View Single Post
      09-13-2012, 03:41 PM   #32
MiddleAgedAl
First Lieutenant
21
Rep
326
Posts

 
Drives: M3
Join Date: Jul 2010
Location: sitting down, facing the keyboard

iTrader: (0)

This is the full PDF document referenced in the "opinion piece", to prove that this strategy did in fact actually exist, and is not a figment of the imagination of some businessweek writer.

http://confoundedinterest.files.word...5/nhsdream.pdf

At 134 pages, it is lengthy to read thru, but you wanted specifics. Even if you skim it, you will see many concrete things the Clinton administration did to encourage high-risk, low income people into homes that they would previously fail to qualify for. This includes things like more flexible mortgage underwriting criteria, changes to insurance, lender processing time reductions, subsidies to reduce downpayments and mortgage costs, regulatory review of manufactured homes, building code reforms to expand supply of starter homes, any many others.

It was not just a matter of Bill standing there any saying "gee, it would be great of more low-income folks had access to home ownership", and it was left at that.

Granted, there is no hard-line legislation that commands lenders to give x number of loans to y number of high-risk people in a set period of time or anything, so you cannot say they were legally FORCED into offering those mortgages against their will.

However, by removing and altering all kinds of impediments for these "subprime borrowers" to get loans (impediments that were there for very good reason), that certainly created incentives that didnt exist before. That, combined with many of the crazy changes you mentioned (like the ability to take that high-risk mortgage and dump it on someone else), all conspired to cause the collapse.

If the government hadn't removed some obstacles and encouraged the wrong type of people to try and own their own home, then no matter how lucrative the profits could have been in the absence of Glass Steagall etc., the banks would have been unable to pursue that $$$ because the influx of new buyers wouldnt have been nearly as big. Yes, they could have still used their new found ability to pass the mortgages onto someone else, but that other party wouldnt have as many problems because there would have been far fewer defaults.