In 1977 President Jimmy Carter signed the Community Redevelopment Reinvestment Act (or CRA) into law. As a result of “national grassroots pressure for affordable housing”, it forced banks to underwrite risky mortgage loans in order to meet the needs of “the entire community.”
In 1995 the Clinton administration strengthened the regulations of the Community Redevelopment Act. The CRA enabled consumers to secure mortgages with “no verification of income or assets; little consideration of the applicant’s ability to make payments; [and] no down payment.”
As the mortgage industry grew, Fannie Mae and Freddie Mac (government-sponsored entities, or GSEs) became a kind of “jobs program for out-of-work Democrats”.
Clinton administration friends and staffers managed the GSEs including Franklin Raines (now advisor to President Obama), Jim Johnson, Jamie Gorelick (outspoken member of the "Bi-Partisan 9/11 Commission")and Rahm Emmanual (now Chief of Staff for President Obama). This small group of executives paid themselves nearly $200 million in only six years’ time.