Thursday, October 2, 2008

One explanation re US Financial crisis

From what I can understand, it's very much to do with subprime mortgages being a weak point for big banks, which has led to a snowballing of consequences.
It turns out banks were pressured into large amounts of sub-prime mortgages by the Community Reinvestment Act (CRA), sponsored by Bill Clinton and pushed by groups such as ACORN (where Obama worked as a community activist) amongst others. This strong-armed banks into commiting a lot of funds into sub-prime loans, putting them at risk in case of mass defaults.

See article

I read elsewhere that despite poor credit history checks etc for sub-prime loans, most of these are in fact being paid off. Hence the US govmt is going to make the problem worse by acting as if they aren't viable loans.

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