Posted by bad_luck on 11/8/2013 2:28:00 PM (view original):
Posted by tecwrg on 11/8/2013 2:19:00 PM (view original):If we're going to assign blame in this mess, I think it goes:
The CRA is not my argument. My argument was that roots of the economic collapse in 2007/2008 can be traced back to the Clinton Administration's encouragement of the issuance of subprime loans. You seem to agree with that. Seems like my work here on this particular topic is done.
Though the papers that I have referenced seem to assign some blame to the CRA. I suppose your argument should be with the folks who wrote those papers.
Nothing for the companies that rated the Asset-Backed Securities bundles?
Look, the banks have a good chunk of the blame, no doubt. But the banks had Clinton AND Bush leaning on them to loosen up credit standards because they had promised more home ownership to the electorate. The banks saw (thought) they could make a profit while making subprime loans, so they were (too) happy to jump on board. The non-bank lenders didn't want to miss out on a brand new, huge market, so they did too. Borrowers took advantage of the minimal income verification, rating agencies rubber-stamped securities packages and the secondary market did a sh*t job of vetting the packages on their own. It all trickles down.
I'm not saying regulations shouldn't have been tightened but, the fact of the matter is, it was the highest level of the federal government that initiated the mess. To say it happened due to LACK of government involvement is disingenuous. The lenders were encouraged BY THE GOVERNMENT to make these loans. Government regulation of that market became a requirement because the government CREATED that market. I find the "the only solution to the problem caused by idiots is to have the same idiots fix it" argument to be extraordinarily uncompelling.