A three year fuzz? Get a clue the snowball down the hill started under Clinton:
(1) Main Culprit: Community Reinvestment Act - Like communism it's good on paper, horrendous in practice. This law forced banks to lend a certain percentage to lower income individuals and minorities or loss tax benefits, face fines and other punitive measures. Banks were forced to give away money to people less likely to be able to pay it back. The lenders are too blame also, but fly by night subprime lenders sprung up like Fremont, New Century, Long Beach and of course Ameriquest. They tosses out the matrix and expanded the stated income/no doc program (intended only for the self-employed who had trouble showing their income) to W2 borrowers. Lenders had to toss out the matrix to compete and stay in compliance with the CRA. This easy money policy artificially SKYROCKETED home values at rates never seen in history. The CRA is the MAIN CAUSE!
(2) Secondary Culprit: Fannie Mae and Freddie Mac powers extended! FM and FM were started in the 30s, but under Clinton their powers were expanded to create an artificial secondary mortgage market. This allowed fly-by-night lenders to write toxic loans, make a killing up front and sell then nearly instanteously for another killing. The original lender didn't care, because they made a huge profit, but took none of the risk. There is a reason that the record for the biggest loses any corp has taken in history has been FM and FM starting in '08, then beating it in '09, '10,'11 and '12. More toxic loans were created by this boneheaded protection than are measurable.
(3) Third Culprit: Repeal of Glass-Steagall Act. In GLB, an very good regulation whose aim was to protect privacy and it did, a tiny section of the act repealed Glass-Steagall. None of the three creators place this in the bill, it was brought through by compromise with others. It was an after throught and not the main theme or goal of the law. Nevertheless it was very impactful. It torn down a protection that was in place to prevent a conflict of interest between commercial banks (lenders), insurance companies and investment banks (brokerages). Horrendous idea that lead to lenders making toxic loans and brokers bundling many of these loans together into a new investment called the CDO stamping a triple AAA rating on them and selling them to well suckers!
(4) Other problems: Student Loans made nondischargable. More free money causes the product to skyrocket. College tuition have increase more since this bill than any product in history, it's destorying the inflation rate and creating minions of slave debtors to the government! College used to be expensive but affordable to middle class families, now it cost as much as a house and is NOT affordable to most middle class families!
NAFTA, China into WTO and removing trade barriers with China - All eroded the manufacturing sector making so much competition for high paying service jobs that employers could remove job security and under-pay for these jobs!
The snow-ball was pushed down the hill on Clinton's watch, but Bush ignored it and Obama is doing the same!
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