moksha wrote:Quick 90s brush up: Back when Newt controlled the GOPpac he also sponsored training for Republican candidates. In the training material he emphasized the strategy of "go sub (negative) early" in the campaign. This lead to success and a new Congressional class emerged, dedicated to making a 'contract on America'. The sub-prime mortgage cascade could be thought of as one of their success stories.
Interesting. What did the Republican congresses of the '90s do that resulted in the sub-prime mortgage mess? And which of these actions were done without President Clinton's blessing?
While there were certainly "big finance" factors in the sub-prime mess (securitized loans, poor diligence from the ratings companies), one of the key factors in perpetuating the problem was the government's involvement through the FHA and Fannie Mae and Freddie Mac, as well as the government focus on getting as many poor people to buy houses as possible with the belief that doing so would help them become "middle class" (because house prices only go up, not down).
The sub-prime mortgage mess couldn't have been done without the cooperation of the banks, finance companies, borrowers, investors, government agencies, and Democrats and Republicans in Washington. Everyone had to work as a team to inflate the bubble to such epic proportions.
