The financial Crisis and future of America
09-29-2008, 07:19 AM
#1
Line Holder
Thread Starter
Joined APC: Aug 2008
Position: MD-80 FO
Posts: 91
The financial Crisis and future of America
I have been very bothered recently by the federal government $700 Billion bailout and even more bothered by why this happend. Perhaps I am a little more offended by this due to the fact that I am an adamant saver and invester. But everyone who gives a damn about future generations (and with a $10 trillion deficit....the future is now for baby boom and gen X'ers) should be very concerned as to both how we got into this financial mess and how we can possibly move forward with this staggaring debt.
So I have been asking anyone who will engage in a conversation "Why did this happen?" I have been given many explanations, the lamest of which is a dismissive accusation of corporate greed or Wall St. greed. This answer did not and will not satisfy me. It seemed like something that could only satisfy a middle school drop out or lemming (mental midget if you prefer).
In the airline industry, we have learned that an accident never occurs due to one thing. It is always a series of events that we call the error chain. The job of the flight crew is to identify the chain and break it. This identification and intervention always prevents disaster. Typically, after a disaster the NTSB will write an accident investigation report for all pilots to read and do all things possible to ensure that it does not happen again.
Shortly after the attacks of 9/11 congress created the 9/11 commission to determine the error chain that led to the terrorist attacks. This commission did an effective job of pointing out the governments own shortcomings for nearly a decade that lead to the breakdowns that muslim extemests capitalized on.
I believe that a new commission report must be written on the financial demise of our country, but that it must be written by US citizens who work everyday and pay far too much in taxes to simply watch politicians in congress destroy the very country that we all used to love.
The biggest link in our current Economic Error Chain that I can find is something called the Community Reinvestment Act. Although its origins are back in 1977 when signed into law by President Jimmy Carter, this legislation did not grow fangs until it was changed in the mid 1990's.
Clinton Administration Changes of 1995
In early 1993 PresidentBill Clinton ordered new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities.[7] The new rules went into effect on January 31, 1995 and featured: requiring strictly numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to target to groups to collect a fee from the banks.[4][6]
The new rules, during a time when many banks were merging and needed to pass the CRA review process to do so, substantially increased the number and aggregate amount of loans to low- and moderate-income borrowers for home loans, some of which were "risky mortgages." Banks set up CRA departments, a CRA consultant industry was created and new financial-services firms helped banks invest in packaged portfolios of CRA loans to ensure compliance. Established and new community groups began marketing such mortgages. The Senate Banking Committee estimated that as of 2000, as a result of CRA, such groups had received $9.5 billion in services and salaries. As of that time such groups also had received tens of billions of dollars in multi-year commitments from banks, including ACORN Housing $760 million; Boston-based Neighborhood Assistance Corporation of America $3 billion; a New Jersey Citizen Action-led coalition $13 billion; the Massachusetts Affordable Housing Alliance $220 million.[4] The number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent.[8][9]
Related rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks, encouraging banks to make even more loans to low income communities, often with no down payment and little documentation. By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market.[5] Due to massive financial losses, on September 7, 2008 the Federal Housing Finance Agency (FHFA) put Fannie Mae and Freddie Mac under the conservatorship of the FHFA.[10]
Here is the link if you require your own research.
http://en.wikipedia.org/wiki/Community_Reinvestment_Act
How does the USA avoid a financial meltdown? How do we not condemn our children and grandchildren to a form of National Debt Slavery? How do we meet even a fraction of our future obligations for Social Security and Medicare?
I believe that we all know the answer. America will simultaneusly lose its standing in the world as "the land of opportunity", the place where all people accross the globe desire to live and work, as well as become a much less charitable country.
I believe that our abandonment of charitable zeal will be felt around the world in the absense of U.S. Federal Dollars for assistance to developing countries as well as at home in a new era where our government divorces itself from all social programs simply to pay the interest on the national debt.
