About “the policies that got us into this mess”

Today’s Wall Street Journal has a letter responding to a recent editorial on the criminalization of banking decisions. In it, the writer dispels the myth that it was too much freedom for bankers that brought on the housing bubble and subsequent financial debacle:

Your editorial is the culmination of many previous missives warning of the cumulative perils in the Community Reinvestment Act, which was imposed by a Democrat Congress and Jimmy Carter in the name of “social justice.” This Washington invention was imposed on banks to make risky loans to heretofore unqualified borrowers. “Uncooperative” banks and lenders were threatened with fines and penalties that would threaten their very existence.

I personally know of one small regional bank that was punished for not granting a loan to an applicant whose stated monthly income was only $15 more than her mortgage payment would have been. When this issue was pointed out, the reviewing Federal Reserve official responded that the bank was “making a lifestyle decision for the applicant.”

I feel this issue, if fully explained during the recent campaign, could have swayed many educated voters to the Romney camp. Every time President Obama would say: “You don’t want to go back to the policies that got us into this mess in the first place,” I cringed. The housing bubble—created by a Democratic-driven agenda—was at the heart of the “mess we are in.”

Elizabeth Stoyko

Phippsburg, Maine

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