The 2008 Recession: Once and For All, Let's Get the Facts Straight

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Mike Griffith
Oct 23, 2012
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Once and for all, let’s get the facts straight about the 2008 recession, aka the Great Recession. We continue to see liberals claim that Bush’s economic policies caused the recession, which is ludicrous. There were several causes of the 2008 recession, but the main cause was disastrous federal intervention in the housing market, followed closely by Federal Reserve monetary policy and the unrealistic mark-to-market accounting requirements established by the Sarbanes-Oxley bill. Some facts:

* No one denies that toxic assets triggered the financial meltdown. But where did those toxic assets come from? No one denies that most of those assets were bad home loans (many of them subprime and alt-A loans). So how did we end up with so many bad home loans?

* In the 1995, the Department of Housing and Urban Development (HUD) established a target goal relating to the home ownership rate among low-income groups, which was eventually set at 70 percent. Then in 1999, HUD directed Fannie Mae and Freddie Mac to relax their requirement standards on mortgage loans, including a move toward sub- and non-prime loan approval, yet maintained their inability to make moves in the non-conforming market. During the 1990s, the GSE share of mortgage loans with high loan-to-value ratios rose from around 6 percent of purchases in 1992 to 19 percent in 1995.

* From 2001 to 2006, sub-prime loans increased from $120 billion (5.5 percent of U.S. mortgage originations) to $600 billion (20 percent of the U.S. mortgage market originations. The level of borrowing against equity in home mortgages increased from $130 billion (6 percent of the U.S. mortgage market) in 2001 to $430 billion (about 15 percent of the U.S. mortgage market) in 2006. Thus, the total level of non-prime home loans reached 48 percent of the mortgage market in 2006.

* The federal Credit Relief Act (CRA), which pressured lenders to make unwise home loans to low-income people, played a major role:

Sizable pools of capital came to be allocated in an entirely new way. Bank examiners began using federal home-loan data—broken down by neighborhood, income, and race—to rate banks on their CRA performance, standing traditional lending on its head. In sharp contrast to the old regulatory emphasis on safety and soundness, regulators now judged banks not on how their loans performed, but on how many loans they made and to whom. As one former vice president of Chicago’s Harris Bank once told me: “You just have to make sure you don’t turn anyone down. If anyone applies for a loan, it’s better for you just to give them the money. A high denial rate is what gets you in trouble.” It’s no surprise, then, that as early as 1999, the Federal Reserve Board found that only 29 percent of loans in bank lending programs established especially for CRA compliance purposes could be classified as profitable. . . .

Was there a high enough level of CRA-related lending to spark our current crisis? Not on its own, of course. The crucial link was the extension of CRA-type thinking and regulation to the secondary mortgage markets through the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which buy loans from banks in order to provide liquidity. Beginning in 1992, the Department of Housing and Urban Development pushed Fannie and Freddie to buy loans based on criteria other than creditworthiness. These “affordable housing goals and subgoals”—authorized, ironically, by the Federal Housing Enterprises Financial Safety and Soundness Act—became more demanding over time and, by 2005, required that Fannie and Freddie strive to buy 45 percent of all loans from those of low and moderate income, including 32 percent from people in central cities and other underserved areas and 22 percent from “very low income families or families living in low-income neighborhoods.” As one former Fannie Mae official puts it: “Both HUD and many advocates in the early 2000s were anxious for the GSEs to extend credit to borrowers with blemished credit in ways that were responsible”. . . .

But the CRA advocates, including the New York Times, continue to claim that CRA-qualified loans made by regulated financial institutions performed well and shouldn’t be implicated in our current troubles. They point to the results of an evaluation of CRA loans by North Carolina’s Center for Community Capital, which found that such loans performed more poorly than conventional mortgages but better than subprime loans overall. What they don’t mention is that the study evaluated only 9,000 mortgages, a drop in the bucket compared to the $4.5 trillion in CRA-eligible loans that the pro-CRA National Community Reinvestment Coalition estimates have been made since passage of the Act. There has been no systematic study, by either the Government Accountability Office or the Federal Reserve, of the performance of loans cited by banks in their CRA filings. Many such loans weren’t even underwritten by the banks themselves, which often purchased CRA-eligible loans (advertised in such publications as American Banker) and then resold them. Again, the emphasis was on showing regulators that loans were being made—not how they were performing. How could such a system not lead to problem loans and high delinquency and foreclosure rates? (The Financial Crisis and the CRA; see also The CRA Scam and its Defenders)​

Let’s repeat some of these facts:

-- By 2005 HUD required that Fannie and Freddie strive to buy 45 percent of all loans from those of low and moderate income, including 32 percent from people in central cities and other underserved areas and 22 percent from “very low income families or families living in low-income neighborhoods.”

-- From 2005 to 2007, Fannie and Freddie bought approximately $1 trillion in subprime and Alt-A loans. This amounted to about 40 percent of their mortgage purchases during that period. Moreover, Freddie purchased an ever-increasing percentage of Alt-A and subprime loans for each year between 2004 and 2007.

-- Nearly 4 in 10 subprime loans between 2004 and 2007 were made by CRA-covered banks such as Washington Mutual and IndyMac. And that doesn't include loans made by subprime lenders owned by banks, which were in effect covered by the CRA.

* Starting in 2004, Bush and Congressional Republicans realized that Freddie and Fannie’s intervention was becoming dangerous and problematic, and they sought legislation to restrain Freddie and Fannie, but the Democrats blocked all such legislation.

Bush and McCain Warned Democrats of Housing Crisis and Financial Meltdown

Democrats Covering Up Fannie and Freddie Scandal

Democrats Blocked Reform of Freddie and Fannie

* The fatally misguided mark-to-market standards imposed by Sarbanes-Oxley greatly contributed to the financial crisis:

Chief economist Brian S. Wesbury and his colleague Bob Stein at First Trust Portfolios of Chicago estimate the impact of the "mark-to-market" accounting rule on the current crisis as follows:

"It is true that the root of this crisis is bad mortgage loans, but probably 70% of the real crisis that we face today is caused by mark-to-market accounting in an illiquid market. What's most fascinating is that the Treasury is selling its plan as a way to put a bottom in mortgage pool prices, tipping its hat to the problem of mark-to-market accounting without acknowledging it. It is a real shame that there is so little discussion of this reality." (Suspend Mark-To-Market Now!)​

Sources for further reading:

The Great Recession, 10 Years Later | Richard M. Ebeling

How Government Housing Policy Led to the Financial Crisis

Sarbanes-Oxley in the Light of the Financial Crisis

Congress Should Repeal or Fix Section 404 of the Sarbanes–Oxley Act to Help Create Jobs

The Government Did It

Did Deregulated Derivatives Cause the Financial Crisis? | Robert P. Murphy

Mark-to-Market Triggered This Recession; It Will Also Trigger the Recovery | Seeking Alpha

Five bad Clinton and Bush-era policies that caused the Great Recession

Fed study says Bush and the banks didn't cause the Great Recession. The Fed did - AEI
 
I keep reading from the libs on the board that the 2008 recession was caused by the Bush tax cuts.
 
