| Senlis said: What got us here is politicians (Democrats in particular, who would have guessed). They pressure Sallie Mae and Freddie Mac into loaning to people who were not qualified for the loans. The reasons the politicians gave for doing this was that many of the people were minorities. SM&FM were not rejecting the loans based on race, but because they did not qualify based on income and credit. Despite that SM&FM approved the loans due to political pressure. The loans fell through when the applicants couldn't pay them, and that caused the housing market problem. Funny that not very many people hear that version of the events. |
I agree that government got us here, but I have different reasons.
It is specious reasoning to blame the crisis on the CRA and Sallie/Freddie. They may have been minor contributors to the crisis, but there are other culprits that, in my opinion, were the main contributors to this crisis. The Fed is culpable in its role in this crisis. It kept interest rates too low for too long. Also, you have a decision by the SEC in 2004, which is when subprime lending increased markedly, to allow certain banks to increase their debt-to-asset ratio. Some, from what I have read, had a debt-to-asset ratio as high as 50-to-1 which significantly increased their risk. The five banks that particpated in this program either failed (Lehman Brothers), were acquired by bank holding companies (Bear Stearns and Merril Lynch), or converted to bank holding companies (Goldman Sachs and Morgan Stanley).
