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In 1999 there was roughly $5 trillion in total U.S. mortgage debt. That number ballooned to $12 trillion by 2007, and we know what happened from there (data is from the U.S. Office of Federal Housing Enterprise Oversight). To put this into perspective, total U.S. GDP is about $11 trillion annually, and U.S. government debt is around $9 trillion. If the housing market really falls apart (meaning more than conservative estimates of a 20% drop), there’s no way the government can simply cover these losses.

Why did it happen? Let’s go back to 1999, when Fannie Mae, the nation’s biggest underwriter of home mortgages, was under pressure by the Clinton administration to find a way to get more loans to “borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans.” A pilot program was launched, which soon became general policy. Money flowed to people who couldn’t afford to pay it back.

How The U.S. Government Engineered The Current Economic Crisis, TechCrunch

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In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.

Fannie Mae Eases Credit To Aid Mortgage Lending, The New York Times

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Madtowntripper said:

Just for the record, I don't believe the posted article at all.

I've heard that the current administration has been warned several times over the course of its tenure that these completely unregulated securities were getting out of hand and that some limits should probably be placed on them.

If the Republican party is whats going to save us from this crisis, which they claim is Democratically created, why didn't they try to stop it BEFORE it happened?

Where were the warning, if your Savings & Loan Soothsayers are so economically prescient?

If these loans that Clinton was supposedly pushing for were such horrible ideas why wouldn't Bush change policies about them when he came to office?  Hundreds of thousands of bad mortgages have been signed since then.  Where was the oversight?  Why the outrage NOW?

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zappaisgod said:

An excuse?  An EXCUSE?  It was mandated.  The government interfered with the market and we get this.  Banks never would have loaned money to these fucks because they weren't likely to pay it back.  They gummint said they must.  If you want to give low income losers a chance to buy a house do it with your money, not mine.  Thank you Mohatma Gandhi.

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Madtowntripper said:

I was referring to his assertion that there was a "Clinton Recession", which is a fable Republicans have been trying to make fact for almost 10 years now.  Only when people talk about a "Bush Recession" do they begin mentioning the text-book definition of a recession.  That part of his statement was nonsense.

As to your post; Hindsight is 20/20.

Again, it if was so obvious that this would be the end result of this bill then the Republicans would have done something about it for the six years they controlled both houses of Congress and the Presidency.

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