This article is a factual examination of the historical causes for the economic collapse that began in 2006.<\/p>\n
Here are some obvious facts about the economic crisis:<\/p>\n
It occurred in 2006.\u00a0 President Bush had been president for six years.\u00a0 The Republicans had controlled both the Senate and the House for six years.<\/p>\n
The last four years of the Clinton administration there was an annual budget surplus.\u00a0 The last time this occurred was in 1969.[i]<\/a><\/sup>\u00a0 It has not happened since.\u00a0 To be fair, the Republicans took control of the House of Representatives in 1994.<\/p>\n Certainly, a significant event that started the collapse happened during the last few years of the Clinton administration.\u00a0 The Gramm\u2013Leach\u2013Bliley Act of 1999, known as financial services deregulation,<\/p>\n repealed part of the Glass-Steagall Act of 1933, opening up the market among banking companies, securities companies and insurance companies. The Glass-Steagall Act prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and an insurance company.[ii]<\/a><\/sup><\/p>\n The bill was a compromise between the Clinton Administration and the House Republicans:<\/p>\n The bill then moved to a joint conference committee to work out the differences between the Senate and House versions. Democrats agreed to support the bill after Republicans agreed to strengthen provisions of the anti-redlining Community Reinvestment Act and address certain privacy concerns; the conference committee then finished its work by the beginning of November. On November 4, the final bill resolving the differences was passed by the Senate 90-8, and by the House 362-57. This legislation was signed into law by Democratic President William Jefferson “Bill” Clinton on November 12, 1999.[iii]<\/a><\/sup><\/strong><\/p>\n The law allowed the traditional investment brokers to create and sell High Risk Investment Products to traditionally Low Rise Investment Banks that led to sub-prime mortgage fiasco and Hedge Fund meltdown of 2007. Historically, the combined industry has been known as the “financial services industry”.[iv]<\/a><\/sup><\/strong><\/p>\n This post will document, reference and detail how the mortgage meltdown occurred.<\/p>\n This is what the data will show:<\/p>\n In 2008 a Washington Post article stated,<\/p>\n In 1995, President Bill Clinton’s HUD agreed to let Fannie and Freddie get affordable-housing credit for buying subprime securities that included loans to low-income borrowers. The idea was that subprime lending benefited many borrowers who did not qualify for conventional loans. HUD expected that Freddie and Fannie would impose their high lending standards on subprime lenders.\u00a0 Banks typically back prime loans with customers’ deposits. But subprime lenders often rely on money from Wall Street investors , who buy packages of loans as investments called mortgage-backed securities.[v]<\/a><\/sup><\/strong><\/p>\n Many folks quote this article but here is the history that proceeded President Clinton\u2019s action:<\/p>\n Conventional loans are low risk.\u00a0 Sub-prime loans are higher risk, non-conventional loans.<\/p>\n How did non-conventional, sub-prime loans get started[vi]<\/a><\/sup>?<\/p>\n Fair Housing Act<\/a>[vii]<\/a><\/sup> of 1968 – President Lyndon B. Johnson<\/a><\/p>\n It was a follow-up to the Civil Rights Act of 1964. While the Civil Rights Act of 1866 prohibited discrimination in housing, there were no federal enforcement provisions.<\/strong><\/p>\n [viii]<\/a><\/sup> of 1974 \u2013 President Gerald Ford<\/p>\n It made it unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction, on the basis of race, color, religion, national origin, sex, marital status, or age.