On December 8, 1993, President Clinton’s Secretary of the Treasury Lloyd Bentsen announced at a press conference that the Community Reinvestment Act, passed into law during the Carter adminstration, would be administratively modified to force banks to make risky loans to those with “low to moderate” incomes to fight “discrminatory” lending practices. Within his remarks was an implied threat to those banks that failed to comply:

In a nutshell, what we’re proposing to do is to make it easier for lenders to show how they’re complying with the Community Reinvestment Act. For those who aren’t familiar with the area of banking law, the changes we’re proposing are important because banks now have a very clear, quantitative standard by which their compliance can be judged. And that is very important to banks when it comes to ask regulators to approve mergers, new branches and the like [emphasis added mine].

Table C-12 (click on image below) of an April 2000 Department of the Treasury report showed that from 1993 to 1998, sub-prime [lending rate] loans increased by 1248% (from 1% to 11% of market share), while managed housing loans increased by 371% (from 1% to 4% of market share).

Here is the pdf of the full report

At that same press conference, Gene Ludwig, the Comptroller of the Currency for the Department of the Treasury explained how lending institutes would be assessed and, if they failed to act, how they would be penalized:

By replacing paperwork requirements with performance tests, this package would stimulate bank lending, investment and service in low and moderate income communities. This proposal is not about formulas. Community groups and bankers both emphasized the need for flexibility. So this proposal recognizes the diversity of banks and the markets they serve. It reduces the examination burden, particularly on small banks without reducing their obligation to serve their communities; and it recognizes that regular public participation is critical if we are to achieve the goals of the law.
…
The 12 current CRA assessment factors would be replaced with three tests — a lending test, a service test and an investment test. And I have right behind me the 12 current assessment factors which are highly subjective and really don’t focus on the target of what we’re talking about here which is getting loans and services and investments out to our communities. And the simple three tests we will have under the new reform: a lending test, a service test, an investment test. Are you making loans? Are you providing services? Are you making investments? It’s really, in the end, just that simple.
…
Q: On the enforcement side, under the current system if you don’t comply with CRA, is the only bad thing that could happen to you the fact that your merger application is denied? And also, do you keep any statistics on how many merger applications have been denied since the CRA was passed?

MR. LUDWIG: Let me say that this does go beyond just the — and that is one of the things that we focused on; that the current process triggers off when you have an application pending. So it creates a very uneven application of the rule.

Now you will see enforcement, not just on the basis of loan application — there will be some of that — but you’ll also see enforcement on the basis of how you’re graded, so that it will even it out.

A detailed search of the Congressional record shows that not once during his four years in the United States Senate has Barack Obama spoken there about Fannie Mae and Freddie Mac or the regulation of those entities.

Now, knowing all that, listen to what Mark Levin said last Monday, how Barack Obama has taken $126,000 in political contributions from Fannie Mae and Freddie Mac since becoming a U.S. Senator, how we really ended up in this financial crisis, and his debunking of Obama’s blaming it on a lack of regulation:

Nor did Barack Obama speak out against risky housing ventures as an Illinois state senator.

As explained in the National Review Online this morning, Obama was instead taking political contributions from a crook, as told by David Freddoso in ‘Obama’s Real-Estate Bust: He did for Illinois taxpayers what shady mortgage lenders have done for the economy.’

Last week, Sen. Barack Obama compared the Savings and Loan bailout of the late 1980s to the situation of the mortgage-securities markets today:

Too many S&Ls took advantage of the lax rules set by Washington to gamble that they could make big money in speculative real estate. . . . [T]hey made hundreds of billions in bad loans, knowing that if they lost money, the government would bail them out. And they were right. The gambles did not pay off, our economy went into recession, and the taxpayers ended up footing the bill. Sound familiar?

Indeed, it does sound familiar — it sounds a lot like what Barack Obama did to Illinois taxpayers as a state senator in Springfield. Using his elected office and his clout, Obama helped Tony Rezko and other unscrupulous low-income housing developers obtain millions of dollars in state grants, tax credits, low-interest loans, and regulatory advantages.

Taxpayers had no serious chance of recouping these “investments” in Rezko and other developers. And many beneficiaries went one step farther, depriving the public of even the benefits they could have gotten. These developers took government help to build low-income housing, and then let their buildings deteriorate into uninhabitable slums.

To date, the most complete account of this sad story is Binyamin Appelbaum’s piece in the Boston Globe. Not only does it demonstrate the monumental failure of the low-income-housing policy that Obama vocally championed as a state senator, it gives a detailed look at how some of Obama’s donors and friends — the beneficiaries of that policy — neglected their own housing developments at the expense of the inhabitants.

There is no indication that Obama approved (or even knew) of the massive and systemic neglect of these properties in his own state-senate district. But there is also no question that he was an enabler in these transactions. He cosponsored at least six bills to give special tax breaks, tax credits, building-and-maintenance subsidies, and zoning exemptions to the developers. In 1998, he wrote letters to state and city officials requesting $14 million for a project developed by Tony Rezko and another close Obama friend — the politician’s old law-firm boss, Allison Davis.
…
Despite all this cheap and free taxpayer money, all of Rezko’s 30 buildings eventually ran into financial difficulties. As of 2007, 17 had gone into foreclosure. Six were boarded up and abandoned.

For most of the last four years, Barack Obama remained silent about the sub-prime financial crisis and was the highest recipient of political contributions from Fannie Mae and Freddie Mac. Before that, he took $250,000 from a now convicted crook as the latter ran 30 housing projects into the dirt. Is that change we can believe in?