"Clinton did it!"



Typical right-wingers. So word on the internets and AM radios says that the Community Reinvestment Act ( http://en.wikipedia.org/wiki/Community_Reinvestment_Act ) is responsible for investment banks diving into the subprime markets. Especially the 1995 modifications.

The government requires certain banks (not investment banks, mind you) to issue a small amount of subprime loans to depressed areas... this -somehow- encouraged them to go nuts. Wall Street apparently said "OMG, WE LOVE THIS REGULATION. LET'S DO IT X'S 1000. IT HAS NOTHING TO DO WITH PROFIT INCENTIVES. THANKS DEMOCRATS."

I'm just curious to see how many of the Fox/AM Radio fans out there buy this rationalization.

9/28/2008 1:34:56 PM

if we really want to get serious and play the blame game

it is the two party system that is responsible for all our problems

ps vote ron paul

9/28/2008 1:42:21 PM

I was gonna say the FED,

depressed interest rates, ease of lending etc etc etc


but yeah you gotta figure the pundits are always going to figure out a way to blame the other party

9/28/2008 3:37:02 PM

I solely place the blame on greedy wall street.

9/28/2008 3:38:13 PM

It wasn't their greed - it was their stupidity. Obviously, the craze in subprime lending isn't exactly turning out too well for them. Yes, they were greedy, as well they should be. But stupidity is what caused it.

The whole point is they didn't do what was best for long-run profitability.

[Edited on September 28, 2008 at 3:45 PM. Reason : a]

9/28/2008 3:44:41 PM

If you really want to hear a good explanation of what happened, watch Clinton's interview on The Daily Show from last week.

9/28/2008 3:45:01 PM

The Rush listening repubs on this board have already trotted out this line from the beginning.

The bottom line is, any number of places in the system, had the appropriate "check" to the system been in place, a large majority of this crisis would be averted.

From the repackaging of loans, the bad ratings of the mbs's, the lying about income information, to the too low interest rates, to the SEC relaxing leverage rules, to the cheap labor imported across the border out west to fuel the building of the homes

if any one of these would have worked "properly", this crisis would have been averted. It really was a perfect storm of bad practices. The fact that the majority of it happened under a GOP admin was partly coincidence partly not.

9/28/2008 4:13:12 PM

but, but, I thought the fundamentals of our economy are strong.

Republicans are so good with their crystal balls.

9/28/2008 6:13:29 PM

So the fact that this set of laws caused, among other things:

Quote :

"The bill encouraged mortgage lending through two government sponsored enterprises ("GSEs"). The Federal National Mortgage Association, commonly known as Fannie Mae, enables mortgage companies, savings and loans, commercial banks, credit unions, and state and local housing finance agencies to lend to home buyers. The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, buys mortgages on the secondary market and sell them as mortgage-backed securities on the open market. ... , substantially increased the number and aggregate amount of loans to low- and moderate-income borrowers for home loans, some of which were "risky mortgages." ... a CRA consultant industry was created and new financial-services firms helped banks invest in packaged portfolios of CRA loans to ensure compliance. ... Established and new community groups began marketing such mortgates. ... Senate Banking Committee has estimated that, as a result of CRA, such groups had received $9.5 billion in services and salaries. ... The number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent. ... Related rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks. By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market."

has nothing at all to do with the mess we're in now? Really? Such huge and sweeping changes to how housing is paid for and who's even qualified to get such loans had nothing at all to do with the insolvency of companies who's assets were tied to mortgage backed securities, the same securities sold by a quasi government entity and implicitly secured by the government? It's hardly the only cause but its certainly a big one.

Quote :

"this -somehow- encouraged them to go nuts. Wall Street apparently said "OMG, WE LOVE THIS REGULATION. LET'S DO IT X'S 1000. IT HAS NOTHING TO DO WITH PROFIT INCENTIVES."

