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Its really simple if you could follow logic in any sort of process.
Banks needed a mechanism to insure themselves against risk from the types of loans they needed to make to be in compliance with CRA. The government provided that with GSE underwriting, CDS legislation, legalzation of mortgage deriviative formulas that were not sound, approval of the rating system being used at the time, legalization of increased leverage, ever higher GSE targets---all of which occurred across 2 administrations and began in yet a third.
Its not a Dem problem or a Rep problem, its a DC establishment problem. They opened the door by creating mechanisms that allowed it to take place, then refused to regulate it before it crashed. Popular policy doesnt mean GOOD policy.
We're getting closer to agreement here, except for one significant phrase: "risk from the types of loans they needed to make to be in compliance with CRA." Compliance with the CRA did not require banks to lower their lending standards to comply. There seems to an assumption amongst the anti-CRA folks that ending racial discrimination and redlining results in higher risk loans. That is not factually correct and seems to be based on racist assumptions. The CRA requires evaluating potential borrowers as individuals, not as members of an ethnic group or residents of a particular neighborhood. If anyone could point to any CRA legislation or regulation that mandates lower standards then I would not be harping on this point.