Quote:
Originally Posted by Jim in CT
I think it's important to figure out "what" broke it, so that we don't repeat the mistake. And "what" broke it is subprime mortgages (which in many cases banks were pressured to write by liberal social engineering policies) and a de-regulated financial sector that came up with crazy ways to rate those mortgages as "safe" investments, and then sell them and leverage them.
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When you say banks, you make it sound like all banks when it was the big banks.
Local banks were not pressured to write sub prime loans. Most local banks would not write a loan without twenty per cent down. Mortgage companies were the biggest culprit writing hundred percent loans or eighty-twenty percent loans, holding two mortgages.
If you want to know the root cause of the current subprime crisis, there are
three things you need to understand:
First, the problem was caused by politicians (primarily Democrats) pushing
their "entitlement" agenda in to the free market. It started with "The
Community Reinvestment Act" (CRA) which required banks to make high risk
loans to minorities and others who could not have qualified for a home loan
or business loan under normal circumstances.
Second, Bill Clinton further liberalized the CRA and signed a bill to repeal
the Glass-Stengal Act. This Act was put in place in the 1930s following the
bank failures during the Great Depression. It was designed to keep banks
out of the speculation business.
Third, George Bush proposed major changes in the CRA, FMAE and FMAC in 2003
that would have tightened requirements for these business loans and subprime
home mortgages. The vote went along party lines, the Democrats won and the
proposed changes were defeated.
Why does Spence want to keep blaming Bush?