So what caused the collapse of financial institutions and the economic crisis / recession? Well, conservatives have maintained since the beginning that it was pretty much the logical outcome of lending money to people that can't pay it back. Which leads to the institutions those people are supposed to pay back losing money...which led us to bailouts, etc.., etc..
But the real question is what caused the bad lending in the first place? Well, a few days ago, former Fed Chairman Alan Greenspan went before Congress and pretty much laid the blame exactly where it belongs. Which means it wasn't appreciated and won't be paid attention to, but...
"While the roots of the crisis were global, it was securitized U.S. subprime mortgages that served as the crisis' immediate trigger," Mr. Greenspan explained. "The surge in demand for mortgage-backed securities was heavily driven by Fannie Mae and Freddie Mac, which were pressed by the Department of Housing and Urban Development and the Congress to expand affordable housing commitments." Unfortunately, Fannie Mae and Freddie Mac weren't the only government agencies to feel the pressure. Mr. Greenspan also noted, "I sat through meeting after meeting in which the pressures on the Federal Reserve - and on, I might add, all of the other regulatory agencies - to enhance lending were remarkable."
In other words, cheap housing policies. Don't expect to hear too much about this in the "mainstream media" outlets. Especially since we're almost at the point where housing is to be declared a "right"...right along with health care.