Of course it had to do with profits, maybe you missed this part:

Quote :

"The CRA mandates that each banking institution be evaluated to determine if it has met the credit needs of its entire community. That record is taken into account when the federal government considers an institution's application for deposit facilities, including mergers and acquisitions."

When your ability to successfully and competitively do business and grow your business is determined by how many of these things you do, don't you think the bank is going to do as many as it can? Of course it's about profits, if you can't do business, you can't profit.

9/28/2008 6:15:33 PM

^ [/thread]

9/28/2008 7:06:46 PM

Uhhh, the CRA came from the republican congress.

9/28/2008 7:35:40 PM

FDR


or, really

Herbert Hoover

9/28/2008 7:36:09 PM

^^^^ You're conflating *some* sub-prime lending with the type of lending that's sinking us. There's a huge difference.

The government in no way encouraged the type of behavior that led to liar loans.


^^ IGNORE THAT.

[Edited on September 28, 2008 at 7:39 PM. Reason : ]

9/28/2008 7:38:01 PM

So when the Bush administration was in charge, and the democrats controlled the congress, whenever problems arose or long-standing issues weren't addressed it was the democrats fault; and yet when the Clinton Administration was in charge, and the republicans controlled congress, it was Clinton's fault when problems arose or long-standing issues weren't addressed?

Can someone define hypocrisy for me, because something doesn't seem right here.

9/28/2008 7:42:26 PM

Quote :

"You're conflating *some* sub-prime lending with the type of lending that's sinking us. There's a huge difference. "

The lending that's sinking us is non performing loans. Period. The fact that some of those loans were CRA loans and some of them weren't has nothing to do with the fact that CRA was a contributing factor, and in more ways than just encouraging risky loans. By encouraging and forcing risky loans on banks, it generated a demand to get rid of that risk in some form or fashion. This includes things like selling off risk to Fannie (who will buy risks others won't because of their implicit government backing) and repackaging risky loans with better loans to sell in a higher rated bundle, leading to a game of hot potato with bad loans. In short, all companies assume a level of risk to operate. When an outside force (like the government) pushes that level of risk above the comfort zone of a given company, they will seek to pass that risk elsewhere. Most people pass off risk with insurance, but since the bank can't insure a loan with anything other than the collateral and the ability of the collateral to insure the loan is itself a risk, the bank is going to seek to get rid of that risk in any way possible, leading to a market for these risks.

Quote :

"The government in no way encouraged the type of behavior that led to liar loans."

Sure they did. They told the banks if you don't make certain numbers of loans to certain groups of people (and with no regard to ability to pay that loan) then they wouldn't be able to continue to grow and operate. That encouraged banks to bend the rules and come up with creative balancing acts to mitigate their risks.

Quote :

"Uhhh, the CRA came from the republican congress."

Republicans or democrats it doesn't matter. The blame falls across the whole government. They stuck their noses into a business they didn't belong in, and they contributed to the mess we're in now. And instead of running them all out on a rail, we're looking to them to solve the problem.

9/28/2008 7:54:08 PM

Yeah, the blame rests on the people who added a couple of drops to the overflowing bucket.

The only place government is to blame for this is lack of regulation.

9/28/2008 8:12:10 PM

Quote :

""The government in no way encouraged the type of behavior that led to liar loans.""

Don't act like it was just liar loans. I'm sure more regular loans went down the deepend due to all the layoffs caused by 9/11 and also the fall of the American auto industry and many other loss of jobs.

9/28/2008 8:12:17 PM

This is the second piece I've seen stating that the CRA just can't have much blame placed on it as the cause for this mess (though, I think the other piece I read about this references the same study)

http://caveatemptorblog.com/2008/09/26/cra-not-the-cause-of-the-foreclosure-mess/

9/28/2008 9:01:54 PM

^

Quote :

"So the truth is forcing banks to loan money to their community out of the money that community has deposited in the bank makes for better safer loans, "

The federal gov't forcing banks to make loans to certain people...doesn't this sound wrong to anybody?

