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I am truly saddened when I hear that our current problems are due to capitalism and greed.
Who encouraged and mandated that banks make risky loans to people who couldn't pay them back? The federal government
Who continually bought up the bad assets during the housing bubble? Fannie and Freddie (the federal government)
Who is wasting taxpayer money on bailouts that obviously are failing to work as intended? The federal government
Capitalism allows for success and failure. When the government is tinkering with the housing market, or preventing failing businesses from failing, capitalism is barely even being practiced.
I am truly saddened when I hear that our current problems are due to capitalism and greed.
Who encouraged and mandated that banks make risky loans to people who couldn't pay them back? The federal government
Who continually bought up the bad assets during the housing bubble? Fannie and Freddie (the federal government)
Who is wasting taxpayer money on bailouts that obviously are failing to work as intended? The federal government
Capitalism allows for success and failure. When the government is tinkering with the housing market, or preventing failing businesses from failing, capitalism is barely even being practiced.
We've been over this time and time again. Fannie Mae and Freddie Mac were the tip of the iceberg to use a comparison that exagerates their importance. The Federal regulations pertaining to minority lending didnt even apply to 80% of Fannie and Freddie bad loans.
You're just repeating right wing nonsense. We've had actual testimony from hearings where Bush administration officials were asked point blank about the minority lending regulations playing a role and they said it was not a factor over and over again.
Janet L. Yellen, President and CEO, Federal Reserve Bank of San Francisco, made the following case in a March 31 speech:
"There has been a tendency to conflate the current problems in the subprime market with CRA-motivated lending, or with lending to low-income families in general. I believe it is very important to make a distinction between the two. Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans, and studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households. We should not view the current foreclosure trends as justification to abandon the goal of expanding access to credit among low-income households, since access to credit, and the subsequent ability to buy a home, remains one of the most important mechanisms we have to help low-income families build wealth over the long term."
University of Michigan Law Professor Michael Barr, a specialist in banking and finance law, flatly rejected claims that the CRA was "a significant factor in the current crisis. CRA was enacted more than 30 years ago. It would be quite odd if this 30-year old law suddenly caused an explosion in bad subprime loans from 2002-2007....Subprime mortgages were mostly made by mortgage brokers and lenders and securitized by investment banks -- institutions not covered by CRA," he told the Huffington Post, adding, "CRA only covers banks and thrifts, and these institutions mostly have not suffered to the same extent or kind from bad lending as the non-CRA-covered institutions at the core of the current crisis. The problem here is not CRA. It is what the late former Fed Governor Ned Gramlich called 'the giant hole in the supervisory safety net' -- bad lending by firms outside the banking sector's rules for prudential supervision, capital requirements, consumer protection and yes, the CRA."
Along similar lines, University of Oregon economist Marc Thoma
Cited the long delay between enactment of CRA and the current crisis and the fact that only 20 percent of subprime loans were made by CRA-regulated lenders, adding two other points: that "subprime loans grew twice as fast in institutions that did not have to meet the conditions of the CRA" and that the scope of coverage of CRA was reduced in 2004 under the Bush administration, "but even though fewer banks were subject to CRA restrictions, the growth of the subprime market continued unabated."
Padcrasher: Thanks for using factual info to bury the nonsense that some of these guys post in here.
Capitalism does "work" but we've known for centuries that free markets, when left TOTALLY to themselves, eventually run amok with all sorts of abuses, such as: liar loans, no doc loans, price fixing, excessive CEO pay, destructive competition (fare wars), lead paint on toys, melamine in drugs, flammable baby clothes, pickup trucks with exploding gas tanks, sick cows in the meat supply, Salmonella in peanut butter and other foods, melamine in pet foods, etc.
It is the ROLE of government to take these ragged edges off capitalism, however that is poorly understood by people who get their edukation from Rush, Sean and the other mouthpieces of GOP hate speech.
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