kane

While I won't argue that entitlements are partially to blame, you are a little bit off. The Community Reinvestment Act started in 1977 and it operated without any problem for about 25 years. If it were to blame we would have seen these problems 25 years ago. There is a reason we didn't. It was working fine because while they still gave loans to low income people there was still a decent amount of pre-qualification that those borrowers had to go through. Then in 1999 the Republican controlled house an senate passed the Gramm-Leach-Bliley Act and Clinton signed it into law. This allowed regular banks to provide the same type of services that investment banks did and vice versa. This also allowed for the wholesale buying and selling of these subprime mortgages to begin. Now small banks could make a lot of profit simply by giving a home loan to someone and then selling it off to some other bank. The reason that Washington Mutual bank is no longer around is because they were one of the worst at this. They started using the CRA as way to give loans to anyone who could sign their name then they packaged them up and sold them off. When the shit hit the fan they had no other real assets to fall back on.

There was also abuse of the CRA by people who should not have had access to it. There was a study done by a non-profit called The Woodstock Institute that showed roughly 45% of the CRA loans were going to people who fell in the middle or upper income tax brackets. This is banks clearly using the system for quick, easy profit.

Another tweak was made to the law in 2005 (guess who controlled the house and senate then). This tweak allowed all banks that offered CRA loans that had more than 1 billion in assets to basically ignore the 50-25-25 rule. The rule basically said that the bank could only offer up to 50% of its services as CRA mortgages. They also had to then have 25% of their business as services and 25% as other investments. The banks with enough assets could ignore this rule (again see Washington Mutual). This freed banks up to basically do nothing but make subprime mortgages and then package and resell them without offering any other services to the community.

You put all of this together and it makes an ugly picture. It isn't the original CRA that caused the problems it is the changes made by the republicans (and Clinton has to shoulder some of the blame for signing the law). also to blame are people who bought houses that they likely knew better than to buy. I have read that somewhere around 30% of all the subprime houses that are in default were second/investment homes. People saw real estate values skyrocketing and decided they could make a quick buck and took advantage of the system to do so.

Here is one other little side note. You say that the democrats have worn out the blaming GWB card and I agree to a point. At some point they need to just shut up and move on. But let me ask you this about wearing something out. Every single election where the republicans are not in power and are trying to regain that power (or even in some cases when they are in power) they promise to lower the debt, cut spending, shrink government and cut taxes. Can you show me one of them that has done this? Bush did cut taxes, but it a moot point because he grew the government by a huge proportion. Reagan and the first Bush both raised taxes, grew the government and increased the debt. They are clearly lying, yet they keep promising the same things so when exactly were they planning on delivering?

I'm not a liberal, more of a libertarian, but I love when the republicans try to play victim.They are all scumbags dems and repubs and everyone should vote against any incumbent in this next election, but that is likely to never happen.


Sorry long post.

Going to be now