To my doctrinaire libertarian friend: the crisis is a function of the macro- and micro- dereg environment. Macro: allowing the big houses to go public in the early 90s meant that they chased short term value for shareholders no matter what the risk; the repeal of G-S eliminated firewalls in the industry, putting brokers, analysts and traditional bankers under one roof--no more G-S, no more checks. Micro: lack of enforcement on the local levels gives rise to liars loans, exotic mortgage instruments, etc.

Too easy?

See here

I could have done a better job explaining how deregulation is at the heart of the crisis, going beyond Gramm-Leach-Bliley. Robert Scheer's recent column does this well:

Just check out the language of Gramm's pet projects, the Gramm-Leach-Bliley Act of 1999 and the Commodity Futures Modernization Act of 2000. By preventing mergers between the various branches of Wall Street, the former act reversed basic Depression-era legislation passed to prevent the sort of collapse we are now experiencing. The latter legitimized the "swap agreements" and other "hybrid instruments" that are at the core of the crisis.

The legislation's "Legal Certainty for Bank Products Act of 2000," Title IV of the law — a law that Gramm snuck in without hearings hours before the Christmas recess — provided Wall Street with an unbridled license to steal.
It made certain that financiers could legally get away with a whole new array of financial rip-off schemes.

One of those provisions, summarized by the heading of Title III, ensured the "Legal Certainty for Swap Agreements," which successfully divorced the granters of subprime mortgage loans from any obligation to ever collect on them.

That provision of Gramm's law

If this rescue (no longer a bailout) bill is passed then all it's multi-millionaires supporters like the Jim Cramer, Larry Kudlow, and Hank Paulson will be able to maintain all their largess. How does this benefit Chris Dodd and Barney Frank? Note: I have never taken a business or econ class. John

Bill seems like a neat guy and I don't wish any ill will on him, but it sounds to me like he has only himself to blame for his mortgage woes. I'm a recent first-time home buyer (pre-housing bubble burst), in an area where the price of real estate had nearly tripled in the past decade, but I got a fixed-rate mortgage (with the option of making further payments on the principal without penalty) instead of the adjustable rate I was originally peddled, even though I have to pay a couple hundred more a month. The choice seemed obvious. The adjustable rate mortgage is for gamblers. It may pay off for you, as it did for many people a couple years ago who were able to sell their homes for a hefty profit before their montly mortgage payments started to balloon. On the other hand, you could get stuck with a house you can't sell and can't afford, as has happened to many people recently. Given that Bill's a liberal guy, I'm guessing that he likely thought Bush's economic policies would lead us to disaster. If my assumption is correct, how

conn, your defense of dereg is absolutely laughable. what planet are you living on? ok so we'll blame "lack of regulation" rather than deregulation.
http://www.businesspundit.com/sub-prime/ try to think indepentdently for 5 minutes while you watch this, i know it's hard to forget your dogma. really just let go, man, you can do it.

Quoting David Edenden: See here

ROFL! Thanks for that. Now, every time I hear Conn fiddling with his pen, I'll remember this clip and laugh instead of being irritated.

Quoting Thus Spoke Elvis: Bill seems like a neat guy and I don't wish any ill will on him, but it sounds to me like he has only himself to blame for his mortgage woes. I'm a recent first-time home buyer, in an area where the price of real estate had nearly tripled in the past decade, but I got a fixed-rate mortgage (with the option of making further payments on the principal without penalty) instead of the adjustable rate I was originally peddled, even though I have to pay a couple hundred more a month. The choice seemed obvious.

The adjustable rate mortgage is for gamblers. It may pay off for you, as it did for many people a couple years ago who were able to sell their homes for a hefty profit before their montly mortgage payments started to balloon. On the other hand, you could get stuck with a house you can't sell and can't afford, as has happened to many people recently.

Given that Bill's a liberal guy, I'm guessing that he likely thought Bush's economic policies would lead us to disaster. If my assumption is correct, how the hell could

Also, Bill's justification for his decision --that he didn't know his mortgage broker would stand to profit from his choosing one type of mortgage over another -- strikes me as stupendously naive. Did Bill ever buy anything from someone who works on a commission before he bought a house? Did he place this same trust in the car salesman who told him he'd give Bill "a great deal" on a car?

Not the best analogy. With a car salesperson it's obvious that the higher the price of the car, the greater the commission. In industries with profit incentives that are not so clear, better disclosure rules are appropriate.