Once and for all, let’s get the facts straight about the 2008 recession, aka the Great Recession. We continue to see liberals claim that Bush’s economic policies caused the recession, which is ludicrous. There were several causes of the 2008 recession, but the main cause was disastrous federal intervention in the housing market, followed closely by Federal Reserve monetary policy and the unrealistic mark-to-market accounting requirements established by the Sarbanes-Oxley bill. Some facts:

* No one denies that toxic assets triggered the financial meltdown. But where did those toxic assets come from? No one denies that most of those assets were bad home loans (many of them subprime and alt-A loans). So how did we end up with so many bad home loans?

* In the 1995, the Department of Housing and Urban Development (HUD) established a target goal relating to the home ownership rate among low-income groups, which was eventually set at 70 percent. Then in 1999, HUD directed Fannie Mae and Freddie Mac to relax their requirement standards on mortgage loans, including a move toward sub- and non-prime loan approval, yet maintained their inability to make moves in the non-conforming market. During the 1990s, the GSE share of mortgage loans with high loan-to-value ratios rose from around 6 percent of purchases in 1992 to 19 percent in 1995.

* From 2001 to 2006, sub-prime loans increased from $120 billion (5.5 percent of U.S. mortgage originations) to $600 billion (20 percent of the U.S. mortgage market originations. The level of borrowing against equity in home mortgages increased from $130 billion (6 percent of the U.S. mortgage market) in 2001 to $430 billion (about 15 percent of the U.S. mortgage market) in 2006. Thus, the total level of non-prime home loans reached 48 percent of the mortgage market in 2006.

* The federal Credit Relief Act (CRA), which pressured lenders to make unwise home loans to low-income people, played a major role:

Sizable pools of capital came to be allocated in an entirely new way. Bank examiners began using federal home-loan data—broken down by neighborhood, income, and race—to rate banks on their CRA performance, standing traditional lending on its head. In sharp contrast to the old regulatory emphasis on safety and soundness, regulators now judged banks not on how their loans performed, but on how many loans they made and to whom. As one former vice president of Chicago’s Harris Bank once told me: “You just have to make sure you don’t turn anyone down. If anyone applies for a loan, it’s better for you just to give them the money. A high denial rate is what gets you in trouble.” It’s no surprise, then, that as early as 1999, the Federal Reserve Board found that only 29 percent of loans in bank lending programs established especially for CRA compliance purposes could be classified as profitable. . . .

Was there a high enough level of CRA-related lending to spark our current crisis? Not on its own, of course. The crucial link was the extension of CRA-type thinking and regulation to the secondary mortgage markets through the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which buy loans from banks in order to provide liquidity. Beginning in 1992, the Department of Housing and Urban Development pushed Fannie and Freddie to buy loans based on criteria other than creditworthiness. These “affordable housing goals and subgoals”—authorized, ironically, by the Federal Housing Enterprises Financial Safety and Soundness Act—became more demanding over time and, by 2005, required that Fannie and Freddie strive to buy 45 percent of all loans from those of low and moderate income, including 32 percent from people in central cities and other underserved areas and 22 percent from “very low income families or families living in low-income neighborhoods.” As one former Fannie Mae official puts it: “Both HUD and many advocates in the early 2000s were anxious for the GSEs to extend credit to borrowers with blemished credit in ways that were responsible”. . . .

But the CRA advocates, including the New York Times, continue to claim that CRA-qualified loans made by regulated financial institutions performed well and shouldn’t be implicated in our current troubles. They point to the results of an evaluation of CRA loans by North Carolina’s Center for Community Capital, which found that such loans performed more poorly than conventional mortgages but better than subprime loans overall. What they don’t mention is that the study evaluated only 9,000 mortgages, a drop in the bucket compared to the $4.5 trillion in CRA-eligible loans that the pro-CRA National Community Reinvestment Coalition estimates have been made since passage of the Act. There has been no systematic study, by either the Government Accountability Office or the Federal Reserve, of the performance of loans cited by banks in their CRA filings. Many such loans weren’t even underwritten by the banks themselves, which often purchased CRA-eligible loans (advertised in such publications as American Banker) and then resold them. Again, the emphasis was on showing regulators that loans were being made—not how they were performing. How could such a system not lead to problem loans and high delinquency and foreclosure rates? (The Financial Crisis and the CRA; see also The CRA Scam and its Defenders)​

Let’s repeat some of these facts:

-- By 2005 HUD required that Fannie and Freddie strive to buy 45 percent of all loans from those of low and moderate income, including 32 percent from people in central cities and other underserved areas and 22 percent from “very low income families or families living in low-income neighborhoods.”

-- From 2005 to 2007, Fannie and Freddie bought approximately $1 trillion in subprime and Alt-A loans. This amounted to about 40 percent of their mortgage purchases during that period. Moreover, Freddie purchased an ever-increasing percentage of Alt-A and subprime loans for each year between 2004 and 2007.

-- Nearly 4 in 10 subprime loans between 2004 and 2007 were made by CRA-covered banks such as Washington Mutual and IndyMac. And that doesn't include loans made by subprime lenders owned by banks, which were in effect covered by the CRA.

* Starting in 2004, Bush and Congressional Republicans realized that Freddie and Fannie’s intervention was becoming dangerous and problematic, and they sought legislation to restrain Freddie and Fannie, but the Democrats blocked all such legislation.