The simple survival of Freedom and the survival of the constitution will require the individual citizens to either coerce or replace memebers of the Senate and House of Representatives to de-fund not only the Community Reinvestment Act, but all acts of Government that blurr the lines between charity and government duty. I believe that every portion of government dedicated to Wellfare programs or programs that promote the public good will be left to Churches and private organizations and individuals.
I thank you for reading and wish for all constructive input.
So I have been asking anyone who will engage in a conversation "Why did this happen?" I have been given many explanations, the lamest of which is a dismissive accusation of corporate greed or Wall St. greed. This answer did not and will not satisfy me. It seemed like something that could only satisfy a middle school drop out or lemming (mental midget if you prefer).
In the airline industry, we have learned that an accident never occurs due to one thing. It is always a series of events that we call the error chain. The job of the flight crew is to identify the chain and break it. This identification and intervention always prevents disaster. Typically, after a disaster the NTSB will write an accident investigation report for all pilots to read and do all things possible to ensure that it does not happen again.
Shortly after the attacks of 9/11 congress created the 9/11 commission to determine the error chain that led to the terrorist attacks. This commission did an effective job of pointing out the governments own shortcomings for nearly a decade that lead to the breakdowns that muslim extemests capitalized on.
I believe that a new commission report must be written on the financial demise of our country, but that it must be written by US citizens who work everyday and pay far too much in taxes to simply watch politicians in congress destroy the very country that we all used to love.
The biggest link in our current Economic Error Chain that I can find is something called the Community Reinvestment Act. Although its origins are back in 1977 when signed into law by President Jimmy Carter, this legislation did not grow fangs until it was changed in the mid 1990's.
Clinton Administration Changes of 1995
In early 1993 PresidentBill Clinton ordered new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities.[7] The new rules went into effect on January 31, 1995 and featured: requiring strictly numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to target to groups to collect a fee from the banks.[4][6]
The new rules, during a time when many banks were merging and needed to pass the CRA review process to do so, substantially increased the number and aggregate amount of loans to low- and moderate-income borrowers for home loans, some of which were "risky mortgages." Banks set up CRA departments, a CRA consultant industry was created and new financial-services firms helped banks invest in packaged portfolios of CRA loans to ensure compliance. Established and new community groups began marketing such mortgages. The Senate Banking Committee estimated that as of 2000, as a result of CRA, such groups had received $9.5 billion in services and salaries. As of that time such groups also had received tens of billions of dollars in multi-year commitments from banks, including ACORN Housing $760 million; Boston-based Neighborhood Assistance Corporation of America $3 billion; a New Jersey Citizen Action-led coalition $13 billion; the Massachusetts Affordable Housing Alliance $220 million.[4] The number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent.[8][9]
Related rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks, encouraging banks to make even more loans to low income communities, often with no down payment and little documentation. By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market.[5] Due to massive financial losses, on September 7, 2008 the Federal Housing Finance Agency (FHFA) put Fannie Mae and Freddie Mac under the conservatorship of the FHFA.[10]
Here is the link if you require your own research.
http://en.wikipedia.org/wiki/Community_Reinvestment_Act
How does the USA avoid a financial meltdown? How do we not condemn our children and grandchildren to a form of National Debt Slavery? How do we meet even a fraction of our future obligations for Social Security and Medicare?
I believe that we all know the answer. America will simultaneusly lose its standing in the world as "the land of opportunity", the place where all people accross the globe desire to live and work, as well as become a much less charitable country.
I believe that our abandonment of charitable zeal will be felt around the world in the absense of U.S. Federal Dollars for assistance to developing countries as well as at home in a new era where our government divorces itself from all social programs simply to pay the interest on the national debt.
The simple survival of Freedom and the survival of the constitution will require the individual citizens to either coerce or replace memebers of the Senate and House of Representatives to de-fund not only the Community Reinvestment Act, but all acts of Government that blurr the lines between charity and government duty. I believe that every portion of government dedicated to Wellfare programs or programs that promote the public good will be left to Churches and private organizations and individuals.
I thank you for reading and wish for all constructive input.
Thread
Thread Starter
Forum
Replies
Last Post
