The video "Burning Down The House: What Caused Our Economic Crisis?" attempts to blame Wall Street's failures on the 1977 Community Reinvestment Act, but the facts are not in agreement with the thesis that the 31-year-old CRA caused the Bush-era housing crisis:
"Contrary to the accusation that the CRA is responsible for the current crisis, experts have said that approximately 80 percent of high-priced subprime loans were offered by financial institutions that are not subject to the CRA. Moreover, the president of the Federal Reserve Bank of San Francisco earlier this year said the CRA has actually increased the volume of responsible lending to low- and moderate-income households" ("Media conservatives baselessly blame Community Reinvestment Act for foreclosure spike," MediaMatters, 30 September 2008)
"CRA didn't bring about the reckless lending at the heart of the crisis. Just as sub-prime lending was exploding, CRA was losing force and relevance. And the worst offenders, the independent mortgage companies, were never subject to CRA -- or any federal regulator. Law didn't make them lend. The profit motive did"
(Robert Gordon, "Did Liberals Cause the Sub-Prime Crisis?" American Prospect, 7 April 2008)
"The CRA was at its strongest in the 1990s, under the Clinton administration, a period when subprime loans performed quite well. It was only after the Bush administration cut back on CRA enforcement that problems arose, a timing issue which should stop those blaming the law dead in their tracks."
(Aaron Pressman, "Community Reinvestment Act had nothing to do with subprime crisis," BusinessWeek, 29 September 2008)
The video's breathlessly paranoid style
...And Political Speech Is Still Free!
At Least Until January...
does nothing to bolster its credibility, and neither does its claim that
Everything In This Video Is Fact
especially when it recycles the Franklin Raines myth:
...And You'll Never Guess?
Who Barack Obama
Gets Advice From...
On Housing Issues...
Meet Franklin Raines...
Oops! I guess they didn't read this AP article, which mentions:
"Frank Raines has never advised Senator Obama about anything -- ever."
Deregulation is a far more plausible culprit for the current crisis, as admitted in this Barron's article:
Wow, we've made quite a mess of things here on Wall Street...[b]ut here's a news flash for you, D.C.: We could not have done it without you. We may be drunks, but you were our enablers: Your legislative, executive, and administrative decisions made possible all that we did. Our recklessness would not have reached its soaring heights but for your governmental incompetence. [...]
1999: The Financial Services Modernization Act repealed Glass-Steagall, a law that had separated the commercial-banking industry from Wall Street, and the two industries, plus insurance, came together again. Banks became bigger, clumsier, and hard to manage. Apparently, risk-management became all but impossible, even as banks had greater access to larger pools of capital.
2000: The Commodities Futures Modernization Act defined financial commodities such as "interest rates, currency prices, and stock indexes" as "excluded commodities." They could trade off the futures exchanges, with minimal oversight by the Commodity Futures Trading Commission. Neither the Securities and Exchange Commission, nor the Federal Reserve, nor any state insurance regulators had the ability to supervise or regulate the writing of credit-default swaps by hedge funds, investment banks or insurance companies.
(Barry Ritholtz, "Uncle Sam the Enabler," Barron's, 29 September 2008)
The closing claim of this hyper-partisan hackwork video, that McCain's continuation of Bush's failed policies should somehow be classified as "change," is so ridiculous that it practically rebuts itself.