Bush and McCain Warned Democrats of Housing Crisis and Financial Meltdown

Democrats Covering Up Fannie and Freddie Scandal

Democrats Blocked Reform of Freddie and Fannie

* The fatally misguided mark-to-market standards imposed by Sarbanes-Oxley greatly contributed to the financial crisis:

Chief economist Brian S. Wesbury and his colleague Bob Stein at First Trust Portfolios of Chicago estimate the impact of the "mark-to-market" accounting rule on the current crisis as follows:

"It is true that the root of this crisis is bad mortgage loans, but probably 70% of the real crisis that we face today is caused by mark-to-market accounting in an illiquid market. What's most fascinating is that the Treasury is selling its plan as a way to put a bottom in mortgage pool prices, tipping its hat to the problem of mark-to-market accounting without acknowledging it. It is a real shame that there is so little discussion of this reality." (Suspend Mark-To-Market Now!)​

Sources for further reading:

The Great Recession, 10 Years Later | Richard M. Ebeling

How Government Housing Policy Led to the Financial Crisis

Sarbanes-Oxley in the Light of the Financial Crisis

Congress Should Repeal or Fix Section 404 of the Sarbanes–Oxley Act to Help Create Jobs

The Government Did It

Did Deregulated Derivatives Cause the Financial Crisis? | Robert P. Murphy

Mark-to-Market Triggered This Recession; It Will Also Trigger the Recovery | Seeking Alpha

Five bad Clinton and Bush-era policies that caused the Great Recession

Fed study says Bush and the banks didn't cause the Great Recession. The Fed did - AEI


Mike, Mike; what is up with you trying to point out facts? No lib is going to post here. They have a narrative, and you just got in that narrative's way.

Shame on you, blame on you, for the biggest sin across the country; non conformity to the all powerful, all knowing, all brilliant, Fauny Baloney, lefty narratives!
 
From an article by economist Veronique de Rugy in Reason magazine:

Myth 1: The government-sponsored housing finance companies Fannie Mae and Freddie Mac had nothing to do with the housing crisis. They were simply innocent bystanders caught in the crossfire. Economist and New York Times columnist Paul Krugman, for instance, has argued that Fannie and Freddie’s role in the housing market was insignificant between 2004 and 2006 because “they pulled back sharply after 2003, just when housing really got crazy.” According to Krugman, Fannie and Freddie “largely faded from the scene during the height of the housing bubble.”

Fact 1: Fannie and Freddie contributed to the housing crisis by making it easier for more people to take out loans for houses they could not afford. Beginning in 2000, Fannie and Freddie took on loans with low FICO scores, loans with low down payments, and loans with little or no documentation.

The federal government’s role in the housing market goes back at least to 1938, but that role changed fundamentally in the 1990s when the government made a push to increase home ownership in the United States. At that time, the federal government pursued several policies that were meant to encourage banks to lend money to lower income earners and to give incentives to low income earners to buy houses. The result, as we now know, was a gigantic amount of subprime mortgages at a time when house prices were starting to go down.

In 2010, Edward Pinto, a resident fellow at the American Enterprise Institute who has served as chief credit officer at Fannie Mae, issued a memorandum on the number of subprime and other high-risk mortgages in the financial system immediately before the financial crisis. In that memorandum, Pinto recorded that he had found over 25 million subprime mortgages (his later work showed that there were approximately 27 million). Since there are about 55 million total mortgages in the United States, it means that as the financial crisis began, half of all U.S. mortgages were of inferior quality and liable to default when housing prices stopped rising, as you can see in the chart below.

Freddie and Fannie were active players in this market.

For instance, as George Mason University economist Russ Roberts explains in his paper “Gambling with Other People’s Money”:

"Fannie and Freddie bought 25.2% of the record $272.81 billion in subprime MBS [mortgage-backed securities] sold in the first half of 2006, according to Inside Mortgage Finance Publications, a Bethesda, MD-based publisher that covers the home loan industry.

"In 2005, Fannie and Freddie purchased 35.3% of all subprime MBS, the publication estimated. The year before, the two purchased almost 44% of all subprime MBS sold.

"In addition, lawmakers in both parties enacted policies directed at increasing home ownership rates, resulting in lower mortgage underwriting standards for Fannie and Freddie. Roberts notes that from 2000 on, Fannie and Freddie bought loans with low FICO scores, loans with very low down payments, and loans with little or no documentation. Contrary to Paul Krugman’s assertions, Fannie and Freddie did not “fade away” or “pull back sharply” between 2004 and 2006."

As the following chart from Roberts’ study shows, during that same time Government Sponsored Enterprises (GSEs) bought near-record numbers of mortgages, including an ever-growing number of mortgages with low down payments. (The Truth About Fannie and Freddie’s Role in the Housing Crisis)​
 
Once and for all, let’s get the facts straight about the 2008 recession, aka the Great Recession. We continue to see liberals claim that Bush’s economic policies caused the recession, which is ludicrous. There were several causes of the 2008 recession, but the main cause was disastrous federal intervention in the housing market, followed closely by Federal Reserve monetary policy and the unrealistic mark-to-market accounting requirements established by the Sarbanes-Oxley bill. Some facts:

* No one denies that toxic assets triggered the financial meltdown. But where did those toxic assets come from? No one denies that most of those assets were bad home loans (many of them subprime and alt-A loans). So how did we end up with so many bad home loans?

* In the 1995, the Department of Housing and Urban Development (HUD) established a target goal relating to the home ownership rate among low-income groups, which was eventually set at 70 percent. Then in 1999, HUD directed Fannie Mae and Freddie Mac to relax their requirement standards on mortgage loans, including a move toward sub- and non-prime loan approval, yet maintained their inability to make moves in the non-conforming market. During the 1990s, the GSE share of mortgage loans with high loan-to-value ratios rose from around 6 percent of purchases in 1992 to 19 percent in 1995.

* From 2001 to 2006, sub-prime loans increased from $120 billion (5.5 percent of U.S. mortgage originations) to $600 billion (20 percent of the U.S. mortgage market originations. The level of borrowing against equity in home mortgages increased from $130 billion (6 percent of the U.S. mortgage market) in 2001 to $430 billion (about 15 percent of the U.S. mortgage market) in 2006. Thus, the total level of non-prime home loans reached 48 percent of the mortgage market in 2006.

* The federal Credit Relief Act (CRA), which pressured lenders to make unwise home loans to low-income people, played a major role:

Sizable pools of capital came to be allocated in an entirely new way. Bank examiners began using federal home-loan data—broken down by neighborhood, income, and race—to rate banks on their CRA performance, standing traditional lending on its head. In sharp contrast to the old regulatory emphasis on safety and soundness, regulators now judged banks not on how their loans performed, but on how many loans they made and to whom. As one former vice president of Chicago’s Harris Bank once told me: “You just have to make sure you don’t turn anyone down. If anyone applies for a loan, it’s better for you just to give them the money. A high denial rate is what gets you in trouble.” It’s no surprise, then, that as early as 1999, the Federal Reserve Board found that only 29 percent of loans in bank lending programs established especially for CRA compliance purposes could be classified as profitable. . . .

