Chiam, you are correct in your general analysis, however this crisis started in 1977 when Jimmy Carter signed into law the Community Reinvestment Act (CRA). You can read more about it here:
http://en.wikipedia.org/wiki/Community_Reinvestment_Act"The purpose of the CRA is to ensure that under-served populations can obtain credit, including home ownership opportunities and commercial loans to small businesses. The Act was passed in 1977 and has been subjected to important regulatory revisions since then."This act which was signed into Federal law by Jimmy Carter actually forced banks to give bad loans to blacks. This treasonous act of social engineering was started with good intentions, but all it did was to lay down asphalt on the road to hell, which is where Wall St. has found themselves from the imploding of the subprime, Alt-A and option-ARM loans.
All of these recent highly visible bank failures, as well as all those that are to come, are caused by one thing: banks made loans to people who couldn't pay them back, not because they wanted to, but because they were forced by Federal law under penalty of fines and public humiliation to do so. In 1995, the law was revised by the Clinton administration to be more far-reaching in its destructiveness:
In early 1993 President Clinton proposed new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities. The new rules went into effect on January 31, 1995 and featured: requiring numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to targeted groups to collect a fee from the banks.This "social justice" is extortion plain and simple: if the banks didn't write enough bad loans to blacks and other 3rd worlders, they would be labeled "racist" and have fines levied against them. It used to be that banks would require good character, indicated by the ability to work consistently enough to save for a 20% down payment, have good credit history, etc. All that went out the window with the CRA which directly created the debacle we have today, and the one company that Clinton lauded praise upon as the exemplary leader in making home loans to minorities was Countrywide Financial, which just imploded due to the incredible amount of bad loans on their books. Unbelievably, even with all these toxic bad loans on their books, Bank of America bought them out for $11 billion which is why I'm quite sure B of A itself will inevitably go bankrupt as a result.
Despite the obvious history which proves with great veracity the horrors of caving in to the 3rd worlders and bending over backward to help them, the clueless idiots in the Bolshevik media are blaming capitalism itself for this mess! Don't believe them for a minute, it was the leftists who forced banks to lower their standards and allowed Wall St. and Fannie Mae and Freddie Mac to securitize these loans into CDOs/CDS and mortgage backed securities which were then rated AAA by Standard and Poor's and Moody's: the equivalent of soverign national debt was assigned to these garbage loans made primarily to inner city blacks who had no ability to pay them back.
As a result of the government meddling in the free markets, lending standards were thrown out the window and a free-for-all attitude developed. This is a massive problem that the government is now trying to charge to taxpayers to the tune of $700 billion, an astronomical sum which they will burn through quickly and then be back at the government trough to borrow probably more than that, much of which will be printed and will cause inflation. None of this Marxist, socialist government interference in the free market will work. The more they meddle, the worse the problem will become until we have a hyperinflationary depression just like Argentina, Weimar Germany or today's Zimbabwe. And in the end, America will have a massive 3rd world population with a 3rd world economy to match.
What lesson can we learn from all of this? I think the lesson is this: America literally bankrupted herself trying to accomodate undeserving minorities in a massive leftist Bolshevik social engineering scheme which was inherently flawed and doomed to failure. Spiritual destruction always preceeds physical destruction, with America currently at the interim pause here in the middle at economic and financial destruction.
I liked the video before it was cut off, but a little more history going back to Carter would be appreciated. Chiam, you are right as always.
Topic: New ENGLISH JTF video: "Affirmative action" caused the financial crisis (Read 4184 times)