Stop trying to blame this on Fannie Mae and Freddie Mac and the Community Reinvestment Act–it is total BS and you know it by now.

I’m getting tired of following all your posts with rational explanations; it’s like a 2-year-old who tells you he needs a diaper change then 10 minutes after getting a new one he takes a crap and asks you to clean it again.

First, the “oversight” reform efforts you keep spouting every couple of days were promulgated by and pushed for by Fannie Mae and Freddie Mac executives who wanted to get out from under congress and get under the cushy “we don’t care what the hell you do as long as you send us a check” GOP leadership. No reasonable person will ever believe what you keep saying–that Bush and his crew were planning to crack down on Fannie and Freddie and the CRA….it’s crap. total. complete. crap.

This whole, “if only Congress didn’t force banks to lend money to poor minorities we wouldn’t be in this mess” nonsense is just that–rightwing nonsense trying to dodge blame.

A bunch of investment banks and insurance companies run by Harvard educated multi-gillionaires went in the toilet and you’re pointing the finger at Jimmy Carter, Bill Clinton, and poor minorities–please.

The idea that the Community Reinvestment Act is somehow responsible for poor lending decisions is insane—I don’t know how you can keep making the argument and not expect to get laughed off of the Internet.

Poor Congressional oversight — a congress lead by the GOP– was part of the problem. But, yeah, I’ll lay some blame at the feet of Dems.

I’ll even grant that banks that sought to meet CRA requirements by throwing money at minorities to meet CRA requirements may have contributed, but as we’ve discussed in other threads that was a small minority of the loans.

But first, the most obvious point you refuse to acknowledge. Fannie and Freddie didn’t make subprime loans. Not one. Ever. They did buy some subprime loans made by others, though.

The Community Reinvestment Act applies to depository banks–most of the institutions that spurred the massive growth of the subprime market weren’t regulated banks. They were mortgage firms that were unregulated by the Federal Reserve or other entities that monitored compliance with CRA.

These fly by night and unscrupulous companies worked with the big investment houses like Bear Stearns and Lehman Brothers (note: these companies also have nothing to do with the CRA), packaging and reselling bad investments mixed with good ones so the first people in could make a bundle and screw the next guys.

The CRA didn’t force any of these mortgage companies to offer loans for no money down, or to throw underwriting standards out the window, or to encourage mortgage brokers to aggressively seek out new markets. The CRA didn’t force the credit-rating agencies to slap high-grade ratings on packages of subprime debt. The big investment houses did.

Are you watching the news? When you see all these stories about people getting tossed from their homes, are they poor people living in modest houses or are they middle and upper middle class people getting thrown out of homes they couldn’t afford to purchase? Shoot, if it were only poor people getting booted from their homes, it wouldn’t even be a story. The MSM doesn’t care about the plight of poor people.

None of this has anything to do with the CRA. Subprime mortgages are a symptom, not a cause.

If you want to blame someone, blame the obscenely wealthy guys who ran Lehman Brothers and Bear Stearns into the ground with absurd leverage ratios of 33 to 1 or by borrowing hundreds of billions of dollars in short-term debt in the capital markets or by buying tens of billions of dollars of commercial real estate at the top of the market.

What part of the CRA compelled AIG to indulge in the ponzi scheme of credit-default-swaps?

How about the hundreds of billions of dollars of leveraged loans—loans banks committed to private-equity firms that wanted to conduct leveraged buyouts of retailers, restaurant companies, and industrial firms?

Can you show me the clause in the CRA that made this occur?

Unregulated Investment firms created a demand for subprime loans because they saw it as a way to generate massive income quickly. It was greed and unscrupulous behavior. They made subprime loans for the same reason they made other loans: They could get paid for making the loans, for turning them into securities, and for trading them—frequently using borrowed capital.

This past week, when Richard Fuld was testifying before congress someone asked him what part of Lehman’s demise was directly attributed to the evil GSE’s…and you know what he said?

“Very little.”

If Fuld can be honest, why can’t you?

You start out going strong by pointing out that even though general perception is going to place blame at Bush’s feet the problem is far broader than that and then you turn around and just try to stick the blame in just as narrow a hole.

You know what? Some of us (Americans) ARE PhDs and historians, readers, wikipedia editors and so on and don’t you dare discount us.

Alan – I agree with you too, I am 26 and Barack has never seen foreign to me.

It doesn’t matter that the root of this crisis lies at the feet of Democrats in congress, their cronies in the GSE’s, and their real-estate affirmative action programs. It doesn’t matter that Bush and republicans have always called for the exact same oversight that has now been passed only after the bubble burst. And it doesn’t matter that Democrats like Chris Dodd, Chuck Schumer, Maxine Waters, and Barney Frank had been blocking this reform consistantly over the last 8 years.

Its all about perception. Americans are laborers, machinists, small buisness owners, teachers, ect… not pHD’s in finance, or historians. All of the jouralists who should be able to report whole cascade of events accurately are partisan, and are most likely liberal democrats.

The President is like a Baseball Manager or a Football coach. If the team sucks, he gets all the blamed and is fired first, not the players.