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Often, government plays a role in bubbles. The housing bubble was in part generated by the Federal Reserve maintaining low interest rates. Easy money meant readily obtainable loans and, at least in the short run, low monthly payments.
Also, Fed Chairman Alan Greenspan denied the housing bubbles existencenot fraud exactly, but deception that kept the bubble going. (Greenspan, whose view was ideologically driven, got support in his bubble denial from the academic work of the man who was to be his successor, Ben Bernanke.)
In addition, government regulatory agencies turned a blind eye to the highly risky practices of financial firms, practices that both encouraged the development of the bubble and made the impact all the worse when it burst.
Moreover, the private rating agencies (e.g., Moodys and Standard and Poors) were complicit. Dependent on the financial institutions for their fees, they gave excessively good ratings to these risky investments. Perhaps not fraud in the legal sense, but certainly misleading.
During the 1990s, the government made tax law changes that contributed to the emergence of the housing bubble. With the Taxpayer Relief Act of 1997, a couple could gain up to $500,000 selling their home without any capital gains tax liability (half that for a single person).
Previously, capital gains taxes could be avoided only if the proceeds were used to buy another home or if the seller was over 55 (and a couple could then avoid taxes only on the first $250,000). So buying and then selling houses became a more profitable operation.
And, yes, substantial fraud was involved. For example, mortgage companies and banks used deceit to get people to take on mortgages when there was no possibility that the borrowers would be able to meet the payments. Not only was this fraud, but this fraud depended on government authorities ignoring their regulatory responsibilities.
Dollars and Sense
You know who else was complicit? Barney Franks, Chris Dodds and a whole cluster of other Democrats.
Long ago, I did a post laying out the guilt on both sides of the aisle, outlining how both sides played a substantial part in the housing debacle. Difference between your post and mine... mine was non partisan, honest, contained rational, independent thought... and blamed ALL those responsible... not some partisan bullshit whining about the GOP.
You should be ashamed of your lack of intellect.
Again where are the fraudulent home loan schemes under Clinton and Carter administrations?
Why is it when there is a Bush nearby the entire economy goes straight to hell?
What is it about repub administrations that attract mammoth fraudulent home loan schemes?
Why did the GW Bush admin lie about how many financial institutions were in fact weakened substantially?
Why did the Bush admin force some banks to take bailout money they did not want?