If you want to see strong evidence over Brad Miller (and handmaidens Brad and Britt) this morning on 101.1, check out this damning paper.
Brad and Britt, those intellectual giants of FM radio, were lapping up Congressman Brad Miller’s dishonest dismissal of "flexible underwriting standards" of the 90s that grew out of the original Community Reinvestment Act. They try to argue (disingeniously) that since the legislation came out in the 1970s – and we saw no meltdown in the 80s – the legislation had no real effect. But the legislation got teeth under Clinton. Can we expect intellectual honesty from radio jocks?
Here is economist Stan Liebowitz’s conclusion:
The question that is being asked is the correct question: how did it come about that our financial system allowed such loans to be made, condoned such loans, and even celebrated such loans? The answers that are being given are not yet the correct ones, however. The main answer that is being given, that unscrupulous lenders were taking advantage of poorly informed borrowers, does not fit the evidence nor does it dig deep enough. The “mortgage innovations” that are largely the federal government’s responsibility are almost completely ignored. These “innovations,” heralded as such by regulators, politicians, GSEs, and academics, are the true culprits responsible for the mortgage meltdown.
Add to that easy credit due to Fed policy (interest rates), the mortgage deduction, and other government policies… and you’ve got the perfect storm.
Here’s another article B&B may want to check out before they further discuss the issue:
http://www.investors.com/editorial/IBDArticles.asp?artsec=16&artnum=1&issue=20080924
That you guys get paid for this is amazing. Kudos for working out such a sweet gig.
Darn tootin’.
Let’s not forget ACORN’s role in this too:
Critics of the notion that CRA had a major impact on the subprime crisis ask how a law passed in 1977 could have caused a crisis in 2008? The answer has a lot to do with ACORN — and the critical years of 1990-1995. While the 1977 Community Reinvestment Act did call on banks to increase lending in poor and minority neighborhoods, its exact requirements were vague, and therefore open to a good deal of regulatory interpretation. Banks merger or expansion plans were rarely held up under CRA until the late 1980s, when ACORN perfected its technique of filing CRA complaints in tandem with the sort of intimidation tactics perfected by that original “community organizer” (and Obama idol), Saul Alinsky.
http://article.nationalreview.com/?q=ZjRjYzE0YmQxNzU4MDJjYWE5MjIzMTMxMmNhZWQ1MTA