So last Friday I went to see Tom Allen in Smith Union. Afterwards I waited in line to shake his hand and meet him. Just as I began to speak to him, a woman shouted to Mr. Allen, "No, don't talk to him. He is a Republican!" Then Tom walked off without a word to me. Now I don't know whether she was an employee of the college, a Campaign staffer or merely a deluded transient woman, but I was shocked by her display of partisanship. The behavior of this woman was childish, but I am more disappointed that Mr. Allen completely disregarded me after learning I am a Republican. Susan Collins would never ignore a constituent because of his or her political beliefs and that's because she has integrity, something absent from the Allen campaign last Friday. Not absent from his Campaign were the usual economic scare tactics used by Democrats to rally support for redistribution. Although Democrats and liberal pundits may assert that this is the worst economic crisis since the Great Depression, that is incorrect. It is actually the worst financial crisis since Jimmy Carter!
In 1977 President Carter signed into law the Community Reinvestment Act. The bill intended to address lending practices that many people thought were discriminatory against minorities in low-income neighborhoods. During the Clinton administration the act was expanded upon, placing even more pressure on banks to engage in risky and uneconomic lending. This was a further effort to reform traditional lending practices which were viewed as discriminatory. The new law required banks to consider extenuating circumstances when lending and told them that "lack of credit history should not be seen as a negative factor." Banks were also encouraged to let low-income borrowers replace down-payments with loans from relatives, non-profits, and municipal agencies. The new law also required banks to consider any child support, welfare, or unemployment benefits as income. With these new conditions in place, it's no wonder so many loans were never paid back. You don't have to be an economics major to see that the actions of previous administrations set a financial time bomb for later presidents to handle.
Although this law sought to end discriminatory lending practices, it ultimately forced banks to make decisions against their best interest. Community groups only increased the pressure on banks by threatening to cry racism if banks did not increase their sub-prime lending. Under extreme financial pressure the banks found a solution. As part of the effort to make home ownership affordable, two government sponsored entities began buying the sub-prime loans from the banks. Now that the banks did not assume any risk from the unwise loans, they gladly complied with the government's pressure by lending wildly. So who was buying up all these risky loans? None other than Fannie Mae and Freddie Mac, and they did so with zero risk because they knew they were insured by the federal government. Banks, mortgage lenders, and Wall Street investors quickly saw the opportunity to increase profits substantially with no risk and the executives of Fannie and Freddie raked in tens of millions of dollars in the process.
How did this problem go unaddressed? Well, just as private greed contributed to the problem, so did the greed of politicians who, under the guise of civil rights legislation, instituted policy that directly interfered with lending in the housing market. When federal regulators under the Bush Administration tried to bring this matter to the attention of Congress, they were met with contempt by Democratic members of Congress who vehemently defended the sub-prime lending as a service to minority communities in America. Just prior to the collapse of Fannie and Freddie, Democratic Congress members Barney Frank, Gregory Meeks, and Chris Dodd openly praised the institutions and testified to the financial soundness of the two mortgage giants. Maybe it's just a coincidence that the politicians who received the most financial contributions from Fannie and Freddie were also the ones defending it so fiercely: Chris Dodd (D-$133,900), John Kerry (D-$111,000) and Barack Obama (D-$105,189). Before entering the Senate, Barack Obama filed a class-action law suit against Citibank alleging that the bank was engaging in discriminatory lending .
It seems that Barack Obama and other Democratic Congressional leaders helped cause the crisis they are now vowing to fix. Can we trust them? Apparently Democratic politicians have found something in the constitution that says every citizen has the right to home ownership. Intervention in the free market is what got us into this situation, not the Bush tax cuts. While the strain the Iraq war has placed on our economy cannot be ignored, neither can the selfish and corrupt behavior of Democratic members of congress. Although some may enjoy fanciful dreams of spreading the wealth, the proposed policies of Barack Obama and Congressional Democrats will only ensure that there is no wealth left to spread. Then again, maybe that is their goal. If we're all miserably poor, at least we'll all be equal.
Steve Robinson is a member of the Class of 2011.