Another Obozo "Accomplishment" Going, Going...

Understand that the root cause of the 2008 housing collapse goes way back to Jimmy Carter and his Community Reinvestment Act. That act outlawed redlining, which was a common sense practice among banks. They literally drew red lines around neighborhoods on maps where people frequently defaulted on loans and where they people did not take care of the properties. Most banks would not lend money for properties in those areas, or they charges a higher interest rate. In other words, these areas were losing propositions where bank losses on loans were the greatest. The Community Reinvestment Act forced banks to make bad loans.

Community Reinvestment Act

The CRA was pretty much ignored during the Reagan years, but the Clinton administration once again threatened to prosecute banks that refused to write bad loans. That's where the problem started with adjustable rate mortgages that were intended to make owning a home more affordable. They also lowered the requirements for loans that were passed to Fannie Mae and Freddie Mac, which became the basis for the toxic loan problem. Banks that were forced to write bad loans sold them to Fannie Mae and Freddie Mac, where they became liabilities to those agencies.

The problem increased further when George W. Bush endorsed the practices and pushed for more loans that people could not afford.

I get a kick out of when the Dems call Adjustable Rate Mortgages "predatory" because poor people allegedly did not understand that the rate for the mortgage was adjustable, even though it stated that in bold print as the title on the loan paperwork.

The more government gets involved in our lives, the worse our situation becomes. Any time the government forces business to do something that defies common sense and normal business practices, the program is doomed to failure.

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Another Obozo "Accomplishment" Going, Going...