Friday, September 26, 2008

Root Cause of Current Crisis

If you don't have time to view this whole video clip, I will summarize. The root cause of the current crisis is the spread of bad mortgage debt through the financial system. This debt flowed because Fannie Mae securitised high risk mortgages and sold them to Wall Street and banks. Fraud in the valuation of these securities also played a role, resulting in the sacking of the Harold Raines, the head of Fannie Mae. The political push that allowed this to happen was the Community Reinvestment Act which turned every mortgage institution in the country into a predatory lender. Obama has much closer ties to the problem than John McCain who made early attempts to correct the problem. This all sounds very dry, but the video is highly entertaining.

H/T Drudge.

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