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Who got the ball rolling? Selling mortgage backed securities is not a "new thing". And clearly sub-prime lending wasn't always popular, because it was considered risky. Obviously it was risky when you look at sub-prime forclosures. So where did this all begin?Answer? CRA. The community reinvestment act, made minority lending a priority. Further, the HUD department, used Fannie and Freddie to push this, through allowing banks to sell sub-prime mortgages to Fannie and Freddie in packages. The result is that it legitimized the sub-prime market, and the banks ran with it. Of course the feds were not going to stop sub-prime loans to "minorities" because that's what they themselves demanded.
Who got the ball rolling? Selling mortgage backed securities is not a "new thing". And clearly sub-prime lending wasn't always popular, because it was considered risky. Obviously it was risky when you look at sub-prime forclosures. So where did this all begin?
Answer? CRA. The community reinvestment act, made minority lending a priority. Further, the HUD department, used Fannie and Freddie to push this, through allowing banks to sell sub-prime mortgages to Fannie and Freddie in packages. The result is that it legitimized the sub-prime market, and the banks ran with it. Of course the feds were not going to stop sub-prime loans to "minorities" because that's what they themselves demanded.
