the excesses of the thrift industry got something from the resolution. During the floor debate on
FIRREA, Gonzales said: “It would be incredible to me to tell my colleagues that we would go
and vote in anguish and travail in producing this kind of legislation, and then come out and say
‘but there is not one penny of commitment for housing finance for moderate-income families
(U.S. House 1989,
H2766
).’” Barney Frank (D-MA) forged the same linkage rhetorically,
testifying that “[I]n the midst of this erroneous expenditure of funds to pay for regulatory errors
and in the absence of our ability to do it in other places, may not the majority of this House find a
pittance for the very poor (U.S. House 1989,
H2767
)?”
The Solution
Thus FHLBs were tagged as a solution to the problem of declining appropriations for
affordable housing and community development activities. Given a perceived problem,
boundedly rational individuals and the organizations they populate are likely to reach for one of
a limited number of familiar alternatives, rather than to start from scratch to conceive and
evaluate the range of possible ways to address a problem. As Kingdon imports this feature of
individual cognition and organizational information processing into his theory of policy process,
he gives the linking of problems to solutions an exceptional degree of randomness. A solution
requires no particular previous relationship to a problem with which it is coupled in an open
window. With Gonzalez’s orchestration, FHLBanks became a solution to the affordable housing
and community development problem. What did FHLBs have to offer?
First, as noted above, the affordable housing and community development provisions in
FIRREA required FHLBs to provide money for specific programs, treating FHLBs’ revenues as
though they were dollars in the U.S. Treasury available for appropriation. In large measure,
Congress and the non-profit community just wanted the money. Secondly however, despite the
System’s difficult history with redlining and segregation, in more recent times, FHLBs had
20
Convention