Quote:
Originally Posted by spence
Remember, the context of the discussion is how Liberal policy caused the crisis...The government forcing banks to make loans to dead beats remember? I still haven't seen any data that really backs this up...I guess I just don't have a clue.
-spence
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can't argue with the last part...
by government forcing banks to change their established lending practices and standards for more "liberal" lending...and eventually encouraging the same be applied through the rest of the industry....
"Countrywide tends to follow the most flexible underwriting criteria permitted under [
Government Sponsored Enterprises] and
FHA guidelines. Because
Fannie Mae and Freddie Mac tend to give their best lenders access to the most flexible underwriting criteria. Countrywide benefits from its status as one of the largest originators of mortgage loans and one of the largest participants in the [
Government Sponsored Enterprises] programs. Countrywide uses
nontraditional credit, a practice now accepted by the [
Government Sponsored Enterprises].
Given these lending practices
mandated by the Fed and encouraged by Fannie Mae and Freddie Mac, the resulting financial problems for financial institutions such as Countrywide and Bear Stearns are not too surprising.