OBAMA NEEDS TO DO A HISTORY CHECK…A Review of History: the Republican and Conservative Record

Democratic attacks on Republican and conservative candidates in local and federal campaigns imply unconscionable motives for elected representatives. Since most challengers to incumbent politicians are Republican, this short “instant replay” will focus on actions of the Democratic Party, especially in the South, and legislation of Democratic Congresses. The references and citations should set the record straight on several issues.


Civil Rights Issues

The Republican Party was formed by anti-slavery activists to combat the pro-slavery Democrats.

The Republican Party freed the slaves and acted to enforce the spirit of their newly won liberties.

1870: Federal grand jury declares the KKK a terrorist organization. The Force Act was passed banned the use of terror, force or bribery to prevent people from voting because of their race.

1871: The Klu Klux Klan Act passed to protect southern blacks from the Ku Klux Klan by providing a civil remedy for abuses then being committed in the South.

1875: A strong racist rally in the South got the Force Act overturned in a Supreme Court case, saying that the federal government could not enforce any rules against private groups, but only against state governments.

The 1924 Democrat National Convention in New York was host to one of the largest Klan gatherings in American history. Dubbed the “Klanbake convention”, a minority of delegates attempted to condemn the presence of the Klan but was rebuked by the Klan supporting Democrat Majority.

The Ku Klux Klan was formed by radical Democrats who opposed equality for blacks.

In 1935 Democrats defeated an Anti-Lynching Bill supported and put forward by Republicans.

1880-1960: The Solid South Democrats voted against civil rights and protected racist policies. It was dismantled by the time of the 1980 election of Ronald Reagan.

On April 20, 1871 the Republican Congress enacted the Ku Klux Klan Act, outlawing Democratic Party-Affiliated terrorist groups.

After The Civil Rights Act was passed, Democrat President Lyndon Johnson praised Republicans for their overwhelming support.

Ronald Reagan, a Republican, made history on November 2, 1983 by signing into law Martin Luther King Jr.’s birthday as a National Holiday. This is the first and only Federal Holiday that recognizes a Black American.

Women’s Rights

The Republican majority passed the Suffrage Act, allowing women to vote.

Fiscal Responsibility & the Banking Crisis

The following summary is a log of legislation from 1968 to 2008 which preceded the housing and stock market crash of 2008. Market forces could not have been stemmed, but changes in laws and regulations paved the way and created the landscape for them.

Democrats dominate Congress from 1955 to 1995.

1968 Democrats pass Fair Housing Act, establishing HUD, a necessary step to correcting housing discrimination.

Congress privatized FNMA (Fannie Mae, Federal National Mortgage Association) and created Ginnie Mae (GNMA, Government National Mortgage Association) under HUD, both guaranteeing FHA and VA approved loans.

1970 Democratic Congress created FLHMC (Freddie Mac, Federal Home Loan Mortgage Corporation) to serve and facilitate a secondary market for conventional mortgages on behalf of the savings and loan industry at a time when Fannie Mae largely served the mortgage banking industry because it was legally limited to buying only FHA-insured or VA-guaranteed mortgages. The FHLMC soon also developed pass-through securities for conventional mortgage loans.

1977 Democrats pass Community Reinvestment Act CRA-mandated oversight of lending in low- and moderate-income communities and CRA linked engagement with fair lending monitoring and enforcement activities.

1980 Democratic Congress passes the Depository Institutions Deregulation and Monetary Control Act (DIDMCA) to allowed thrifts to make consumer loans up to 20 percent of their assets, issue credit cards, accept negotiable order of withdrawal (NOW) accounts from individuals and nonprofit organizations, and invest up to 20 percent of their assets in commercial real estate loans.

1981 Democratic Congress passes the Economic Recovery Tax Act of 1981 (ERTA) in August 1981 and initiating the regulatory changes by the Federal Home Loan Bank Board allowing S&L’s to sell their mortgage loans and use the cash generated to seek better returns soon after enactment; The buyers—major Wall Street firms—were quick to take advantage of the S&L’s’ lack of expertise, buying at 60%-90% of value and then transforming the loans by bundling them as, effectively, government-backed bonds (by virtue of Ginnie Mae, Freddie Mac, or Fannie Mae guarantees).