I tell you, that Commerce clause in the Constituion has been so abused. It was originally thought to be a fairly harmless inclusion- one which would allow the fed gov't to normalize and encourage trade between the states.

And now it's used as an excuse to allow the federal gov't obcene amounts of power over us.

Justice Clarence Thomas stated in the 1995 case of U. S. v. Lopez:

"We have said that Congress may regulate not only ‘Commerce…among the several states,’…but also anything that has a ‘substantial effect’ on such commerce. This test, if taken to its logical extreme, would give Congress a ‘police power’ over all aspects of American life."

Forcing banks to make loans to people in the community is a slap-in-the-face to limited government.

9/29/2008 1:17:10 AM

Quote :

"It wasn't their greed - it was their stupidity."

I'd have to agree. Warren Buffet (who is being made out to be a financial prophet in some news articles) is a fairly greedy man in many ways; he was still disturbed enough by mortgage backed securities to advocate avoiding them. He even called them "financial weapons of mass destruction" well before the collapse of the investment banks.

He wasn't the only person who could smell that there was something rotten with the subprime lending practices and the uncertainty of the contents of mortgage backed securities. There have been news articles in financial papers, some of the cable news channels, and even NPR for about 2 years now about subprime lending and mortgage backed securities. Many greedy people knew these were rotten- some like Buffet could even guage their eventual impact.

I wish these CEOs could be charged with criminal negligence of some sort since their reckless actions resulted directly and indirectly in the destruction of billions in other people's property.

9/29/2008 2:10:22 AM

From the NY Times on September 30, 1999: "Fannie Mae Eases Credit To Aid Mortgage Lending":
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=all
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990s by reducing down payment requirements,'' said Franklin Raines, Fannie Mae's chairman and CEO. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s (MP: How prophetic!).
'
'From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

9/29/2008 10:46:46 AM

^
Wow.. great post L-Snark. The banking industry pressures the gov't to loosen up standards in order to get more loans, and the gov't is all too eager to comply since it gives goodies to potential voters. All the while ignoring the probable consequences.

9/29/2008 10:57:15 AM

Silly me, I thought it was medical foreclosures that caused this crisis.

What with them being responsible for more bankruptcies and foreclosures than any other reason.

9/29/2008 2:58:54 PM

^^ and they knew the government would bail them out if they failed

9/29/2008 3:02:04 PM

Hey guess what...IT WAS GOVERNMENTS FAULT. That goes for everyone in it. Show me a bill that was passed with ONLY one party agreeing to it.

9/29/2008 8:15:13 PM

Quote :

"IT WAS GOVERNMENTS FAULT"

It's only guilty of inaction.

Quote :

"Show me a bill that was passed with ONLY one party agreeing to it."

Exactly. Think of all the regulation bills that weren't passed because of Republicans.

9/29/2008 10:10:09 PM

Boone, the govt caused this. It was years in the making. Hell they called this back in 1999.

http://www.youtube.com/watch?v=_MGT_cSi7Rs

9/29/2008 10:24:45 PM

to blame one single entity for all of this is absurd and quite retarded

9/29/2008 10:26:34 PM

still amazed no one is saying that the american public needs to share the blame. because we most definitely do. "main street" is just as much to blame as "wall street". how many times in the past 10 years have you heard people say "you know, it's gonna be a stretch, but this is a good investment property"...or similar excuses for buying too much house. sure, lower interest rates allowed people to do it, but at some point all the $50K/yr millionaires rolling around this country with huge houses and pricey cars were eventually gonna default on their massive amounts of debt.

and it's absolutely foolish to think that low-income families defaulting on mortgages for their $100K houses are the core reason for this thing - it's the upper/middle income families who invested in an $800K condo in Miami as an investment, just to watch its value fall by 50% before it's even completed, that are the root cause of these problems.

