



Ellsworth out of step with bailout vote

In an interesting bit of irony Congressman Brad Ellsworth prominently features on his Web site a running tally of the national debt ($9.6 trillion) with a subtotal showing my individual share of that debt. Yet being as apparently concerned about that debt as he is he decided to vote in favor of bailing out the fat cats.

In typical politician form, he blames the current crisis on Wall Street greed. No doubt Wall Street greed played a role, but it was the artificial money policies of the government that provided the steroids for Wall Street to overspend.

There is plenty of blame to spread between Demicons and Republicrats. But George Bush the Second surely gets a golden star for his role. In a vote-buying scheme orchestrated by Karl Rove, Bush capitalized on the 1977 Community Reinvestment Act to push a radical new home-ownership program that specifically targeted minorities, more specifically Hispanic minorities. Bush stated as his goal that he wanted to expand home ownership by 5.5 million first-time home buyers (5.5 million times $120,000 mortgage equals about $700 billion. Where have we seen that number before?).

He further elaborated that he wanted to put people with bad credit histories into new homes. Then, in typical heavy-handed government fashion, Bush II had the Justice (sic) Department go after lending institutions that weren’t being aggressive enough in loaning money to bad-credit-risk minorities.

Perhaps this explains why if one looks at a map of the country showing mortgage defaults by location that the overwhelming majority of them are in California, Nevada, Arizona and Florida.

But let’s get back to Mr. Ellsworth. Congressman Ellsworth apparently thinks that a problem created by phony money can simply be fixed by dumping more phony money into the system. In an insanely funny press release explaining his bailout vote he assures us that he has put provisions in the bill to make sure all the money is paid back to the Treasury. The press release states: “The bill provides taxpayers with an equity stake in participating firms to enable taxpayers to receive a share of their profits or be first in line to recover assets if a company fails.”

Question: How do we know when the company fails? Isn’t that what just happened? It would indeed be hilarious if it didn’t come at so great a cost to all of us plebs.

More than 90 percent of the American public was opposed to a bailout. Why do we have a congressman who is so out of step with representing the will of the people?

— Dean May

Terre Haute

        

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