Wednesday, October 29, 2008

How the Current Fiscal Crisis Happened -- According to The New York Times

In 1999, The New York Times reported that "under increasing pressure from the Clinton Administration," Fannie Mae will encourage banks "to extend home mortgages to individuals whose credit is generally not good enough to qualify them for conventional loans."

According to the Times's reporter,

"In moving, even tentatively, into this new area of lending, . . . the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's."

The story quoted a fellow of the American Enterprise Institute: "[T]his is another thrift industry growing up around us. If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

In 1999.

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