The Real Culprits In This Meltdown

... Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.

The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but "predatory.

While government arguably has a role in helping low-income folks buy a home, Clinton went overboard by strong-arming lenders with tougher and tougher regulations, which only led to lenders taking on hundreds of billions in subprime bilge.

Market failure? Hardly. Once again, this crisis has government's fingerprints all over it.

[until that time lenders, in typical actuarial fashion, ran the numbers and learned that some neighborhoods simply were to high a risk of not being paid back - and so were 'red lined' to exclude from loans.

A 'disproportionate' number of the neighborhoods were predominantly black. Naturally, 'redlining' was deemed racists, and the rules loosened to have Fannie (predominantly) buy such loans.

Yes there's more to it - but that was the first domino that fell into the others: government interference]

The solution? More government?]

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