1) The CRA (Community Re-Investment Act, passed by Dems under Carter & given more power under Dem Clinton via Bob Rubin @ Treasury. This Act has been used to [sic] "urge" Financial Institutions to make loans to individuals & businesses that they otherwise would not have w/out this Federal Regulatory Act.
2) The Fed, under Greenspan, kept interest rates artificially low (just as they are doing now!), which resulted in lower mortgage rates, which in turn, artificially increased the 'demand' for homes, which caused home prices to be 'bid up.' In other words, the major contributor to the 'bubble' in home prices was the Fed.
3) Because it was the official policy of BOTH 'W' and the Congress to increase 'home ownership, FANNIE & FREDDIE were urging Financial Institutions to 'write' as many mortgages as they could and FANNIE & FREDDIE would 'buy' them. Because home prices appeared as if they would go up forever, there was little perceived risk in writing so-called "ninja" loans. The problem was that home prices don't go up forever (neither do oil prices or the prices of anything else for that matter). Everyone from the Federal Gov't to the Financial Institutions and Insurance Cos. were playing the financial equivalent of "musical chairs" all of them hoping the music wouldn't stop while they were 'holding the bag.'
4) As w/ALL bubbles, the housing bubble began to burst in late 2006 & early 2007. As home prices fell below the values of their respective mortgages, those who had paid little down had very little incentive to stay in their homes and many simply "walked away" which, of course, accelerated the process.
5) Conclusion: OUR OWN FEDERAL GOV'T was the root cause of this crisis just as it was the root cause of the Great Depression. Sadly many people are too dense to figure this out! And government schools don't point these facts out because their programs by design are not enlightening the public on this history (note this is NOT the teachers that is doing this, this is the government-mandated teaching material. The teachers have no "fault" in this!).
2) The Fed, under Greenspan, kept interest rates artificially low (just as they are doing now!), which resulted in lower mortgage rates, which in turn, artificially increased the 'demand' for homes, which caused home prices to be 'bid up.' In other words, the major contributor to the 'bubble' in home prices was the Fed.
3) Because it was the official policy of BOTH 'W' and the Congress to increase 'home ownership, FANNIE & FREDDIE were urging Financial Institutions to 'write' as many mortgages as they could and FANNIE & FREDDIE would 'buy' them. Because home prices appeared as if they would go up forever, there was little perceived risk in writing so-called "ninja" loans. The problem was that home prices don't go up forever (neither do oil prices or the prices of anything else for that matter). Everyone from the Federal Gov't to the Financial Institutions and Insurance Cos. were playing the financial equivalent of "musical chairs" all of them hoping the music wouldn't stop while they were 'holding the bag.'
4) As w/ALL bubbles, the housing bubble began to burst in late 2006 & early 2007. As home prices fell below the values of their respective mortgages, those who had paid little down had very little incentive to stay in their homes and many simply "walked away" which, of course, accelerated the process.
5) Conclusion: OUR OWN FEDERAL GOV'T was the root cause of this crisis just as it was the root cause of the Great Depression. Sadly many people are too dense to figure this out! And government schools don't point these facts out because their programs by design are not enlightening the public on this history (note this is NOT the teachers that is doing this, this is the government-mandated teaching material. The teachers have no "fault" in this!).
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