I’ve always considered it the height of doublethink to insist that the CRA, a government program meant to increase homeownership by forcing looser lending standards, had nothing to do with a recession caused by an overheated housing market and risky loans associated with loose lending. And in the past, I always considered Obama guilty of feeding into this delusion. However, Obama’s administration appears to have expressed interest in deviating from his party’s base on this matter. He may actually abandon the Democrats’ long-standing goal of using certification incentives to influence the willingness of mortgage firms to lend to low-income individuals.
This is important because it suggests that Obama may recognize that firms under free-market incentives are better at looking out for their own stability than those being influenced by the government. On the other hand, it may just a be a transition from one damaging economic policy to another less notorious one, as Obama has, in the past, expressed support for rent control.
So is this the first step in rethinking the Democrats’ approach to economics? Or is it just another case of political dancing and rhetoric in anticipation of the midterm elections? Only time will tell.