"I know the implication is to the current crisis, but to believe that sub-prime is what caused our current problems is plain incorrect... but the system was pri

"I know the implication is to the current crisis, but to believe that sub-prime is what caused our current problems is plain incorrect... but the system was primed by fundamental issues." You've simply stated an analogy rather than supporting facts. This does not move the discusson forward. From the 1999 article: "Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people..." And expand them they did. The Community Reinvestment Act was signed into law in 1977 by Jimmy Carter, when Democrats controlled both houses of Congress (post-Watergate). It didn't have many teeth then, though, and the damage was minimal. In 1998, Clinton signed into law a version with serious bite. It allowed "community activists" such as ACORN (Association of Community Organizations for Reform Now) to harass any banks they felt weren't "reinvesting" in the "community", blocking future expansions, etc. You'll notice that, of the 5,700 retail (as opposed to investment) banks in the Federal Reserve System, only about 40 are in trouble. They just happen to be the ones operating in America's larger cities. Rural and small town banks are doing fine. Nor are State Banks in trouble. You'll also notice that overseas retail banks are not having problems either. Strange, no? The retail banks in the big cities, which were subject to pressure from "community organizers", knew the subprime mortages were garbage and looked around for ways to offload the risks forced onto them by government, so they bundled the loans up into tranches ("securitization") and sold them to investment banks like Bear Stearns, Morgan Stanley, Northern Rock (British bank, now bankrupt), etc. Now the cancer of risk spread through the system and bodies began showing up at the morgue. It didn't take long for the fun to start. Superior Bank of Chicago failed in July, 2001. According to a press release from the Office of Thrift Supervision, "Superior Bank suffered as a result of its former high-risk business strategy, which was focused on the generation of significant volumes of subprime mortgage and automobile loans for securitization and sale in the secondary market. OTS found that the bank also suffered from poor lending practices, improper record keeping and accounting, and ineffective board and management supervision." George Kaufman, a finance professor at Loyola University Chicago called Superior's failure "a tale of gross mismanagement," adding that "[Superior] was engaged in relatively unethical practices, fancy-footwork accounting, playing it very close to the edge." The Pritzker family, including Penny Pritzker, were fined a record $460 million for violations of the RICO Act. http://en.wikipedia.org/wiki/Superior_Bank_of_Chicago http://en.wikipedia.org/wiki/Superior_Bank_of_Chicago (Sorry about the Wikipedia link. The best I could do on short notice.) Completely by coincidence, Penny Pritzker is Campaign Finance Chairpersion for a very famous politician from the same city as Superior Bank. Who used to be a community organizer in Chicago. Who used to do legal work for ACORN. This just happens to be the same politician who received more money from Fannie and Freddie in the last four years than any of the other 535 members of Congress. Of course, you've already seen all this in the mainstream media, right? Right? We are about to have the world's first Politically Correct Recession, boys and girls, and You Are There. Nothing to see here folks. Move along, move along.