Originally Posted by
acrylics
http:///forum/post/2760548
There were a more factors than just what's above though. Clinton's '95 revisions to the CRA (Community Reinvestment Act) allowed/forced many lenders to make loans to low income families, loans that would never have been approved. This also led to more upscale folks being able to buy more home than they could afford by conventional means and more creative lending practices which allowed loans to be approved which simply should not have been. A democrat congress was in session in '94 when this was written, the republicans didn't have a majority until they took office in January, '95 and the revisions took effect at that time as well.
But it wasn't all Clinton's or democrat's fault per se, part of the issue IMO stems from the Gramm, Leach, Bliley Act which repealed much of the Class-Steagall Act which kept commercial banks and investment banks. The passing of the Gramm, Leach, & Bliley Act essentially led to deregulation of commercial & investment banks and allowed banks to bundle these securities (sub-prime mortgages) together which leads us to where we are now. FWIW, the Gramm, Leach, Bliley Act was in '99, Clinton signed it but the bill was veto-proof from a republican majority in both houses. That said, the bill passed by a HUGE margin in both houses so was bipartisan in it's final version.
So, IMO both parties carry some responsibility to a certain extent but if folks simply would not have bought more house than they could afford - this might not have happened.
I agree this bill was crucial, but imo, in an of itself there is nothing wrong in bunding these securities together, if the loans itself were propperly vetted, and these morgage lenders were responsible, in lending money instead of lending to high risk people then turning around and selling them to fanny and freddy. Which they didn't because of very little risk to that point. They knew they could lend the money, and turn around and sell it to the government.
As for the securities, I don't have a problem with the concept because they actually have a more stable value backing them. Your home. VS stay a .com company. Where the stocks were selling for some rediculous amount, and they were nothing more than a warehouse and a network of servers. (but that isn't my area of expertise) Just my opinion as an uneducated observer.
