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Financial Crisis of 2008 (view source)
Revision as of 07:45, October 10, 2008
, 07:45, October 10, 2008Causes -> Community Reinvestment Act
Although an American presidential election is in its last month, candidates have not focused on the crisis. Both major parties blame the other for neglecting adequate regulation. Both the major party candidates have expressed anger at the crisis, and have promised extensive new regulations of the financial industry.
Although an American presidential election is in its last month, candidates have not focused on the crisis. Both major parties blame the other for neglecting adequate regulation. Both the major party candidates have expressed anger at the crisis, and have promised extensive new regulations of the financial industry.
==Causes==
==Causes==
In ''The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities'', [[Howard Husock]] describes how the [[Community Reinvestment Act]] of 1977 and the expansion in 1995 contributed to the Financial Crisis of 2008. <ref>[http://www.city-journal.org/html/10_1_the_trillion_dollar.html The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities], Howard Husock, ''City Journal'', Winter 2000</ref>
In the early 2000s, U.S. interest rates were low and demand for housing was high, as housing prices soared, especially in [[California]], [[Florida]], [[Nevada]] and [[Arizona]]. Mortgage companies and banks were very eager to lend at low rates, especially to people with mediocre [[credit]] who would not previously have been eligible for mortgages. The expectation was that rising house prices would cover the mortgage payments through refinancing. In addition, hundreds of billions of dollars poured into the U.S. from abroad, and financiers looked for imaginative ways to make a profit. They turned to [[real estate]].
In the early 2000s, U.S. interest rates were low and demand for housing was high, as housing prices soared, especially in [[California]], [[Florida]], [[Nevada]] and [[Arizona]]. Mortgage companies and banks were very eager to lend at low rates, especially to people with mediocre [[credit]] who would not previously have been eligible for mortgages. The expectation was that rising house prices would cover the mortgage payments through refinancing. In addition, hundreds of billions of dollars poured into the U.S. from abroad, and financiers looked for imaginative ways to make a profit. They turned to [[real estate]].