Bill Clinton helped create the sub-prime crisis!

As with most economic problems, we find the hand of government. The Community Reinvestment Act of 1977, whose provisions were strengthened during the Clinton administration, is a federal law that mandates lenders to offer credit throughout their entire market and discourages them from restricting their credit services to high-income markets, a practice known as redlining. In other words, the Community Reinvestment Act encourages banks and thrifts to make loans to riskier customers.

Now, Bush is going to try to use government again...to fix a problem that government created in the first place:

President Bush's plan to deal with the subprime crisis is to freeze interest rates on adjustable rate mortgages. Freezing interest rates would stop people's mortgage payments from increasing. That is a gross violation of basic contract rights and would appear to be a Fifth Amendment violation. If a contractual agreement is willingly entered into and agreed upon by a borrower and lender, it is binding and if broken by one party or the other, harsh penalties should ensue. Now here comes government, under the Bush plan, to declare millions of contracts null and void. The long run effect of the Bush plan is to make lending institutions even more selective in choosing borrowers. Then there's the question: If government can invalidate the terms of one kind of contractual agreement where the borrowers can't pay, what's to say that it won't invalidate other contractual agreements where the borrowers encounter hardship and what will that do to financial markets?

What's happening to our freedom? Do we all not want the ability to make personal decisions about anything anymore? What happened to the concept of "fairness"? Shall we change the rules and make bait-and-switch the name of the game so now no one will ever be able to gauge the results of their actions?

The Bush bailout, as well as Federal Reserve Bank cuts in interest rates, is a wealth transfer from creditworthy people and taxpayers to those who made ill-advised credit decisions, and that includes banks as well as borrowers. According to Temple University professor of economics William Dunkelberg, 96 percent of all mortgages are being paid on time. Thirty percent of American homeowners have no mortgage. Delinquency rates were higher in the 1980s than they are today. Only 2 to 3 percent of all mortgages are in foreclosure. The government bailout helps a few people at a huge cost to the rest of the economy.

Subprime Bailout - Read the whole thing!