IIRC, this started under Clinton with the “Community Reinvestment Act” (CRA).
It pretty much forced banks to make housing loans to folks that would never, ever have qualified otherwise.
Those folks, naturally, had trouble keeping their mortgages up to date and thus the trouble began.
Common sense says that there should be no 100% financing without absolutely perfect credit. Things really got out of hand when banks started giving loans and credit cards to illegals , without even a SS number.
Who would have thought that giving $500,000 mortgages to illegals making minimum wage would be a problem??
Indianapolis alone had over 1,000 homes involved in two HUGE Mortgage Fraud schemes, that paid inner-city druggies $500 bucks to sign mortgages on inner-city homes, that were sold over and over again, with ever-increasing mortgages, until it fell apart in 2002-2003.
That was just ONE medium-sized U.S. city. This ACORN-enabled fraud was repeated, time and again, in cities across America, especially Baltimore, Philly, Detroit, etc.
Must be “BOOSH’S FAULT!(tm)”, Right?
The California housing market began coming apart during the CLINTON RECESSION in 2000. Or have you forgotten about that?
Like I said, dude’s a troll.
“IIRC, this started under Clinton with the “Community Reinvestment Act” (CRA).”
Yours is a widely shared opinion but it’s not accurate. The CRA was only a minor factor in the bubble. There’s a Lazard Investment study available on the net that examines what factors led to the bubble and one thing they learned is that CRA loans have performed better than the majority of loans issued during the bubble.
For one thing CRA only applied to depository firms, and it didn’t mandate that the loans covered by the act be mortgages. What the act did require is that a percentage of loans be made to the neighborhoods from which the bank was drawing its deposits.
By contrast the billions of dollars of subprime loans generated by pure mortgage lenders, by investment banks, by hedge funds were not covered by the CRA at all. Or any other act for that matter. There was no government requirement for any non-depository firm to make even a single risky loan. In fact these firms successfully lobbied Congress to keep their business completely unregulated culminating in the Commodities Futures Modernization Act of 2000.
If you want to look for the root of the bubble look at that act, at Graham-Leach-Bliley, at David X Li’s Gaussian copula function, to the Fed’s zero interest rate policy among other factors.