Quoting fedorovingtonboop: conn, your defense of dereg is absolutely laughable. what planet are you living on? ok so we'll blame "lack of regulation" rather than deregulation.
http://www.businesspundit.com/sub-prime/

try to think indepentdently for 5 minutes while you watch this, i know it's hard to forget your dogma. really just let go, man, you can do it.

Yeah, Conn was an absolute company man as far as preaching the Heritage talking points on deregulation, wasn't he? He was amazingly well rehearsed on this aspect -- a debating win via straw man and bluster. I would give him some credit for intellectual honesty concerning John McCain, although it also has to be admitted that his paymasters never liked McCain, so this might be nothing more than Heritage thinking the best strategy now is to wash their hands of this election and concentrate on the next.

US ‘will lose financial superpower status’
By Bertrand Benoit in Berlin Published: September 25 2008 11:55 | Last updated: September 25 2008 20:28 The US will lose its role as a global financial “superpower” in the wake of the financial crisis, Peer Steinbrück, the German finance minister, said on Thursday, blaming Washington for failing to take the regulatory steps that might have averted the crisis. “The US will lose its status as the superpower of the world financial system. This world will become multi*polar” with the emergence of stronger, better capitalised centres in Asia and Europe, Mr Steinbrück told the German parliament. “The world will never be the same again.” His were the most out*spoken comments by a senior European government figure since Wall Street fell into chaos two weeks ago. He later told journalists: “When we look back 10 years from now, we will see 2008 as a fundamental rupture. I am not saying the dollar will lose its reserve currency status, but it will become relative.” The minister, who has spearheaded German efforts to rein in financial markets in the past two years, attacked the US government for opposing stricter regulations even after the subprime crisis had broken out last summer. The US notion that markets should

yeah, no kidding. it's like McCain accusing Obama of not suporting the "surge" or something. wait a minute, didn't your types start the war in the first place??
I now know why I've skipped every single Conn C. diavlog before this one. this'll be my first and last...what a partisan hack.

...this might be nothing more than Heritage thinking the best strategy now is to wash their hands of this election and concentrate on the next.

Kudos for using the Pontius Pilate metaphor rather than the more McCainesque seaworthy one of rats deserting the sinking ship.

Quoting David Edenden: See here

Smiling at his off-camera handlers?

Bill and Conn are in behavioral rut.
No offense intended; but their customary contention blurs the instructive clarity of which their conversation is capable.
In their diavlogs with others we’ve enjoyed watching them develop with other diavloggers as um, communicators, people who make things clearer by listening, and carefully highlighting central points and issues. A quality-of-attention thing.
Having enjoyed that it’s a bit jarring being thrown back in the Gotcha pit with all its noise; the more noise, the less light. They lost the cocoon and were the better for it. Lose the cocoon reflexes here, and we’ll all benefit. Please if you would be so kind. As for Conn’s infatuation with Palin I lift my comment from the last thread:

Maybe I’m not judging accurately in the terms set by the Gibson interview; but the Couric interview did present Palin as not only incompetent, but wholly lacking what has come to be (or more likely has always been) expected of someone with a claim to leadership; self-possession, an appearance of mastery, and an ease of speaking. Her manner of speaking seemed more appropriate to a grocery check-out line or beauty-shop (or rural church coffee

Re Bill's mortgage woes, this is why God invented lawyers--a short chat with a general business attorney could have saved him endless grief. I'm amazed how often supposedly smart people will refuse to get legal advice for what is probably the most important purchase of their lives. And how even more people refuse to read the contract they're about to sign and do the math. I too received endless pressure from brokers to get an adjustable loan but the thought of not knowing what my housing costs would be from month to month seemed a dangerous situation to be in. So I asked a few lawyers and trusted loan officer friends for the pros and cons, did the math to see how much I'd be stuck paying in the event of a huge rate increase, shuddered in horror and went for the fixed. Really simple stuff.

Quoting Mari Dupont: Re Bill's mortgage woes, this is why God invented lawyers--a short chat with a general business attorney could have saved him endless grief. I'm amazed how often supposedly smart people will refuse to get legal advice for what is probably the most important purchase of their lives. And how even more people refuse to read the contract they're about to sign and do the math. I too received endless pressure from brokers to get an adjustable loan but the thought of not knowing what my housing costs would be from month to month seemed a dangerous situation to be in. So I asked a few lawyers and trusted loan officer friends for the pros and cons, did the math to see how much I'd be stuck paying in the event of a huge rate increase, shuddered in horror and went for the fixed. Really simple stuff.