<\/strong><\/p>\n Home Mortgage Disclosure Act<\/a>[ix]<\/a><\/sup> of 1975 (HMDA) \u2013 President Gerald Ford<\/p>\n It requires financial institutions to maintain and annually <\/strong>disclose<\/strong><\/a> data about home purchases, home purchase pre-approvals, home improvement, and refinance applications involving 1 to 4 unit and multifamily dwellings. It also requires branches and loan centers to display a HMDA poster. <\/strong><\/p>\n HMDA was designed by the <\/strong>Federal Reserve Board<\/strong><\/a> in order to:<\/strong><\/p>\n Help public officials to distribute public-sector investments<\/strong><\/p>\n Discover if <\/strong>financial institutions<\/strong><\/a> are serving housing needs of communities<\/strong><\/p>\n Identify where there are discriminatory lending practices<\/strong><\/p>\n Community Reinvestment Act of 1975<\/a>[x]<\/a><\/sup> – President Jimmy Carter<\/p>\n It was designed to encourage commercial <\/strong>banks<\/strong><\/a> and <\/strong>savings associations<\/strong><\/a> to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as <\/strong>redlining<\/strong><\/a>.<\/strong><\/p>\n The Questionable Authority is a blog that explains redlining well,<\/p>\n Let’s start with the <\/strong>Community Reinvestment Act<\/strong><\/a> and the reasons that it was passed. For decades prior to the law’s passage, banks engaged in a process known as <\/strong>redlining<\/strong><\/a>, where they declined to write loans in certain geographic areas – typically low-income areas with large minority populations. They did not decline to write bad loans in these areas; they refused to write any loans at all. For example, in 1975 the largest bank in the Bronx wrote a grand total of 32 loans in the entire borough (Rooney 1995, p.50). No loans means no new businesses, no new housing, no opportunity. <\/strong>[xi]<\/a><\/sup>\u00a0<\/strong><\/p>\n Here is a historical chart based on The American Institute of Policy Research and the Government Accounting Office.[xii]<\/a><\/sup> [xiii]<\/a><\/sup> The columns are:<\/p>\n the total sub-prime loans as a percentage of all loan originations (Col 1).\u00a0 The total includes Government Sponsored Enterprises (GSEs are Freddie, Fannie and FHA) and private mortgage companies.\u00a0 Freddie and Fannie are not government agencies.<\/p>\n the percent of GSE sub-prime loans (Col 2).\u00a0 For example, 1997 the GSE sub-prime loans were 51% of the total originations of 19%.<\/p>\n the total in billions of all of all loan originations (Col 3).<\/p>\n the total in billions of all sub-prime loans (Col 4) including private sector, GSE and FHA.<\/p>\n the total in billions of sub-prime, GSE and FHA loans (Col 5).<\/p>\n the percent of the total market of GSE and FHA, sub-prime loans (Col 6)<\/p>\n the default percentage of the total market (Col 7)<\/p>\n the amount in billions of the total market defaults (Col 8 )<\/p>\n Note: All currency amounts in billions<\/p>\n Year\u00a0\u00a0\u00a0 Col 1\u00a0\u00a0\u00a0 Col 2\u00a0\u00a0\u00a0 Col 3\u00a0\u00a0\u00a0 Col 4\u00a0 Col 5\u00a0 Col 6\u00a0 Col 7\u00a0 Col 8<\/p>\n 1997\u00a0\u00a0\u00a0 19%\u00a0\u00a0\u00a0\u00a0 51%\u00a0\u00a0\u00a0\u00a0 $926\u00a0\u00a0\u00a0 $176\u00a0\u00a0\u00a0 $90\u00a0\u00a0\u00a0\u00a0\u00a0 10%\u00a0\u00a0\u00a0\u00a0 0.9%\u00a0\u00a0\u00a0 $8<\/p>\n 1999\u00a0\u00a0\u00a0 22%\u00a0\u00a0\u00a0\u00a0 61%\u00a0\u00a0\u00a0\u00a0 $1050\u00a0 $231\u00a0\u00a0\u00a0 $141\u00a0\u00a0\u00a0 13%\u00a0\u00a0\u00a0\u00a0 0.9%\u00a0\u00a0\u00a0 $12<\/p>\n 2001\u00a0\u00a0\u00a0 19%\u00a0\u00a0\u00a0\u00a0 65%\u00a0\u00a0\u00a0\u00a0 $1437\u00a0 $273\u00a0\u00a0\u00a0 $177\u00a0\u00a0\u00a0 12%\u00a0\u00a0\u00a0\u00a0 0.7%\u00a0\u00a0\u00a0 $17<\/p>\n 2003\u00a0\u00a0\u00a0 17%\u00a0\u00a0\u00a0\u00a0 67%\u00a0\u00a0\u00a0\u00a0 $1765\u00a0 $300\u00a0\u00a0\u00a0 $201\u00a0\u00a0\u00a0 11%\u00a0\u00a0\u00a0\u00a0 0.6%\u00a0\u00a0\u00a0 $21<\/p>\n 2005\u00a0\u00a0\u00a0 26%\u00a0\u00a0\u00a0\u00a0 43%\u00a0\u00a0\u00a0\u00a0 $1042\u00a0 $271\u00a0\u00a0\u00a0 $117\u00a0\u00a0\u00a0 11%\u00a0\u00a0\u00a0\u00a0 1.5%\u00a0\u00a0\u00a0 $9<\/p>\n 2007\u00a0\u00a0\u00a0 18%\u00a0\u00a0\u00a0\u00a0 70%\u00a0\u00a0\u00a0\u00a0 $2033\u00a0 $366\u00a0\u00a0\u00a0 $256\u00a0\u00a0\u00a0 13%\u00a0\u00a0\u00a0\u00a0 0.5%\u00a0\u00a0\u00a0 $28<\/p>\n Column 1 show that, for the years shown, all private sector and public sector sub-prime loans which includes low income loans peaked in 2005 at 26%.