There's a good article in The American Prospect, "Did Liberals Cause the Sub-prime Crisis?" which takes on the falsehoods being peddled by the right-wing that we can basically blame poor people and minorities for the current crisis. Don't buy the lies.
The fact of the matter is that Fannie and Freddie have had the same standards of lending for poor people since 1977, when the Community Reinvestment Act was passed, but we obviously didn't see the housing bubble even begin forming until around 2001. How can you blame a 25-year old policy for something that just started? Scapegoating black people, of course!
The problem with this argument is that CRA didn't even apply to 50% of subprime lending, and applied very little to another 30%! That's because CRA still had regulatory structure and transparency in lending, while the mess we have now is due to lack of standards and the shadiness of transactions involving mortgage-backed securities. So long as banks were on the hook if a mortgage failed, they had a vested interest in abiding by the standards of CRA. It was only in finding a way to magically pass on risk to others that predatory lending took off and the bubble was born. How did this happen? Fancy shuffling on Wall Street.
The fundamental issue is this: in 2000, a de-regulation bill called the Commodity Futures Modernization Act passed by McCain's right-hand man, Phil Gramm allowed for new fancy ways for banks to get around risk containment with mortgages, best summarized by the image of a bunch of fat cats with chainsaws tearing up regulatory law. In 2004, Bush and the GOP Congress pulled even more lenders out from under the regulatory structure of the CRA! Thus Gramm's "credit default swaps" legislation fueled the bubble and led to the free-for-all on Wall Street that we're paying for now. Paul Krugman explains that financial institutions were allowed to gamble with trillions of dollars with little to no regulation, and when risk became "spread" through the ability to bundle and sell mortgage-backed securities and investment vehicles, people went a little beserk by ignoring the serious risk that still existed and pretended that house prices would soar indefinitely. Financial institutions were allowed to play like banks, without the regulation that banks must submit to, and now are being bailed out like banks.
As Nouriel Roubini says, this is GOP welfare: privatize profits and socialize losses.
Don't buy the spin that this is the fault of liberals who wanted poor people and minorities to have houses. There were still rigorous standards of who could be lent money and at what rates, and transparency as to the creditworthiness of mortgage-related securities at that time. It was in 2000 that this changed, and it was directly thereafter that Wall Street began its party.