Was there a high enough level of CRA-related lending to spark our current crisis? Not on its own, of course. The crucial link was the extension of CRA-type thinking and regulation to the secondary mortgage markets through the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which buy loans from banks in order to provide liquidity. Beginning in 1992, the Department of Housing and Urban Development pushed Fannie and Freddie to buy loans based on criteria other than creditworthiness. These “affordable housing goals and subgoals”—authorized, ironically, by the Federal Housing Enterprises Financial Safety and Soundness Act—became more demanding over time and, by 2005, required that Fannie and Freddie strive to buy 45 percent of all loans from those of low and moderate income, including 32 percent from people in central cities and other underserved areas and 22 percent from “very low income families or families living in low-income neighborhoods.” As one former Fannie Mae official puts it: “Both HUD and many advocates in the early 2000s were anxious for the GSEs to extend credit to borrowers with blemished credit in ways that were responsible”. . . .

But the CRA advocates, including the New York Times, continue to claim that CRA-qualified loans made by regulated financial institutions performed well and shouldn’t be implicated in our current troubles. They point to the results of an evaluation of CRA loans by North Carolina’s Center for Community Capital, which found that such loans performed more poorly than conventional mortgages but better than subprime loans overall. What they don’t mention is that the study evaluated only 9,000 mortgages, a drop in the bucket compared to the $4.5 trillion in CRA-eligible loans that the pro-CRA National Community Reinvestment Coalition estimates have been made since passage of the Act. There has been no systematic study, by either the Government Accountability Office or the Federal Reserve, of the performance of loans cited by banks in their CRA filings. Many such loans weren’t even underwritten by the banks themselves, which often purchased CRA-eligible loans (advertised in such publications as American Banker) and then resold them. Again, the emphasis was on showing regulators that loans were being made—not how they were performing. How could such a system not lead to problem loans and high delinquency and foreclosure rates? (The Financial Crisis and the CRA; see also The CRA Scam and its Defenders)​

Let’s repeat some of these facts:

-- By 2005 HUD required that Fannie and Freddie strive to buy 45 percent of all loans from those of low and moderate income, including 32 percent from people in central cities and other underserved areas and 22 percent from “very low income families or families living in low-income neighborhoods.”

-- From 2005 to 2007, Fannie and Freddie bought approximately $1 trillion in subprime and Alt-A loans. This amounted to about 40 percent of their mortgage purchases during that period. Moreover, Freddie purchased an ever-increasing percentage of Alt-A and subprime loans for each year between 2004 and 2007.

-- Nearly 4 in 10 subprime loans between 2004 and 2007 were made by CRA-covered banks such as Washington Mutual and IndyMac. And that doesn't include loans made by subprime lenders owned by banks, which were in effect covered by the CRA.

* Starting in 2004, Bush and Congressional Republicans realized that Freddie and Fannie’s intervention was becoming dangerous and problematic, and they sought legislation to restrain Freddie and Fannie, but the Democrats blocked all such legislation.

Bush and McCain Warned Democrats of Housing Crisis and Financial Meltdown

Democrats Covering Up Fannie and Freddie Scandal

Democrats Blocked Reform of Freddie and Fannie

* The fatally misguided mark-to-market standards imposed by Sarbanes-Oxley greatly contributed to the financial crisis:

Chief economist Brian S. Wesbury and his colleague Bob Stein at First Trust Portfolios of Chicago estimate the impact of the "mark-to-market" accounting rule on the current crisis as follows:

"It is true that the root of this crisis is bad mortgage loans, but probably 70% of the real crisis that we face today is caused by mark-to-market accounting in an illiquid market. What's most fascinating is that the Treasury is selling its plan as a way to put a bottom in mortgage pool prices, tipping its hat to the problem of mark-to-market accounting without acknowledging it. It is a real shame that there is so little discussion of this reality." (Suspend Mark-To-Market Now!)​

Sources for further reading:

The Great Recession, 10 Years Later | Richard M. Ebeling

How Government Housing Policy Led to the Financial Crisis

Sarbanes-Oxley in the Light of the Financial Crisis

Congress Should Repeal or Fix Section 404 of the Sarbanes–Oxley Act to Help Create Jobs

The Government Did It

Did Deregulated Derivatives Cause the Financial Crisis? | Robert P. Murphy

Mark-to-Market Triggered This Recession; It Will Also Trigger the Recovery | Seeking Alpha

Five bad Clinton and Bush-era policies that caused the Great Recession

Fed study says Bush and the banks didn't cause the Great Recession. The Fed did - AEI

nice story

For the Last Time, Fannie and Freddie Didn't Cause the Housing Crisis
 
It was all a scandal to collapse the economy in 2007/08...then blame it on Bush....then find the next Mao Tsay Duung to take over and keep tanking the economy
 
Once and for all, let’s get the facts straight about the 2008 recession, aka the Great Recession. We continue to see liberals claim that Bush’s economic policies caused the recession, which is ludicrous. There were several causes of the 2008 recession, but the main cause was disastrous federal intervention in the housing market, followed closely by Federal Reserve monetary policy and the unrealistic mark-to-market accounting requirements established by the Sarbanes-Oxley bill. Some facts:

* No one denies that toxic assets triggered the financial meltdown. But where did those toxic assets come from? No one denies that most of those assets were bad home loans (many of them subprime and alt-A loans). So how did we end up with so many bad home loans?

* In the 1995, the Department of Housing and Urban Development (HUD) established a target goal relating to the home ownership rate among low-income groups, which was eventually set at 70 percent. Then in 1999, HUD directed Fannie Mae and Freddie Mac to relax their requirement standards on mortgage loans, including a move toward sub- and non-prime loan approval, yet maintained their inability to make moves in the non-conforming market. During the 1990s, the GSE share of mortgage loans with high loan-to-value ratios rose from around 6 percent of purchases in 1992 to 19 percent in 1995.

* From 2001 to 2006, sub-prime loans increased from $120 billion (5.5 percent of U.S. mortgage originations) to $600 billion (20 percent of the U.S. mortgage market originations. The level of borrowing against equity in home mortgages increased from $130 billion (6 percent of the U.S. mortgage market) in 2001 to $430 billion (about 15 percent of the U.S. mortgage market) in 2006. Thus, the total level of non-prime home loans reached 48 percent of the mortgage market in 2006.