<\/p>\n Column 2 shows that, for the years shown, all<\/p>\n The American Institute of Policy Research further states,<\/p>\n \u00a0<\/strong><\/p>\n Subprime Loans as a percentage of total originations were fairly constant for the period 1997-2003, averaging about 19.5%. The percentage averaged 26% for 2004-2006, before declining to 18% in 2007.<\/strong>[xiv]<\/a><\/sup><\/strong><\/p>\n Conclusion:<\/p>\n Non-conforming, sub-prime loans were a small percentage of all mortgage originations.\u00a0<\/p>\n Fannie, Freddie and FHA were an even smaller percentage of all sub-prime loans.<\/p>\n Defaults on all mortgages were even smaller<\/p>\n In 1997, two years after the Clinton and HUD issue, GSE and FHA sub-prime loans represented about 10% of the total market.\u00a0 Even in the Bush administration this only grew 13%.<\/p>\n This is a historical chart based on a paper presented to the Financial Crisis Inquiry Commission.[xv]<\/a><\/sup> The columns are:<\/p>\n GSE new mortgage business as a percentage of total single family mortgage originations (Col 1)<\/p>\n FHA new mortgage business as a percentage of total single family mortgage originations (Col 2)<\/p>\n Private, sub-prime new mortgage business as a percentage of total single family mortgage originations (Col 3)<\/p>\n Private, high risk (stated income, etc.) new mortgage business as a percentage of total single family mortgage originations (Col 4).\u00a0 High risk was not tracked until 2002.<\/p>\n Year\u00a0\u00a0\u00a0 Col 1\u00a0\u00a0\u00a0 Col 2\u00a0\u00a0\u00a0 Col 3\u00a0\u00a0\u00a0 Col 4<\/p>\n 1997\u00a0\u00a0\u00a0 32%\u00a0\u00a0\u00a0\u00a0 9%\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 14%\u00a0\u00a0\u00a0\u00a0 NA<\/p>\n 1999\u00a0\u00a0\u00a0 42%\u00a0\u00a0\u00a0\u00a0 9%\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 12%\u00a0\u00a0\u00a0\u00a0 NA<\/p>\n 2001\u00a0\u00a0\u00a0 44%\u00a0\u00a0\u00a0\u00a0 6%\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 9%\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 NA<\/p>\n 2003\u00a0\u00a0\u00a0 51%\u00a0\u00a0\u00a0\u00a0 4%\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 10%\u00a0\u00a0\u00a0\u00a0 21%<\/p>\n 2005\u00a0\u00a0\u00a0 30%\u00a0\u00a0\u00a0\u00a0 2%\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 32%\u00a0\u00a0\u00a0\u00a0 42%<\/p>\n 2007\u00a0\u00a0\u00a0 30%\u00a0\u00a0\u00a0\u00a0 2%\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 34%\u00a0\u00a0\u00a0\u00a0 45%<\/p>\n The report further states,<\/p>\n It thus appears that the subprime lending innovations over this period actively displaced GSE and FHA activity, leading to the declines in their market shares.<\/strong> [xvi]<\/a><\/sup><\/p>\n Conclusion: From 2003 to 2006 GSEs and FHA new market share went down significantly while private mortgage company\u2019s market share on sub-prime, high risk loans went up significantly.<\/p>\n MBS are packages of mortgages (sort of like mutual funds) that are bought and sold on in the stock market.\u00a0 They are mortgages bought from private companies and bundled into packages by huge trading firms (you know the ones we bailed out) and sold on the stock exchange.<\/p>\n In 1997 the GSEs owned about 12% of the total market share of these securities. In 2001 the GSEs owned about 15% of the total market share of these securities.\u00a0 In 2008 this percentage had grown dramatically to 40%.\u00a0<\/p>\n In intervening years it was much more.\u00a0 President Bush directed his HUD director to pressure the GSEs into buying massive amounts these MBS on the open market.\u00a0 This created huge market for these securities and encouraged more and more risky private sector mortgages so they could be bought, bundled and sold on the open market largely to Fannie and Freddie.