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Inside Information About the Sub-prime Mortgage Crisis

By Selwyn Duke

Writer Marilyn Barnewall has written a piece about the sub-prime mortgage crisis titled "Dollar Woes: Part of a One World Government Conspiracy?"  Marilyn is a fine lady who I occasionally correspond with, and she also used to work in the banking industry.   Thus, she can offer a rarely-heard perspective on the situation in question.

Marilyn points out something of which most are unaware.  To wit: The current mortgage crisis was partially caused by what is, in essence, government-mandated affirmative action.  She writes:

If you have not heard of the Community Reinvestment Act of 1977, ( CRA
) Wikipedia has a good explanation of it. It was signed into law by
Jimmie Carter after being passed by a Democrat-controlled Congress.

CRA
has always been a pain in the posterior. As a banker in the 1970s, I
was involved in the implementation of this Act. It was part of the
reason I decided to resign my vice-presidency and start my own bank
consulting company. Basically, CRA forces banks and some other
financial institutions to make loans to people who do not qualify for
them… people who live in "communities of color," as the Act puts it.

Ah, so the truth comes out.  It figures that leftist social engineering is part of the root cause of the problem; it’s the root cause of most everything ailing us.  This is also typical of how statists operate, of how they grow government.  First they cause a crisis with bone-headed leftist policies — meddling in things not within government’s scope — and then pretend the market is at fault.  Next comes the coup de grâce.  They march in like a white knight on a tall horse and offer the cure:

More government intervention.

Yes, socialism is what we need, by gum.

Marilyn’s article is definitely worth a read.  The only area where I may part company with her is when she mentions a possible conspiracy related to this; however, it is a very small part of the piece and is framed as food for thought.  And there’s nothing wrong with that.

As for my position on conspiracies, I like to quote that old maxim:

"Never attribute to malice what can be better explained through stupidity."

Read the rest of Marilyn’s piece here.

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5 responses to “Inside Information About the Sub-prime Mortgage Crisis”

  1. Jason Christensen Avatar
    Jason Christensen

    Enlightening. If we speak about stupidity, we should also include the American public who:

    Failed to read the terms of their agreements
    Blindly looked past their financial capabilities so they could afford a home well outside their means.
    Refinanced their homes to the max so they could squeeze money out of their home’s value to support their overzealous spending habits.
    So far, fingers of blame have been pointed in every direction but except to themselves. Unfortunatley, the only real government intervention that should occur is the education of our youth in regards to financial management, but it seems these days were more concerned about our kids knowing how to put a condom on a cucumber.

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  2. Walt Avatar
    Walt

    The Gov’t must intervine for any semblance of stability. The Gov’t got us into the mess now it must help businesses that support the USA survive. Then the Gov’t needs to back off and get out of the puppet master biz. The gov’t is waaaaaaay to big.

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  3. mike Avatar
    mike

    Ditto! The article is just an affirmation of something you suspect but cant be sure of until you read it from someone who knows. Thanks for the heads-up and link Selwyn

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  4. Mark Denton Avatar
    Mark Denton

    Of course, blame excess and greed on a policy from 1970’s! Funny how Cons are all about personal responsibility, unless it applies to them and then it’s someone elses fault.
    As a former Director at a K.C. based Top 15 Sub prime originator, I think I can provide just as compelling an argument of Reaganomics “crashing” in 1987 and it’s reincarnation doing the same in 2007.
    First, when W’s tax policy’s are creating trillions of dollars in additional wealth at the very top, that money needs to go somewhere and it needs to earn sweet returns.
    Subprime was a perfect solution! 10 – 15% Interest rates on Subprime loans meant great margins for the excess trillions…But that wasn’t enough, need more, more! Got to compete, got to keep those quarterly dividends growing…
    So a business I started with in 2003, which required a 640 Credit score and proof of employment, morphed into the company I left in 2007 that required a 480 Credit Score and introduced a line of NINA (No Income, No Assets) loans.
    Sorry, that is greed, not a policy from the 70’s.
    Add to that the real “foreclosure” issue, which isn’t the lower income risky buyer, it’s the guy that was buying up multiple houses, condos etc. in “hot” markets and flipping them to make a killing. Once the bottom dropped out, those savvy investors bailed on their properties like Rats on a sinking ship!
    But hey, your typical Con can’t stand a single mother getting “help” in the means of $400 a month in food stamps…But they won’t flinch a bit when the Govt. steps in with $360 BILLION in assistance to company’s that just last year paid over $40 Billion in Bonuses.

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  5. investment property rental mortgage advice Avatar
    investment property rental mortgage advice

    We are really on the mortgage crisis right now and i hope the government will make a move to solve this problem.
    -James

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