Joe Bloe's home stereo woes, this is why god invented digital multimeters, a short chat with me and I could have pointed out that most amplifier failures are a result of metal stress on the semiconductor junctions of

Quoting kidneystones: I still expect McCain to pull it out because, IMHO, McCain's solutions make more sense and he's not driven entirely by narcissism.

Do you have training in making a psychiatric diagnosis? Well, I guess not, if one considers the above statement...

Handle: My point is that when treading into unfamiliar business territory, it's common sense to get a second (and third and fourth) opinion from professionals who have nothing to gain by giving you bad advice. Especially if you're not comfortable with contracts or don't like doing math (though it appears that half the country felt quite comfortable signing a stack of documents they clearly didn't understand. Go figure.) This is why lawyers are such downers; they spend all their time looking for the countless ways someone could screw over their clients.

Quoting Mari Dupont: ... this is why God invented lawyers--

Mari, welcome to BhTV. I also had some inspired moment and chose a very low fixed rate instead of the obvious ARM trap. But, I'll add to my very good friend handle's comment, by saying, that not all lawyers were invented by God. One could encounter the other kind too... and all of those work in mortgage brokers' companies and other financial institutions.

[quote=ed fielding;92207]Bill and Conn are in behavioral rut. I expect it was noticed I omitted an article there, you know, the a between ‘in’ and ‘beh...’ Maybe it would explain that locking-horns thing.

ROFL: "If BS were currency, Palin could bail out Wall Street ..." That's brutal.

Quoting TwinSwords: ROFL: "If BS were currency, Palin could bail out Wall Street ..."

That's brutal.

How funny! A burst of insight! I said this before: Palin is fired... From day one, it was clear she is incompetent. And dangerous. Mostly because she doesn't even have a clue about her own incompetence. Perhaps she will come up with some personal drama that will make her resign. But the GOP will first weigh what option will be less damaging. Besides, who would they come up with as a substitute? However, considering they tried to pull the Palin card, they could almost pull anyone...

Quoting ed fielding: ...In their diavlogs with others we’ve enjoyed watching them develop with other diavloggers as um, communicators...

Melber / Carroll !

I've been a BloggingHeads fan for a long time, and this is my first comment (yay!). I can't stand Bill Scher. I've liked, or at least respected, every blogging head I've seen on this site for the year I've been watching. This guy's sole arguement is to laugh increduously. It's pitiful really. If he's not giong to be be better prepared for diavlogues, he should be banned.

So I'm halfway through his third dialogue that I've heard now, and he tells me how he got duped for buying a sucker's mortgage. How can I trust anything he says when he gets duped by a 25-year-old mortgage broker. WTF?

Living as I do in a country where the banks are well regulated (France =socialist despotism according to the American crackpot right), where homebuyers (or apartment buyers) have to come up with a big chunk of equity before they can even think of purchasing property, and where interest rates are regulated by the government, I find it amusing that it is now the Europeans who are lecturing the US on fiscal responsibility and sound capitalist principles...

Living as I do in a country where the banks are well regulated (France =socialist despotism according to the American crackpot right), where homebuyers (or apartment buyers) have to come up with a big chunk of equity before they can even think of purchasing property, and where interest rates are regulated by the government, I find it amusing that it is now the Europeans who are lecturing the US on fiscal responsibility and sound capitalist principles...

Well said, i totally agree with your perspective...
_____________________
Stop Foreclosures

Quoting Francoamerican: Living as I do in a country where the banks are well regulated (France =socialist despotism according to the American crackpot right), where homebuyers (or apartment buyers) have to come up with a big chunk of equity before they can even think of purchasing property, and where interest rates are regulated by the government, I find it amusing that it is now the Europeans who are lecturing the US on fiscal responsibility and sound capitalist principles...

I agree as well. I apologize for the arrogance and derision that many of our (especially southern) citizens express towards you. Many just have no idea that you guys do a lot of things better and in a more fair way than we do it. The reason being lack of interest in education and ability to see other perspectives. You could probably also include excessive pride, right wing propaganda and sheer ignorance. I suspect this'll be a lasting problem as long as the uninhibited constitutional rights to own guns and to lobby congress guide our country.

