The Meltdown -- who and what caused it

There are two books published recently on the financial crises that everyone should read:  Peter Sweitzer's "Architects of Ruin", and Thomas Sowell's "The Housing Boom and Bust".  Both authors agree, by and large, that the root cause of the crises resulted from the influence of liberal politicians on financial institutions. This is contrary to the spin offered now by those very politicians at the heart of the disaster that it was a lack of regulation and therefore a failure of free market capitalism.  The solution from this perspective is obviously to rewrite and stiffen regulations and put the government more firmly into this sector of the economy.  Not so says these two authors.  The problem started with the notion that minorities were being discriminated against by stringent loan standards of banks and that the solution was for the banks to loosen these standards and thereby allow more low income people to get into homes, i.e.,  at the bottom of this debacle is social engineering, not the failure of the free market and capitalism.  It's hard to argue with the case these economist/historians make when you follow the trail of the CRA (Community Redevelopment Act) from it's inception in the 1960's, coupled with role of Freddie Mac and Fannie Mae, housing NGOs that benefited from the full faith credit backing of the government buying up the loans made by banks in the first place.  The bad guys in this scenario are not only the liberal ennablers, Barney Frank, Chris Dodd, et al., but also Acorn and the many other community activist groups who brought extreme and often physically threatening pressure on bank loan officers at the local level to ensure they complied with the spirit and letter of the CRA rules and regulations.  Freddie and Fannie were crucial in this equation freeing the banks from the consequences of bad loans by buying them up and passing them on to Wall Street for securitization.  Once this flawed paper was securitized it was passed on throughout the world helping trigger the worldwide financial crises from which it will likely take a generation to recover.  It bears mentioning that Freddie and Fannie were the largest contributors to the reelection campaigns of many politicians over the years, one of whom, Barack Obama, received more contributions than any other than Chris Dodd.  Ugh!  The books are most instructive for those who want to understand the invidious nexus of liberal politicians and the financial institutions.