Monday, September 29, 2008

Efforts to Regulate Freddie and Fannie

Katrina Vanden Heuvel, editor of The Nation, and Eric Schlosser, argue in today's WSJ that 'What we really need is a new New Deal: a systematic approach to the financial and economic problems of the U.S.' Crisis and Leviathon. The really bad news of bad news is anticipating more clueless cures from Washington.

Check out this compilation of snippets from people defending Fannie and Freddie when they were sowing the seeds of this current mess, berating the motives of those who were criticizing these institutions, and Franklin Raines' statement about mortgages
"These assets are so riskless, that their capital should be under two percent"
With that kind of mindset from the top, it's obvious a disaster was inevitable, it was just a matter of time.

Now, this is a partisan Republican piece, and surely many Republicans were in on the disastrous idea that increasing homeownership would be riskless, but I think the balance of blame is clear. [Interestingly, George Bush's biggest failures were, in my opinion, his efforts to do classically liberal policies, such as No Child Left Behind, the Iraq War (very Wilsonian), and the 'ownership' society.--But the Left hates him more than ever].

1 comment:

Anonymous said...

There's some editing going on to cast blame ... because everyone was in the tank on this one.
Plenty of Republicans were against increasing regulation too. One of McCain's campaign managers (Scmidt?) got $2 million to lobby congress for Fannie/Freddie. And he wasn't known for his relationships with democrats. Fannie/Freddie had other lobbyists to reach out to Dems. Same thing for the Mortgage Banker's Association.
Plenty of blame to go around here.