Wednesday, September 24, 2008

The real cause the economic crisis

Neal Boortz is a radio talk show host and a real estate lawyer who “was making most of my money…closing loans for some of the very institutions that are in the tank today.” According to Boortz, “This rather unique combination – closing lawyer and radio talk show host – gave me a front row seat to the politicization of mortgage loans that led us to today’s headlines.”

Boortz says that while the politicians want to blame “greedy” mortgage brokers and lenders, the blame really falls on the politicians. Boortz points out that twenty years ago investigative journalists were doing stories about “evil and racist mortgage lenders refusing to make real estate loans to various minorities and to applicants who lived in lower-income neighborhoods.”

Boortz says that “credit histories, job stability, loan-to-value ratios and income levels were considered there was no evident racial discrimination.” The problem had nothing to do with racism at all. The banks “didn’t want to loan money to Joe Homebuyer because Joe had a spotty job history, owed too much money on his credit cards, and wasn’t all that good at making payments on time.”

Nevertheless, Washington sprang into action with the Community Redevelopment Act, making it clear that if lending institutions did not make home ownership available to more low-income people , “there would be a heavy price to pay.”

Boortz notes that one of “the community groups browbeating banks into making these bad loans was an outfit called ACORN.” Barack Obama was a community organizer for ACORN. Obama was also the second highest recipient of money coming from Fannie Mae and Freddie Mac! (Just a coincidence, I’m sure).

Boortz notes that the Left is using this crisis “as evidence the failure of the free market and capitalism” when the fact is that the economic crisis is the result of Washington’s “political interference in free market economics.”

Please read the entire article. Boortz explains it much better than my brief summary of his article.

Boortz may have uncovered one aspect of this economic crisis but I doubt that anyone would think his explanation is the whole story. It will be interesting to see if they FBI turns up anything.

1 comment:

Alcamadus said...

The blame game is pretty popular among both sides, while I am sure there is a great level of truth in his words I very much doubt this is the main reason why the crisis is happening. But I will say that he is right that politicians are obviously just as guilty.