I wrote to you previously (Meet Barry Obama, 'Fair Housing' Lawyer) about the Community Reinvestment Act, a law which compels banks to make home loans in minority neighborhoods to people who were poor credit risks. Although the CRA is well known in the financial industry, political pundits and reporters often know very little about finance and so have missed this extremely important aspect of the story. Ignorance of economics doesn't help much either. The political class seems blissfully unaware of the concept of unintended consequences which is the idea that laws which are designed to make our lives better often make our lives worse.
On a recent edition of Kudlow and Company, I debated Vermont Senator Bernie Sanders on precisely this point. He seemed not only to disagree with my point that if congress compels banks to make Subprime loans, then they share responsibility for the crisis that results when the borrowers default; he seemed not to understand it. For him once we identify the target group as bankers, nothing else matters - they're bad and he's good, no more reasoning is necessary.
It's not just Congress that's responsible. Yes, they forged the weapons, but some army needed to wield them. That's where guys like Barry Obama came in to the picture. When Barry (who was gradually changing his name to Barack around this time) graduated from Columbia, he took a brief stint as a researcher writing for a corporate consulting firm. According to his memoirs he thought of himself as 'a spy' who was dropped 'behind enemy lines'. Shortly thereafter, he left the enemy territory of corporate America and moved to a job about which he could feel proud - he went to work for the New York branch of the Public Interest Research Group. PIRG is one of those left of center activist groups who, among other things, uses the legitimate concept of 'fair housing' to force banks into making bad loans. PIRG has actively lobbied for a stronger (yes, you guessed it) Community Reinvestment Act.
One thing, however, is perfectly clear already. Obama spent his pre-elected career working right in the middle of the complex of law firms and activist groups which use law and regulations to push banks into vastly increasing their lending to Subprime borrowers right in the middle of the golden age of the expansion of the Subprime industry.