Forum Post: Reason for housing crisis
Posted 11 years ago on Nov. 1, 2011, 7:31 p.m. EST by willyouunderstandfacts
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It is a very long article but well worth the time.
.......what if government encouraged, even invented, those "abusive practices"?
Rewind to 1994. That year, the federal government declared war on an enemy — the racist lender — who officials claimed was to blame for differences in homeownership rate, and launched what would prove the costliest social crusade in U.S. history.
At President Clinton's direction, no fewer than 10 federal agencies issued a chilling ultimatum to banks and mortgage lenders to ease credit for lower-income minorities or face investigations for lending discrimination and suffer the related adverse publicity. They also were threatened with denial of access to the all-important secondary mortgage market and stiff fines, along with other penalties........
This is BS. Holy crap. Where to begin.
The CRA was enacted in 1977 to prevent discrimination. It was a scoring system designed to reflect an institution's record of making loans to credit worthy individuals within the communities where funds were deposited. There has never been any sort of mandate for banks to make loans to anyone. There is no link between the CRA and subprime.
This is what really happened:
The first subprime loans were issued in 1994. It was a gimmick to sell more homes, artificially inflate the market, sell more homes at higher profits, foreclose on those who could not pay when the ARM rates readjusted, take their homes leaving them with nothing to show for their payments, resell the homes at a higher profit and so on. It was a cruel and calculated plan to sell more homes and artificially inflate the market. Those loans were incredibly profitable for well over a decade before the house of cards finally collapsed. In the meantime, bankers got richer along with the richest one percent who made off with higher dividends. It was a sham.
The biggest player in the game was Countrywide. Endorsed by Oprah Winfrey, Ellen Degeneres, and Dr Phil. If you have their shows from '04' to '06' on tape, watch them again. All three were paid millions specifically to endorse Countrywide by name. The biggest subprime player in the game. They issued more ARM loans than anyone else. Foreclosing on those who could not make their monthy payments when the rates suddenly went through the roof. It was a cruel and calculated plan to sell more homes, artificially inflate the market, foreclose, and resell for a higher profit. The sham worked like a charm for 12 years before the house of cards finally fell in.
Oprah, Ellen, and Dr Phil were paid millions for their endorsements. Ch'Ching!
FDR too; he started Fannie Mae and FHA. Government meddling in the 30's was never wound down, only grown. Government for decades pimped housing using taxpayer guarantees right up into the crisis. The Father of the entitlement society is still doing his damage.
Bush Ownership Society. Both are to blame, because both work for the guys who print it.
This will be ignored and redirected in a million ways. Progressives love to attack these points...hold tight.