* The federal Credit Relief Act (CRA), which pressured lenders to make unwise home loans to low-income people, played a major role:

Sizable pools of capital came to be allocated in an entirely new way. Bank examiners began using federal home-loan data—broken down by neighborhood, income, and race—to rate banks on their CRA performance, standing traditional lending on its head. In sharp contrast to the old regulatory emphasis on safety and soundness, regulators now judged banks not on how their loans performed, but on how many loans they made and to whom. As one former vice president of Chicago’s Harris Bank once told me: “You just have to make sure you don’t turn anyone down. If anyone applies for a loan, it’s better for you just to give them the money. A high denial rate is what gets you in trouble.” It’s no surprise, then, that as early as 1999, the Federal Reserve Board found that only 29 percent of loans in bank lending programs established especially for CRA compliance purposes could be classified as profitable. . . .

Was there a high enough level of CRA-related lending to spark our current crisis? Not on its own, of course. The crucial link was the extension of CRA-type thinking and regulation to the secondary mortgage markets through the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which buy loans from banks in order to provide liquidity. Beginning in 1992, the Department of Housing and Urban Development pushed Fannie and Freddie to buy loans based on criteria other than creditworthiness. These “affordable housing goals and subgoals”—authorized, ironically, by the Federal Housing Enterprises Financial Safety and Soundness Act—became more demanding over time and, by 2005, required that Fannie and Freddie strive to buy 45 percent of all loans from those of low and moderate income, including 32 percent from people in central cities and other underserved areas and 22 percent from “very low income families or families living in low-income neighborhoods.” As one former Fannie Mae official puts it: “Both HUD and many advocates in the early 2000s were anxious for the GSEs to extend credit to borrowers with blemished credit in ways that were responsible”. . . .

But the CRA advocates, including the New York Times, continue to claim that CRA-qualified loans made by regulated financial institutions performed well and shouldn’t be implicated in our current troubles. They point to the results of an evaluation of CRA loans by North Carolina’s Center for Community Capital, which found that such loans performed more poorly than conventional mortgages but better than subprime loans overall. What they don’t mention is that the study evaluated only 9,000 mortgages, a drop in the bucket compared to the $4.5 trillion in CRA-eligible loans that the pro-CRA National Community Reinvestment Coalition estimates have been made since passage of the Act. There has been no systematic study, by either the Government Accountability Office or the Federal Reserve, of the performance of loans cited by banks in their CRA filings. Many such loans weren’t even underwritten by the banks themselves, which often purchased CRA-eligible loans (advertised in such publications as American Banker) and then resold them. Again, the emphasis was on showing regulators that loans were being made—not how they were performing. How could such a system not lead to problem loans and high delinquency and foreclosure rates? (The Financial Crisis and the CRA; see also The CRA Scam and its Defenders)​

Let’s repeat some of these facts:

-- By 2005 HUD required that Fannie and Freddie strive to buy 45 percent of all loans from those of low and moderate income, including 32 percent from people in central cities and other underserved areas and 22 percent from “very low income families or families living in low-income neighborhoods.”

-- From 2005 to 2007, Fannie and Freddie bought approximately $1 trillion in subprime and Alt-A loans. This amounted to about 40 percent of their mortgage purchases during that period. Moreover, Freddie purchased an ever-increasing percentage of Alt-A and subprime loans for each year between 2004 and 2007.

-- Nearly 4 in 10 subprime loans between 2004 and 2007 were made by CRA-covered banks such as Washington Mutual and IndyMac. And that doesn't include loans made by subprime lenders owned by banks, which were in effect covered by the CRA.

* Starting in 2004, Bush and Congressional Republicans realized that Freddie and Fannie’s intervention was becoming dangerous and problematic, and they sought legislation to restrain Freddie and Fannie, but the Democrats blocked all such legislation.

Bush and McCain Warned Democrats of Housing Crisis and Financial Meltdown

Democrats Covering Up Fannie and Freddie Scandal

Democrats Blocked Reform of Freddie and Fannie

* The fatally misguided mark-to-market standards imposed by Sarbanes-Oxley greatly contributed to the financial crisis:

Chief economist Brian S. Wesbury and his colleague Bob Stein at First Trust Portfolios of Chicago estimate the impact of the "mark-to-market" accounting rule on the current crisis as follows:

"It is true that the root of this crisis is bad mortgage loans, but probably 70% of the real crisis that we face today is caused by mark-to-market accounting in an illiquid market. What's most fascinating is that the Treasury is selling its plan as a way to put a bottom in mortgage pool prices, tipping its hat to the problem of mark-to-market accounting without acknowledging it. It is a real shame that there is so little discussion of this reality." (Suspend Mark-To-Market Now!)​

Sources for further reading:

The Great Recession, 10 Years Later | Richard M. Ebeling

How Government Housing Policy Led to the Financial Crisis

Sarbanes-Oxley in the Light of the Financial Crisis

Congress Should Repeal or Fix Section 404 of the Sarbanes–Oxley Act to Help Create Jobs

The Government Did It

Did Deregulated Derivatives Cause the Financial Crisis? | Robert P. Murphy

Mark-to-Market Triggered This Recession; It Will Also Trigger the Recovery | Seeking Alpha

Five bad Clinton and Bush-era policies that caused the Great Recession

Fed study says Bush and the banks didn't cause the Great Recession. The Fed did - AEI

There problem with all this is that Bush was the executive. He should have been putting things in place to A) stop boom and bust and B) stop the toxic buying.

7 million people lost their homes because the government didn't bother to do its job properly.

Bush pumped the economy to get re-elected, and the higher you go, the harder you fall, and the US fell hard.
 

Another liberal who did not bother to read the OP. If they had, they would have known that the OP and its links answer every one of the phony arguments made in that propaganda article. Liberals frequently cite that article to try to deny the critical role that Freddie and Fannie played in causing the housing crisis and the financial meltdown.

It is also important to understand the role that the Sarbanes-Oxley horribly misguided mark-to-market rules played in making the financial crisis far worse than it should have been. After the dust settled, many banks pointed out that the financial meltdown would have been avoided had it not been for mark-to-market accounting rules, which required toxic assets to be carried on their books at fire-sale prices, based on recent trades of similar assets for far less than they would command in normal times.

John A. Courson, president of The Mortgage Bankers Association, told a congressional committee that mark-to-market rules had never been tested in an “inactive or illiquid market environment,” and that they were improperly forcing banks to report big losses due to temporary conditions. He correctlyh noted that the rules should be changed to require write-downs only when conditions are judged to be permanent or long-term.

