Once again, one of my comments over at PW grew arms and legs, so I'll post it here to save Jeff's bandwidth.
I was responding to this comment, and my response starts out here.
So here's the problem:
Many progressives see the requirements to getting a mortgage — credit checks, asset evaluation, collateral, down payments — as the equivalent of the poll tax; in other words, it was a means of keeping the non-privileged down by creating an arbitrary, pseudo-legitimate bar that they knew the "undesirables" could not clear.
The aforementioned barrier to voting was genuinely discriminatory. But because progressives understand economics less than I do, they don't get that the qualifications for a mortgage are not arbitrary at all but instead are a real index of whether someone is able to handle the long-term responsibility of a mortgage. And then there's the bit about when you have a hammer, everything looks like a nail. Very inflexible paradigms in progressivism, see.
Think about it: if you're a greedy bastard, you're not going to lend your precious money to someone who will likely default, because foreclosures are expensive and messy. Merely repossessing the house and the car does not sufficiently compensate you for the trouble, and you lose money in the deal.
So the bar that lenders set is designed to reduce their risk, which is what all greedy bastards do: protect what's theirs while making a buck.
Without the implied guarantee of government bail-out, no greedy bastard worth his salt would lend all that money to people who didn't meet those requirements. I mean, people on welfare could get mortgages. The artificial interference of the CRA and Fan & Fred and its agitators permitted the greedy bastards to pursue a path to filthy lucre that was not open before.
But as usual, progressives don't understand the real causes of poverty, so their solutions are entirely wrong-headed and usually hurt more than help. (Cancer? Use cyanide!) They think that people are poor in the U.S. because greedy bastards are hogging the finite pie and won't share.
But in this country, if you're poor it's because you don't possess the habits and beliefs and attitudes that permit you to function as a bread-winner. The poor often are not responsible for the fact that they don't have the chops to be wealthier, but the fact remains that if you want to help people not be poor, you have to help them acquire the necessary habits and attitudes for getting and keeping a steady, reasonably good-paying job, and then to wisely manage the money they earn.
But those kinds of skills are difficult to teach, especially in our I Want It Now culture. And many of the poor also have serious emotional, psychological, and/or physical problems that make it unlikely that they'll ever be able to support themselves, or if they do, it will be years before they've learned how.
And don't forget those who are caught in the endless cycle of dependency that has prevented them from internalizing the rhythms of responsibility — you get up, get to work, on-time, every day, whether you want to or not. You do what the boss says, even if he is a first-class moron. You tolerate slights. You hold up under pressure. Unless you grew up in a home where at least one person did that, it's hard to acquire that rhythm yourself. Most people can't do it without help, and some people actually don't want to become solid citizens, for reasons only they understand.
As usual, the progressives took the easy way out as they relied on their caricatures of Evil White Lenders and and on their confidence in the utter purity of their motives.
They just handed out the mortgages like leaflets in Vegas and figured that that would be all it took to get people out of poverty and into the mainstream of life.
But because their plan was not founded on How Wealth Works, this is the result: the collapse of the credit market and possibly a big recession or the D word for the rest of us. They tossed a bunch of people into icy, deep water without teaching them how to swim. BECAUSE OF THE COMPASSION!
Did a bunch of greedy bastards contribute mightily to the problem? Oh hell yes. There is no shortage in human society of predators who never miss an opening to exploit someone or something. They're the flesh-eating bacteria of society, always present, always awaiting the opportunity to invade a paper cut and gangrenate your whole hand or leg.
But the paper cut — or gaping wound, in this case — was inflicted by excessively wrong-minded do-gooders (or those who pose as such) that profoundly misunderstand the consequences of their actions and refuse to acknowledge them when they're pointed out. And whose cooperation has usually been bought by the greedy bastards who are benefiting the most from the racket.
This crisis was both foreseeable and foreseen, and Cassandras have been sounding the alarm for years. But if you've invested all your ego in how Good you are and how Evil society is, then you're not going to rethink your positions.
Especially if taking down the current system is the end game after all, the rubble upon which you will build your Perfect Society for all to enjoy. As long as they toe the line, that is. All else need to be moved from their place, by any means necessary.
UPDATE: Oh, look. Corroboration.
UPDATE II: How ACORN intimidated lenders into compliance.