{"id":381,"date":"2008-09-16T21:14:32","date_gmt":"2008-09-17T01:14:32","guid":{"rendered":"http:\/\/www.jasetaro.com\/blog\/?p=381"},"modified":"2008-12-24T22:07:20","modified_gmt":"2008-12-25T03:07:20","slug":"how-did-we-get-here","status":"publish","type":"post","link":"https:\/\/www.jasetaro.com\/blog\/2008\/09\/16\/how-did-we-get-here\/","title":{"rendered":"How Did We Get Here?"},"content":{"rendered":"

Ed Morrissey @ Hot Air asks “Whose policies led to the credit crisis?<\/a>”<\/p>\n

The answer depends on who you ask… Democrats of course blame Republicans and Republicans of course blame Democrats. Personally, I think it’s safe to point fingers at both parties and the Federal Reserve Board.<\/p>\n

The roots of the current credit crisis can, as John Lott noted in March<\/a>, be traced to a 1992 Boston Federal Reserve study that reportedly found evidence of racial discrimination in mortgage lending. As Lott notes:<\/p>\n

The Fed later used the study to produce a manual for mortgage lenders that: “discrimination may be observed when a lender’s underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants.”<\/p>\n

So what is on the list of Fed’s “outdated criteria”? Such “discriminatory” factors as the borrower’s credit history, income verification, and the size of the mortgage payment relative to income.<\/p>\n

But it turns out that the original study was mistaken.<\/p>\n

Economists discovered that there were errors in the data the study used. Some minorities were listed as having wealth up to hundreds of times greater than they actually had, making it look like wealthy minorities were being turned down for loans. When the data errors were corrected minorities with the same financial background as whites had been at no disadvantage in getting mortgages.<\/p><\/blockquote>\n

It was Clinton era changes to the Community Redevelopment Act that helped create the market for risky subprime loans<\/a>… The very things that Democrats now point to as evidence of predatory lending practices.<\/p>\n

Yes, it was Democrats who wanted to preserve Clinton era policies and resisted the Bush Administrations attempts to rein in the credit markets. But it was Republicans who don’t appear to have put much effort into exposing corruption at Fannie Mae and Freddie Mac and\/or fighting for reforms.<\/p>\n

Bottom line this isn’t the time for finger pointing but since we’re going to do it any anyway we might as well blame the entrenched Washington political culture. Our current credit crisis isn’t Democrat or Republican problem… It’s a culture problem; Washington shuns accountability, tolerates corruption and places political correctness ahead of good governance.<\/p>\n","protected":false},"excerpt":{"rendered":"

Ed Morrissey @ Hot Air asks “Whose policies led to the credit crisis?” The answer depends on who you ask… Democrats of course blame Republicans and Republicans of course blame Democrats. Personally, I think it’s safe to point fingers at both parties and the Federal Reserve Board. The roots of the current credit crisis can, […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[26,7],"tags":[129,59,44],"class_list":{"0":"post-381","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-economy","7":"category-politics","8":"tag-credit-crisis","9":"tag-democrats","10":"tag-republicans","11":"entry"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/pfpI7-69","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":383,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/09\/17\/the-democrats-credit-crisis\/","url_meta":{"origin":381,"position":0},"title":"The Democrats Credit Crisis…","author":"Jeff","date":"September 17, 2008","format":false,"excerpt":"The more I dig into the history behind our current crisis the more outraged I become... Commenter Veretax writes: \"I think the American people have had it with this situation where the middle-income people in our country are not protected from the ramifications of the risk-taking and the greed of\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":502,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/09\/26\/video-burning-down-the-house-what-caused-our-economic-crisis\/","url_meta":{"origin":381,"position":1},"title":"Video: Burning Down The House: What Caused Our Economic Crisis?","author":"Jeff","date":"September 26, 2008","format":false,"excerpt":"This video has been floating around the web for a couple of days... It provides a detailed look at how the Community Reinvestment Act was used to push banks into sub-prime mortgages and how that distorted the housing market... And helped create the bubble that burst. A couple of caveats\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":490,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/09\/25\/bailing-on-the-bailout\/","url_meta":{"origin":381,"position":2},"title":"Bailing on the Bailout?","author":"Jeff","date":"September 25, 2008","format":false,"excerpt":"It looks like the bailout deal, if there ever was one, is collapsing... Democrats and Paulson are whining. ABC News' George Stephanopoulos Reports: Treasury Secretary Henry Paulson fears the Wall Street bailout deal is falling apart after a chaotic White House meeting, sources say. Paulson walked into the room where\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":444,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/09\/22\/credit-crisis-redux\/","url_meta":{"origin":381,"position":3},"title":"Credit Crisis Redux","author":"Jeff","date":"September 22, 2008","format":false,"excerpt":"Today's Wall Street Journal takes a look at our current credit crisis and how we got here. Among the culprits the Journal identifies: The Federal Reserve. Fannie Mae and Freddie Mac. A credit-rating oligopoly. Banking regulators. The Community Reinvestment Act. The conclude their analisys by thusly: We could cite other\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2486,"url":"https:\/\/www.jasetaro.com\/blog\/2009\/07\/07\/anatomy-of-a-crisis-the-fannie-mae-and-freddie-mac-debacle\/","url_meta":{"origin":381,"position":4},"title":"Anatomy of a Crisis: The Fannie Mae and Freddie Mac Debacle","author":"Jeff","date":"July 7, 2009","format":false,"excerpt":"Republican members of the House Committee on Oversight and Government Reform have released a report analyzing the role of the government sponsored enterprises (GSE), Fannie Mae and Freddie Mac, in the housing meltdown. You can read the full report here, but here are the highlights: Political pressure led to the\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2105,"url":"https:\/\/www.jasetaro.com\/blog\/2009\/05\/01\/mortgage-cramdown-bill-dies-in-senate\/","url_meta":{"origin":381,"position":5},"title":"Mortgage Cramdown Bill Dies in Senate","author":"Jeff","date":"May 1, 2009","format":false,"excerpt":"Barack Obama's economic policy suffered a setback yesterday when a bill that would have allowed bankruptcy judges to force lenders to adjust the principal on mortgages failed in the Senate. The bill received 45 votes, 6 short of the 51 needed for passage... A dozen Democrats joined Republicans in opposing\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/posts\/381","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/comments?post=381"}],"version-history":[{"count":0,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/posts\/381\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/media?parent=381"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/categories?post=381"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/tags?post=381"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}