I trace this back to the repeal of Glass-Steagall, which was engineered by Phil Gramm, but which Clinton didn't veto because the Democrats wanted to make it easier for (financially unqualified) minorities to get home loans. See what happens when bipartisanship takes hold!
The government support for issuing these bad loans of course then drove up housing prices. As long as prices went up, the borrowers could repay the loans. The other half of the blame lies with the entities that either bought mortgage-backed securities or insured them (credit-default swaps) because their risk analysis failed utterly.
no subject
Date: 2009-09-24 07:50 pm (UTC)The government support for issuing these bad loans of course then drove up housing prices. As long as prices went up, the borrowers could repay the loans. The other half of the blame lies with the entities that either bought mortgage-backed securities or insured them (credit-default swaps) because their risk analysis failed utterly.