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Politics : American Presidential Politics and foreign affairs

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To: DuckTapeSunroof who wrote (39563)	12/14/2009 6:01:09 PM
From: TimF	Read Replies (1) of 71588

Private lenders made the majority of sub-prime loans. So what? Making sub-prime loans, and contributing to the crises are far from perfectly overlapping things. Also Fannie and Freddie did increase the amount of sub prime loans, and complex securitization of all types of loans, and they did so from the perspective of a federally backed entity (thus creating moral hazard), and with a divided mission, not only to seek profit (while supposedly managing risk), but also to expand home ownership. It’s a universe in which regulators coerced bankers into making loans to unqualified borrowers, even though only one of the top 25 subprime lenders was subject to the regulations in question. One of the top 25? Perhaps, and many of those out of the top 25. More importantly the coercion extended well beyond the direct impact of CRA regulations. Lawsuits, and political pressure related to those regulations and their aims (which is why I say "CRA and related issues", and not just "CRA") drove similarly bad lending decisions.

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