It is imperative that we look at our past to truly understand how we got here. And we need not look further than the Carter administration's Community Reinvestment Act of 1977 for the answer. That act required banks to lend to un-creditworthy borrowers, mostly in underprivileged and minority communities.
While the concept of putting more Americans in homes comes across as a "feel good" policy, the fact of the matter is that these types of policies saddle families who don't have the income or earning potential to meet their payment obligations, leading to foreclosure and displacement.
This type of enabling legislation, coupled with predatory lenders and institutions, including those under federal government control, who would push potential investors into home-buying and other schemes for which they were not fiscally viable, formed an all-too-powerful formula that led to an almost paralyzing economic bust.
Democrats in Washington have looked at this scenario as a political opportunity in the run-up to the midterm elections. Without acknowledging the complexity or history of the issue, they hope to score easy points with a hit on Wall Street and the promise of reform. But insensible reform is nothing but reckless.
Last week, all 41 Republican senators, under the leadership of Mitch McConnell, signed a letter stating their opposition to the current version of the "Wall Street reform bill." If needed, this type of unity could stop the bill.
Key Republicans have declared their intent to use their unity as a negotiating position with which to improve the bill, rather than as a tool to kill it. Sen. John McCain said, "This one is a little bit different [than the health care bill]. We want to keep 41 votes together to have a negotiating position; on healthcare, we didn't like any of it."