Tuesday, September 30, 2008
The Blame Game
My initial reaction to news of the $700 billion government bailout was totally apoplectic – I am certain that I would be so much happier if I didn’t have a clue about what is going on in the world. But after allowing all of this to digest for the past two weeks, I have come to the point where I am thoroughly amused by the whole fiasco. It is so entertaining to watch all those morons in Washington running around pointing the finger at everyone else. Do they not realize that we (the lowly peasants whom they “serve”) have access to the world-wide web? History is so well-documented now through newspaper archives and youtube, that anyone can do their own research. So I decided to do a little research of my own.
The New York Times printed an article exactly 9 years ago today titled “Fannie Mae Eases Credit to Aid Mortgage Lending”. The Clinton administration was placing enormous pressure on the nation’s biggest underwriter to expand mortgage lending to low income individuals. The chairman of Fannie Mae at the time, Franklin Raines was very proud of the fact that they had successfully “expanded home ownership for millions of families in the 1990’s by reducing down payment requirements”, yet he was still concerned about borrowers whose credit ratings were a notch below the already loosened credit standards. Another push to include those with less-than-stellar credit in the housing market spawned new credit criteria and made mortgage loans available to subprime borrowers with favorable interest rates.
Most of the politicians are now pointing their fingers at Wall Street, claiming that corporate greed is to blame. Yet, more than a decade ago the Washington elite were sticking their grubby little fingers all over the financial markets, meddling with the mortgage lending requirements and offering to buy up any loans that banks made to subprime borrowers. Of course the banks were willing to make those loans in order to gain greater profits, as the federal government just relieved them of practically all of the risk. The privatization of profits and socialization of losses was bound to create risky behavior in any profit driven enterprise.
The democrats are screaming that the current financial mess is all President Bush’s fault, the republicans are blaming the democrats and they are all pointing the finger at those “capitalist pigs” on Wall Street. Yet you rarely hear any politician flat out say “WE screwed up”. That type of honesty in these trying times would be a breath of fresh air.
The New York Times printed an article exactly 9 years ago today titled “Fannie Mae Eases Credit to Aid Mortgage Lending”. The Clinton administration was placing enormous pressure on the nation’s biggest underwriter to expand mortgage lending to low income individuals. The chairman of Fannie Mae at the time, Franklin Raines was very proud of the fact that they had successfully “expanded home ownership for millions of families in the 1990’s by reducing down payment requirements”, yet he was still concerned about borrowers whose credit ratings were a notch below the already loosened credit standards. Another push to include those with less-than-stellar credit in the housing market spawned new credit criteria and made mortgage loans available to subprime borrowers with favorable interest rates.
Most of the politicians are now pointing their fingers at Wall Street, claiming that corporate greed is to blame. Yet, more than a decade ago the Washington elite were sticking their grubby little fingers all over the financial markets, meddling with the mortgage lending requirements and offering to buy up any loans that banks made to subprime borrowers. Of course the banks were willing to make those loans in order to gain greater profits, as the federal government just relieved them of practically all of the risk. The privatization of profits and socialization of losses was bound to create risky behavior in any profit driven enterprise.
The democrats are screaming that the current financial mess is all President Bush’s fault, the republicans are blaming the democrats and they are all pointing the finger at those “capitalist pigs” on Wall Street. Yet you rarely hear any politician flat out say “WE screwed up”. That type of honesty in these trying times would be a breath of fresh air.
