The Dummies Guide to how this crisis happened

Jay Tea at Wizbang:

When Bill Clinton pushed through the expansion of the Community Reinvestment Act in the last 1990s, the theory was to get more people into homes. At that point, the banks -- who would be making the loans -- balked. "Yeah, we can get them into the homes, but a good chunk of them won't be able to stay there. We'll end up having to foreclose, and then we'll be owning a bunch of homes we don't want."

"Don't worry," said the Democrats. "We'll take care of that. We'll let you sell off the loans as 'investment-grade assets.' You won't get stuck with them."

"But who the hell would buy them? They're still shaky loans, no matter who owns them or what we call them."

"It's OK, we'll get Fannie Mae and Freddie Mac to insure them. With those folks behind the loans, they'll sell like hotcakes. And later, if they bust, you'll be off the hook."

"I dunno... it's still a shaky deal. I think we'll just pass, thanks. You can't make us give mortgages that we think will go bad."

"Actually, we can. You see, if you ever want to merge with any other bank, or make any other major moves, the public can sue to stop it -- and one of the grounds will be if you're in compliance with the CRA. In other words, you start making these loans, or our buddies at ACORN and the like will shut down any big moves you want to make. But really, that shouldn't be necessary -- you'll still make money off these bad loans, so what's the problem?"