Why do conservatives try to blame low income people for the housing crisis?
Right wingers claim that the housing bust was caused by "liberals' making it too easy for lower income people to buy homes. This of course is a lie but who cares, it sounds good!
The housing crisis was caused by the massive de-regulation of the mortgage industry. Just go to Las Vegas and see the blocks of foreclosed homes that were bought for a half million dollars by people who could only afford a two hundred thousand dollar house. These homes were bought at inflated prices through ARM loans, and interest only loans. They were told the home would go up in value to the point where at the end of three to five years they could either sell the home for a large profit, or else refinance. These were the six figure yuppie types that bought these places, not lower income people.
The government did not "force" banks to loan money to anyone. This is a Limbaughesque lie.
As for Bush seeing the crisis coming and trying to stop it is laughable. I saw a speech on You Tube where Bush is speaking before a group of Realtors in 2002. He says and I quote, "Just because people have lousy credit does not mean they have to live in a lousy home." He encouraged people with "poor credit to work with Fannie and Freddie."
Yes, after the roof started caving in the Bush Administration told Congress to do something. If Bush was as on top of this as right wingers claim, why did he never mention it in any of his state of the union speeches?
Mortgage companies are who we ought to blame. They were lending money to people with NO CREDIT checks, and lying about people's incomes to get them into expensive homes.
The Republican National organization of Realtors were cheering as well.
Lower income people did not get ARM loans and interest only loans, the got standard FHA loans.
When Bush ran for re-election in 2004 he boasted at every campaign stop about all the new and "minority" home ownership.
Even Alan Greenspan said that blaming the "Community Reinvestment Act" is nonsense.
low income people did NOT buy homes on anything but standard FHA loans.
Bush did not warn anyone until the ship had sailed. Bush ran for re-election in 2004 boasting of all the new home owners. Low income people DID not get loans with balloon payments. Six figure types did.
Turn Rush,and Hannity, off and get real facts.
Why did Bush not ONE TIME mention this impending crisis in any of his State of the Union Speeches?
The banks were NOT forced to loan money. They loved the government backed loans because they could make money with little risk.
Bush bragged in 2004 about all the new "minority home owners." It was part of his "ownership society."
- DanielLv 610 years agoFavorite Answer
It was actually the Bush administration who encouraged the onslaught of subprime loans. A couple of things happened. There were house flippers who thought the prices of homes were going to continue to rise (right before the so-called bubble pop). Also, a lot of high risk (or low income) people obtained loans they never should had. All this piled up. Then, companies like AIG sold credit protection on these loans. And when the housing market topped out and declined and the unemployment rate went up, many loans couldn't be paid off.
The whole plan of blind consumer confidence was a fail. Money circulation in itself isn't enough for a good economy.
- 10 years ago
The problem was both greedy, corrupt men in the banks and low income people. I'm not saying it's bad for them to have a house, just as long as they can afford it. What happened was that interest rates were good, so people looked to buy houses. The bank gave them a loan with an ADJUSTABLE rate. That is what did it. But why was it the poor people's fault? Because they didn't figure out that in five years, they wouldn't be able to afford the house. The rate increased, they couldn't make the payments and their house was foreclosed on. But, because the payments weren't made, the bank didn't get all their money. And where did they get the money? The people who stashed their money in the bank in an account. Now the accounts were lower and that didn't ring too well with the people. The bank experienced mass numbers of accounts being closed. This is like when a business has no customers. What happens now? Bank failure. Now, it was mostly the banks fault. But the poor people that didn't have enough sense to read the fine print, they are at fault too. Now, you probably want me to name some names. There's two. Barney Frank and Chris Dodd. Bush tried to get Fannie Mae and Freddie Mac out from under the Congress when accounting scandals were detected and into the hands of the Treasury department, but the Congress voted no. That was in 2003. We could have prevented this recession. But the Congress kept themselves in denial and were power hungry.
- Anonymous10 years ago
I do not think anyone has said "low income" people caused the problem, most people I heard said the banks being forced to give loans to people who could not afford them was the issue, as in your very example.
And concerning your statement about Bush, there is a difference in lousy credit and buying a half million dollar home on 100K income. After 2006 banks were not "graded" on the number of solvent loans they had, but the number of minority loans they had made, that may be where YOU are getting "low income" from.
But bluntly how smart does a person have to be to understand if you are only bringing in a grand a month that it would be REAL difficult to make a three thousand dollar a month mortgage payment. So personally I see no one to blame but the democrat congress forcing banks to give bad loans and the idiots that knowing they could not afford them signing on the dotted line.
- Michael of GLv 410 years ago
real estate was only a fraction of the cause for the bubble bursting, basically silly people buying selling with greed and no end point in the equation. Buying businesses and shares and real estate just to make money money, not make more industry products.
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- strataLv 610 years ago
you need to be schooled ..the banks were "coerced" in a rather tough way to give loans to folks who could not and will not be able to make the payments..this GOVERNMENT intervention started in 1916 and has progressed through the years..the government caused this mess..bush went to the senate 17 times to warn them about fannie and freddie and our illustrious barney "fwank" said..in essence..no way they are very secure of course one of his boyfriends was a ceo..that aside..you are flat wrong..like most liberals who never let facts get in the way
- Anonymous10 years ago
It wasn't low income housing people, it was house flippers and house investers that did it.
Greedy people wanting to make a fast buck buying over priced houses to resell them at a ridiculous profit but then the housing bubble burst and the prices dropped and now they're stuck with houses they paid way too much for and no way to unload them with out losing tons of money.
- theREALtruth.comLv 610 years ago
Go look up the Community Reinvestment Act of 1995 and then answer your own question.
- Anonymous10 years ago
Because if they admit that it was greed and trickery that put America underwater on the housing issue then they have to admit that they encouraged the problem by eliminating the governments ability to police the banks, mortgage companies and Wall Street Firms who used deceptive business practices to cause the real problem. And it was done on the Republican watch.
- 10 years ago
That's just what they do.