But what needs to be understood is the role political correctness played.
Madness: This insanity reached a climax with President George W. Bush’s American Dream Down Payment Initiative
The Government promises that its new mortgage assistance scheme will not repeat the mistakes of the American system that set off the global boom and bust — from whose after-shocks we are suffering.
But what needs to be understood is the role political correctness played.
The trail is a long one.
By the Seventies and in the name of the American Dream of home ownership, the U.S. government had established three agencies to make home-buying easier and cheaper: Fannie Mae (the Federal National Mortgage Association); Freddie Mac (the Federal Home Loan Mortgages Corporation); and Ginnie Mae (the Government National Mortgage Association).
The first two seemed to promise a government guarantee and the last did so explicitly.
They bundled up huge packages of mortgages they bought from banks, which were traded like stocks and shares. It freed up, as intended, more room for the banks to lend.
Bricks and mortar being deemed so safe, this in turn set off a huge international market in derivatives.
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