Posted by
zapdoodat on Tuesday, September 30, 2008 3:33:15 PM
Time to blame the private mortgage lenders and Wall Street investment banks. All those re-fi letters you got in the mail, the past few years(one a day, no?) came from organizations outside the government regulatory process.
Wall Street would accept a mortgage from anyone with a pulse, bundle into a Collateral Mortgage Obligation and sell it for a lot of money. Unfortunately, they saddled these CMO's with credit default swaps and other heavily over-leveraged financial derivatives that they themselves didn't understand. The real estate market sunk which their quant models had NOT predicted. Oops!!
Did you see last Monday in the WSJ that JP Morgan and Goldman Sachs volunteered to go into the regulatory US banking system? They figured the government could run their business better than their own business plans. It has all been a big disgrace!
Though Fannie and Freddie have a share of the blame, I can't really put any of the blame on the Community Re-Investment Act.
It seems that for the past fews years, that I had heard a lot about 'Predatory Lending'. A situation where, instead of the government forcing lenders to lend more, that their could have been some rules to slow down too much lending.
According to the WSJ there were many states that wanted to institute their own rules, protecting their state's citizens, but the Bush administration opposed this, due to their core belief in democratic centralism, otherwise known as the Unitary Executive Theory and also known 100 years ago as Bolshevism.