Here is my reply, feel free to use it.
Like a lot of forwarded emails, especially emails forwarded by people who listen to misinformation propagated by the Rush Limbaughs of the world, this email is rife with errors.
WHERE ARE THEY NOW?
FRANKLIN RAINES? Raines works for the Obama Campaign as Chief Economic Advisor - Absolutely False
TIM HOWARD? Howard is also a Chief Economic Advisor to Obama Also False
http://www.snopes.com/politics/obama/fanniemae.aspUnfortunately low information voters are easily misled.
The fact is that though the dittoheads are disseminating what they have been fed, the 30 year old Community Reinvestment Act and Franklin Raines, Tim Howard & Jim Johnson are not what caused the current credit & liquidity crisis.
Greed and Republican deregulation ideology did.
Some history.
From 1994-2006 the Republicans were in the majority in both the House & the Senate.
From 2000-2006 the Republicans controlled all 3 branches. From 2006 to the present, while it is true the Democrats have a majority in the House & Senate, the Executive branch has veto power and the GOP has filibustered more legislation, and required more cloture votes to break those filibusters, than any other in recent memory.
Now back to the credit & liquidity crisis which has rocked the world markets.
In 1999 Phil Gramm, a former economic adviser & friend of John McCain sponsored the Gramm-Leach-Bliley Act. Gramm-Leach-Bliley passed the Senate 54-44 on May 6, 1999. It dismantled the depression era Glass-Steagall Act
and enabled commercial lenders to underwrite and trade mortgage-backed securities and collateralized debt obligations and establish so-called structured investment vehicles, or SIVs, that bought those securities.
On Friday, December 15, 2000, the Republican majority Senate rushed to pass an essential government reauthorization bill. One legal textbook later referred to "a stunning departure from normal legislative practice," when the Senate tacked on a complex, 262-page amendment at the urging of you guessed it, McCain buddy Phil Gramm.
That amendment came to be called the Commodity Futures Modernization Act.
Phil Gramm, who is now Chairman of Swiss Bank UBS, said at the time, "The work of this Congress will be seen as a watershed where we turned away from an outmoded Depression-era approach to financial regulation and adopted a framework that will position our financial services industry to be world leaders into the new century."
Warren Buffett called the risky new investment instruments Gramm unleashed "financial weapons of mass destruction." It is the derivatives and mortgage backed securities that fed the subprime mortgage crisis like gasoline on a fire. Gramm created what Wall Street analysts now refer to as the "shadow banking system," an industry that operates outside any government oversight.
Four years later on April 28, 2004, the 5 member SEC agreed to a change in the Net Capital Rule at the behest of the big 5 investment banks including included Goldman Sachs, which was headed at that time by Henry Paulson.
That change in the Net Capital rule exempted brokerage units from an old regulation that limited the amount of debt they could take on. The exemption unshackled billions of dollars held in reserve as a cushion against losses. Those funds allowed the investment banks to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.
Then you have Republican Alan Greenspan who testified before congress on Oct. 23, 2008.
"What went wrong with global economic policies that had worked so effectively for nearly four decades? The breakdown has been most apparent in the securitization of home mortgages. The evidence strongly suggests that without the excess demand from securitizers, subprime mortgage originations (undeniably the original source of crisis) would have been far smaller and defaults accordingly far fewer. But subprime mortgages pooled and sold as securities became subject to explosive demand from investors around the world. These mortgage backed securities being "subprime" were originally offered at what appeared to be exceptionally high risk-adjusted market interest rates. But with U.S. home prices still rising, delinquency and foreclosure rates were deceptively modest. Losses were minimal. To the most sophisticated investors in the world, they were wrongly viewed as a "steal."
The consequent surge in global demand for U.S. subprime securities by banks, hedge, and pension funds supported by unrealistically positive rating designations by credit agencies was, in my judgment, the core of the problem. Demand became so aggressive that too many securitizers and lenders believed they were able to create and sell mortgage backed securities so quickly that they never put their shareholders' capital at risk and hence did not have the incentive to evaluate the credit quality of what they were selling. Pressures on lenders to supply more "paper" collapsed subprime underwriting standards from 2005 forward. Uncritical acceptance of credit ratings by purchasers of these toxic assets has led to huge losses.
It was the failure to properly price such risky assets that precipitated the crisis."
Well all righty then.
Where did the Republicans get the idea that markets could regulate themselves and that the protagonists would operate in an ethical manner?
Ronald Reagan famously said "Trust but verify". Recently the Republican ideology of deregulation has led the current crisis as we have discovered that hedge fund managers, CEOs & shareholders will not act in an ethical and responsible manner and not just in their own profit seeking self interest.
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