Simply put, when the financial crisis started, many banks and firms were forced to value assets at far below their real value because of mark-to-market rules. Many of those assets, though certainly not ideal, were not nearly as bad as some analysts claimed, and some of them were even still profitable or at least holding water. But, there was panic in the financial sector and many non-toxic assets were wrongly labeled as toxic assets because perception had driven their market value far below their real value.

It was like this: Suppose you lived in a town where suddenly there was a scare about Hondas and Fords, and you drove a Ford. Your Ford car was working okay, as were many others, but some Fords were experiencing severe problems and even catching fire or causing accidents due to malfunctions. Suppose there were silly car-value rules that forced you to list your Ford's value as being far below its real value just because some other Fords were total pieces of junk. That's what the Sarbanes-Oxley mark-to-market rules did to many non-toxic assets during the financial crisis.
 
Partisan hack job.

Bush of course didn't cause the crash all by himself but his administration's policies certainly played into it.

Greenspan was advertising for variable rate mortgage products, his administration expanded HUD goals, loosened bank leverage standards, urged GSE's to buy up more subprime-backed securities in 2003 and generally pushed home ownership as part of his Ownership Society themes. It could be also argued that his admin failed to heed the signs of a giant bubble and his regulators were asleep at the wheel.

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Partisan hack job.

Bush of course didn't cause the crash all by himself but his administration's policies certainly played into it.

Greenspan was advertising for variable rate mortgage products, his administration expanded HUD goals, loosened bank leverage standards, urged GSE's to buy up more subprime-backed securities in 2003 and generally pushed home ownership as part of his Ownership Society themes. It could be also argued that under his administration regulators were asleep at the wheel.

Oh, come on. Bush began to warn about Freddie and Fannie in 2005, and Republicans twice tried to rein in Freddie and Fannie but the Democrats played the race card and the class warfare card both times and blocked the attempts.

The actions you describe happened far below Bush, and I doubt that he was aware of specific HUD policies on housing vouchers, loans, etc., etc.

And Bush could not control Greenspan, anymore than Carter could control Volcker.

If the Dems had not blocked Bush's efforts to rain in Freddie and Fannie, the housing bubble would have been much smaller and the damage would have been far less.

As for Bush's regulators being asleep at the wheel, that stuff happened far downstream from the cause. If Freddie and Fannie and CRA had not caused a gigantic increase in mediocre and high-risk home loans, the actions of the regulators would not have mattered because there would have been far fewer mediocre and bad home loans to bundle in the first place.
 
Partisan hack job.

Bush of course didn't cause the crash all by himself but his administration's policies certainly played into it.

Greenspan was advertising for variable rate mortgage products, his administration expanded HUD goals, loosened bank leverage standards, urged GSE's to buy up more subprime-backed securities in 2003 and generally pushed home ownership as part of his Ownership Society themes. It could be also argued that under his administration regulators were asleep at the wheel.

Oh, come on. Bush began to warn about Freddie and Fannie in 2005,

He and Republicans were actually warning about GSE's well before, but their warnings had little to NOTHING to do with the crash.

Their concerns consistently rotated around GSE's accounting practices and NOT general real estate market collapse exposure risks.

Bush's administration actually urged GSE's in 2003 to "keep up with private market" and to take on more subprime backed securities.
 
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Partisan hack job.

Bush of course didn't cause the crash all by himself but his administration's policies certainly played into it.

Greenspan was advertising for variable rate mortgage products, his administration expanded HUD goals, loosened bank leverage standards, urged GSE's to buy up more subprime-backed securities in 2003 and generally pushed home ownership as part of his Ownership Society themes. It could be also argued that under his administration regulators were asleep at the wheel.

Oh, come on. Bush began to warn about Freddie and Fannie in 2005,

He and Republicans were actually warning about GSE's well before, but their warnings had little to NOTHING to do with the crash.

Their concerns consistently rotated around GSE's accounting practices and NOT general real estate market collapse exposure risks.

Bush's administration actually urged GSE's in 2003 to "keep up with private market" and to take on more subprime backed securities.

You might want to break down and watch the videos in my OP. Bush and the Repubs warned about severe economic consequences if Freddie and Fannie were not reined in. I might add that none of this has anything to do with Bush's tax cuts, which the left is always claiming caused or contributed to the recession.

You guys can dance all you want, but the fact remains that most of the toxic assets that cratered the financial sector were home loans secured, funded, or otherwise made possible by Freddie and Fannie and by the CRA.

And I notice no one wants to address the Sarbanes-Oxley mark-to-market rules that forced so many banks and firms to value many assets far below their actual value, which made the financial crisis much worse than it should have been.
 
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Just to follow up, as early as 2001, Bush warned that Freddie and Fannie's intervention could "cause strong repercussions in financial markets" (). In 2003, the Bush administration again issued a warning and urged REGULATION of Freddie and Fannie, but the Democrats rejected this. Congressional Republicans likewise voiced numerous fears about the economic consequences of Freddie and Fannie's activities.

Barney Frank’s Denialism About the Housing Bubble


Bush and McCain Warned Democrats of Housing Crisis and Financial Meltdown


Democrats Covering Up Fannie and Freddie Scandal


Democrats Blocked Reform of Freddie and Fannie
 
I believe subprime mortgage loans kicked things off but why it became a crisis was the unregulated derivatives sold by hedge funds based on mortgage backed securities, corporate debt, credit card debt, auto loans, etc. These mortgages at least had a foundation of real assets. The derivatives were based on thin air and make believe.
 
Just to follow up, as early as 2001, Bush warned that Freddie and Fannie's intervention could "cause strong repercussions in financial markets" (). In 2003, the Bush administration again issued a warning and urged REGULATION of Freddie and Fannie, but the Democrats rejected this. Congressional Republicans likewise voiced numerous fears about the economic consequences of Freddie and Fannie's activities.

Barney Frank’s Denialism About the Housing Bubble


Bush and McCain Warned Democrats of Housing Crisis and Financial Meltdown


Democrats Covering Up Fannie and Freddie Scandal


Democrats Blocked Reform of Freddie and Fannie


Did you watch YOUR OWN VIDEOS?

When it came to the question of general risk of real estate market cratering everyone is nodding their head about how it will never happen.

GSEs were market participators, but it was not " Freddie and Fannie's intervention" that caused market to collapse, but rather a market where right about no one took the possibility of house prices stalling as a serious possibility.


