What caused the Subprime Mortgage Crisis that Caused 2008 Financial Disaster?

[Rocky]

New Study Finds Democrats Fully to Blame for Subprime Mortgage Crisis that Caused 2008 Financial Disaster
Posted by Jim Hoft on Saturday, December 22, 2012, 9:48 AM

In his early activist days, Barack Obama the community organizer sued banks to ease lending practices.

State Sen. Barack Obama and Fr. Michael Pfleger led a protest against the payday loan industry demanding the State of Illinois to regulate loan businesses in January 2000. During his time as a community organizer Barack Obama led several protests against banks to make loans to high risk individuals. (NBC 5 Week of January 3, 2000)

Here’s something that won’t get any play in the liberal media…
A new study by the respected National Bureau of Economic Research found that Democrats are to blame for the subprime mortgage crisis.
Investor’s Business Daily reported:


Democrats and the media insist the Community Reinvestment Act, the anti-redlining law beefed up by President Clinton, had nothing to do with the subprime mortgage crisis and recession.


But a new study by the respected National Bureau of Economic Research finds, “Yes, it did. We find that adherence to that act led to riskier lending by banks.”


Added NBER: “There is a clear pattern of increased defaults for loans made by these banks in quarters around the (CRA) exam. Moreover, the effects are larger for loans made within CRA tracts,” or predominantly low-income and minority areas.



To satisfy CRA examiners, “flexible” lending by large banks rose an average 5% and those loans defaulted about 15% more often, the 43-page study found.



The strongest link between CRA lending and defaults took place in the runup to the crisis — 2004 to 2006 — when banks rapidly sold CRA mortgages for securitization by Fannie Mae and Freddie Mac and Wall Street.


CRA regulations are at the core of Fannie’s and Freddie’s so-called affordable housing mission. In the early 1990s, a Democrat Congress gave HUD the authority to set and enforce (through fines) CRA-grade loan quotas at Fannie and Freddie.



It passed a law requiring the government-backed agencies to “assist insured depository institutions to meet their obligations under the (CRA).” The goal was to help banks meet lending quotas by buying their CRA loans.



But they had to loosen underwriting standards to do it. And that’s what they did.



Republicans warned Democrats of the impending doom in 2004.
video
Fannie Mae/Freddie Mac Hearings 2004
http://www.youtube.com/watch?feature=pla…


But Democrats wouldn’t budge.

http://www.thegatewaypundit.com/2012/12/…


http://news.investors.com/ibd-editorials…

[Vince]

Caused by people too stupid not to know that you have to live within your means.

Anyone dumb enough to sign loan documents in order to buy a 500K house with 30K annual income deserved everything they got and I dont feel sorry for them at all.

[Vince]

Democrats suck. Please answer mine,

http://answers.yahoo.com/question/index;...117AA6JFPH

[Drunkenvase684]

Banking deregulation started in the Carter years, and Democrats still haven't stopped repealing the regulations that prevented the return of the Depression for 70 years.

http://www.investorwords.com/7826/Deposi...l_Act.html
Depository Institutions Deregulation and Monetary Control Act
"Federal act passed in 1980 leading to the deregulation of deposit interest rates, while also allowing financial institutions to have easier access to the Federal Reserve's discount window. "

http://video.pbs.org/video/1302794657
Frontline: The Warning - the story of Brooksley Born, the Clinton appointee who was shunned by the Clinton admin for advocating regulation of derivatives.

http://www.youtube.com/watch?v=ebWJ892h5dA
Shocking Video Unearthed Democrats in their own words Covering up the Fannie Mae, Freddie Mac Scam that caused our Economic Crisis

http://www.youtube.com/watch?v=cMnSp4qEX...re=related
Timeline shows Bush, McCain warning Dems of financial and housing crisis; meltdown

http://www.youtube.com/watch?v=lFwv0FgtebI
Bill Clinton "democrats at fault for Fannie & Freddie

The Glass-Steagall Act was repealed by the 1999 Gramm-Leach-Bliley banking deregulation act, which passed with overwhelming majorities of both parties in both houses of Congress, then it was eagerly signed into law by Bill Clinton. The 2008 meltdown was attributed directly to this law.

Arthur Levitt, Jr. was the longest serving head of the SEC. Do a Google search on him, see what pops up.

He was appointed by Clinton in 1993 and again in 1998. He left in 2001, so he covered the entire Clinton administration.

Levitt gave Madoff a free pass because they were both members of the Harmonie Club, a social club for the ultra wealthy in NYC.

Madoff was first reported to the SEC in 1992:
http://www.guardian.co.uk/business/2009/...sec-report
Report: Regulator was tipped off about Madoff fraud as early as 1992
"a suspicion of trouble at Madoff Investment Securities arose as early as 1992 when customers of Avellino & Bienes, a fund that invested all its money with Madoff, complained about documents making a seemingly impossible promise of "100%" safe investments. Although the SEC shut down Avellino & Bienes, the agency only made a "brief and very limited" examination of Madoff."

Avellino & Bienes was shut down by the SEC in 1993, the year Levitt took charge.

Levitt also gave a special exemption to Enron, exempting it from accounting rules. This special exemption led directly to the Enron scam and the subsequent meltdown of the company, which took down a major chunk of the economy with it. It also led to the discovery of similar fraud at many other companies, fraud that got its start in the Clinton years.

If I was going to pick one individual who was most responsible for the rampant fraud of the Clinton years, it would have to be Art Levitt.

[RLP]

LIBERALS

**yes - I know you asked "what" and I stand by my answer.

[TK]

Loosening underwriting standards doesn't equate to fraudulent loan applications filled with wholly imagined "facts" about a person's occupation and his or her annual income, and it doesn't equate to "valuations" manipulated by real estate appraisers to meet whatever level that real estate brokers and mortgage originators required in order to close their deals. And in the case of sales, every sale booked at an inflated valuation ratcheted up the next round of inflated valuations becoming ever more unsustainable since it was inevitable that the Federal Reserve would eventually wake from its stupor and increase interest rates.

The many private sector individuals who and institutions that abused CRA guidelines to originate subprime, Alt-A or conventional mortgages should have been sued and/or prosecuted for their violations of federal law, but it turns out that the numbers would have been overwhelming. The violations were committed by real live people purportedly acting within CRA guidelines. That's a distinction you seem incapable of grasping, no doubt because it doesn't serve the ends of the conspiracy theory your pushing.

Out of Afghanistan in 2013!