Subprime Lending - Or How The Liberals In Congress Got Us Into This Mess

The Virginian ^ | 5/10/2008 | Moneyrunner

[moneyrunner]

The subprime mortgage meltdown has cost the world 15% of its market capitalization, about $9 trillion. The primary culprit who caused all of this financial loss, pain and suffering is not the mortgage companies. Neither is it the overextended borrowers. It is our own federal regulations interfering with the free market.

...

The unintended consequences of good intentions can do more economic harm than all the mean-spirited greed within capitalism.

Part of the good intention was forcing banks to be good neighbors by making altruistic loans that discriminated in favor of underprivileged communities. Any attempts by banks to set higher rates, terms or conditions on people with questionable credit was labeled "predatory lending" and used to hold lenders hostage. This form of price controls held the price on questionable loans artificially low.

[Notary Sojac]

when you change the standards for lending, you change them for everybody, not just people who have dark skin

That's a fair point and I don't disagree.

But I still maintain that the securities deregulation of 1999 (pushed by Phil Gramm and signed by Bill Clinton, blame all 'round) was the locomotive, and the minority lending standards the caboose. Your mileage may vary....