bad underwriting (encouraged by gov)+expansion of subprime (encour by gov)+securitization+existing subsidies
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I read the paper Caplan based his post off, & indeed it is excellent. https://www.russellsage.org/sites/all/files/Rethinking-Finance/Willen.rsage_paper_2_11pw.pdf …
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Almost immediately it poses a big challenge to your theory; the success of pre-2006 borrowers.pic.twitter.com/1w1sc3hnCb
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Your thesis is something like: Lending to obviously problematic borrowers was directed by politics
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If so, what politics explains why pre-2006 subprime borrowers did well enough, & post-2006 badly?
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A simpler idea works: Those pre-2006, of any race, were "scrabblers"; those past it speculators.
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Note the differential b/w origination dates & dates of failure. If CRA incentives directed banks..
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to lend to minorities, it did not have immediate detrimental effect; failures stayed the same.
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Only when real-estate "opportunity" came fully into the public consciousness, did defaults start.
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