According to Bill:
In the "agreement in principle," there is the effect of a major "earmark" which commits money from future "profits" to be given to nonprofits organizations like ACORN, National Council of La Raza and potentially the National Urban League. This agreement clearly evidences that the Government expects to benefit in the future from the bailout when the values of property rises and mortgages or properties are then sold by the Federal government. The agreement --
"Directs a certain percentage of future profits to the Affordable Housing Fund and the Capital Magnet Fund to meet America's housing needs."
In the proposed bailout agreement, Sen. Christopher Dodd, the Senate Banking Committee and other Democrats desire to pre-direct that future funds (profits) not be returned to the taxpayers via the treasury but that they be used to underwrite potential questionable (maybe even illegal activities) of certain nonprofits which have had a hand in promoting and expanding access to "no money down" loans for minorities, illegal voter registrations and extensive lobbying activities.
I suppose I'm being overly optimistic to think that the current crisis would have taught these idiots a lesson, but I guess not.
The major reason we're in this mess isn't because of 'greed by Wall Street,' but because legislators like Dodd wrote laws to accomplish such social engineering like 'affordable housing,' threatening banks if they didn't increase the number of mortgage loans to minority and low-income individuals. They even went so far as to say that welfare and unemployment payments should be considered as 'earnings' for the purposes of qualifying for loans.
John Lott, a senior research scientist at the University of Maryland, cites a manual from the Federal Reserve Bank of Boston in the early '90s that warned mortgage lenders to no longer deny urban and lower-income minority applicants on such "outdated" criteria as credit history, down payment or employment income. Those "outdated" criteria:
Credit History: Lack of credit history should not be seen as a negative factor...
Sources of Income: In addition to primary employment income, Fannie Mae and Freddie Mac will accept the following as valid income sources: overtime and part–time work, second jobs (including seasonal work), retirement and Social Security income, alimony, child support, Veterans Administration (VA) benefits, welfare payments, and unemployment benefits.
The Fed warned the banks:
"Did You Know? Failure to comply with the Equal Credit Opportunity Act or Regulation B can subject a financial institution to civil liability for actual and punitive damages in individual or class actions. Liability for punitive damages can be as much as $10,000 in individual actions and the lesser of $500,000 or 1 percent of the creditor’s net worth in class actions."
Other members of Congress, specifically Rep. Barney Frank and Sen. Chuck Schumer, fought against reforms in Fannie Mae and Freddie Mac that would have addressed many of the issues before they became a crises.
In Congress, they made sure there was no additional oversight, no additional limit on executive behavior and compensation, and no further restraint on the growth of the companies' mortgage-backed-securities portfolios, among other changes.
Even after the 2003 Freddie Mac accounting scandal, Frank said, "I do not think we are facing any kind of a crisis."
The Wall Street Journal quoted Congressman Barney Frank in 2003 as criticizing Greg Mankiw, chairman of President Bush's Council of Economic Advisers, "because he is worried about the tiny little matter of safety and soundness rather than ‘concern about housing.'"
And now, they're at it again, attempting to take any profits the government might possibly get from all these 'illiquid' assets and direct them NOT back to the taxpayers whose money is being used, but right back into the very practice that got us into the mess in the first place.
I can only hope that some of the Republicans in Congress, like Rep. Mike Pence, can hold the line.
Warner Todd Huston has some interesting points on this as well.
Red State's commentary on the pork provision.