<\/p>\n As the Washington Post article states,<\/p>\n But by 2004, when HUD next revised the goals, Freddie and Fannie’s purchases of subprime-backed securities had risen tenfold. Foreclosure rates also were rising. <\/strong><\/p>\n That year, President Bush’s HUD ratcheted up the main affordable-housing goal over the next four years, from 50 percent to 56 percent. John C. Weicher, then an assistant HUD secretary, said the institutions lagged behind even the private market and “must do more.”<\/strong><\/p>\n For Wall Street, high profits could be made from securities backed by subprime loans. Fannie and Freddie targeted the least-risky loans. Still, their purchases provided more cash for a larger subprime market. <\/strong><\/p>\n “That was a huge, huge mistake,” said Patricia McCoy, who teaches securities law at the University of Connecticut. “That just pumped more capital into a very unregulated market that has turned out to be a disaster.”<\/strong>[xvii]<\/a><\/sup><\/strong><\/p>\n How did the GSE\u2019s accomplish this?\u00a0 As the article further states:<\/p>\n In 2003, the two bought $81 billion in subprime securities. In 2004, they purchased $175 billion — 44 percent of the market. In 2005, they bought $169 billion, or 33 percent. In 2006, they cut back to $90 billion, or 20 percent. Generally, Freddie purchased more than Fannie and relied more heavily on the securities to meet goals.<\/strong><\/p>\n “The market knew we needed those loans,” said Sharon McHale, a spokeswoman for Freddie Mac. The higher goals “forced us to go into that market to serve the targeted populations that HUD wanted us to serve,” she said.<\/strong><\/p>\n But because Fannie and Freddie were buying mortgage-backed securities rather than the actual subprime loans, their involvement came too late to require stiffer standards from lenders. <\/strong><\/p>\n Fannie and Freddie “made no progress in civilizing the market,” said Sandra Fostek, a senior regulator at HUD. <\/strong><\/p>\n William C. Apgar Jr., who was an assistant HUD secretary under Clinton, said he regrets allowing the companies to count subprime securities as affordable. <\/strong><\/p>\n “It was a mistake,” he said. “In hindsight, I would have done it differently.”<\/strong>[xviii]<\/a><\/sup><\/strong><\/p>\n Conclusion: Even though Fannie, Freddie and FHA had much less to do with new loans in the Bush administration they bought huge amounts of MBS in those years to meet President Bush\u2019s 56% housing requirement.\u00a0<\/p>\n Additionally, the President encouraged the GSEs to \u201cfocus\u201d their \u201ccore housing mission\u201d \u201cwith respect to low-income Americans and first-time homebuyers\u201d in the following statement from the White House,<\/p>\n The Administration strongly believes that the housing GSEs should be focused on their core housing mission, particularly with respect to low-income Americans and first-time homebuyers. Instead, provisions of H.R. 1461 that expand mortgage purchasing authority would lessen the housing GSEs’ commitment to low-income homebuyers.<\/strong>[xix]<\/a><\/sup><\/strong><\/p>\n Conclusion:\u00a0 President Bush had directed HUD to require the GSEs to meet the 56% low income housing requirement.\u00a0 This pressured the GSEs to buy massive MBS.\u00a0 This created a massive market for junk mortgages.<\/p>\n Credit Default Swaps are insurance policies on mortgages, sort of like the futures market for commodities for MBS.\u00a0 Credit Default Swaps are not regulated.\u00a0 The government did not own credit default swaps.\u00a0 This was purely a private market commodity.<\/p>\n Between 2000 and 2008, the market for such swaps ballooned from $900 billion to more than $30 trillion.<\/strong>[xx]<\/a><\/sup><\/strong><\/p>\n This is what brought AIG down.<\/p>\n Goldman Sachs played both sides MBS and Credit Default Swaps.<\/p>\n When the Fannie and Freddie bought huge amounts of MBS, pressured by the Bush administration, the market for credit default swaps went astronomical.