Prove it. Well, from 1999 to 2004--five years, the bubble did not burst. It should have if Clinton's actions were at fault. Exactly, . . . when regulations were changed under Bush in 2004, reasonably prudent lending practices went out the window. It became open season on borrowers.
Hold on....at its very heart, the mortgage crisis is about the mass failure of homeowners to pay their mortgages. Now you're saying that the very act that forced companies to give mortgages to people they already knew could not pay back a mortgage did not spur the crisis? :rolleye33:
That's half of it. The other half is the mass failure of banks to adhere the prudent lending practices previously followed. Deregulation enabled greedy operators to drive the business. Companies were only "forced" to give loans to low-income home-buyers, mostly buying low-priced homes. Deregulation allowed the lenders to quite willingly spread the sub-prime lending practice to all of their mortgages including to people with good jobs buying dream-home mansions and also to speculative real-estate investors. They consciously inflated the value of real estate to make the expensive loans seem affordable--your home would just keep increasing in value at a high rate. That amassed the huge amounts of unsecured debt that broke the mortgage industry.
I'm sure greed played its role as well, but as you say,"prudent lending practices....", I'm not in that business, but logic tells me lending money to someone you know can't pay you back is hardly prudent. Who passed legislation that forced the lenders to make bad loans? We're talking about the time before deregulation. And you can't say "oh, these were just low interest loans." If they were prudent loans, it would not have taken Bill Clinton to get the mortgage companies to make said loans. After all, that's how they make money. All I'm looking for here is some acknowledgement that this is not 100% a GOP (read George Bush)-generated crisis.
100%? Of course not. These deregulation practices started even earlier than Clinton, all the way back to Reagan. In Carter's time, government overregulation had become stifling. Reagan-era deregulation opened things up and was a good thing. But like many good things it was taken way too far in the other direction. Clinton-era politicians used it make loans available to poor people. Bush-era politicians used it to make sub-prime loans available to everybody. But the mantra of "deregulate" went full tilt in the Bush 43 administration and finally broke the camels back. No, this wasn't 100% the GOP's fault, but neither was it Clintons fault, as Sabanfan suggests. Just look at the numbers. It was in this decade--George Bush's decade--that the problem got completely out of control and failed, primarily because of Bush administration policies.
Not by my logic. :insane: I say Clintons changes survived five years without a collapse until Bush's changes collapsed it within five years.
I'm with Red on this one. Subprime lending was pretty constant up through 2003, defaults were not a problem yet. Consider the below, from the CNBC special "house of cards". http://www.msnbc.msn.com/id/29163182/ So there you have it. Red has shown the graph above showing the explosion of subprime lending in 2004-2006, and we have Greenspan in 2004 calling for more innovative mortgage alternatives. The biggest offenses are not on Clinton, Bush/Greenspan spurred it on in 2004.
CNBC is from the same family as NBC and MSNBC, all of which would spin World War II into being Bush's fault if they thought they could get away with it. But does it really matter who committed "the biggest offenses" anyway? Time magazine's online page did a Top 25 list of who the blame can be placed on. Both W and the Slickster were included. Curiously, they omitted Barney Frank and Chris Dodd, who have been Fannie/Freddie's biggest advocates in Congress. Point being, as I tried to say earlier, there is plenty of blame to go around, enough that neither party should be able to distance itself from the crisis.
