Tuesday, October 7, 2008

How the Dems Caused the Housing Bubble

Here's a primer on the Community Reinvestment Act that explains, step by step, how the Democrats interfered in the market by forcing banks to give mortgages to people who were supremely unqualified.

The housing bubble, and the bust that followed, were not -- as Democrats whine -- caused by a lack of government regulation. To the contrary, we face an economic crisis caused by government social engineering. Democrats assumed that if we enable poor people to buy a house, then ipso facto, they have joined the middle class. Right, that notion of getting the job before the house and saving a down-payment is so conservative -- just another tool of oppression by old white guys.

The bailout was necessary to correct the market distortions caused by the government literally punishing banks who engaged in prudent lending, the kind of lending that enraged Democratic special interest groups. It was an act of courage to support the bailout to clean up the disaster that the Democrats wrought.

John McCain tried to warn us five years ago that Fannie and Freddie were out of control. But Barack Obama -- the Senator who received the second highest amount of campaign donations from Fannie and Freddie -- failed to exercise his famous judgment on anything but advancing his own career.

This, from the presidential candidate who looks to Franklin Raines for housing advice -- and for all we know might put Raines in his cabinet. After all the millions of dollars that Raines collected in bonues for running Fan and Fred into the ground, Raines is no doubt prepared to live on a government salary without cutting his living standard.

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