It is all very well for President Obama to vent his anger on all those US bankers who continued to claim billions of dollars in bonuses while expecting Washington to bail them out after the sub-prime mortgage scandal brought the banks to their knees. But conveniently overlooked has been the curious part Mr Obama himself played in the sub-prime debacle.Source: The Telegraph
At the heart of it was a 1995 amendment to the Community Reinvestment Act which legally required banks to lend money to buy homes to millions of poor, mainly black Americans, guaranteed by the two biggest mortgage associations, Fannie Mae and Freddie Mac. And no one campaigned more actively for this change to the law than Mr Obama, as a young but already influential Chicago politician.
It was this Act which, more than anything, helped to create the US housing bubble, well beyond the point where it was obvious that hundreds of thousands of homeowners would be likely to default. And in 2005 no one more actively opposed moves to halt Fannie Mae's reckless guarantees than Senator Obama, as he was by then. As the official records show, no senator received more donations from Fannie Mae than he did (although Hillary Clinton ran him close). Thus no US politician arguably did more to promote the sub-prime disaster than the man now expected to pick up the pieces, Rather like Gordon Brown, really.