Jeff Jacoby from the Boston Globe has an opinion on whose fingerprints are all over the sub-prime mortgage mess and who killed reforms before it affected the economy. While Democrats blame the private-sector for causing the crisis and President Bush for blocking attempts to reign in Fannie and Freddie, the facts prove otherwise.
...while the mortgage crisis convulsing Wall Street has its share of private-sector culprits they weren't the ones who "got us into this mess." Barney Frank's talking points notwithstanding, mortgage lenders didn't wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers. It would be closer to the truth to say they woke up to find the government twisting their arms and demanding that they do so - or else.
The roots of this crisis go back to the Carter administration. That was when government officials, egged on by left-wing activists, began accusing mortgage lenders of racism and "redlining" because urban blacks were being denied mortgages at a higher rate than suburban whites.
Like most left-wing ideas, the solution was to water-down requirements under the guise of "fairness". But when did it become clear to some that the sub-prime mortgage industry was in trouble and might bring the entire economy down?
Time and time again, Frank insisted that Fannie Mae and Freddie Mac were in good shape. Five years ago, for example, when the Bush administration proposed much tighter regulation of the two companies, Frank was adamant that "these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis." When the White House warned of "systemic risk for our financial system" unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing.
Now that the bubble has burst and the "systemic risk" is apparent to all, Frank blithely declares: "The private sector got us into this mess." Well, give the congressman points for gall.
He's got gall alright.
Post page13news to Facebook
1 comment:
This makes no sense. It's not a stretch to call out those responsible for F&F, but to suggest that the government somehow influenced the private sector is a fairy-tale.
If that were the case, then the private companies would be grudgingly lending to "risk", and the securities would not be bought and sold by as many companies as they were. The private sector gobbled the crap up. No one did their homework.
Again, F$F are just a part of this, not the cause.
Post a Comment