Thank you for the link. I read it. But he isn’t entirely correct. What really caused the problem wasn’t just the bad loans, but the derivatives based upon them. On those two links I gave above, Steven Eismann figured this whole scheme out and started shorting this crap. The other link tells you how the “dog crap” got transmuted into AAA dog crap. And why.
CRA loans were never more than 3% of originations. Check out the Republican Congressional report by Issa. If you need link I will provide it.
The above 3 links should give you plenty to think about, but if you are still unconvinced and I will send you more. Seems like a woman named Brooksley Born tried to stop this and was shut down by Greenspan, Rubin, Summers, and Clinton. It was the derivatives gambling that really nailed us.
The reason why I am pointing this out so much is that Obama is going to try to re-regulate the derivatives market and I suspect Wall Street and the GOP will go apesh*t.
parsy, who has been reading up on this stuff
“CRA loans were never more than 3% of originations.”
There’s a response to this here by John Carney, summarizing the debate:
http://www.businessinsider.com/the-cra-debate-a-users-guide-2009-6
Also, another article by Carney:
“As much as I respect Barry’s formidable analytical powers, I’m afraid he’s taken too narrow of the view of the matter. His question is far easier to answer than he suspects. Regulations often touch those who are not directly regulated. Indeed, the regulation of one group in a marketplace will almost always wind up affecting other groups.
More concretely, there are three very specific ways in which the CRA nudged Countrywide and other mortgage companies to adopt lax lending standards.”
There’s also an exchange between Sailer and Barry Ritholtz here.
http://isteve.blogspot.com/2009/06/mr-ritholtz-has-question.html