An Ol' Broad's Ramblings
Reality Is An Ugly Thing…..
Every American, young or old, must be told who was really behind the subprime loan disaster that threw our economy off track and injured the good people who lost their homes — like those now boarded up in Cleveland and other major cities — plus the millions of other citizens hurt by yet another failed Big Government-run program gone awry.
In 1977, Jimmy Carter and a Democrat Congress created the Community Reinvestment Act mandating that banks make more housing loans to lower-income and inner-city borrowers. It was for a well-intended social cause and even appeared to work in the 1980s.
But in 1995, President Clinton imposed even tougher regulations that forced banks to make dramatically more subprime loans to previously unqualified people with lower credit scores in higher-risk areas.
Government regulators rated banks by how well they performed in meeting these strict new CRA obligations. Failure to comply meant stiff penalties and limits on mergers, acquisitions and expansion.
Big Government forced the lowering of long-proven safe-lending standards. Most of the more than $1 trillion of new subprime CRA loans had adjustable rates. Many required no documentation of the borrower’s income and little or no down payment.
For the first time, the Clinton regulatory rules allowed and encouraged lenders to bundle the new, riskier subprime loans with prime loans and sell these packages to other institutions. The first one hit the market in 1997. That tragic blunder let loan originators make their profits faster and eliminate any future risk for those lower-quality loans. It let them turn around and make even more CRA-type loans and sell them off in packages again, with little future risk.
So, it’s time to give credit where credit is due! Bush did NOT cause this current fiasco. Granted, he should have pushed a LOT harder back in 2003, and he does deserve the blame for not having big enough balls to stand up the the losers in Congress. BUT…. perhaps, if Barney Frank had not been in bed, literally, with Fannie Mae and Freddy Mac, something could have been accomplished to ward off this mess.
Bottom line: This whole mess was another Big Government program created, designed and run by Democrats. It started with great intentions but resulted in typically awful unintended consequences that materially hurt the very people they were supposed to help.
I would encourage everyone, most especially those with a case of major BDS, to read this column. The information is out there, every where actually, but you won’t find it on the MSM, or in your left leaning blogs. Why? Because of the prior mentioned BDS! This is not a “right” vs “left”, or a Republican vs Democrat. Our Congress failed us time and time again.
