Thursday, October 16, 2008

My take on the mortgage crisis

I'm feeling somewhat tired so I'm simply going to reprint a letter I wrote to my local paper(responding to a conservative who blamed it on ACORN and minority lending.):

Many of the institutions that spurred the massive growth of the subprime market were companies such as Argent and American Home Mortgage, which were generally not regulated by the Federal Reserve or other entities that monitored compliance with the CRA. As the conservative but honest American Conservative magazine has asked: Did community organizers really force lenders to infect all financial markets by repackaging their bad mortgages into securities? Did poor blacks invent credit default swaps? The mortgage crisis is the fault of the easy credit policies of the Federal Reserve and industry recklessness; it is absurd to blame it on loans to poor minorities.

There are lots of villains in this crisis: Barney Frank, who was bought off by Fannie and Freddie, President Bush, who stopped state attorney generals from going after unscrupulous lenders,homeowners who took out loans they couldn't afford, irresponsible lenders, the Fed which lowered rates way too much and caused overspeculation, etc.. Not a lot of heroes here.

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