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W catches the blame because he is considered

68.123.205.203

Bruce Kendall

In Reply to: RE: Well, at the risk of sticking my neck out . . . posted by JoshT on March 09, 2008 at 21:08:42

the head of the republican party for the time being. The republican party led the charge to reducing banking regulations, which caused some of the problems, and fueled fiscal practices that artificially propped up housing prices to keep consumer confidence high and maintain the appearance of a robust economy. We have borrowed out butts off to fund our adventures in Iraq, and now I fear that we are devaluing the dollar to make it less costly to repay that debt -- or even to just make the interest payments. And guess who takes it in the butt when we do that?

So yeah, W gets some of the credit.

Follow Ups:

"The republican party led the charge to reducing banking regulations." No, it was the Carter administration. - clarkjohnsen 10:34:34 03/10/08 (1)
I posted this last week, but perhaps you didn't catch it. The article explains the unintended consequences of such "progressive" law-making.

__

The crisis has its roots in the Community Reinvestment Act of 1977 [passed by a Democratic Congress, note], a Carter-era law that purported to prevent "redlining" - denying mortgages to black borrowers - by pressuring banks to make home loans in "low- and moderate-income neighborhoods." Under the act, banks were to be graded on their attentiveness to the "credit needs" of "predominantly minority neighborhoods." The higher a bank's rating, the more likely that regulators would say yes when the bank sought to open a new branch or undertake a merger or acquisition.

But to earn high ratings, banks were forced to make increasingly risky loans to borrowers who wouldn't qualify for a mortgage under normal standards of creditworthiness. The Community Reinvestment Act, made even more stringent during the Clinton administration, trapped lenders in a Catch-22.

"If they comply," wrote Loyola College economist Thomas DiLorenzo, "they know they will have to suffer from more loan defaults. If they don't comply, they face financial penalties . . . which can cost a large corporation like Bank of America billions of dollars."

Banks nationwide thus ended up making more and more subprime loans and agreeing to dangerously lax underwriting standards - no down payment, no verification of income, interest-only payment plans, weak credit history. If they tried to compensate for the higher risks they were taking by charging higher interest rates, they were accused of unfairly steering borrowers into "predatory" loans they couldn't afford.

Trapped in a no-win situation entirely of the government's making, lenders could only hope that home prices would continue to rise, staving off the inevitable collapse. But once the housing bubble burst, there was no escape. Mortgage lenders have been bankrupted, thousands of subprime homeowners have been foreclosed on, and countless would-be borrowers can no longer get credit. The financial fallout has hurt investors around the world. And all of it thanks to the government, which was sure it understood the credit industry better than the free market did, and confidently created the conditions that made disaster unavoidable.

"No man's life, liberty, or property is safe," warned Mark Twain, "while Congress is in session." Mark Twain was a humorist, but that was no joke.
- http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/03/09/how_government_makes_things_worse/ (Open in New Window)
- No, it was the USA's blind subservience to big business. - dave c 15:21:49 03/10/08 (0)
  Why single out one party?
  That is just to buy into the big lie that one side represents something significantly different to the other.
  Over and over even in the forum we are shown examples of how the difference, even the traditional difference between the parties has been done away with as the USA lurches to the right and the corporations take over the reins.
OK - JoshT 09:48:37 03/10/08 (0)
I'm not knowledgeable enough to agree or disagree in this case (though I certainly agree with you on the Iraq mess), but appreciate your thoughts.

My main point, of course, was that the originally posted statistics were inaccurate (though I now know they were posted in good faith). No one else seemed all that curious about them.

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