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For accuracy, the Clinton-era laws against discrimination in housing (which caused the 2007 financial meltdown, by the way) were not justified by deliberate racial animus, but by “disparate impacts.”

Essentially, the government said, “we recognize that banks are doing what they’re doing for legitimate reasons, namely, because the blacks who have been rejected for loans are more likely to default on those loans. The point is that by creating policies to prevent bad loans, you have hurt black people more than white people. This means that more black people have to pour their money down the drain by renting, which perpetuates the poverty that is the excuse for rejecting loans to more black people.”

The bank that most resisted “leveling the playing field,” racially would be the one that was the most economically successful, since it made the fewest risky loans.

So, bankers and the government, including Republicans and Democrats, came up with a plan by which banks and their investors could share the risk: CDOs. The Bush administration even tightened the rules on bankruptcy in part to make CDO safer.

The problem was that the Clinton administration, supported later by the Bush administration, changed the rules AFTER the Gramm bill. Banks had to lend equally not only to blacks, but also to Hispanic immigrants, of whom a large percentage were illegal aliens. Once illegal aliens went underwater, they disappeared, their debts included. No bankruptcy.... just disappearance.

The more illegal immigrants disappeared, the more housing values went down, meaning more houses went underwater, encouraging more illegal immigrants to disappear, further driving housing values. Soon, the entire economy was collapsing and people were losing their jobs meaning they defaulted on their loans, driving housing prices down further.