The CRA only covers depository institutions, like banks and thrifts, which only account for 25% of recent lending activity. The CRA does not apply to the mortgage companies like Countrywide and Ameriquest that were behind so many bad loans. The CRA also had nothing to do with the wave of Wall Street and banking deregulation started under Clinton and the Congressional Republicans, and greatly intensified under the Bush era, which led to no document loans and no income loans. These type of sub prime loans were mostly for middle class homes, and it was the Bush White House, SEC and Treasury which let them occur, not the Democratic minority in Congress! And it was Sen. Phil Gramm and Fed Chair Alan Greenspan who strongly resisted any regulation of credit default swaps which DIRECTLY led to the current crisis.

And Fannie/Freddie, which had been insuring up to 40% of these risky loans, saw Wall Street and the mortgage companies buying up these sub prime loans so much that their market share declined to 22%. It was the Bush White House, in 2005, which ordered James Lockhart, the Fannie/Freddie regulator, to direct them to buy more loans, making $40 Billion available for that purpose. Their share increased to 33%. Thus, it is the Republican Executive Branch which bears the most responsibility for the current mess. Yes, Barney Frank and Maxine Waters squealed about regulating Fannie/Freddie in 2005. But who cares? The Republicans controlled the House, Senate and White House in 2005, and they didn’t pass anything. Nothing passed until the Dems took over in 2007. And it was the Bush White House in 2005 that ordered Fannie/Freddie to buy MORE bad loans, not less. Bush and Congressional Republicans also intensified deregulating Wall Street and the banking industry, putting no controls on credit default swaps and other exotic instruments. Virtually every element of the current crisis was set by Republicans – after all they mostly controlled the Congress from 95 to 07, and the White House, Treasury, Federal Reserve and SEC from 2001 until now.

Conservatives need to admit that the policies of no regulation simply did not work, while still showing that excessive regulation is not the answer. Until they do that, the American people will not trust them, and it looks like Obama is headed for a 5 to 7 point landslide win, and the Dems pick up 5 to 9 seats in the Senate, and 20 to 30 in the House.