Sowell has a point the the government sure didn’t help matters with the Community Reinvestment Act which was passed in 1977 and “strengthened” in 1995. However, this is a very complex crisis and there is probably plenty of blame to go around.
The investment salesmen were turning a blind eye to investors bidding up prices by fraudulently obtaining resident loans. Also, the mortgage brokers were clearly pulling a fast one with the marketing of subprime loans as investment instruments.
I’d like to hear an assessment of the effect the Fed had by lowering prime which induced a lot of buyers into the market.
Like I said, lot’s of blame to be spread around.
Definitely lots of complicity parties to blame, but this and Greenspan’s cheap money and the Republican’s repeal of Glass Steagall all contributed heavily to allowing the banks to hang themselves on their own rope of greed. The government paved the way to NINJA loans, but the banks weren’t forced to make those loans, and they may well not have if they didn’t think they could sell the toxic crap to unwary investors.
I wonder if this isn't a direct result of the CRA to begin with - how else to recoup losses? (not excusing it just observing)