Quoting Francoamerican: Living as I do in a country where the banks are well regulated (France =socialist despotism according to the American crackpot right), where homebuyers (or apartment buyers) have to come up with a big chunk of equity before they can even think of purchasing property, and where interest rates are regulated by the government, I find it amusing that it is now the Europeans who are lecturing the US on fiscal responsibility and sound capitalist principles...

lol Hopefully no matter what happens we don't become as arrogant as the french.

Quoting avatar299: lol Hopefully no matter what happens we don't become as arrogant as the french.

I have some news for you. We are more arrogant than the french. So much so, that we don't even have a clue about it. We think it's a fact of life. Some sort of natural entitlement...

Quoting Ocean: I have some news for you. We are more arrogant than the french. So much so, that we don't even have a clue about it. We think it's a fact of life. Some sort of natural entitlement...

Second that. And worse, we tend to be arrogant about the wrong things, like excessive religious zeal, pride in ignorance, a conviction that might makes right, too much fondness for material gain, and a sense of entitlement that we should be allowed to continue hogging more than our fair share.

Quoting avatar299: lol Hopefully no matter what happens we don't become as arrogant as the french.

any chance you could spare us the utterly moronic france bashing?

Quoting nikkibong: any chance you could spare us the utterly moronic france bashing?

It is laughable, isn't it? Like the pot calling the kettle black. The French are proud of being French....why shouldn't they be? They have contributed at least as much to world civilisation as have Americans. I'm afraid the problem for many Americans is that France is one of the few European countries that doesn't always accept the Americans at their own (rather exaggerated) self-assessment.

We are all French now.

We are all French now.

Mon dieu! Just when I was feeling all warm, fuzzy and Ukranian inside.

sorry but i have never met a nice or even approachable french person. At least America has southern hospitality

I'm sorry, did i upset the frogs? lol

Quoting avatar299: I'm sorry, did i upset the ...

I don't see any need to use ethnic slurs, even as a joke. Please delete your comment.

Quoting avatar299: I'm sorry, did i upset the frogs? lol

No, you did not. Since I have double nationality I suppose I should be upset. But we pseudo-frogs are used to American vulgarity.

Umm.. let me think about that....no. Franco came in here with the chest-thumping, arrogant and insulting attitude, and makes an inaccurate statement at that(our interest rates are regulated as well Napoleon. It's one of the biggest talking points about the bailout.) When he shows some class and intelligence about the issue, maybe I will think about it , but his nationalist superiority complex isn't impressive to me, so he is still a frog And a lovely frog at that. Can't wait for the next riot.

No, you did not. Since I have double nationality I suppose I should be upset. But we pseudo-frogs are used to American vulgarity.

Yeah Vulgarity vs. "French pride" Hilarious

Quoting avatar299: Umm.. let me think about that....no.

Suit yourself. But even if you don't care that you are indulging yourself in speech that others find offensive, you should be aware that you're undermining your credibility. Maybe you don't care about that either, though.

[quote=avatar299;92427](our interest rates are regulated as well Napoleon. It's one of the biggest talking points about the bailout.) True, your interest rates are regulated....so that they screw the poorest Americans.

you don't know a single damn thing about this, do you? The interests were lowered to bring housing prices down and help the poor. That was the entire sell. Their purchases would spur the post-9/11 economy and the benfits would trickle up. The interests were regulated to the interests of low income families, not to the rich. bjkeefe, I don't think I'm undermining my name as quickly as Franco is, who not only is arrogant about the situation, but clearly doesn't get it at all.

Quoting avatar299: you don't know a single damn thing about this, do you? The interests were lowered to bring housing prices down and help the poor. That was the entire sell. Their purchases would spur the post-9/11 economy and the benfits would trickle up.

The interests were regulated to the interests of low income families, not to the rich.

bjkeefe, I don't think I'm undermining my name as quickly as Franco is, who not only is arrogant about the situation, but clearly doesn't get it at all.

Trickle up, trickle down... you do think in clichés, Avatar299, but it isn't your fault. So few Americans can think logically, or think at all. The adjustable rate mortgages are at the origin of the subprime crisis, hence at the origin of the financial crisis that is now shaking the planet. Poor Americans (along with some speculators....a uniquely American breed of imbecile) were misled by mortgage brokers into buying houses they could not afford at deceptively low initial interest rates (and no downpayment). When the interest rates rose on these houses, and the poor suckers could no longer come up with payments, the whole farce began to unravel. Their inability to repay

Quoting Francoamerican: Trickle up, trickle down... you do think in clichés, Avatar299, but it isn't your fault. So few Americans can think logically, or think at all.

