LETTER: How to fix the banks

Things are much worse than the general public realizes. Generally the public is against bailing out the banking industry, but ignora
Sandusky Register Staff
May 24, 2010

Things are much worse than the general public realizes. Generally the public is against bailing out the banking industry, but ignorant as to the immanent crash of our financial institutions.

Back in 1995 when Bill and Hillary were in the White House, a decision was made to revise an obscure law called the Community Reinvestment Act, established to require that banks invest in or loan to blacks and other minorities. Previously banks had been accused of red-lining or refusing to lend in what were viewed as black or other minority areas. The CRA was to force banks to loan mortgage money in the redline areas. Lending money should be a discriminatory process.

Anyway Fannie Mae and Freddie Mac were created to facilitate these loans. My favorite legislator, Barney Frank, pushed these loans. Soon local banks who would not loan money in zip code 40001 were told by Freddie Mac, don't worry, lend the money, we will buy your paper. And at that moment our banking industry was doomed.

In Cuyahoga County there are presently 25,000 foreclosures. A banking friend of mine said the properties are junk. There is no liquidity in the banking industry. At present, there is no bank that can borrow overnight from another bank to meet margin requirements. In Port Clinton several banks have already closed the market to any loans for recreational vehicles and boats. Several bank employees have already been laid off.

We are days away from a crash. We have to reorganize Fannie Mae and Freddie Mac. We have to go to basic banking principles: 20 percent down, a stable work record. Barney Frank and left wing Democrats will be angry, but wake up America!

Ron Mainous

Port Clinton