Quote:
Originally Posted by JD Barleycorn
31 years of government malfeasonance [sic] starting with the 1977 Community Reinvestment Act and ending with Barney Frank telling the world that Fannie and Freddie were sound in July of 2008.
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Yes, there certainly was no shortage of government
malfeasance, and Frank was responsible for plenty of it. In fact, according to this IBD editorial, he even inadvertently confirmed that:
http://news.investors.com/ibd-editor...ial-crisis.htm
But partisans need to recall that there was plenty of blame to go around. In a variety of ways, the Bush administration left fingerprints all over the wreckage. GWB's first NEC director, Larry Lindsey, acknowledged this when he admitted that few within the administration were eager to do much to dial back the "ownership society" push, or to undertake action to prevent the expansion of a debt-fueled bubble. And the gross fiscal irresponsibility of the first half of the last decade helped steer the nation's fisc toward a shaky location.
And the eagerness with which reckless policy goals are pursued continues unabated. 28-year-old columnist Josh Barro points to one key example:
http://www.businessinsider.com/you-c...-reason-2013-9
Wash. Rinse. Repeat. It seems that nobody ever learns anything.
A recent op-ed in the
Los Angeles Times offers a brief but cogent explanation of the almost completely unreformed (at least in any meaningful way) status of the financial system.
http://www.latimes.com/opinion/comme...,4139139.story
But the residential real estate boom & bust would not have been remotely as serious without a mighty assist from arguably the biggest enabling agent of all -- the Federal Reserve.
In an overreaction to the equity market deflation of 2000-2002, and to 9/11, the Fed shoved the policy rate (Fed funds target rate) all the way down to 1% and left it there for an extended period of time before slowly raising it. The die was cast and the bubble began to be pumped. The rest is history.
When poor public policy choices allow sharp operators and fraudsters to game the system, a number of them quickly rush in to fill the space. We saw that in the decade following the poorly designed S&L deregulation of a third of a century ago. In that instance, there were a lot of cases of clear-cut criminality. Many people went to prison.
But the last decade featured a smarter, more careful collection of miscreants. They were able to play high-stakes "heads we win, tails taxpayers lose" games with other people's money, but with little or no risk of criminal prosecution.
Five Years Ago Today
