Carter, Clinton policies to blame for meltdown

Stephen Willing Albemarle County
Published: October 29, 2008

Being upset with the current economic situation, I wanted to find out who was responsible. It appears to me that the Community Reinves-tment Act signed by President Carter in 1977 is the root cause of the current global economic crisis. This act encouraged banks to loan mortgage money to people with lower incomes, therefore with a higher risk of default.

Then, in the 1990s, Clinton administration regulations toughened the CRA, threatening to penalize banks $500,000 if they failed to meet low-income loan targets.

This quota system encouraged people to buy homes that they might not have been able to afford and might not have qualified for under conventional loan standards.

Hence these loans were sub-prime. I can also see where the banks would need to get more creative with loans, in order to meet the government mandate. The Department of Housing and Urban Development required Fannie Mae and Freddie Mac to buy a percentage of poor-quality loans from the banks; this percentage has gradually increased over the years.

This system worked for many years, as long as the prices of houses kept increasing.

Now, however, since housing prices have declined, we are faced with a large bailout for which we, the taxpayers, are being held responsible.

However, it does not make sense for the government to get more involved in the financial markets, since their interference with the free-market system seems to have caused the problem in the first place.

I am very impressed with Congressman Goode for standing up for us and voting against the bail out.

In 2006, Sen. John McCain was one of only four sponsors of a bill (S. 190) that was to rein in Fannie and Freddie.

One has to wonder if things would be a lot different today if Sen. McCain’s bill had passed.  His insight and independence makes him the best choice in these tough economic times.