Wait.... So saying "trickle up" make someone ignorant, but pretending as if the American government doesn't regulate the interests rates of homes isn't. lol okay

Quoting Francoamerican: The adjustable rate mortgages are at the origin of the subprime crisis, hence at the origin of the financial crisis that is now shaking the planet. Poor Americans (along with some speculators....a uniquely American breed of imbecile)Ha Ha HA HA HA HA You do know speculators are in every market in the world right were misled by mortgage brokers into buying houses they could not afford at deceptively low initial interest rates (and no downpayment). When the interest rates rose on these houses, and the poor suckers could no longer come up with payments, the whole farce began to unravel. Their inability to repay their mortgages is now causing the Wall Street banks and all the other fools who bought the securities backed by these mortgages to regret that they ever lent money to a country unable to live within its means.

Nice

I didn't say that American mortgage rates weren't regulated. I said that they are regulated...."so that they screw poor Americans." True, speculators exist in other countries, but they flourish in the US, which more than most countries, is prone to speculative bubbles. The UK went on the same deregulatory binge as the US and is now suffering the consequences. Finally, it is true that my explanation would have been obvious to anyone who reads the WSJ, the Financial Times or the Economist (and even lowbrow readers of Wikipedia). But apparently you do not: Otherwise, why should you react so vehemently to my statement about interest rates? I have read similar statements a thousand times in the past year.

Quoting avatar299: That elementary explanation doesn't add any credence to the argument that interest rates were manipulated to hurt the American poor

Postscript: Where did I say that interest rates were "manipulated?" Whatever may have been the intention of the promoters of "adjustable rate mortgages," they were aggressively marketed to the poorest Americans, who could least afford to borrow on such terms. I find it hard to believe that the mortgage brokers and the banks were unaware of the risks they were taking or of the possible consequences to the borrowers. But of course the brokers and banks simply passed the risk along to Wall Street and the rest of the world on the ridiculous assumption that real estate prices always rise.... So whether or not these mortgages were intended to help the poor, they were based on very flawed assumptions about human nature and markets. And yes Avatar299 people were saying all this long before the bubble began to burst in August 2007... Where were you?

Quoting avatar299: bjkeefe, I don't think I'm undermining my name as quickly as Franco is, who not only is arrogant about the situation, but clearly doesn't get it at all.

I don't agree, but as long as you're criticizing ideas rather than making ethnic slurs, I'm encouraged by that.

Well played, Francoamerican: a calm, fact-based analysis like yours will prevail over the emotional raving of avatar-types every time. The problem for avatar is that your argument and facts are correct; this leaves avatar299 with nothing to add except insults. He should know, however, that it's clear to everyone reading who's the idiot and who really understands the origins of this crisis and the gouging of the poor that preceded it. What I'm hoping, and it's probably too much to ask, is that this financial catastrophe acts as a kind of natural selection, wiping out once and for all the careers of the pundits, policy planners, and politicians responsible for the bankrupt economic theories that are responsible for this crisis. Yeah, way too much to ask.

Quoting TwinSwords: What I'm hoping, and it's probably too much to ask, is that this financial catastrophe acts as a kind of natural selection, wiping out once and for all the careers of the pundits, policy planners, and politicians responsible for the bankrupt economic theories that are responsible for this crisis.

Yeah, way too much to ask.

Are you invoking the Apocalypse...?

Quoting Francoamerican: I didn't say that American mortgage rates weren't regulated. I said that they are regulated...."so that they screw poor Americans."

What? "Regulating" interest rates is just manipulating them so the market delivers the desired results. Do you not know what you type?

Quoting Francoamerican: True, speculators exist in other countries, but they flourish in the US,

Duh. A large portion of our economic model depends on the private sector investing in infrastructure. Tell me something i don't know.

Quoting Francoamerican: Finally, it is true that my explanation would have been obvious to anyone who reads the WSJ, the Financial Times or the Economist (and even lowbrow readers of Wikipedia). But apparently you do not: Otherwise, why should you react so vehemently to my statement about interest rates? I have read similar statements a thousand times in the past year.

Because you acted like an arrogant twat, and lied about our regulation knowing full well that the same problem is happening to the Europeans. You had nothing to add but nationalistic chest-thumping which goes a long way with your cheerleaders.

