I've been watching with astonishment as right wing nut cases have been pushing the blame for the credit crisis to minority homeowners and Freddie and Fannie Mac.
How convienient for conservatives that the two reasons were are in this mess have to do with either people associated with or supporting Democrats (e.g. poor blacks and hispanics) or government entities that conservatives hate.
But these are all false.
Yes, Freddie and Fannie Mac and minority homeowners were involved but that's like there being a raging fire in a forest and blaming the trees and the leaves for starting the fire.
I would just like to put down some talking points so we can all get on the same page and we can write to the local newspapers expressing our points.
Conservative Talking Point 1:
You should blame this mess on the Community Reinvestment Act that forced banks to give loans to people who shouldn't be getting those loans.
Progressive Counter Point 1:
That's silly and stupid.
First, banks lend money to make money and not because they think it's their moral duty or because the government told them to lend money.
Second, The Community Reinvestment Act was written in 1977 to require banks to lend in low-income neighborhoods where people had deposits. Most of the subprime loans were made by mortgage firms that are not regulated by CRA because CRA has to do with only banks.
Third, Given the higher degree of supervision and regulation, loans made under the CRA program were made in a more responsible way than other subprime loans. CRA loans carried lower rates than other subprime loans and were less likely to end up securitized into the mortgage-backed securities that have caused so many losses, according to a recent study by the law firm Traiger & Hinckley
Conservative Talking Point 2:
You can blame Freddie and Fannie Mac.
Progressive Counter Point 2:
That is stupid and silly.
First, Freddie and Fannie don't give out loans to people. They buy loans from banks and then pool those loans and sell them to investors. Again, the problem is that the mortgage companies and banks were giving out bad loans because there was a global demand for the securitized mortgages.
Let me say this again: Fannie and Freddie didn't originate any of the bad loans -- that disastrous piece of work was done by purely private, largely unregulated companies, which did it for the usual bubble-logic reason: to make a quick buck.
Second, Freddie and Fannie didn't get involved with the really toxic subprime loans late in the game. It was stupid, yes, and they should have been better regulated, thanks Republicans, but this is not the reason for the financial mess.
Conservative Talking Point 3:
The borrowers are to blame. They fradulently took out loans they knew they couldn't pay back. ( wink wink the blacks or hispanics)
Progressive Counter Point 3:
WTF are you talking about?
First, Banks lend money to make money.
Second, A 2007 report by the Mortgage Bankers Association reports that the FBI estimates "80 percent of all reported fraud losses arise from fraud for profit schemes that involve industry insiders." That means the lenders, not the borrowers.
Okay, well that is all of the points that I could think of off the top of my head. If you know any crazy reasons that conservatives are using for this financial mess let me know and I'll try to think of a good talking point.