Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

American housing policy and mortgage practice since the war had systematically favored home ownership for the white majority.15 In the 1990s promoting home ownership for lower-income and “underserved” minority communities became a congressional priority. The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 called for lending goals to be set for the GSEs. In December 1995 the government issued targets for underserved areas and low-income housing. Many of the new home owners in the 1990s and 2000s were ethnic minority families who had been denied mortgages for decades under the regime of “redlining” institutionalized by New Deal housing policy. Viewed in this way the real estate boom was part of the rise of the diverse African American and Latino middle class on which the Democrats as a political party had a lot riding.16 On the back of their influence over the Democratic Party, the GSEs built one of the most powerful lobbies in Washington, DC. Their political firepower was legendary. By the same token, the GSE mortgage regime always attracted the ire of the American Right.