I believe a recent essay that appeared on Slate.com is worth reading carefully.
One item of interest is the role of the Community Reinvestment Act. Here's a fact: CRA requirements apply almost exclusively to regulated, depository banks and not to the unregulated financial institutions that contributed most to the current meltdown. Interesting stuff.
Poor folks aren't to blame. We serve thousands here. Almost no one under 50 in my world owns a home.
Here's an excerpt from the Slate essay by Daniel Gross:
Look: There was a culture of stupid, reckless lending, of which Fannie Mae and Freddie Mac and the subprime lenders were an integral part. But the dumb-lending virus originated in Greenwich, Conn., midtown Manhattan, and Southern California, not Eastchester, Brownsville, and Washington, D.C. Investment banks created a demand for subprime loans because they saw it as a new asset class that they could dominate. They made subprime loans for the same reason they made other loans: They could get paid for making the loans, for turning them into securities, and for trading them—frequently using borrowed capital.
At Monday's hearing, Rep. John Mica, R-Fla., gamely tried to pin Lehman's demise on Fannie and Freddie. After comparing Lehman's small political contributions with Fannie and Freddie's much larger ones, Mica asked Fuld what role Fannie and Freddie's failure played in Lehman's demise. Fuld's response: "De minimis."
Lending money to poor people doesn't make you poor. Lending money poorly to rich people does.
Read the entire article here.