This entire story is so big. And while Clinton was arguably the beginning, if you look at the true politics of it -- the stuff that made liberals turn their heads to it, you have to look at government backing of Freddie and Fannie as the original sin. When government guaranteed these organizations, it was a matter of time until people realized, "Hell, this stuff is risk free. If they go belly up, we get to keep our money! At the same time, Freddie and Fannie are saying, "We are a risk free entity. No matter how badly we screw up, we get government dollars to pay of our mess!"
So, when banks started following Clinton's new regulations, Fannie Mae just said, "Why not fix our rules? Then we can get all that crappy debt the mortgage brokers are writing."
S&L Crisis Redux. This time, with derivatives.
When "Long-term Capital Management" went into crisis, Brooksley Born told the administration derivatives needed to be regulated. Robert Rubin summarily fired her and eliminated her department.
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