Clayton Cramer has a terrific, but not overly long, post at his blog titled What Went Wrong. I highly recommend it as a history of the thirty years of undermining of the mortgage and banking system by the government. Primarily Democrats, but no doubt some Republicans had a hand in this too.
Read it and the next time someone tells you it was the greedy bankers and mortgage companies, refer them to his post.
This is a short excerpt, which includes part of a Wall Street Journal editorial,
Third warning: a November 11, 2003 Wall Street Journal editorial about the housing finance market. White House chief economist N. Gregory Mankiw argued for stronger regulation of Fannie Mae, because of the risks to taxpayers. And who argued against? “Congressman Barney Frank criticized Mr. Mankiw because he is worried about the tiny little matter of safety and soundness rather than ‘concern about housing.’ But as Mr. Mankiw pointed out, most of the federal subsidy for the companies goes to enrich private investors and executives, not poor home-owners.”
The following sentence from that 2003 editorial is especially prescient: “One weakness of democracy is that it tends to ignore problems before they erupt into crises. The risk portfolios of Fannie Mae and Freddie Mac are a classic example.”
We must understand what went wrong so that we don’t repeat those mistakes. It was not Republican laissez faire that caused this. A Democratic President imposed regulation that ballooned the subprime mortgage market in the interests of making housing affordable. When Bush Administration officials said that more supervision was needed because of the risk, the most liberal Democrats in Congress defended the status quo.
Senator McCain (R-AZ) sponsored corrective legislation in 2005 and 2007—which went nowhere. A bipartisan group of Congressmen, mostly Democrats but with just enough Republicans to prevent a Republican-controlled Congress from passing it, blocked the bill when the alarm bells were ringing, but before the fire was out of control.
We were warned. And those who foolishly defended these policies now control Congress and the White House.
That’s the same Barney Frank that expresses faux outrage at greedy bankers and executives of AIG.
The other cause of the mess were in was greed – pure unalderated unchecked greed by those who stood to make money off these loans. This greed was fueled by the deregulation of the banking industry and repeal of usury limits in 1983. Usury is prohibited by the bible and our Republican controlled White House and congress chose to allow it, fleecing America in the process. Greed and usury – both spoken against in the good book but allowed by our Christian Conservative leaders. Shame on you.
Anon… please, let’s be adults here & understand the facts.“Unalderated (?) unchecked greed” is what runs our economy, whether you like it or not. Folks do what they do to… wait for it… MAKE MONEY! Is that a big surprise to you? I’m going on the wild assumption that you go to work somewhere, for someone. What is your goal in applying your talents to your job? What is your employer’s goal? Yup.And look, please, to the facts of Fannie & Freddie. They were both directed by Frank & Dodd to deliver loan money to those who most probably could not repay their loans. And they didn’t. The results are “toxic assets” that started the fuse burning on our present implosion.Your precious monkey boys in the democrat party screwed this up big time; don’t blame “Christians” or “Conservatives” for this lunacy; the blame is square where it lies.Oh, & BTW Anon? “Shame” is an unknown quantity on the left.Piss off…