Here’s a bit of animation that tries to explain just how the US got into this financial mess. It’s a pretty simplistic, if not completely accurate, lesson. Some omissions include the government’s role in pushing sub-prime (aka Risky) mortgages onto the market… But overall, a nice “Economic Crisis for Dummies” lecture.
Tag Archives: subprime
The Predators’ Ball
Fannie Mae and Freddie Mac have helped defang laws that might have prevented the subprime mess.
Aug. 18-25, 2008 issue
Roy Barnes is a self-described “small-town” lawyer with a mane of silver hair and an Andy Griffith drawl. But like Griffith’s Ben Matlock, the TV character he resembles, Barnes is the furthest thing from a rube. He comes from a family of bankers, and back in the ’90s Barnes saw, far before many in Washington, what was happening as deregulation took lending further away from the local banks and gave it to mortgage brokers and Wall Street. So when Barnes was elected governor of Georgia in 1998, he decided to push through the toughest antipredatory lending law in the country. The 2002 law made everyone up the line, including investment banks on distant Wall Street and rating agencies like Standard & Poor’s, legally liable if the loans they sold, securitized or rated were deemed unfair. “There has to be accountability,” Barnes told NEWSWEEK. “In the end you have to be able to say, do I really want to make this loan? Because I may have to eat it.” “A victory for Georgia consumers,” the Atlanta Journal-Constitution called the new law, which was also hailed by AARP and the NAACP.
[ED: In an effort to trace the recent economic collapse, Dan Dafler dug deep in to the Internet archives of the NY Times to bring you this byline from 1999 – smack dab in the “Clinton Years”. We’ve added the bold text for emphasis.]
September 30, 1999
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.