Tuesday, September 16, 2008

A hidden cause of the mortgage crisis

An editorial from the Investors business daily does lay a lot of the blame for the mortgage meltdown on the government - the Clinton government that is. Here are the key excerpts:

"But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street's most revered institutions.

Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.

The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans..."

This is what happens when the government interferes in the private market... catastrophe.

The Democrats obsession with social tinkering has now cost the U.S. economy hundreds and hundreds of billions of dollars, helped to destroy some of our oldest and most prestigious firms, and forced the U.S. taxpayers to foot the bill for tens of billions of dollars in loses.

The virtues of multiculturalism are debatable but we must understand that the government, by its very nature and essence, is a destructive entity that corrupts everything in its sphere of influence. 

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