That was a really precient article! It just about predicted the future 10 years ago.

We all know the old expression, "The road to hell is paved with good intentions." This appears to be the case here, as the goals of the regulations were admirable: extend home ownership to demographics that are currently underrepresented in that department. Why? Because home owners take more pride and care in their communities, which therefore leads to better cared-for neighborhoods and upward mobility for traditionally poorer Americans. Maybe it just makes sense in boom times like 1999 and it was bound to go bust.

However, I take umbrage with the statement that banks were "forced to make bad loans". Nowhere in the CRA or any other regulation does it say you need to loan to people that have no income. Nowhere does it say you need to loan a half-million dollars to someone that should only be borrowing $200K. Nowhere does it say that banks or mortgage broker should be pushing these ARMs that start at 4% and then skyrocket, or tell buyers that there will always be Refi opportunities so don't worry about signing for a mortgage that will be out of reach next year.

I don't think we're ever going to agree completely with one another, but we should agree that the banks and lenders are neither innocent nor victims of overregulation. I agree with you that hard quotas are usually a bad thing; guidelines tend to work better. But the banks took all sorts of risks that were not written into regulation because there was quick and dirty cash available. I won't say the gov't is absolved of their responsibility in this matter but I definitely won't say the banks are either.

It's been an enlightening conversation. Good talking with you too.

Compared to the last administration, I'd say we're in good hands. The Bush administration was like asking a prayer healer who doesn't believe in surgery to operate on you.

I certainly cannot go point-for-point with you, as I'm no expert in these matters, but I believe that government regulations provide a framework for business, and a combination of ethical business practice and honest oversight is needed to make them work. I'm not saying that the regulation was written well, I just don't know about that, but I do know there was not much concern for honest oversight the last 8 years, and that led to a breakdown of ethical business practices, as everyone in the market has to follow suit to keep up with those gaming the system.

The thing I find interesting is how many people are "disconcerted" with the makeup of Obama's administration who were not at all disconcerted when Bush was putting the very people who lobbied against regulation in charge of upholding and defending those regulations in their various industries. Those who don't believe in government have no business running it.

Chihuahua,
I really appreciate your comments, as a friend of mine was trying to illustrate how gov't requirements helped along this crisis, but he didn't have the facts to make it stand up. However, to say you have not named one party over the other is ridiculous, as you've pointed out Obama and his Administration and Chris Dodd as the culprits. If that's not naming the Democratic Party I don't know what is. (Not to mention "The interference of the Fed Gov’t in the free market is what led to it" is pretty much naked Republican ideology.)

Now, let's call it straight. The Free Market allowed redlining in the first place, and the gov't addressed it in the name of fairness and justice. The banks and other moneymongers figured out how to get rich off it, and then it all collapsed. The question remains, I guess, whether the banks and mortgage brokers would or would not have come up with the idea of Subprime Mortgages without gov't regulation. Honestly, did the gov't force lenders to give to unqualified applicants, or did they do it because there was money to be made?