Phil Gramm: The DeregulatorIt’s a convenient excuse: claiming that the financial crisis was caused by the poor and those who made it easier for them to get mortgages. The problem: it’s simply not true. In a New York Times Op-Ed, Michael Barr and Gene Sperling lay the blame squarely where it belongs — with investment bankers, mortgage brokers and the willful lack of government supervision by the Bush administration. For his part, economist Michael Ettlinger looks at the conservatives’ claims and concludes, “they’re so far off the mark that one can’t even give them points for cleverness.”
Unfettered markets led to the financial crisis, but that’s hard for conservative policymakers and pundits to admit. So some have made a target of the 1977 Community Reinvestment Act, which was passed to overcome discrimination in lending. This idea, which started on fringe blogs, simply doesn’t pass the laugh test, writes CAP’s Tim Westrich.
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It’s not easy for a conservative to admit that aggressive deregulation and lack of oversight led to the financial crisis. So instead, many are blaming Fannie Mae and Freddie Mac, federally backed institutions that were set up to encourage broad home ownership in America. The facts don’t square with this “When in Doubt, Yell ‘Fannie Mae‘” story line, as David Abramowitz writes. In fact, Fannie and Freddie actually got pushed aside when rules were loosened and Wall Street crowded into the market for riskier mortgages, making it ballon. As Businessweek’s Aaron Pressman writes, Fannie and Freddie were victims not culprits. Reaching even farther, right-wing blogger Michelle Malkin even pointed a finger at illegal immigrants. Slate says that blaming the crisis on poor, minority homeowners is not only wrong but downright offensive.
