In the midst of a global economic crisis, President Bush has asked “How did we get here?”, according to sources close to the president.
Well, the New York Times has an answer for him.
A recent article said that Bush’s own policies and actions contributed to the economic collapse---and it has supporting evidence to back that claim.
The article contends Bush loudly pressed to expand homeownership (especially to minorities), much to the happiness of some of his largest campaign donors who were set to benefit from that approach.
The article further said that Bush’s policies on the housing market and his “hands-off approach” to industry regulation encouraged laid-back lending criterion.
If you’re struggling to make it through these tough times, check out Total Bankruptcy for filing bankruptcy information on how you may be able to eliminate or reduce your debt.
Tags: bankruptcy, Bush, economic crisis
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Make it political if you wish but remember these excerpts from the Bankrtuptcy Review Commisions report from 1997:
Companies specializing in lending to borrowers with
tarnished credit histories have been among the fastest-growing credit issuers
in the past five years. Although losses are substantial, effective interest
rates of 18 to 40%, make this profitable. General credit issuers have
recently entered the sub-prime credit market, which suggests that such
marketing may expand. Some industry analysts predict that sub-prime
lending will cause total loan default rates to double by the year 2001, warning
that “by lowering their credit standards and saturating the market with loans,
many banks will be unable to avoid potentially enormous delinquencies and
write-offs.†On May 2, 1997, the FDIC issued a warning about the risks
posed by increased sub-prime lending.
They were on the money. They went on:
Home equity lines of credit, virtually unknown a
decade ago, have permitted many American families to make significant purchases – financing an education, renovating a home, or consolidating debt
obligations at lower interest rates. Regulations governing the solicitation of
home equity lines of credit will permit more aggressive marketing beginning
on October 1, 1997. Prior to the change, lenders who wanted to take a
mortgage on a home could advertise only for customers to apply; now lenders
can send pre-approved lines of credit for home equity loans.167 Lenders offer
credit cards, equity checks, and overdraft protection to homeowners. In
addition, some new home equity lines of credit exceed the value of the home.
While some lenders will not lend on a partially secured basis, other lenders
now routinely issue lines of credit at a loan-to-value ratio of 125 percent,
thereby increasing the amount of credit available. While home equity
borrowing is sometimes less expensive than credit card debt, it means that
homeowners risk losing their houses if they are unable to make timely
repayments.