Return of the Frank&Dodd Monster

First I want to point out that Congress passes the bills, makes the laws, and sets the budget for America. It takes a majority of votes to get anything done in Congress; thus if a President of one party has a Congressional majority of the opposing party, everything that is done or not done falls on the shoulders of the party that holds the Congressional majority. It boils down to whether or not the Congress will do what that President wants done; or if the Congress will not do what that President doesn't want done. During the 2nd term of President George Bush, a Republican, the Democratic party gained a majority in Congress. Therefore, the fault or blame for what did or didn't happen during that term of President Bush lies squarely with that Democratic Congress.

Now I have to sadly report that the 2 headed Frank&Dodd monster, Fannie Mae and Freddie Mac, has reared it's ugly head once again. Barney Frank, as Chairman of the House Financial Services Committee and Chris Dodd, as Chairman of the Senate Banking Committee, were responsible for forcing mortgage lenders to issue subprime home loans to people with low incomes, people on welfare, people without provable income, people without identification or proof of citizenship. The video above, "Burning Down the House" came out during the 2008 campaign season; yet, it is still relevant today because it gives a factual history of the mortgage crisis in 10 short minutes. The housing crisis did not start during George Bush's Presidency; but during George Bush's Presidency the Republicans tried 17 - yes, 17 - times to get tighter regulation over Fannie Mae and Freddie Mac. Only to be shot down every time but 1 by the Democratic majority. John McCain co-sponsored a bill in 2005 that could have prevented most if not all of the mortgage meltdown. By the time the Democratic majority decided to listen to the Republicans, in 2007, there was $1 trillion in toxic subprime mortgages floating around. Still, the Democratic majority in Congress didn't act until 2008, by which time it was too late to prevent the crash and burn of the housing market. So after the Democratic majority Congress caused the mortgage train wreck, President Bush really had no choice but to sign the Troubled Asset Relief Program (TARP) bailout in the fall of 2008. (usnews.com)

Earlier this month, Fannie Mae (Barney Frank is still the House Financial Services Committee Chairman, and Chris Dodd is still the Senate Banking Committee Chairman) unveiled a new program called "Affordable Advantage". So far 4 states have jumped on the bandwagon; Massachusetts, Minnesota, Idaho, and Wisconsin. I'm sure more will follow. The programs allows people to get essentially no-money-down mortgages. It's supposed to require $1,000 down payments, but one couple in Wisconsin was able to game the system and just bought a $115,000 home for only 67 cents down. Sounds like a great program, doesn't it? Wrong. It will put people into homes where they don't have any immediate equity, like they would have if they had made a down payment. With the still-unstable housing market, if home prices fall any at all, those people will find themselves quickly in over their heads with upside-down mortgages; owing more than the home is worth, a "negative equity". And with the uncertainty of the economic picture and the jobs market, even an "affordable" mortgage can fast become unaffordable. If people with negative equity mortgages find themselves in an economic downturn and can't sell the house or refinance, then the outcome is foreclosure. What this program is probably going to lead to is a new wave of financially marginal people experiencing the joys of foreclosure. And a new group needing government bailout. Oh, Joy. Thank you, Frank&Dodd.
(theatlantic.com)