Claims of racial discrimination were frequently aimed at banks in the mid-1990s by community activists who, through judicial actions or by producing demonstrations by irate citizens, embarrassed banks into lowering their lending requirements to the point where, in common parlance, banks began issuing "sub-prime" mortgages. In an effort to both protect the financial integrity of local community banks and provide access to enormous amounts of cash for mortgages, Congress instructed Fannie Mae and Freddie Mac to purchase such mortgages from the original lender, returning the original lender to his original state of liquidity.More about the Democrat-engineered meltdown can be read in Mark Levin's book, "Liberty and Tyranny" and in Thomas E. Wood's book, "Meltdown."
Fannie and Freddie then offered institutions such as Lehman Brothers and other major Wall Street firms a chance to "bundle" these mortgages and sell derivative securities, with their value basis predicated on such bundles.
The meltdown not only wrecked the economy, it provided the duplicitous mass media and the Democratic Party an opportunity to benefit from their own misdeeds. The bubble burst in the last few months of George Bush's presidency. In an extraordinary display of bad faith, the Democrats then blamed the meltdown on a lack of governmental oversight, the machinations of Wall Street and the Republican policies of George W. Bush.
Read Yardley's article: So Obama Inherited a Mess, Did He? From Whom?