# Is George W. really to blame for our economic situation?

**URL:** <https://boards.straightdope.com/t/is-george-w-really-to-blame-for-our-economic-situation/488249>\
**Category:** Great Debates\
**Created:** [March 4, 2009, 5:53am UTC](https://boards.straightdope.com/t/is-george-w-really-to-blame-for-our-economic-situation/488249 "2009-03-04T05:53:47Z")\
**Posts on this page:** 1\
**Page:** 4

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**Author:** ![welby](https://avatars.discourse-cdn.com/v4/letter/w/d78d45/32.png) [@welby](https://boards.straightdope.com/u/welby)\
**Post date:** [March 5, 2009, 6:50pm UTC](https://boards.straightdope.com/t/is-george-w-really-to-blame-for-our-economic-situation/488249/61 "2009-03-05T18:50:46Z")

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> [@Voyager](#):
>
> Please don’t perpetuate this lie. From [The Federal Reserve](http://www.federalreserve.gov/dcca/cra/):  
> Fannie and Freddie started with more stringent requirements on the loans they bought than most. They did go astray, partially because they were privatized, and partially because of the demand for high yielding crap loans from the market, helped on by the improper rating of these loans. Plus, as **Spartydog** said, the worst culprits were not covered by CRA, and so CRA cannot be blamed. CRA also does not explain why brokers were incentivized to push risky loans. The increased profit from their high interest rates explains it quite well.

It [certainly](http://www.city-journal.org/html/10_1_the_trillion_dollar.html) [didn’t](http://www.lewrockwell.com/dilorenzo/dilorenzo125.html) [help](http://www.csmonitor.com/2008/0917/p09s01-coop.html?page=2). The CRA isn’t the only contributor, but without many of the 1995 changes it’s likely that getting into this mess would have been a lot harder.

And it DID provide incentives, alebit in a negative way. Banks that failed to comply with the act faced fines, penalities, and rejection of expansion opportunities. The end result was that banks made loans that they were going to make anyway, but now had to include a larger number of risky loans in order to earn a good rating and avoid penalties. It also expanded the applicable areas for CRA funds, which sort of obviated the whole point of CRA - to increase home ownership in low income neighborhoods.

So while it’s not totally to blame, it sure helped make things worse than they needed to be.

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