I recently was listening to a podcast of "Democracy Now"–by the way, IMO the best and only accurate newscast I can find, esp. when it comes to American Foreign Policy–and there was an interview with Nomi Prins, who wrote this article for Mother Jones on the the five ways we were set up for the biggest economic downturn in decades, if not longer. While I knew some of the basics from previous interviews I had heard, [1] this article gave me some very useful additional insights.  You should definitely check it out if you have a chance. 

Here is an excerpt:

Why the Economy Went South

News: A reformed Wall Streeter explains where Congress went wrong on lending. Plus, a [2] timeline of the mortgage crisis.

By Nomi Prins

July 7, 2008

After months of housing-market debris, Congress is still grappling with temporary solutions. One question they should be asking this week: How could these problems have been avoided?

Below, [3] five ways Wall Street and Washington set us up for the crash.

Newt Gingrich and Home Ownership

There were myriad calls in the early ’90s to usher in banking controls on the precipice of the GOP "contract with America" revolution. In response, the House battled for the [4] Home Ownership and Equity Protection Act of 1994 to cap the most outrageous predatory loans.

HOEPA’s passage had dire consequences. First, it left a huge gap between the most egregious rates and fees a lender could charge and the next most egregious. If lenders didn’t want to hit the new caps, they could still extend loans with rates and fees just beneath the HOEPA triggers. Since they would make less money off of each loan due to reduced rates and fees, they’d have to find more borrowers to make the same profits.

Voila, the quiet birth of subprime lending.