\u00a0 This is ultimately what broke them and resulted in tax payers having to bail them out. [xxi]<\/a><\/sup><\/p>\n If you do not believe me what about Greenspan, Treasury Secretary Paul O’Neill, Securities and Exchange Commission chairman Harvey Pitt, and Commodity Futures Trading Commission chairman James Newsome,<\/p>\n In September 2002, Greenspan, Treasury Secretary Paul O’Neill, Securities and Exchange Commission chairman Harvey Pitt, and Commodity Futures Trading Commission chairman James Newsome wrote a letter to members of Congress to note their opposition to legislation that would regulate derivatives. They wrote:<\/strong><\/p>\n We believe that the [over-the-counter] derivatives markets in question have been a major contributor to our economy’s ability to respond to the stresses and challenges of the last two years. This proposal would limit this contribution, thereby increasing the vulnerability of our economy to potential future stresses….<\/strong><\/p>\n We do not believe a public policy case exists to justify this governmental intervention. The OTC markets trade a wide variety of instruments. Many of these are idiosyncratic in nature….<\/strong><\/p>\n While the derivatives markets may seem far removed from the interests and concerns of consumers, the efficiency gains that these markets have fostered are enormously important to consumers and to our economy.<\/strong><\/p>\n Greenspan and the others urged Congress “to be aware of the potential unintended consequences” of legislation to regulate derivatives. <\/strong><\/p>\n They got it exactly wrong. Swaps and derivatives ended up undermining, not bolstering, the economy.<\/strong>[xxii]<\/a><\/sup><\/strong><\/p>\n This data clearly shows that:<\/p>\n The increase of low income, sub-prime loans and the low overall default rate of all loan originations (1.5% in 2005 was the highest tracked in this data, through 2007).\u00a0 This dispels that myth that the crisis was caused by loan defaults of low-income folks.<\/p>\n The huge increase of MBS purchased by the GSEs from 2003 through 2006 under pressure from the Bush administration to meet the 56% affordable housing requirement along with the 30 trillion dollar credit default swap fault market it created in the private sector was the cause of the housing bubble that burst into the subsequent economic crisis.\u00a0 Even Alan Greenspan, a Republican, admitted in his interview Brian Naylor,<\/p>\n BRIAN NAYLOR: The man once known as the maestro for his direction of the nation’s economy as Fed chairman sat for four long hours yesterday, watching lawmakers who once cheered his performances turn into harsh critics. Testifying before the House Oversight Committee, Greenspan didn’t down play the severity of the crisis in the nation’s markets. <\/strong><\/p>\n \u00a0<\/strong><\/p>\n Mr. ALAN GREENSPAN (Former Chairman, Federal Reserve): We are in the midst of a once-in-a-century credit tsunami. Central banks and governments are being required to take unprecedented measures. <\/strong><\/p>\n \u00a0<\/strong><\/p>\n NAYLOR: Under questioning from Democrats on the panel, Greenspan conceded he might have been, as he put it, partially wrong in not moving to regulate trading of some derivatives that are among the root causes of the credit crisis. He also admitted his free market ideology may be flawed. This exchange with committee chairman, Democrat Henry Waxman of California, verged on the metaphysical. <\/strong><\/p>\n \u00a0<\/strong><\/p>\n Representative HENRY WAXMAN (Committee Chairman, Democrat, 30th District of California): You found a flaw in the reality… <\/strong><\/p>\n \u00a0<\/strong><\/p>\n Mr. GREENSPAN: Flaw in the model that I perceived is a critical functioning structure that defines how the world works, so to speak. <\/strong><\/p>\n \u00a0<\/strong><\/p>\n Rep. WAXMAN: In other words, you found that your view of the world, your ideology was not right. It was not working. <\/strong><\/p>\n \u00a0<\/strong><\/p>\n Mr. GREENSPAN: How it – precisely. That’s precisely the reason I was shocked, because I’ve been going for 40 years or more with very considerable evidence that it was working exceptionally well.