The tire iron wielding Bubba isn’t alone in his hatred, ignorance and xenophobia…the folks over at Wall Street feel the same way toward the poor masses. How else could one explain their continued adherence to the notion that the nations poor are to blame for the worst global financial meltdown in 100 years? This quote from the WSJ Op-Ed pages is patently ridiculous to anyone with even a basic understanding of what caused the meltdown:
Fifty percent of the high-risk loans are estimated to be CRA (Community Reinvestment Act) loans, with much of the remainder useful to the GSEs (Government Sponsored Enterprises) in meeting their affordable-housing goals.
The flood of CRA (Community Reinvestment Act) and affordable-housing loans with loosened underwriting standards, combined with declining mortgage interest rates-to 5% in 2003 from 10% in early 1991-resulted in a massive increase in borrowing capacity and fueled a house price bubble of unprecedented magnitude over the period 1997-2006.
So the government is to blame for the crisis because they made it so much easier for poor people to buy a home…right.
The reality of what happened is pretty well summarized in “Fool’s Gold”…I think this review of the book is spot on. The only way bad mortgages take down the entire financial system is when they are used as the ‘raw material’ for speculation by the investment community, whose insatiable appetite for risk, for betting on just about anything, and unfettered greed will always destroy any sane conventional system of banking. History has shown us this several times…Greenspan’s now infamous ‘shocked disbelief’ is laughable when you consider a historical perspective. Or maybe it was those irresponsible poor people who didn’t read the fine fine fine print on the terms of their sub-prime mortgage, right Wall Street?