Wednesday, October 30, 2013

Warren Disputes Financial Myth

Elizabeth Warren Destroys Financial Crisis Myth:
...The study Warren was referring to refuted a common conservative argument blaming the Carter-era Community Reinvestment Act for forcing Fannie and Freddie to buy shoddy mortgages in poor neighborhoods. "It was the federal government that pushed the subprime loans … that pushed the Community Reinvestment Act," said Rep. Michele Bachmann (R-Minn.) in a GOP primary debate during her presidential campaign, when asked who was to blame for the financial crisis.

However, the St. Louis Federal Reserve analyzed data in California and Florida -- two states hard-hit by the mortgage crisis -- and found that "the extensive purchases of risky private-label mortgage-backed securities by the GSEs were not due to affordable housing mandates..."

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