It's true -- except that I already said that poor people didn't do it. The government did. I'm sorry none of your Leftist friends told you all about it already. Who knew ... they would be so remiss?
The government forced investment banks into over-leveraging themselves, by as much as 30-to-1? They forced CDO indexes to rely on a crude single-factor Gaussian default correlation? They caused the credit-derivatives market to grow to over $62 trillion by September of this year?
So, what are you saying? That this must have been caused by normal market forces? If you have something to share, then enlighten your readership. Belittling vitriol is not a currency accepted here.
What part of the chart do you disagree with? Do you dispute the facts, or the effects of these laws and other actions by governmental agents? What effect did these mandates have on the behaviors of the lenders that sold to Fannie Mae and Freddie Mac? And what is your opinion of Fannie Mae and Freddie Mac as institutions?
First of all, asking questions is vitriolic? I'm suggesting that this chart does not nearly capture the scope of the problem. It in no way addresses the issues of CDOs and the over-leveraging of same.
One problem with the chart is that the Home Mortgage Disclosure Act and the Community Reinvestment Act were passed in 1975 and 1977, respectively, not "in the '90s." I think it's a stretch to say that these 30-plus year old bills merely sat on the sidelines until the last 2 years when they decided to cause a crisis.
Right, that would be an excellent point and was a glaring question I had, too; but I believe that these laws from the 70s were given their teeth in the 90's, the teeth that were responsible for this bite. That's my understanding, and I would have to go back to my sources to answer any more detailed question about how this ultimately affected particular kinds of financial instruments. I have to say that I don't know what a CDO is; and I thought over-leveraging was one of the effects on lender behavior in response to the new incentive (and punitive) laws, but I could be wrong. I would have to do some serious work to learn about financing to apply in detail my broad economic principles. I wonder if the Teaching Company has a course on high finance
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What part of the chart do you disagree with? Do you dispute the facts, or the effects of these laws and other actions by governmental agents? What effect did these mandates have on the behaviors of the lenders that sold to Fannie Mae and Freddie Mac? And what is your opinion of Fannie Mae and Freddie Mac as institutions?
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One problem with the chart is that the Home Mortgage Disclosure Act and the Community Reinvestment Act were passed in 1975 and 1977, respectively, not "in the '90s." I think it's a stretch to say that these 30-plus year old bills merely sat on the sidelines until the last 2 years when they decided to cause a crisis.
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