No, it wasn’t.
I wish people would quit repeating this “conventional wisdom.”
The number of CRA or similar “forced” loans out there in the mortgage market are so small relative to the number of PRIME, CONFORMING mortgages that were written to people with questionable ability to pay (but good FICO scores - some of which were “rented”) is minute.
Look at the percentage of PRIME, CONFORMING mortgages in default or foreclosure. No one had to force any bank to write a PRIME, CONFORMING loan. No one. They just *do*. That’s their business.
No one forced the banks to drop the 20% down payment. I used to think that the impetus behind dropping the 20% down payment was the government. No, in fact the government was lobbied by one Angelo Mozillo (he of Countrywide, you know, the white-haired guy with the fabulous tan) to drop the 20% down payment requirement so that Countrywide could originate more PRIME, CONFORMING loans which they could then sell to Fannie/Freddie/everyone as MBS packages.
Once the realization was out that dropping from 20% down to 10% down got “X%” more business in the loan market, then the banks started engaging in behavior to get the other 10% eliminated - anything to be able to write a loan and then sell it into the securitization stream.
The key takeaway here for conservatives is that the banks are NOT blameless. They brought this one themselves. They’re the ones STILL engaging in fraudulent behavior - look at the recent legal action brought by the AG in Nevada. The bankers and their lawyers were warned about robo-signing on foreclosure docs. It’s wrong, it’s illegal and it’s unethical for lawyers to engage or participate in such frauds upon the court.
They’re STILL doing it.
Now, back to the Man With The Tan:
http://www.sec.gov/news/press/2010/2010-197.htm
Why isn’t this guy in jail? Where was the DOJ on the criminal aspects of these charges? He’s engaged in securities fraud, wire fraud, mail fraud, you name it in the loan scams he ran. The results of his actions are still likely to take down Bank of America. Why is he still walking around free?
Conservatives need to quit thinking that the bankers are blameless, that they’re victims of big government. They’re not.
Oh, and for those who still think that the CRA was the cause of so much rampant lending: Explain why the situation is the same in the UK, in Australia, in China, in Spain, etc. Did US law force the banks to lend to real estate buyers who couldn’t service the debt there too? No, the bankers went wild in the last 10 years - everywhere.
My cousin was assistant state director of USDA rural housing and just recently retired. He was in the business for the USDA for more than 30 years. I am merely citing much of what he told me about the guidelines the USDA’s program was forced to follow. And now, we have multi-billion dollar lawsuit settlements going to hispanic and africans because they claim they were discriminated against by this lending agency and others—the USDA is currently advertising for victims of discrimination so they can send them a minimum of 50K with no strings attached; not as a loan, but a handout. Ask yourself why????? The banks may not be faultless, but I still stand by what I wrote earlier. If forced lending had not come down the by gov’t mandate, this level of collapse never would have happened. The gov’t set the precedent for making bad loans and it spun out of control.
Excellent and true. Conservatives have to admit that bankers brought this disaster about willfully. Government was just their handmaiden. That Obama, a man of the people, hasn’t prosecuted these guys tells you where his bread is buttered.