It started with the Community Reinvestment Act of 1993, which gave the government the power to punish banks that did not meet their goals of loans to minorities. To meet these goals, banks were forced to issue higher risk loans than they had previously deemed wise.

Then, to offset that risk, the derivative investment devices were created. But since the risk was inherently unknown (government had never forced high risk loans to be made before), those investments themselves were risky.

But the government (pushed by Democrat political operatives running Fannie Mae and Freddie Mac) also opened those government-sponsored entities (they keep profits, but the US taxpayer takes the risks) to purchase a bunch of these risky papers.

In the course of having created these derivatives for the government-mandated risky lending, financial firms found that it could be lucrative to offer similar risky loans and play in the derivatives market with non-poor people. And with Fannie and Freddie buying paper to the tune of trillions, the money flow kept on going.

As time went, real estate prices soared, and with the Fed loaning money out at low interest rates (supported by Bush and his “ownership society” policy), that created a real estate pricing bubble.

And when people started noticing this was a bad thing, it was Democrats who were able to prevent the GOP from making changes, because the GOP only had a small majority in the Senate, and a slightly larger majority in the House. And Democrats like Dodd and Frank, who had very cosy relationships with the banking industry, prevented any action that could have tempered the coming realignment by addressing it sooner.

So, it is pure, unfettered ignorance to simply blame it on Bush, or even wholly on the Democrats.

The problem was caused by government intervention into the market, which caused a significant distortion of risk, and fueled by bad Fed policy caused an unstable bubble that when it popped, ravaged the financial sector of the economy. And that had a very large ripple effect over the rest of the economy.

So, this is the type of occurrence we refer to when we conservatives say that government is the problem, not the answer.

FOR MORE INFORMATION CONTACT:
Mr.Denise Brown
(GMD) Trustedloan

For more on this subject, see also, “How do I choose a good password?” and “Are passwords safe?”

This all started more than a decade ago with the Community Reinvestment Act and can’t be blamed on Bush or Clinton, but on the liberal, socialist leaning members of Congress who enacted it. Here is a referrence:

From Wikipedia, the free encyclopedia
The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.[1][2][3] Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining.[4][5]

Sometimes “fairness” is not a good thing, especially when it’s forced on us and on business. It’s ruined the entire economy this time, harming many individuals, families and businesses. Giving mortgages to people who can’t afford to pay them back, just to be “fair”, is what has caused the current economic crisis.

Those Senators that were paid kickbacks and given great favors and gifts to keep the subprime loan program going despite the warnings that it would eventually ruin the economy are more to blame than others. The top three Senator recipients of the most pay offs are Barney Frank, Chris Dodd, and Barack Obama.

So think twice when you hear the White House say they “inherited” this economic crisis. The current administration actually help to cause it.

But dude, if you can’t do better than 24.5%, you should just ride a bike until you can save most of the price of the car!