The truth is social engineering by the Democrats set the stage for the financial system's break down. Though the evidence is clear, Democrats still fail to admit their complicity. As long as they continue to fail to do so, any action by the fed to "bailout" the financial system in this country will also fail because the system will still be subject to the same affirmative action-based regulations that put the color of a borrower's skin ahead of their ability to pay.
Thomas B Edsall, of the Huffington Post, recently wrote:
"[A]n argument popular (who could be surprised?) among besieged conservatives, that "social engineering" is the root cause of the current economic crisis -- in the form of a 31-year-old law passed during the Carter administration by a Democratic Congress.
[C]onservatives have initiated a racially explosive argument, shifting the blame for the current economic crisis to legislation designed to improve access to mortgage financing for African- Americans, other minorities and residents of low-income neighborhoods generally."
He goes on to quote some liberal economists:
"CRA was enacted more than 30 years ago. It would be quite odd if this 30-year old law suddenly caused an explosion in bad subprime loans from 2002-2007."
It's obvious by the way Democrats are shaping their responses that they have chosen to be less than honest about the roll they played in this crisis. In all of the analysis of the "Diversity Recession," none have blamed the Community Reinvestment Act as it was originally enacted in 1977. They point to the modifications to the act made by Democrats during the Clinton administration in the 90's that instituted de facto race-based quotas on mortgage lenders.
Immediately following the date the Clinton administration's modifications to the CRA went into affect in 1995 (not 2002, as Edsall would have you believe), the nearly 30 years of stability in the level of home ownership in the U.S. gave way to a dramatic increase in minority ownership that grew overall levels by 5%.
The race-based quotas rose as a result of the modifications from the CRA through annual adjustments by the Department of Housing and Urban Development from 21% during the Clinton administration to 39% today. To compound the issue, the federal Reserve in 1999 declared the use of outdated criteria, like the ability of borrowers to make their payments, to determine credit worthiness may constitute discrimination.
While there may be no more worthy endeavor than to increase home ownership levels among America's poor, it can not come at the expense of sound economic policy. In an erie prediction come true, a 1999 NYTimes article warned of the consequences of doing just that.
So, for Democrats to know full well the consequences of their blind, ideological actions and still try and use half truths and straw men arguments to deny any responsibility is despicable, if not treasonous.