Ask yourself this simple question - what has been done about GSE's highly leveraged nature since the crash. The answer is NOTHING. Why? Because no one seriously believes that it was them specifically that caused the general market failure,
 
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It is amazing how alike the right wing zealots and the left wing zealots are.

Right wing zealot..a GOP president is responsible for every good thing that happens when they are in office and hold no blame for anything bad.

Left wing zealot...the DNC president is responsible for every good thing that happens while in office and shares no blame for anything bad


Sent from my iPhone using USMessageBoard.com
 

This is the perfect example of the liberal concept of "refuting" or "demolishing" something (read: facts they don't like). Obviously, this person did not read the OP, or she would have known that the OP and its links debunk the article that she cited.

She cited David Min's 2011 article "For the Last Time, Fannie and Freddie Did Not Cause the Housing Crisis." Who is David Min? He's a far-left writer with the far-left Center for American Progress. Ever since Min wrote that article, liberals will invariably cite it whenever this issue comes up. Liberals will cite Min's article and then act as if they have won the argument and as if further discussion is pointless. Yet, it is obvious that none of them have read any of the responses to Min's article or any other research that contradicts Min's claims.

Yes, do read Min's article, and then read the OP and the numerous links provided in the OP. You'll see that Min simply ignores all kinds of evidence and that he distorts other evidence. For starters, compare Min's article with economist Veronique de Rugy's article in Reason magazine. Here's an excerpt from de Rugy's article:

Myth 1: The government-sponsored housing finance companies Fannie Mae and Freddie Mac had nothing to do with the housing crisis. They were simply innocent bystanders caught in the crossfire. Economist and New York Times columnist Paul Krugman, for instance, has argued that Fannie and Freddie’s role in the housing market was insignificant between 2004 and 2006 because “they pulled back sharply after 2003, just when housing really got crazy.” According to Krugman, Fannie and Freddie “largely faded from the scene during the height of the housing bubble.”

Fact 1: Fannie and Freddie contributed to the housing crisis by making it easier for more people to take out loans for houses they could not afford. Beginning in 2000, Fannie and Freddie took on loans with low FICO scores, loans with low down payments, and loans with little or no documentation.

The federal government’s role in the housing market goes back at least to 1938, but that role changed fundamentally in the 1990s when the government made a push to increase home ownership in the United States. At that time, the federal government pursued several policies that were meant to encourage banks to lend money to lower income earners and to give incentives to low income earners to buy houses. The result, as we now know, was a gigantic amount of subprime mortgages at a time when house prices were starting to go down.

In 2010, Edward Pinto, a resident fellow at the American Enterprise Institute who has served as chief credit officer at Fannie Mae, issued a memorandum on the number of subprime and other high-risk mortgages in the financial system immediately before the financial crisis. In that memorandum, Pinto recorded that he had found over 25 million subprime mortgages (his later work showed that there were approximately 27 million). Since there are about 55 million total mortgages in the United States, it means that as the financial crisis began, half of all U.S. mortgages were of inferior quality and liable to default when housing prices stopped rising, as you can see in the chart below.

Freddie and Fannie were active players in this market.

For instance, as George Mason University economist Russ Roberts explains in his paper “Gambling with Other People’s Money”:

"Fannie and Freddie bought 25.2% of the record $272.81 billion in subprime MBS [mortgage-backed securities] sold in the first half of 2006, according to Inside Mortgage Finance Publications, a Bethesda, MD-based publisher that covers the home loan industry.

"In 2005, Fannie and Freddie purchased 35.3% of all subprime MBS, the publication estimated. The year before, the two purchased almost 44% of all subprime MBS sold.

"In addition, lawmakers in both parties enacted policies directed at increasing home ownership rates, resulting in lower mortgage underwriting standards for Fannie and Freddie. Roberts notes that from 2000 on, Fannie and Freddie bought loans with low FICO scores, loans with very low down payments, and loans with little or no documentation. Contrary to Paul Krugman’s assertions, Fannie and Freddie did not “fade away” or “pull back sharply” between 2004 and 2006."

As the following chart from Roberts’ study shows, during that same time Government Sponsored Enterprises (GSEs) bought near-record numbers of mortgages, including an ever-growing number of mortgages with low down payments. (The Truth About Fannie and Freddie’s Role in the Housing Crisis)​

And here is an excerpt from Edward Pinto's response to Min's article:

Most significant was the policy to largely eliminate downpayments for targeted borrowers. As the government demanded more and more such lending, particularly those with incomes below 80 percent of median and special target groups, virtually the entire industry responded by moving further and further down the demand curve and out the risk curve. FHA, Fannie, Freddie, banks, subprime lenders, Alt-A lenders, first-time buyers, repeat buyers, and cash-out refinance borrowers all became much more highly leveraged. Moral hazard became rampant as downpayments and initial equity disappeared throughout much of the housing finance system.

Other loan risk factors were magnified by the push to reduce equity. My Forensic Study documents that self-denominated subprime first mortgages traditionally had 20 percent or more initial equity. In 1989 cash equity of 20 percent or more was common on “A-” subprime loans, with several investors setting a maximum LTV of 75 percent.3 Maximum LTVs of 70-75 percent and 60-70 percent respectively were required on subprime “B” and “C” loans. In 1991, Fannie and FHA’s median LTVs were about 73 percent4 and 95 percent respectively. The GSE Act mandated that Fannie and Freddie undertake an entirely new mission to compete with FHA and traditional subprime lenders. (Government Housing Policy: The Sine Qua Non of the Financial Crisis - AEI)​
Here are a few articles that I did not include in the OP:

Acorn and the Housing Bubble

A Q&A with Peter Wallison on the 2008 financial crisis and why it might happen again

The CAP-AEI Fannie Mae Food Fight

Role of Fannie & Freddie in Driving Financial System Leverage

Ed Pinto: Fannie and Freddie accept responsibility for misleading investors | Zero Hedge | Zero Hedge

The House That Uncle Sam Built | Peter J. Boettke

Government-Sponsored Meltdown
 
Once and for all, let’s get the facts straight about the 2008 recession, aka the Great Recession. We continue to see liberals claim that Bush’s economic policies caused the recession, which is ludicrous. There were several causes of the 2008 recession, but the main cause was disastrous federal intervention in the housing market, followed closely by Federal Reserve monetary policy and the unrealistic mark-to-market accounting requirements established by the Sarbanes-Oxley bill. Some facts:

* No one denies that toxic assets triggered the financial meltdown. But where did those toxic assets come from? No one denies that most of those assets were bad home loans (many of them subprime and alt-A loans). So how did we end up with so many bad home loans?

