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No problem. The housing bubble which set off the economic downturn was indeed unstable, from the first days of the CRA when ‘rats started forcing banks to make risky loans to people who couldn’t possible repay them, through the days under Clinton when Freddie and Fannie were required to start buying those lousy loans until they made up about fifty percent of the FF portfolios, through the period when Wall Street was buying them up and bundling them into convoluted financial instruments which were sold for investments around the world. Anyone with more than half a brain in his head knew that eventually those loans would come due and default, and the more thoughtful were warning that only as long as housing prices continued to rise in a strong economy could this collapse be avoided – it took only the pin prick of rising oil prices in 2008 to burst the bubble and start the shockwave of falling house prices, failing loans, consequently worthless derivatives, bankrupt institutions, and disappearing sovereign wealth.

Of course it’s fashionable to try to seem evenhanded and blame both ‘rats and Republicans for the mess, but the scheme to buy votes by giving taxpayer-paid freebies to the poor, which is the basis of the collapse, is a uniquely Democrat idea, one of the few new ones they’ve had in the last hundred years. Most Republicans would avoid it like the proverbial plague. Yes, yes, we’ve all heard about Bush’s speech on down-payment loans many times – Bush wasn’t pushing to provide loans to people regardless of whether or not they could pay them back. Nor was he plotting government manipulation of private financial institutions; in fact, one of his proposals was that faith-based and charitable organizations be more involved in helping to provide loans to aid those seeking to buy homes. There is simply no comparison between Bush’s advocating and even cheerleading for increased home ownership and the Democrats’ thuggish imposition of governmental strong-arm tactics to force ownership where it wasn’t earned or warranted. Moreover, a number of Republicans, including now candidate Santorum, pushed at various times during Bush’s administration for Senate bills to impose greater regulation and oversight on the Fannies, a move which very likely could have short-circuited the stockpiling of bad loans which fueled the eventual meltdown of the financial system. It was Democrats who threatened filibusters of these attempts and killed reform. Except by the most liberal reading of the facts are Democrats anything but totally responsible for the bubble.

A vivid demonstration of ChuckRogers' point that we badly need a conservative advocate fact checker.......

“through the period when Wall Street was buying them up and bundling them into convoluted financial instruments which were sold for investments around the world.”

A nice story, but not at all accurate.

Wall Street investment banks and hedge funds were bundling and securitizing their own subprime loans, not CRA paper. There wasn’t enough CRA paper to suit them, and more to the point CRA paper was conforming paper and therefore didn’t offer the high yield that IBs and hedge funds wanted for their own uses.

The IBs and hedgies provided warehouse credit lines to an army of independent mortgage brokers, instructing them to write high yield subprime loans. Unlike the conforming CRA paper these loans were OptionARMs, negative amortization, NINJA, No Doc and variations on those themes. This mortgages became the fodder for CDOs, CMOs, and second order derivatives which is why Wall Street wanted the high yield paper in the first place.

“Of course it’s fashionable to try to seem evenhanded and blame both ‘rats and Republicans for the mess, but the scheme to buy votes by giving taxpayer-paid freebies to the poor, which is the basis of the collapse, is a uniquely Democrat idea, one of the few new ones they’ve had in the last hundred years. “

I could care less about ‘fashionable’. And attempts by the half-educated to spin the subject for political convenience annoy me. I live at the epicenter of the subprime industry. I know people who started with Arnall and who went on to own their own subprime shops. Their funding came from Wall Street and none of their activity was covered by the CRA, or any other regulation for that matter. They were in it because they were making fortunes writing exotic subprime paper. You do a disservice to fellow conservatives by repeating the BS that the subprime lending of the bubble was driven by the CRA.