Originally posted by: AllWhacked
Originally posted by: techs
Funny, but I heard the loans made for low income workers under the Community Reinvestment Act have turned out to be fantastically good performers with a LOWER rate of delinquincies and defaults than regular home loans. IIRC I heard it from about 5 different sources. I also heard that the HUGE bulk of the loans that are the problem were made during the last 7 years, so blame Bush.
It still doesn't change the fact that many of the defaulting loans were made to individuals who could ill afford the sub-prime mortgages they were given. This scam works so long as housing keeps going up in value, since the borrower can keep refinancing every 5 or so years, but like anything, history does not happen in a vacuum. The CRA laid the groundwork that forced lenders to make loans to high risk borrowers. Everything is fine so long as housing kept going up in value (the borrower would just keep refinancing), but it's ridiculous to think that housing can keep going up indefinitely.
Now that the housing bubble has burst, those who failed to get fixed 30 year loans are now defaulting as interest rates go up and their low interest, introductory rates expire. If you want to blame Bush, go ahead. But at least he tried to fix the problem in 2003. But his attempts were voted down by the Democrats. Of course, people will argue that it was a Republican congress and administration and therefore it's all there fault, but as we all know a minority party in the senate can hold up key legislation if it wants to. And in the case of reforming FM/FM, it was voted down strictly by party lines. The Repubs. tried to reform FM/FM 12 separate times and they were stopped. Even Clinton admitted that his attempts to reform FM/FM were blocked by those in his party.
Anyway, I'm not saying the the CRA is a bad idea. I'm just saying that the Dems keep making the argument that it was the lack of regulation that led to this mess. Yet, when regulation was proposed and pushed to fix this before it became a $200 Billion bailout of FM/FM + $700 Billion bailout of Wall Street, we got jerks like Barney Frank saying there is no problem. And now he has the gall to blame everyone but himself.
We also have Pelosi saying the Dems have no share in the blame--she literally said this when questioned about sharing responsibility in this mess. She then says there is not going to be a witch hunt to determine how we got into this mess. I bet that if this had republican finger prints on it, she would be demanding a 9/11 style hearing to investigate this, but she knows that the Democrats have played a big part in creating this mess as well as blocking attempts to fix it because of partisan politics.
Obama keeps saying its the failed economic policies of the Bush administration that caused this, but it was lefty social engineering policies that caused the sub-prime mortgage meltdown. If Bush and the republicans had had their way, perhaps we wouldn't be in this mess. Because I know for a fact that since the Democrats DID have their way, FM/FM were not regulated and as a consequence they took on more bad loans than they should have.