A large number of S&L customers’ defaults and bankruptcies ensued, and the S&L’s that had overextended themselves were forced into insolvency proceedings themselves. The federal government agency FSLIC, which at the time insured S&L accounts in the same way the Federal Deposit Insurance Corporation insures commercial bank accounts, then had to repay all the depositors whose money was lost. From 1986 to 1989, FSLIC closed or otherwise resolved 296 institutions with total assets of $125 billion. An even more traumatic period followed, with the creation of the Resolution Trust Corporation in 1989 and that agency’s resolution by mid-1995 of an additional 747 thrifts. There also were state-chartered S&L’s that failed. Some state insurance funds failed, requiring state taxpayer bailouts.

The federal government ultimately appropriated 105 billion dollars to resolve the crisis. After banks repaid loans through various procedures, there was a net loss to taxpayers of approximately $124 billion dollars by the end of 1999.

1980 to 1994, 1617 banks failed, or 9.14 % of all banks, while 8.98 % of total bank assets were placed at risk by the S&L crisis.

1990’s Adjustable rate mortgages, ARM’s, were introduced in the 1970’s by S&L’s. They were used by banks to shorten risk associated with long-term mortgages. ARM’s built into the loan package teaser rates with options to increase interest after the bubble payment (remaining loan principle) was due a few years after the loan originated.

As well, Interest Only Loans became a popular instrument of banks.

Down payment requirements disappeared, leaving owners of loan paper exposed.

Real estate agents, mortgage agents, real estate and mortgage brokers, and commercial banks conspired to create instruments of “bundled” low risk and high risk mortgages to resell on the commercial market. As foreclosures, late payments, bankruptcies threatened the market, these instruments moved more quickly among traders and were repackaged.

Essentially, the packages were derivatives of a once solid industry, reduced to speculative shares of a failing market.

Competitive Equality Banking Act of 1987 (CEBA), Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) and Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) were enacted to cover present and future damage by the S&L crisis.

1994 Riegle-Neal Interstate Banking and Branching Efficiency Act enacted by Democratic Congress with Clinton support, allowing concentration of banking activity to occur unmonitored in federal regulation as it had been.

The growing risks of the FHA’s mortgages can also be seen in its sharply increasing default rates, which exceeded the default rate on subprime loans between 2003 and 2006 before subprime defaults surged ahead in 2007 to 18.82 percent, compared to 14.11 percent for FHA mortgages. With the Administration’s Hope Now plan extending FHA mortgage refinancing opportunities to existing subprime borrowers under certain conditions, FHA default rates will likely rise over the next several years.

1999 Republican Congress passed the Gramm-Leach-Bliley Act, also known as the “Financial Services Modernization Act“. This law repealed the part of the Glass-Steagall Act that had prohibited a bank from offering a full range of investment, commercial banking, and insurance services since its enactment in 1933.

2004 Republican Congress – Home Mortgage Disclosure Act (HMDA) provides information on loans to individuals and on locations where loans are made, supporting the enforcement of both the fair lending laws and the CRA.

2006 Republican Congress – FNMA to join FHLMC in the conventional market, and their pass-through securities quickly dominated the securitized secondary market at the expense of the GNMA, still limited to the FHA/VA mortgages.

2005-7 Republican Congress – Regulatory changes in these years opposed oversight and fiscal management while further exposing banks to higher risk investments.

2008-2010 Democratic Congress

President Bush and cabinet members warned against these measures. Congressman Frank stood behind them, saying the Fannie Mae and Freddie Mac were sound and had plenty of equity as did the banking system.

Congress passes laws, not presidents.

Notice the difference between Budget Office and White House estimates, off only a few hundred billion, or the total deficit in 2007. In 2020, hang on to your shekels.

http://randysright.wordpress.com/2010/10/27/obama-needs-to-do-a-history-check-a-review-of-history-the-republican-and-conservative-record/