9/29/2008 10:34:39 PM

It was the well intentioned policy to lower lending requirements and subsidize loans using fed money that IS the problem. Im not suggesting that all of this mess was caused by poor people defaulting, far from it. But I am suggesting that the feds causing a housing bubble by pumping in fed funds and encouraging lower lending standards caused a shitload of people who took risks on houses with no money down... and then walked away.

What happens when a population who previously couldnt afford traditional loans, now have these news loans? Demand shoots up along with prices.

Did anyone see the reason why wachovia went under? Basically one bad decision.. This is from the charlotte observer.

"But things started to unravel after the bank, eager for a bigger stake in mortgage lending, bought Golden West Financial in 2006 – the height of the housing bubble.

The California company was known for nontraditional loans, some to borrowers with shaky credit, but it had weathered previous downturns throughout the decades. Wachovia paid $24 billion for the company, its biggest purchase ever.

Golden West's Pick-A-Pay mortgages would prove to be Wachovia's undoing. The loans allow borrowers to pay less than the interest owed on their monthly payments, which means the borrower's balance can grow rather than shrink, making it harder to repay. As housing prices have fallen, the Pick-A-Pay portfolio has soured. The bank now expects to lose 12 percent on the $122 billion portfolio, though some analysts think the losses could be higher."


Seriously.. pick-a-pay? WTF

Sorry, here is the link if interested.

http://www.charlotteobserver.com/banking/story/221194.html

[Edited on September 29, 2008 at 10:44 PM. Reason : link]

9/29/2008 10:43:20 PM

^x's4 Why do you all insist on lumping somewhat risky loans that the government made commercial banks issue with outrageously risky loans that investment banks took out by their own volition?

I mean, I obviously know why-- because recent events are conflicting with your ideology, so you have to oversimplify the situation until it almost looks like over regulation is the culprit... if you squint just right.

Fanny and Freddie are good ideas, and worked for decades before this crisis. If it hadn't been for the impossibly stupid practices of the unregulated investment banks, we wouldn't be in this situation.



^ Yeah, and how exactly did the government encourage pick-a-pay loans, other than to be dumb enough to allow it? Again, common sense regulation would've avoided the whole situation.

[Edited on September 29, 2008 at 10:46 PM. Reason : ]

9/29/2008 10:43:43 PM

Boone go re-read that NY times article from 1999. Clinton expanded both programs and banks were basically told to make the loans, fanny will buy them.

Seriously, you are a teacher right. Not meant to be an insult, but just read a little bit.


From the NY Times article from 1999

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.



[Edited on September 29, 2008 at 10:49 PM. Reason : .]

9/29/2008 10:47:18 PM

^^^ oh, i totally agree. the policies in place allowed this problem to arise. so yes, the govt, and poor decisions by seemingly all banks, are major parts of the issue. my point is that in addition to these two entities, the american public's greed and need to "keep up with joneses" is equally at fault. this fact just seems to be ignored...

[Edited on September 29, 2008 at 10:49 PM. Reason : .]

9/29/2008 10:49:02 PM

I totally agree. For too long the majority has lived beyond thier means, which cause "crisis" when something bad happens. I.E. I cant afford healthcare, but my hummer and satelite tv still work fine. Get serious. Instead of saving, people consume. This is another instance where they could get something nice with zero down... only it was a house and not a tv, couch, or car.

[Edited on September 29, 2008 at 10:54 PM. Reason : .]

9/29/2008 10:53:54 PM

Quote :

"still amazed no one is saying that the american public needs to share the blame. because we most definitely do. "main street" is just as much to blame as "wall street". "

Oh believe me, there's plenty of blame for the morons that bought more than they could afford. Unfortunately the same government that wants to buy all of these bad loans also wants the banks to renegotiate these loans or stop foreclosing on them, essentially making worthless assets even more worthless, and keeping people from feeling the consequences of their stupidity. But yes, all the idiots who bought more house than they could afford all deserve to lose their homes too.

