No, it's all tied to government involvement in the housing market. Banks were basically forced to come up with bundling schemes to support the amount of subprime risky loans that were being promoted by government. The SEC turned a blind eye to the creation of new securities to facilitate the continuance of the government's push for more subprime lending. Fannie and Freddy were instructed by politicians to support their housing ambitions and toss normal lending practices out the window. 99% of the mortgage mess is a result of government intervention. There is no doubt about this.
So? This wouldn't have happened without the government. It also wouldn't have happened without the sheeple. Apparently you're too jaded to see how it's all inter-related.
The True Origins of This Financial Crisis: The problem is summed up succinctly by Stan Liebowitz of the University of Texas at Dallas: From the current handwringing, youâd think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards--at the behest of community groups and "progressive" political forces.⦠For years, rising house prices hid the default problems since quick refinances were possible. But now that house prices have stopped rising, we can clearly see the damage done by relaxed loan standards. The point here is not that low-income borrowers received mortgage loans that they could not afford. That is probably true to some extent but cannot account for the large number of sub-prime and Alt-A loans that currently pollute the banking system. It was the spreading of these looser standards to the prime loan market that vastly increased the availability of credit for mortgages, the speculation in housing, and ultimately the bubble in housing prices. http://spectator.org/archives/2009/02/06/the-true-origins-of-this-finan
I can buy that. It certainly was the build up then bursting of the housing bubble that exposed the mortgage lending problems. And, it was the push by liberal groups and liberal government to ease lending practices that led to the speculative bubble that eventually burst. But, the bubble grew so big and the housing market is such a large part of the average Americans net worth that the collapse is lasting years as government tries to interfere with the market and prop it up.
---------------------------------------------------------------------------------- Remember this thread is talking about CRA and to blame for this financial crisis. Here is the quote from the op link. "At the October 11 GOP Presidential primary debate on Bloomberg TV, Karen Tumulty of the Washington Post asked candidate Michelle Bachmann if Wall Street bankers had been adequately punished for âthe damage they did to the economy.â In reply, Bachmann schooled the uninformed Tumulty, saying, âIf you look at the problem with the economic meltdown, you can trace it right back to the federal government. It was the federal government that pushed the subprime loans. It was the federal government that pushed the Community Reinvestment Actâ¦. We had lending standards lowered for the first time in American history. The fault goes back to the federal government." Newt Gingrich affirmed the same view...... ----------------------------------------------------------------------------------- Here is how much of this loans is from the CRA, and how much is from brokers making the subprime loans/no doc/alt-a And this is my point. You can see the default rate for the loans from the CRA is low compare to the subprime loans made from outside of the CRA regulation and from the private brokers. So maybe you do not know so many minorities, but you will be surprised maybe how if they can have the access to loans with the good terms, they work hard to pay thier loan, to improve their life and to create comfort and wealth in their family in the USA. Not all minorities are crazy gang crackhead people. --------------------------------------------------------------------------------- "In this research, we examine the relative risk of subprime mortgages and a sample of community reinvestment loans originated through the Community Advantage Program (CAP). Using the propensity score matching method, we construct a sample of comparable borrowers with similar risk characteristics but holding the two different loan products. We find that the sample of community reinvestment loans have a lower default risk than subprime loans, very likely because they are not originated by brokers and lack risky features such as adjustable rates and prepayment penalties. Results suggest that similar borrowers holding more sustainable products exhibit significantly lower default risks." http://www.ccc.unc.edu/documents/Risky.Disaggreg.5.17.10.pdf
And do not blame government or CRA for all this (subprime mortgages) created from private brokers to feed this funds like the Magnetar. They(Magnetar) want this high risk mortgages. They buy this high mortgages because this equity tranche make them money to fund their bet this morgages will default. They have no compassion for their country, no compassion for the long term effect to the people of their country, no caring for the growth of thier country. This is short term gain for few people.
You just look foolish continually trying to distort this. The government was primarily responsible for the financial crisis because they're the only entity that had the responsibility to make and enforce the laws, regulations, etc., that governed the system within which everyone else had to operate, and they're the only entity that had authority over the other bad actors.