Banks were pressured by legislation and community organizing groups to make loans to those who otherwise would not qualify. Heightening in the 90’s as Fannie Mae and Freddie Mac were given increased latitude, money flooded the market and housing prices spiraled upwards. When defaults avalanched, the pyramid scheme collapsed, insurance pools dried up, and the government came in to pick up the tab. Homeowners now pay more for their own home, and pay for someone elses’, too.
In just 3 years as a Freshman Senator, Obama became the #2 receipient of Fanney May lobbying money. Why? Simple: His reputation of pushing out their sub-prime loans and helping fund developers like Tony Rezko.
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