However, the majority of blame lies at the feet of greedy bankers, real estate agents, appraisers, hedge funds etc who encouraged this crap in order to sustain the natural boom conditions
If you recall this was supported by both Clinton and Bush admins to keep the economy going and encourage home ownership - aka the ownership society. Their goals, while admirable, leaned on banks to make loans to more risky people by using fanny and freddy to insure the risky loans.
Funny.......the abuses all occurred under Bush.
What should be learned is the government started the ball rolling, I'm not absolving all the others in the money chain - but government should acknowledge it's role in creating the mess. If they had not offered to insure such risky practices those banks never would have loaned money to those less capable people. I see it as yet another example of unintended consequences when government intervenes with policy goals in the free market.
This is what's interesting......the gov't had little to do with this whole mess. Yes, I know......you all point to the HUD program that encourages home ownership for the lower middle class but that was not the culprit. The program worked well all throughout the Clinton years. And then when that's doesn't fly....you talk about how Greenspan lowered interest rates. Well that's a bunch of crap. You might as well blame banks for having housing loan programs.
In fact, the problems didn't start to happen en masse until 2003-2004 when the housing boom was starting to slow. People in the real estate industry did not want to see the good times end. So that's when lenders, appraisers, real estate agents, underwriters etc began to fudge and started putting people into houses that shouldn't have been there. Then those problems were further exacerbated by securization and the creation of CDOs, a Wall Street invention. The crap loans discussed above were mixed in with good loans in such a way that it was virtually impossible to tell one from the other without close scrutiny and then sold to Fannie and Freddie who are secondary lenders or to other banks. The good times were so good that most of these banks including Fannie and Freddie did not even bother to do any due diligence.
Now where was gov't in this mess? Under Bush, practicing laissez-faire. It was the don't look, don't touch policy. It was the same policy that allowed Bernie Madoff to go unmolested for years after a whistleblower complained to the SEC about him. That was gov't's contribution......a failure to perform their fudiciary responsibility to regulate. In other words, they didn't start the ball rolling but they helped it stay rolling.
And this entire mess rests on Bush's shoulders.....may he never have a moment of peace until he dies. |
