Re: [asa] Deregulation Madness was Re: Ben Stein on Sub Prime Mortage Crisis...

From: Rich Blinne <rich.blinne@gmail.com>
Date: Mon Dec 08 2008 - 00:14:39 EST

On Dec 7, 2008, at 9:17 PM, John Walley wrote:

> But wouldn't the Community Reinvestment Act (CRA) be an example of
> gov't regulation rather than the dreaded deregulation? Wouldn't the
> sub-prime issue been avoided if not for this gov't interference in
> the market?
>
> Thanks
>
> John
>

No, because the CRA wasn't the problem. Roughly 85% of the loans were
prime and they were by statute issued only by commercial banks and
according to commercial bank rules. It was the unregulated bundling
and predatory loans by non-commercial banks and third parties such as
CountryWide that was the problem. One of the more noxious things about
this debate is the blaming of victims. It was not the poorer people
who bought modest homes that caused the problems. Rather, it was the
people who were financing the McMansions using "creative" financing.

Rich Blinne
Member ASA

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Received on Mon Dec 8 00:15:37 2008

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