How Government Stoked the Mania

Quoting Russell Roberts, a professor of economics at George Mason University
(I inserted the links):

“Beginning in 1992, Congress pushed Fannie Mae and Freddie Mac to increase their purchases of mortgages going to low and moderate income borrowers. For 1996, the Department of Housing and Urban Development (HUD) gave Fannie and Freddie an explicit target -- 42% of their mortgage financing had to go to borrowers with income below the median in their area. The target increased to 50% in 2000 and 52% in 2005.”

“First passed in 1977, the CRA was ‘strengthened’ in 1995, causing an increase of 80% in the number of bank loans going to low- and moderate-income families.”

“Beware of trying to do good with other people's money. Unfortunately, that strategy remains at the heart of the political process, and of proposed solutions to this crisis.”

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