This video has been floating around the web for a couple of days… It provides a detailed look at how the Community Reinvestment Act was used to push banks into sub-prime mortgages and how that distorted the housing market… And helped create the bubble that burst.
A couple of caveats though… First it lays the blame solely at the feet of Democrats and while they do have a lot of explaining to do, Republicans are not blameless. They controlled both houses of Congress in 2003 when the Bush Administration proposed new rules to rein in Fannie and Freddy and yet they failed to act. Likewise in 2006 when they failed to fight for the Federal Housing Enterprise Regulatory Reform Act that Chuck Hagel, John McCain, John Sununu, and Elizabeth Dole sponsored.
Second it ignores the role of the Federal Reserve Board and the Bush Administration in keeping interest rates artificially low and weakening the dollar. Which lead to a rise in commodity prices and that I think ultimately helped hasten our current economic problems.
There’s plenty of blame to go around, this isn’t so much a Democrat or Republican problem as it is Washington political culture problem. Yes, Democrats started the ball rolling but we all should have know better…