Can someone explain the financial crisis to me?

Economics
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…This news article has a quote regarding the $10,000 fines tied to the CRA:

http://www.foxnews.com/story/0,2933,424945,00.html

Accepting these new criteria was hardly voluntary. The Fed warned the banks:

“Did You Know? Failure to comply with the Equal Credit Opportunity Act or Regulation B can subject a financial institution to civil liability for actual and punitive damages in individual or class actions. Liability for punitive damages can be as much as $10,000 in individual actions and the lesser of $500,000 or 1 percent of the creditor’s net worth in class actions.”

Added on Edit:

As with other regulatory laws, it becomes a nightmare trying to understand if you are complying or not. You can read the text of the laws and not realize you will be held accountable for your actions in an arbitrary manner, because each regulation is tied to other regulations which are tied to other regulations, and one needs to hire lawyers to try to figure out what the hell will be your punishment for non-compliance.

So, just to clarify, there is no $10,000 fine per denial of loan. There can be up to a $10,000 fine for an individual action that goes against the Equal Credit Opportunity Act. They don’t have to lend money to everybody, although from reading the text of the Act, that’s certainly the easiest way to guarantee your compliance! Here is a link to the full text of the ECOA:

Equal Credit Opportunity Act

We can’t pin the crisis on any one government action, but there are so many actions that have pushed and pulled us toward the state we’re in.

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We can’t pin the crisis on any one government action, but there are so many actions that have pushed and pulled us toward the state we’re in.

That’s a fair assessment.

It’s the whole regulatory system that forces actions upon businessman that they would otherwise not do, and the rationale for that is often an altruistic “fairness” standard. But it is also the implied threat that gets businessman to act against their better judgment, and complying with regulations can drive a business broke, though it might take many years for that to happen. The Community Reinvestment Act was reinforced in 1995, and it took 12 years for us to feel the pain in the economy. As I have said before, though, a lot of businessman don’t mind the regulations, or at least don’t complain about them, because they are not fully for laissez-fare capitalism either. Without rules, the modern businessman wouldn’t know how to deal with a free market, and prefer to have laws that they can claim they followed to the letter, even as they go broke. Sad to say, but short-sighted pragmatism has driven them to that. It would be rare for any one of them to make an outcry like Hank Rearden did in Atlas Shrugged. Of course, when one is at the mercy of unjust laws, what can you do when you are such a minority? I would say speak out, but then you might get the wrath of a regulator down your throat.