http://www.businessinsider.com/mike-bloomberg-blame-congress-not-banks-for-the-mortgage-crisis-2011-11Capital New York's Azi Paybarah caught this bit from New York City Mayor Michael Bloomberg discussing the Occupy Wall Street movement today at a breakfast in midtown:
"I hear your complaints. Some of them are totally unfounded. It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I'm not saying I'm sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn't gave gotten them without that.
"But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it's one target, it's easy to blame them and Congress certainly isn't going to blame themselves. At the same time, Congress is trying to pressure banks to loosen their lending standards to make more loans. This is exactly the same speech they criticized them for."
I don't believe anyone forced the mortgage lenders to make non-credit worthy loans but there seems to be evidence of collusion between the gov't, banks and mortgage lenders to lower the standards and make riskier loans.
From an August 1995 HUD memo...
http://www.huduser.org/publications/txt/hdbrf2.txtThe National Homeownership Strategy
For over 60 years, the Federal Government has played an important
role in making the American Dream of homeownership a reality for
millions of families. It created the Federal Housing Administration
(FHA) and Government-sponsored enterprises such as Fannie Mae
to enhance the availability and affordability of home mortgage funds.
HUD and other Federal agencies have provided billions of dollars in
grants and loans to support affordable home construction and
rehabilitation and to aid low- and moderate-income families in buying
their first home. Incentives for homeownership have been
written into the Nation's tax code.
However, Federal institutions, policies, and programs alone cannot
meet
President Clinton's goal of record-high levels of homeownership
within the next 6 years. Under the leadership of Secretary Cisneros,
HUD has forged a nationwide partnership that will draw on the
resources and creativity of lenders, builders, real estate profession-als,
community-based nonprofit organizations, consumer groups, State and
local governments and housing finance agencies, and many others in a
cooperative, multifaceted campaign to create ownership opportunities
and reduce the barriers facing underserved populations and
communities. The National Homeownership Strategy is committed to:
MAKING FINANCING MORE AVAILABLE, AFFORDABLE, and FLEXIBLE. The
inability (either real or perceived) of many younger families to qualify
for a mortgage is widely recognized as a very serious barrier to
homeownership. The National Homeownership Strategy commits both
government and the mortgage industry to a number of initiatives
designed to:
Cut transaction costs through streamlined regulations and
technological and procedural efficiences.
Reduce downpayment requirements and interest costs by making
terms more flexible, providing subsidies to low- and
moderate-income families, and creating incentives to save for
homeownership.
Increase the availability of alternative financing products in housing
markets throughout the country.