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Unqualified home buying culprit in financial disaster

by YankeeJim | December 16, 2010 at 06:48 am

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Clinton-era policy was a disaster and there is no doubt about it. Compounding the mistakes by home buyers were the banks and financial institutions exploiting the situation with derivative transactions.

Add wars we can’t afford and a fake economy based on electronic commerce notions that went bust with dot.coms and there you have it.

“Crisis panel's GOP members blame U.S. housing policy for financial plunge

By Zachary A. Goldfarb and Brady Dennis

Washington Post Staff Writers
Thursday, December 16, 2010; 12:48 AM

Republicans on a congressionally appointed panel studying the causes of the financial crisis largely blamed federal housing policy in a brief paper Wednesday that highlighted how differently the right and the left view the origins of the crisis.

Splintering from their Democratic counterparts, the four GOP members of the Financial Crisis Inquiry Commission pointed the finger at politicians in Washington for promoting lax mortgage lending standards that allowed lower- and moderate-income people to buy homes beyond their means.

Specifically, they wrote, the Clinton and Bush administrations turned mortgage finance companiesFannie Mae and Freddie Mac, chartered by Congress to expand homeownership, into "two enormous monoline hedge funds" whose "only option available was to invest in mortgages of increasingly lower quality and higher risk to the taxpayer."

While the 10-member FCIC was originally intended to emulate the 9/11 Commission, which released a widely respected study of intelligence failures before the 2001 terrorist attacks, the panel has struggled through political tension and staff turnover, including the departure of the report's lead writer.”