Quote :

"Why do you all insist on lumping somewhat risky loans that the government made commercial banks issue with outrageously risky loans that investment banks took out by their own volition? I mean, I obviously know why-- because recent events are conflicting with your ideology, so you have to oversimplify the situation until it almost looks like over regulation is the culprit... if you squint just right. Fanny and Freddie are good ideas, and worked for decades before this crisis. If it hadn't been for the impossibly stupid practices of the unregulated investment banks, we wouldn't be in this situation."

Fannie and Freddie worked until about the mid 90's, when housing prices started skyrocketing way above their normal rates of increase. Incidentally, this was the same time that enforcement of CRA regulations started heating up. And then again in the late 90's when Fannie and Freddie asked for and received even more relaxed lending rules, exclusively for them, from the government.

But of course, the government had nothing to do with this, and these abnormal changes in the market had nothing at all to do with the new regulations and rules put in place immediately preceding these changes.

[Edited on September 29, 2008 at 10:55 PM. Reason : asdfakjsdh]

9/29/2008 10:54:11 PM

No worries, the media will do a story on this AFTER the election. LOL

9/29/2008 10:56:47 PM

Look at the 700 billion-dollar price tag of bailing out the investment banks who never had anything to do with the CDA.

Compare that to the cost of buying out Fanny Mae's debt.


Again, you're lumping them together, for obvious reasons.

[Edited on September 29, 2008 at 11:06 PM. Reason : ]

9/29/2008 10:57:21 PM

Anyone who looks to blame the CRA hasn't paid attention much in the past year when it was blamed in the past and that blame was roundly dismissed by economists. The point is, the role the CRA played in this current housing crisis is minimal at best. Because of the regulations placed on CRA loans, it would be impossible for it to have anything to do with the no doc/no income loans that are the root cause.

I find it interesting that people are blaming a 31 year old law for the makings of the past decade. It is also convenient that as the influence of the CRA waned it some how gets the blame.

Simple measures to look at, only 1/4 or subprime loans were CRA-affiliated loans and those had a lower default rate than non-CRA loans.

http://www.prospect.org/cs/articles?article=did_liberals_cause_the_subprime_crisis

http://www.newamerica.net/blog/asset-building/2008/no-larry-cra-didn-t-cause-sub-prime-mess-3210

9/29/2008 11:07:51 PM

so, yeah, requiring banks to take on riskier loans didn't lead to this mess. not gonna buy that.

9/30/2008 12:59:05 AM

The CRA doesn't require banks to take on riskier loans. Furthermore, the loans taken on by CRA-affiliated banks through the CRA are all federall insured. There is no way that these loans are responsible for the clusterfuck that is currently happening.

9/30/2008 9:59:48 AM

Great article for you guys.

http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview

The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.

Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared.


and MY FAV:

The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.


exactly

9/30/2008 10:24:00 AM

that's nice the libertarian choses to believe this. I don't.

9/30/2008 10:26:35 AM

choose to believe what?

He isnt the only one that sees how this mess started.

[Edited on September 30, 2008 at 11:11 AM. Reason : .]

9/30/2008 11:02:30 AM

You say that because he is supporting your position. His whole little op-ed failed to provide backgroud data to support his claim that Freddie, Fannie, and the CRA are to blame. He made a broad sweeping statement and provided no support.

9/30/2008 1:08:37 PM

then go read the times article from 99, posted earlier. geez

9/30/2008 1:35:43 PM

You're still purposely lumping CRA-regulated subprime loans with the type of unregulated subprime loans that caused the meltdown.

Simply because they share the label of "subprime" doesn't mean they're remotely comparable.

9/30/2008 1:54:21 PM

LoneShark (or earthdogg) - care you answer these questions regarding the 1999 NYTimes article you posted?