<\/strong>[xxiii]<\/a><\/sup><\/p>\n This is what happens when the private sector and government work in collusion with each other.\u00a0 Between the Democrats and the Republican\u2019s who do you suppose would have the explicit, stated purpose of doing that?\u00a0 Hint: Who wants to privatize Social Security[xxiv]<\/a><\/sup> and Medicare?\u00a0 Who do you think is going to pay for it?<\/p>\n 1968 to 2007, in Billions of Dollars<\/p>\n Sources: Congressional Budget Office; Office of Management and Budget.<\/p>\n Date\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0 Deficit (-) or Surplus\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Debt Held by the Public<\/p>\n 1968\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -25.2 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 289.5<\/p>\n 1969\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 3.2 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 278.1<\/p>\n 1970\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -2.8 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 283.2<\/p>\n 1971\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -23.0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 303.0<\/p>\n 1972\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -23.4 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 322.4<\/p>\n 1973\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -14.9 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 340.9<\/p>\n 1974\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -6.1 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 343.7<\/p>\n 1975\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -53.2 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 394.7<\/p>\n 1976\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -73.7 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 477.4<\/p>\n 1977\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -53.7 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 549.1<\/p>\n 1978\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -59.2 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 607.1<\/p>\n 1979\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -40.7 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 640.3<\/p>\n 1980\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -73.8 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 711.9<\/p>\n 1981\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -79.0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 789.4<\/p>\n 1982\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -128.0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 924.6<\/p>\n 1983\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -207.8 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1,137.3<\/p>\n 1984\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -185.4 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1,307.0<\/p>\n 1985\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -212.3 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1,507.3<\/p>\n 1986\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -221.2 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1,740.6<\/p>\n 1987\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -149.7 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1,889.8<\/p>\n 1988\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -155.2 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2,051.6<\/p>\n 1989\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -152.6 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2,190.7<\/p>\n 1990\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -221.0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2,411.6<\/p>\n 1991\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -269.2 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2,689.0<\/p>\n 1992\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -290.3 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2,999.7<\/p>\n 1993\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -255.1 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 3,248.4<\/p>\n 