Ted, > For an example, how did politicians actively encourage lending to poor people? They couldn't without violating all kinds of federal and state laws.
The details are complicated, but it involved stretching the intent of the Community Reinvestment Act beyond fiscal responsibility. Community activists such as ACORN would pressure financial institutions to lend to poor, especially poor minorities, and the banks would follow along because they were afraid of being the target of the Justice Department. Local politicians such as Maxine Waters were also involved.
(Of course ACORN would deny any involvement, claiming that they were always against "predatory lending." But although related, the practice of predatory lending is a separate issue which we can discuss some other time.)
Evidence abounds among loan officers who were pressured by their higher-ups to approve anything and everything that came across their desks. The loan officers themselves would question privately the wisdom of said decisions, but the top-down orders gave them cover. Besides, everyone was getting rich off of real estate anyway, so why crash the party?
In short, it's a classic case of bubble mentality, brought on by efforts under the Bush administration to transfer the dot-com bubble to the real estate bubble. People then jumped onto the bandwagon, thinking that the market can infinitely expand. Politicians did the same, as well as lower-income communities who wanted to be part of this "American Dream." Of course, the dream then turned into a nightmare.
That's why I'm challenging CJ (and anyone else) to point to regulation that would have prevented this mess from occurring had those oh-so-greedy Republicans not cut them. It's really easy, even chickens--t, to look back in hindsight and say, "Coulda shoulda woulda." Well now's your chance.
Tenchusatsu |
