While that is true, this article paints the relaxing of mortgage standards as the culprit. It was not. If people had continued to have jobs, they would have been able to pay the mortgages. The REAL CULPRIT was the oil price shock.
We've done precious little in 40 years since the last oil price shock to avoid the devastating effects on our economy from oil prices. Mortgage failures are the symptom, not the cause. And Mortgage failures occur in almost every economic downturn, frequently causing the economic downturn to be termed a "real estate bubble" when it's not really.
Show me the big increase in foreclosures and delinquent rates between 1995 and 2005. Then get back to me.
“Mortgage meltdowns and housing bubbles don’t cause themselves, they are caused.”
He also caused that big hole at the end of Manhattan
I would like to do a “man on the street” (literally) interview to see if the Occupy people even know what damage government intervention has caused in our housing market. Unfortunately history gets rewritten by the time it gets to the next generation.
“The root cause of our current housing mess was massive government intervention that went horribly wrong.”
In other words, big government as usual.
Let’s not forget that this all began as a solution for the problems of public housing, and the belief that pride of ownership was the magic needed to solve poverty. That created plans for easy money, a relaxing of standards and regulations, and once there is easy money to be had, money people are going to figure out how to take advantage of it. It’s off to the races, and everyone is betting big.
The Community Reinvestment Act (CRA), passed in 1977, holds banks and savings institutions accountable for meeting the credit needs of all communities they are chartered to serve, including low- and moderate-income communities. Under the legislation, federal banking agencies periodically evaluate banks to ensure that they are attentive to community needs.
To ensure a positive CRA evaluation, banks actively cultivate links to the community, especially through providing funds and services to a community-based program like Neighborhood Networks. Contact the CRA officer at your local bank. The bank may be willing to sponsor an innovative new welfare-to-work program or bank employees may be willing to teach a course on financial literacy for residents.
Neighborhood Networks centers can benefit from the CRA by working with their local banks and financial institutions to promote increased community-lender partnerships. These partnerships can lead to greater resources available in the community to promote sustainability and development.
The links below and to the right provide more information on CRA and the opportunities it presents to Neighborhood Networks centers.
http://www.hud.gov/offices/hsg/mfh/nnw/resourcesforcenters/fundingyourcenter/nnwcommunityreinvestment.cfm
See also:
Here's How The Community Reinvestment Act Led To The Housing Bubble's Lax Lending
For some reason there is a blind spot on the Free Republic about the true reason for the 2008 economic melt-down. It was The Commodity Futures Modernization Act of 2000 (CFMA) signed into law on December 21, 2000 by President Bill Clinton. This combined with the Gramm-Leach-Bliley Act, recinded the Glass-Steagall Act of 1932. It was this United States federal legislation that officially ensured the deregulation of financial products known as over-the-counter derivatives. President Clinton left office with legislation that virtually left Wall Street investors with a free license to run the derivatives market any way they wanted. It was like opening a five lane freeway with no speed limits. It was these derivatives, especially the credit default swap, which were at the heart of the financial crisis of 2008. The effects of the collapse of the housing market was amplified by the credit default swap market. It is time we put a blue flashing light on Bill Clinton—and Republican Senator Phil Gramm.