1994\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -203.2 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 3,433.1<\/p>\n 1995\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -164.0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 3,604.4<\/p>\n 1996\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -107.4 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 3,734.1<\/p>\n 1997\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -21.9 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 3,772.3<\/p>\n 1998\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 69.3 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 3,721.1<\/p>\n 1999\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 125.6 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 3,632.4<\/p>\n 2000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 236.2 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 3,409.8<\/p>\n 2001\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 128.2 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 3,319.6<\/p>\n 2002\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -157.8 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 3,540.4<\/p>\n 2003\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -377.6 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 3,913.4<\/p>\n 2004\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -412.7 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4,295.5<\/p>\n 2005\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -318.3 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4,592.2<\/p>\n 2006\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -248.2 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4,829.0<\/p>\n 2007\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -160.7 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 5,035.1<\/p>\n http:\/\/www.cbo.gov\/budget\/data\/historical.pdf<\/a><\/p>\n [ii]<\/a><\/sup>Gramm\u2013Leach\u2013Bliley Act<\/p>\n http:\/\/en.wikipedia.org\/wiki\/Gramm-Leach-Bliley_Act<\/a><\/p>\n [iii]<\/a><\/sup>Gramm\u2013Leach\u2013Bliley Act<\/p>\n http:\/\/en.wikipedia.org\/wiki\/Gramm-Leach-Bliley_Act<\/a><\/p>\n [iv]<\/a><\/sup>Gramm\u2013Leach\u2013Bliley Act<\/p>\n \u00a0http:\/\/en.wikipedia.org\/wiki\/Gramm-Leach-Bliley_Act<\/a><\/p>\n [v]<\/a><\/sup>How HUD Mortgage Policy Fed The Crisis<\/p>\n http:\/\/www.washingtonpost.com\/wp-dyn\/content\/article\/2008\/06\/09\/AR2008060902626.html<\/a><\/p>\n [vi]<\/a><\/sup> Community Reinvestment Act<\/p>\n http:\/\/en.wikipedia.org\/wiki\/Community_Reinvestment_Act<\/a><\/p>\n [vii]<\/a><\/sup>FAIR HOUSING ACT<\/p>\n \u00a0http:\/\/www.justice.gov\/crt\/housing\/title8.php<\/a><\/p>\n [viii]<\/a><\/sup>US Code, 15 U.S.C. \u00a7 1691<\/p>\n \u00a0http:\/\/www.law.cornell.edu\/uscode\/15\/1691.html<\/a><\/p>\n [ix]<\/a><\/sup> Home Mortgage Disclosure Act of 1975<\/p>\n http:\/\/www.fdic.gov\/regulations\/laws\/rules\/6500-3030.html#6500hmda1975<\/a><\/p>\n [x]<\/a><\/sup> Community Reinvestment Act<\/p>\n http:\/\/www.fdic.gov\/regulations\/laws\/rules\/6500-2515.html#6500hcda1977<\/a><\/p>\n [xi]<\/a><\/sup>http:\/\/scienceblogs.com\/authority\/2008\/09\/the_subprime_mortgage_crisis_a.php<\/a><\/p>\n [xii]<\/a><\/sup>Table 3: Detail for Subprime Loans – see endnotes for sources (page 10 pdf)<\/p>\n http:\/\/www.aei.org\/docLib\/Pinto-High-LTV-Subprime-Alt-A.pdf<\/a><\/p>\n Figure 1: GSE Investment Portfolio and MBS ($ Billions, Left Axis),<\/p>\n GSE % of Total Outstanding Single Family Mortgages (Right Axis)<\/p>\n http:\/\/www.fcic.gov\/hearings\/pdfs\/2010-0227-Jaffee.pdf<\/a><\/p>\n [xiii]<\/a><\/sup> \u00a0GAO report (page 18 for sub-prime data and page 21 for default rates data in pdf):<\/p>\n http:\/\/www.mortgagebankers.org\/files\/News\/InternalResource\/57640_GAOReportInformationonRecentDefaultandForeclosureTrends.pdf<\/a><\/p>\n [xiv]<\/a>http:\/\/www.aei.org\/docLib\/Pinto-High-LTV-Subprime-Alt-A.pdf<\/a> (page 12 pdf)<\/p>\n\n
[i]<\/a><\/sup>Revenues, Outlays, Deficits, Surpluses, and Debt Held by the Public,<\/p>\n