Quoting Francoamerican: Postscript: Where did I say that interest rates were "manipulated?" Whatever may have been the intention of the promoters of "adjustable rate mortgages," they were

Quoting avatar299: What?

"Regulating" interest rates is just manipulating them so the market delivers the desired results. Do you not know what you type?

Duh. A large portion of our economic model depends on the private sector investing in infrastructure.

Tell me something i don't know..

Well, for one you don't know the difference between manipulation and regulation, or investment and speculation. So belligerant and so ignorant! So lacking in intelligence and so self-assured! Just like your president... You really should return to your video games and comic books, or whatever people of your social class do when they are not spewing bile.

:lol wow. Oh please tell me the huge difference between the two. I really want to know how govt mandates to regulate interest at certain points to promote a steady growth in any industry isn't manipulation. or tell me how investment and speculation in practice are different? They only differ in ultimate goals. The American model is based on private investment, but not all investments have the same goal, hence here enters speculation, risky "investments" with the hope of short term profits. That's basic knowledge, and the fact that you act like speculators are an american institution is hilarious. Maybe the truth is you don't know what you are talking about, and instead of having some class(who would expect that) and admitting you don't know you come in with some video game nonsense? I mean It's not like you could respond to this

Because you acted like an arrogant twat, and lied about our regulation knowing full well that the same problem is happening to the Europeans.

or this

Also I love how you completely ignore the credit unions and smaller banks that didn't subprime loan just to make this sound like

Scher's mortgage story was ridiculous. Did he really think the mortgage salesman would automatically do what was in Bill's best interest rather than his or his employer's best interest. An the idea someone would even know what was best for you because they were supposedly an "expert" is laughable. Hell, without knowing a great deal about your life, how would he even know what was in your best interest. Bill, if you go to buy a car or TV, be warned, the salesmen may not be acting in your best interests. News flash, the realtor probably wasn't working in your best interest either, even if it was a seller's agent. If you want advice in your best interest ask someone you know and trust or someone who's working on your dime. Second, he may well have been best served by the ARM. Bill, how much money did you save on payments and how much did it cost to convert to a fixed rate? There's a good chance you came out ahead. A friend once (1992) bought a house on an ARM in Colorado while I bought with a fixed rate. We both owned the houses

Quoting JimS:
We could have another million government regulations and regulators, and they still couldn't save us from human naivety and stupidity.

I would say it is naive to deny that many mortgage "salesmen" were engaging in deceptive practices in order to obtain customers. Financial institutions, via their employees, representatives and intermediaries have an obligation for full disclosure. Usually regulations aren't designed for the smartest and best informed customer, but rather to protect those that are more vulnerable to deception. A separate problem is that of borrowers that used ARM as gambling.

No European country has had the equivalent of the subprime problem because European banks do not lend to uncreditworthy people. They are heavily regulated by the government. They make every effort to verify that their clients have the ability to continue making payments. Typically they are required by law to examine tax returns, pay slips, record of employment etc. Variable rate mortgages are extremely rare (in France at least) and in any case it is virtually impossible to get a "no downpayment" mortgage. Only the very rich are likely to benefit from such deals: As we say in French: On ne prête qu'aux riches. Yes European banks are now having problems: They bought too many mortgage-backed securities (and derivatives) from Wall Street and Fanny Mae and Freddy Mack. You are free to believe that speculation and investment are the same thing. Good luck! Finally, let me remind you that this exchange began with your gratuitously rude response to my original posting in which I expressed "amusement" that Europeans are now lecturing Americans on fiscal responsibility and sound capitalist principles---as if no one had the right to laugh at the USA and

Bill, the argument against Conn's erroneous contentions about Fannie Mae and Freddie Mac being the cause of the credit crisis were addressed REPEATEDLY on The Economists View blog you brought up. This canard, and others about CRA (Community Reinvestment Act) causing problems, have been making the rounds of conservative blogs. Jonah may point to You Tube videos of fundraisers, but the graphs show that it is the asset back securities were the growth area. Securitization of MBS that were "Balkanized" (sliced and diced) with multiple owners who when loans go south cannot agree on renegotiation of terms seems a much more plausible explanation. We need more regulation, higher capitalization, more insurance, and better underwriting. Yves stuff on how systems can exacerbate and accelerate bad effects is very informative. Bob, Mark Thoma or Brad DeLong would be nice to get for a diavlog. http://economistsview.typepad.com/ec...nt-fannie.html
http://www.google.com/search?q=cra&b...ew.typepad.com