Why won’t Democrats take their share of the blame in this housing & financial market meltdown?
From a 1999 LA Times article:
“It’s one of the hidden success stories of the Clinton era. In the great housing boom of the 1990s…
Under Clinton, bank regulators have breathed the first real life into enforcement of the Community Reinvestment Act, a 20-year-old statute meant to combat “redlining” by requiring banks to serve their low-income communities…
In 1992, Congress mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement… Fannie Mae has agreed to buy more loans with very low down payments–or with mortgage payments that represent an unusually high percentage of a buyer’s income. That’s made banks willing to lend to lower-income families they once might have rejected.
The top priority may be to ask more of Fannie Mae and Freddie Mac. The two companies are now required to devote 42% of their portfolios to loans for low- and moderate-income borrowers; HUD, which has the authority to set the targets, is poised to propose an increase this summer. Although Fannie Mae actually has exceeded its target since 1994, it is resisting any hike. It argues that a higher target would only produce more loan defaults by pressuring banks to accept unsafe borrowers. HUD says Fannie Mae is resisting more low-income loans because they are less profitable.” [Hmmmm imagine that]
So, this is the result of a 1979 law passed by Jimmy Carter, a 1992 policy mandate by Clinton and Democrat controlled Congress and Senate. They forced Fannie Mae and Freddie Mac to push loans on people who couldn’t afford them. When these corporations balked at the prospect, they were accused of being greedy. Now look where we are. Does this make anyone say hmmm?