Follow this link to a McClatchy Washington Bureau article that debunks the idea that Fannie Mae or Freddie Mac triggered the financial crisis by lending to minority home owners.
Before I read this article, I had said in an email to reader GinnySL,
I have not investigated the charges they make about Barney Frank interfering with regulating Fannie and Freddie because it would be so out of character for him that it is hard to believe. I also believe there is an issue with mortgages for underserved minorities that Barney Frank would have been for and the conservatives like to twist into saying he was against regulation. I just haven’t checked to see if their charges are only related to this issue.
By the way, conservatives like to blame sub-prime mortgages as the cause, but they are off the mark here too. There is nothing wrong, in principle, with giving sub-prime mortgages as long as you don’t use tricks like ARMs with adjustment clauses that you know the borrower will never be able to handle. Then there are the other tricks like interest only loans and payment option loans.
Follow this link to see the video that highlights the claims that the Republicans are making to Democratic culpability. It certainly looks pretty damning. Knowing how Rev. Wright’s words were carefully edited to make him look like he was espousing ideas directly opposite of what he was espousing, I am going to have to do a little research on the original videos to see if the same trick is being pulled here.
Follow this link to the unedited video from C-SPAN of a Senate committee hearing on April 4, 2005. I have just watched this 2 hour 22 minute video. It has been quite an education. I am not in a position at the moment to be able to summarize what I have learned. I can say that I learned something at various points throughout the 2 hours and 22 minutes and that it is worthwhile to listen to the whole thing.
I think the next phase of understanding this whole area is to find out what happened to the proposed legislation that should have resulted from these hearings. What shape did it take, did it get passed, was it signed into law, and how did we end up in the fix that we are in despite of or because of what happened to that legislation? This was in 2005, when the Republicans were in control of the legislative and executive branches. So I am going out on a limb because I do not know the answers to the questions I have posed.
Added on October 13, 2008
If Ben Bernanke is reputed to be such an expert on the Great Depression, it finally occurred to me that I should do a Google search on anything he might have said or written about the topic. I posted one result in my blog entry titled What Does Ben Bernanke Know About The Great Depression?