Submitted by derekcrane (not verified) on October 6, 2008 - 10:03am.
All of this is mere speculation without testing various contributing factors in a sound econometric model. So far as I know no one has yet to endeavor on such a massive task. However, I surmise that some of the likely culprits would include HUD requirements on Freddie and Fannie to purchase subprime loans, NINJA loans, the growth of Mortgage-backed securities, the FED’s artificially low interest rates, increased power and influence of community groups like ACORN and NACA, proliferation of subprime originators, the compromise Gramm-Leach-Biley Act of 1999, creation of credit default swaps and many other factors including the CRA and its many revisions through the years.
I suspect (and, yes, this is speculation) that the CRA got the ball rolling down the hill and picked up all the accretions mentioned above to create the massive financial problem we face today. This CRA stone picked up a lot of moss on it way down. I would guess that the CRA is responsible for about a third of the damage, but the whole problem would not have started without its passage in 1977.
CRA
All of this is mere speculation without testing various contributing factors in a sound econometric model. So far as I know no one has yet to endeavor on such a massive task. However, I surmise that some of the likely culprits would include HUD requirements on Freddie and Fannie to purchase subprime loans, NINJA loans, the growth of Mortgage-backed securities, the FED’s artificially low interest rates, increased power and influence of community groups like ACORN and NACA, proliferation of subprime originators, the compromise Gramm-Leach-Biley Act of 1999, creation of credit default swaps and many other factors including the CRA and its many revisions through the years.
I suspect (and, yes, this is speculation) that the CRA got the ball rolling down the hill and picked up all the accretions mentioned above to create the massive financial problem we face today. This CRA stone picked up a lot of moss on it way down. I would guess that the CRA is responsible for about a third of the damage, but the whole problem would not have started without its passage in 1977.