What specific legislation or executive policies forced banks and mortgage lenders?

to give loans to people that couldn't really afford it? Or was more of a greed fueled, lack of integrity, clustergasm of nonregulation?What specific legislation or executive policies forced banks and mortgage lenders?
I believe it was only their greed.



They found a free rope and hung themselves, a typical greedy rich reaction.
Thank You. I'm truly honored.

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What specific legislation or executive policies forced banks and mortgage lenders?
In 1977, the Community Reinvestment Act, which forced banks to lend to uncreditworthy borrowers, was signed into the law by President Carter in the first year of his presidency.



In 1995 President Clinton signed an executive order which penalizes lenders that did not lend a specified quota of dollars to "underserved" communities which were low-income Blacks and Hispanics.



With the above two changes, the subprime market took off and from $35 billion in loans in 1994 and now Fannie Mae and Freddie Mac now own or guarantee almost half of the country's $12 trillion in mortgage debt.



So, as you can see, the housing crash has EVERYTHING to do with Democrats and OVER-regulation.





EDIT: I welcome those who "thumbs down" to post a direct reply stating why they don't accept these researchable facts. Otherwise you're just party liners who don't know a damn thing about this country.
There were definitely policies that created incentives to lend too easily. In particular, there was a lack of regulation of lenders.



But the only rules that would "force" lenders to make loans are rules saying that lenders can't discriminate based on race, gender, etc. Any lender can refuse to make a loan on the basis of the risk of non-repayment, and that's the way it's always been.



The Community Reinvestment Act of 1977 does not force any lender to make loans indiscriminately. If you read the Act, y ou would know.What specific legislation or executive policies forced banks and mortgage lenders?
The CRA did not "force" banks to give money to people who were not proper credit risks. What it did was eliminate the practice of redlining under which banks would not lend in a specific geographic area regardless of how good a risk someone was. Banks still had a fiduciary responsibility under the CRA to not make risky loans. However, the coupling of the CRA with the removal of restrictions under the Glass-Steagall Act (allowing investment bankers to enter the lending market) created vehicles which bankers believed lowered the risk of defaults to the bottom line, thus creating a demand (by the lenders) for more risky loans, leading to sub-prime lending. By allowing investment bankers to create complex derivative instruments that packaged sub-primes with primes (supposedly lowering overall risk), banks were able to sell more mortgages, providing more money for lending. As with typical supply and demand, the added supply of money for lending created a demand to issue more mortgages, leading, of course to the need to take on more risk as "safe" or low-risk borrowers became fewer in number. Couple this with a real estate bubble that finally burst just as many of these high-risk adjustable loans reached the adjustment point and you get your crisis.
The original Community Reinvestment Act was signed into law in 1977 by Jimmy Carter. Its purpose, in a nutshell, was to require banks to provide credit to “under-served populations,” i.e., those with poor credit.

In 1995, Bill Clinton’s administration made various changes to the CRA, increasing “access to mortgage credit for inner city and distressed rural communities,” i.e., it provided for the securitization, i.e. public underwriting, of what everyone now calls “sub-prime mortgages.



that's the facts, read 'em and weep
The Community Reinvestment Act

http://en.wikipedia.org/wiki/Community_R…



If deregulation was a problem, it was more a problem of oversight with Government Sponsored Enterprises (GSEs) like Fannie Mae and Freddie Mac. These institutions purchased subprime loans from mortgage banks and packaged them together as securities for resale to investment bankers. The government encouraged them to do this more and more, even pegging bonuses to Fannie Mae executives to the amount of mortgage-backed assets on the books. You may be familiar with the hearings to stop this:

http://www.youtube.com/watch?v=_MGT_cSi7…



The youtube video is several years before the financial meltdown. You can guess, from watching the video, which party blocked deregulation of Fannie Mae on the grounds that it would be racist and discriminatory.

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EDIT: Sadcat is woefully unaware of the manner in which the Community Reinvestment Act was enforced, or of the aggressive manner in which ACORN specifically went after bankers who did not lend in communities where they wanted them to. This is a part of my real life experience.



However, I will give him credit. Much of the mortgage money was originated by mortgage companies - not banks - that were not subject to CRA. Competitive pressures, and the willingness of Fannie Mae to purchase bad loans, were more the deciding factor.
Had the ratings agencies not TOTALLY shirked their responsibilities, I believe investors never would have invested so much in these ticking timebombs.



"Employees at Moody's Investors Service and Standard %26amp; Poor's privately questioned the value of some mortgage-backed securities that were given creditworthy ratings, saying they created a ``monster,'' according to e-mails released by a U.S. House panel.



``Let's hope we are all wealthy and retired by the time this house of cards falters,'' one e-mail from an S%26amp;P employee said."



Would'a should'a, could'a.



And more importantly, has anything changed since then? NOPE!
greed , predatory lending and de-regulation

these people just didn't realize that all of them were doing it, and those that did were getting too much money from commissions they did not care if they were lighting a fuse
CRA, repeal of Glass Steagall, Greenspan, and greed.
Community Reinvestment Act of 1977.

12 U.S.C. 2901 stat. 1147 title VIII
You mean what lack of government regulation caused the banks to give bad loans.
carter and Clinton forced it......all in the name of helping minorities.
CRA.



And threats from Janet Reno if they didn't make high risk loans.
0% interest rates force lenders to make bad loans.



Here take free money. Just dont lend it out badly?
absolutely none.

That is nothing but a right-wing lie used to prevent them from having to take responsibility for the free trade policies supported by republicans and their party nationalists, that put Americans in the position to default on their loan after losing their jobs to cheap foreign labor.

The Community Reinvestment Act never forced banks to give loans to people that could not afford them. It just made it so they couldn't discriminate against people who could afford the loan based on property location.

anyone who says otherwise has never read the thing.



Prior to the CRA banks would only give loans to the wealthy in wealthy areas while the middle class was forced to rent and never own.