* In the 1995, the Department of Housing and Urban Development (HUD) established a target goal relating to the home ownership rate among low-income groups, which was eventually set at 70 percent. Then in 1999, HUD directed Fannie Mae and Freddie Mac to relax their requirement standards on mortgage loans, including a move toward sub- and non-prime loan approval, yet maintained their inability to make moves in the non-conforming market. During the 1990s, the GSE share of mortgage loans with high loan-to-value ratios rose from around 6 percent of purchases in 1992 to 19 percent in 1995.

* From 2001 to 2006, sub-prime loans increased from $120 billion (5.5 percent of U.S. mortgage originations) to $600 billion (20 percent of the U.S. mortgage market originations. The level of borrowing against equity in home mortgages increased from $130 billion (6 percent of the U.S. mortgage market) in 2001 to $430 billion (about 15 percent of the U.S. mortgage market) in 2006. Thus, the total level of non-prime home loans reached 48 percent of the mortgage market in 2006.

* The federal Credit Relief Act (CRA), which pressured lenders to make unwise home loans to low-income people, played a major role:

Sizable pools of capital came to be allocated in an entirely new way. Bank examiners began using federal home-loan data—broken down by neighborhood, income, and race—to rate banks on their CRA performance, standing traditional lending on its head. In sharp contrast to the old regulatory emphasis on safety and soundness, regulators now judged banks not on how their loans performed, but on how many loans they made and to whom. As one former vice president of Chicago’s Harris Bank once told me: “You just have to make sure you don’t turn anyone down. If anyone applies for a loan, it’s better for you just to give them the money. A high denial rate is what gets you in trouble.” It’s no surprise, then, that as early as 1999, the Federal Reserve Board found that only 29 percent of loans in bank lending programs established especially for CRA compliance purposes could be classified as profitable. . . .

Was there a high enough level of CRA-related lending to spark our current crisis? Not on its own, of course. The crucial link was the extension of CRA-type thinking and regulation to the secondary mortgage markets through the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which buy loans from banks in order to provide liquidity. Beginning in 1992, the Department of Housing and Urban Development pushed Fannie and Freddie to buy loans based on criteria other than creditworthiness. These “affordable housing goals and subgoals”—authorized, ironically, by the Federal Housing Enterprises Financial Safety and Soundness Act—became more demanding over time and, by 2005, required that Fannie and Freddie strive to buy 45 percent of all loans from those of low and moderate income, including 32 percent from people in central cities and other underserved areas and 22 percent from “very low income families or families living in low-income neighborhoods.” As one former Fannie Mae official puts it: “Both HUD and many advocates in the early 2000s were anxious for the GSEs to extend credit to borrowers with blemished credit in ways that were responsible”. . . .

But the CRA advocates, including the New York Times, continue to claim that CRA-qualified loans made by regulated financial institutions performed well and shouldn’t be implicated in our current troubles. They point to the results of an evaluation of CRA loans by North Carolina’s Center for Community Capital, which found that such loans performed more poorly than conventional mortgages but better than subprime loans overall. What they don’t mention is that the study evaluated only 9,000 mortgages, a drop in the bucket compared to the $4.5 trillion in CRA-eligible loans that the pro-CRA National Community Reinvestment Coalition estimates have been made since passage of the Act. There has been no systematic study, by either the Government Accountability Office or the Federal Reserve, of the performance of loans cited by banks in their CRA filings. Many such loans weren’t even underwritten by the banks themselves, which often purchased CRA-eligible loans (advertised in such publications as American Banker) and then resold them. Again, the emphasis was on showing regulators that loans were being made—not how they were performing. How could such a system not lead to problem loans and high delinquency and foreclosure rates? (The Financial Crisis and the CRA; see also The CRA Scam and its Defenders)​

Let’s repeat some of these facts:

-- By 2005 HUD required that Fannie and Freddie strive to buy 45 percent of all loans from those of low and moderate income, including 32 percent from people in central cities and other underserved areas and 22 percent from “very low income families or families living in low-income neighborhoods.”

-- From 2005 to 2007, Fannie and Freddie bought approximately $1 trillion in subprime and Alt-A loans. This amounted to about 40 percent of their mortgage purchases during that period. Moreover, Freddie purchased an ever-increasing percentage of Alt-A and subprime loans for each year between 2004 and 2007.

-- Nearly 4 in 10 subprime loans between 2004 and 2007 were made by CRA-covered banks such as Washington Mutual and IndyMac. And that doesn't include loans made by subprime lenders owned by banks, which were in effect covered by the CRA.

* Starting in 2004, Bush and Congressional Republicans realized that Freddie and Fannie’s intervention was becoming dangerous and problematic, and they sought legislation to restrain Freddie and Fannie, but the Democrats blocked all such legislation.

Bush and McCain Warned Democrats of Housing Crisis and Financial Meltdown

Democrats Covering Up Fannie and Freddie Scandal

Democrats Blocked Reform of Freddie and Fannie

* The fatally misguided mark-to-market standards imposed by Sarbanes-Oxley greatly contributed to the financial crisis:

Chief economist Brian S. Wesbury and his colleague Bob Stein at First Trust Portfolios of Chicago estimate the impact of the "mark-to-market" accounting rule on the current crisis as follows:

"It is true that the root of this crisis is bad mortgage loans, but probably 70% of the real crisis that we face today is caused by mark-to-market accounting in an illiquid market. What's most fascinating is that the Treasury is selling its plan as a way to put a bottom in mortgage pool prices, tipping its hat to the problem of mark-to-market accounting without acknowledging it. It is a real shame that there is so little discussion of this reality." (Suspend Mark-To-Market Now!)​

Sources for further reading:

The Great Recession, 10 Years Later | Richard M. Ebeling

How Government Housing Policy Led to the Financial Crisis

Sarbanes-Oxley in the Light of the Financial Crisis

Congress Should Repeal or Fix Section 404 of the Sarbanes–Oxley Act to Help Create Jobs

The Government Did It

Did Deregulated Derivatives Cause the Financial Crisis? | Robert P. Murphy

Mark-to-Market Triggered This Recession; It Will Also Trigger the Recovery | Seeking Alpha

Five bad Clinton and Bush-era policies that caused the Great Recession

Fed study says Bush and the banks didn't cause the Great Recession. The Fed did - AEI

The CRA did not cause the real estate bubble. That's been thoroughly debunked approximately one zillion times on this forum alone.
 

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