Of course GOP politicians, right wing pundits and those who enable them will deny that their worshiping at the free market alter -- as they see it -- had anything to do with the current economic problems. Paul Krugman had been warning us or years about the pending collapse of the Bush pumped economic bubble but hey, who the hell is he, besides a Nobel prize winning economist.
Much of the malaise has been propelled by the subprime debacle. After the credit collapse, bear in mind the next domino to fall was the auto industry, whose prospective customers couldn't get loans to buy cars.
But of course the right acts like the rotting was bi-partisan. Why not? That's their job. They have been blaming all this going back to Carter. Why not pin it on Truman?
But a post on this blog lays out the case why the right owns this recession.
- Did the 1977 legislation, or any other legislation since, require banks to not verify income or payment history of mortgage applicants?
- 50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision; another 30% were made by banks or thrifts which are not subject to routine supervision or examinations. How was this caused by either CRA or GSEs?
- What about "No Money Down" Mortgages (0% down payments) ? Were they required by the CRA? Fannie? Freddie?
- Explain the shift in Loan to value from 80% to 120%: What was it in the Act that changed this traditional lending requirement?
- Did any Federal legislation require real estate agents and mortgage writers to use the same corrupt appraisers again and again? How did they manage to always come in at exactly the purchase price, no matter what?
- Did the CRA require banks to develop automated underwriting (AU) systems that emphasized speed rather than accuracy in order to process the greatest number of mortgage apps as quickly as possible?
- How exactly did legislation force Moody's, S&Ps and Fitch to rate junk paper as Triple AAA?
- What about piggy back loans? Were banks required by Congress to lend the first mortgage and do a HELOC for the down payment -- at the same time?
- Internal bank memos showed employees how to cheat the system to get poor mortgages prospects approved that shouldn't have been: Titled How to Get an "Iffy" loan approved at JPM Chase. (Was circulating that memo also a FNM/FRE/CRA requirement?)?
- The four biggest problem areas for housing (by price decreases) are: Phoenix, Arizona; Las Vegas, Nevada; Miami, Florida, and San Diego, California. Explain exactly how these affluent, non-minority regions were impacted by the Community Reinvesment Act ?
- Did the GSEs require banks to not check borrowers credit?