QuoteOriginally posted by: ppauperQuoteOriginally posted by: gardener3QuoteOriginally posted by: ppauperQuoteOriginally posted by: CuchulainnQuoteOriginally posted by: ppauperQuoteOriginally posted by: jawabeanQuoteOriginally posted by: JohnLeMintimating that Mathematicians, Scientist, would be the people to blame for the current crisis.if not them, then who else? the social engineers of the BJ Clinton administration.It has been much publicized that BJ Clinton forced banks to lend money to people they would rather not have lent money too and forced Fannie&Freddie to insure those loans. That led to the subprime crisisOn the other hand, everyone was for it at the time? No they weren'tWe've been posting all NYTimes editorials from the era where folks were saying how stupid it was and disaster would ensue !This CRA thing is nonsense. A policy is put in place 15 years ago, and nothing happens until 2003-2004 when we start seeing large increases in sub-prime lending. Here are some facts:"* More than 84% of the subprime mortgages in 2006 were issued by private lending institutions.* Private firms made nearly 83% of the subprime loans to low- and moderate-income borrowers that year.* Only one of the top 25 subprime lenders in 2006 was directly subject to the CRA;* Only commercial banks and thrifts must follow CRA rules. The investment banks don't, nor did the now-bankrupt non-bank lenders such as New Century Financial Corp. and Ameriquest that underwrote most of the subprime loans.* Mortgage brokers, who also weren't subject to federal regulation or the CRA, originated most of the subprime loans. "more half-truths from gardenerYou don't mention that Fannie and Freddie, the Federal Home Loan Mortgage Corp. were forced to purchase loans from the private lenders you mention and that HUD set targets for Fannie and Freddie to purchase low-income loans for sale into the secondary market with that target eventually reaching 52 percent of loans.Even if a private lender is, as per your claim, not forced to follow CRA rules, the fact that Fannie and Freddie were forced to buy those loans meant that private lenders would be generate themCharles Krauthammer, NYT on the CRA:"it led to tremendous pressure on Fannie Mae and Freddie Mac who in turn pressured banks and other lenders to extend mortgages to people who were borrowing over their heads. That's called subprime lending. It lies at the root of our current calamity."Do the math: the percentage of subprime loans purchased by Fannie and Freddie had to increase.You mention New Century and Ameriquest>>The biggest suppliers of the securities to Fannie and Freddie included Countrywide Financial Corp. of Calabasas, California, >>as well as Irvine-California-based New Century Financial Corp. and Ameriquest Mortgage Co., >>lenders that either went bankrupt or were forced to sell themselves. >>Fannie and Freddie were the biggest buyers of loans from Countrywide, according to the company.Again, Freddie and Fannie buying because of the targetsDavid Stevens, a former head of Freddie's single- family mortgage business:The targets ``were significant enough to force them to go down the credit curve to meet them, which meant participating in some way or form in the higher-risk areas of the mortgage market,'' including ``the subprime business.''Fannie and Freddie were the chief and primary enablers of subprime loansYou are conflating two issues, and clearly confused about the role played by GSEs and the impact of CRA in the non-conforming secondary market. The argument is that Clinton does something in 1994, nothing happens for 9 yrs and then there is a huge explosion in subrime mkt starting in 2003. If you look at the data, there is a big difference in default rates of 04-07 subprime vintages compared with the earlier loans, and most of the problems are with ARMs. And the default problem is not contained to sub-prime. Btw, if you follow your logic, it would have been Bush's plan in 2002 to increase minority ownership by 5.5 million and the Fannie and Freddie commitment at that time that would have caused this mess (which btw I also think is non-sense).