Quote :

"Let's clarify the causes of current circumstances. Ask yourself the following questions about the impact of the Community Reinvestment Act and/or the role of Fannie & Freddie: • Did the 1977 legislation, or any other legislation since, require banks to not verify income or payment history of mortgage applicants? • 50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision; another 30% were made by banks or thrifts which are not subject to routine supervision or examinations. How was this caused by either CRA or GSEs ? • What about "No Money Down" Mortgages (0% down payments) ? Were they required by the CRA? Fannie? Freddie? • Explain the shift in Loan to value from 80% to 120%: What was it in the Act that changed this traditional lending requirement? • Did any Federal legislation require real estate agents and mortgage writers to use the same corrupt appraisers again and again? How did they manage to always come in at exactly the purchase price, no matter what? • Did the CRA require banks to develop automated underwriting (AU) systems that emphasized speed rather than accuracy in order to process the greatest number of mortgage apps as quickly as possible? • How exactly did legislation force Moody's, S&Ps and Fitch to rate junk paper as Triple AAA? • What about piggy back loans? Were banks required by Congress to lend the first mortgage and do a HELOC for the down payment -- at the same time? • Internal bank memos showed employees how to cheat the system to get poor mortgages prospects approved that shouldn't have been: Titled How to Get an "Iffy" loan approved at JPM Chase. (Was circulating that memo also a FNM/FRE/CRA requirement?) • The four biggest problem areas for housing (by price decreases) are: Phoenix, Arizona; Las Vegas, Nevada; Miami, Florida, and San Diego, California. Explain exactly how these affluent, non-minority regions were impacted by the Community Reinvesment Act ? • Did the GSEs require banks to not check credit scores? Assets? Income? • What was it about the CRA or GSEs that mandated fund managers load up on an investment product that was hard to value, thinly traded, and poorly understood • What was it in the Act that forced banks to make "interest only" loans? Were "Neg Am loans" also part of the legislative requirements also? • Consider this February 2003 speech by Countrywide CEO Angelo Mozlilo at the American Bankers National Real Estate Conference. He advocated zero down payment mortgages -- was that a CRA requirement too, or just a grab for more market share, and bad banking? "

http://bigpicture.typepad.com/comments/2008/10/misunderstandin.html

10/2/2008 11:32:11 AM

The answer to most of your question is the same. It is similar to Gresham's Law, or how bad money will drive out good.

A banker which stands firm and refuses to issue mortgages at unsustainable rates and practices will find themselves not making any loans, earning no interest, and going bankrupt after paying interest to their depositors. This is a common position for the owners of capital, such as insurance companies and defined benefit pension funds. They must accept whatever risk/return the market offers them, because earning nothing means death just as much as losing money.

Here it helps to use a metaphore. Toyota does not make most of the cars sold in America. But because it has found ways to make cars cheaply it insists on selling them at low prices. As a result, Toyota's competitors must sell their cars for less than it cost to make them, hence why GM and Ford are losing money. Here it is not a problem because as GM and Ford go away, Toyota just makes even more cars to sell cheaply.

Well, along comes Freddie and Fannie into the mortgage market with a mandate to buy affordable mortgages of those that are least able to pay. In other words, they are going to purposefully buy mortgages at rates and conditions that would lose money for a private firm. It is any wonder that private firms forced by circumstance to compete with these rates and conditions have found themselves unable to cover their losses when Fannie and Freddie, with their favored borrowing status, themselves went bust?

[Edited on October 2, 2008 at 4:29 PM. Reason : .,.]

10/2/2008 4:27:33 PM

the housing bubble was caused by policies of the federal government and the Federal Reserve over the last 13 years. The government is taking on all this debt now, and turning on the printing presses. Look for hyperinflation coming to a neighborhood near you in the next 18 months.

10/2/2008 8:22:40 PM

While we're on this topic, you guys should check out the wild exchange between O'Reilly and Barney Frank (D).

Hilarious...

10/2/2008 11:29:00 PM