From 2007 to 2009, America suffered a severe economic downturn, known as the Great Recession,

also known as the supreme mortgage crisis.

The economy, as measured by GDP or gross domestic products, shrank by over 4%.

Unemployment doubled peaking at 10%.

The Dow Jones Industrial average fell 50%. Millions lost their homes.

How did this happen? Here's the short version. In the spring of 2006, housing prices,

which had been rising for years, began to decline and then freefall. 30% nationwide, 60% in some markets like Las Vegas and Phoenix.

Why did this lead to a recession?

The usual explanation goes something like this.

Free market ideologues in Republican administrations deregulated the banks.

Free from constraints, these institutions enticed millions of Americans to take out home loans that

were beyond their means. It was according to Ford's advisor, a classic tale of greed and

deregulation. There is one more crucial component here. These subprime loans were variable.

That is, they rose or fell based on interest rates. When interest rates were low,

monthly payments were affordable. If interest rates increased, so would monthly payments. But few thought

that would actually happen. This raises an obvious question. How did banks, which are inherently

risk adverse, become so reckless with their money. To answer that, we need to look at

federal policy, specifically a piece of legislation called the Community Reinvestment Act, or CRA,

signed in 1977 by President Jimmy Carter and expanded in 1995 by President Bill Clinton,

both Democrats. The CRA had an idealistic goal, make homeownership

easier for low-income Americans. But the government was making a encouraging suggestion.

It was making a demand, one with quotas attached. As Phil Grant and Donald Woodrow explaining

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