Kudlow on MJ spreading the meme

"guilty liberals forced banks to make loans to
poor (read black) people who couldn't pay them back"

since I've heard the guy talking about
"there's global warming on Mars", I get it that
he's considered a reliable vector for right wing
spin - and we've already seen that the email trolls are
spreading the same idea that this meltdown is
a product of Clinton era "liberal" reforms, not
republican deregulation.

Joe did not seem to be buying it.

Most of these assholes should be taken out behind the woodshed and given a pummeling. What fucking scum!

and the first example he cites is:

Poor people looking for cheap housing

Asshole

And Joe damn well knows it.

naive homebuyers. Dickhead.

Try though they may, they can't tie the housing bubble and its concomitant fraudulent loan practices to loans to poor people.

They weren't forced to change their underwriting criteria.

The banks were just forced to show that they were not red-lining to make sure there was no discrimination. This probably forced some banks to go to neighborhoods they were purposely ignoring, but they didn't have to hand out bad loans. If the person did not meet the criteria the banks just had to keep proper records.

It's a complete lie.

Moreover, anti-redlining legislation (to wit, the CRA) DOES NOT require that banks loan to unqualified borrowers, and - indeed - expressly states that they should not. It requires banks to lend to qualified borrowers regardless of location. This isn't a nuanced point. Qualification criteria for the loan does not change in any respect EXCEPT for removing criterion of location.

Finally, the vast vast vast majority of these loans were NOT for formerly redlined locations, and I DEFY anybody to prove to me that they were.

Banks and mortgage companies have never been forced to loan to unqualified borrowers. They did that on their own, for a very simple reason: they could immediately unload the risk of bad loans by packaging them as mortgage-backed securities and selling them on the market. Once they could be packaged in CDO's, the banks and mortgage brokers not only could offload the one thing that incentivized them to make good loans (the actual holding of the loan and risk on their own books), they also stood to make more money by the selling of these instruments, regardless of the quality of the loan.

Essentially, the creation of various mortgage backed securities removed the negative incentive for making good loans and introduced a positive incentive for making bad ones.

It has ZERO to do with home ownership policies at the government level.

You have outlined it much better than I.

What happened to the Jews?

1) The Community Reinvestment Act was passed in 1977. How could it then be the proximate cause of a market meltdown in 2007-2008? Indeed, it was probably passed before the talking head who asked Frank about it was even born.

2) The Community Reinvestment Act didn't force banks to make loans to unqualified borrowers. It prevented banks from turning down qualified borrowers based on location. The loaning of money under weird financial instruments to completely unqualified borrowers really began in the 2000's, and there is so much documentation and history on this that only a complete liar would claim otherwise. You can track pretty clearly how loans went from "show bank balances/W-2's," to "show W-2's" to "claim your income," to "whatever, here's the money."

3) The Community Reinvestment Act refers to thrifts and community banks, who were not the entities making outrageous and unjustifiable loans. That was the mortgage brokers, like Countrywide, who are not covered or asked to do anything whatsoever by the CRA. The thrifts and community banks, in fact, have largely been spared the crisis.

4) The real problem was not anybody being forced to loan money to unqualified borrowers. They did that on their own as a result of the emergence of CDO's and other "mortgage" and "asset" backed securities. Essentially, the lender had zero risk on a bad loan, because it would be immediately packaged and sold as a security to some investment bank, which would itself turn around and sell it, packaging "strong tranches" with "weak tranches" in order to hedge the deeply irresponsible loans.

5) Nobody forced banks and mortgage brokers to create and irresponsibly market Adjustable Rate Mortgages and zero down loans. They created these instruments and marketed them to unqualified borrowers on their own accord.