CNN attempts a Fact ChectTM on John McCain, but ends up making themselves look foolish. Alina Cho chides McCain for distorting Barack Obama’s support for subprime lending, but only demonstrates that she doesn’t understand the concept:
But here’s what McCain didn’t talk about. Obama went on to say that greed changed all of that. Certain lenders and brokers, quote, began to lower their standards, Obama said, and borrowers — well, they ended up in places they could never afford. So Obama definitely spoke out against the practice.
Well, that’s exactly what subprime lending was. The entire subprime lending structure intended to get loans to people who didn’t qualify for them by lowering lending standards. In fact, thanks to the CRA and groups like ACORN, lenders got accused of racism if they didn’t lower their standards — and so long-established prerequisites for mortgages like income standards and down payments disappeared.
And where did the greed arise? It came from Congressional mandates to have Fannie Mae and Freddie Mac buy up subprime loans to provide short-term profits to the lenders lowering those standards. Who pushed those mandates? Obama’s own party. Who accused regulators like Armando Falcon of racism for blowing the whistle on the bad financial decisions at Fannie and Freddie resulting from the massive underwriting of these loans? Obama’s own party.
Cho needs a fact checker of her own. McCain’s point was perfectly valid. The financial crisis came from government deliberately distorting the lending market to push people into subprime loans who could not afford the houses they were buying — and the advocates of that policy counted on “greed” to make it work. In fact, they built it into the program.
Addendum: The video seems to have some problems in loading. If you can’t get it to work, here’s the link to the CNN page.