The Right Wing

Everybody is talking about this massive bailout that congress is trying to get through.  And everybody is claiming we need more regulation and that the lack of regulation is what caused this credit mess.  What nobody is saying (except for a few enlightened conservatives) is the truth.  Too much government caused this crash.

Have you noticed how companies dealing with government back loans are the ones failing and causing all the problems while the private lenders are pretty healthy.  Fannie Mae and Freddie Mac, at the center of this mess, are government chartered entities.  They are government chartered and government backed yet they were trading as a public company.  Let me ask you, when you know the government is backing you up and ready to bail you out what drives you to practice sound business/lending policies?  Nothing, instead you can buy up risky loan after risky loan without ever worrying you will go bankrupt or get paid your CEO bonus.  There has to be risk associated in business or the market doesn’t work.  This crisis however cannot be blamed purely on Fannie Mae and Freddie Mac executives.  The government is the main culprit.  For years the government (mainly but not just democrats) has been pushing lenders to make more loans to lower-income (riskier) people so they can “realize the American dream.”  They have done this through pressure, legislation, and backing these loans in the first place.  Think about it, the government pushed for loans (backed by your tax dollars) to be granted to people who are likely to not pay them back.  Hence why private loan institutions rejected them.  Sounds stupid doesn’t it.

The Community Reinvestment Act, a piece of legislation enacted under Jimmy Carter, started this whole mess by forcing banks to offer credit to high risk parties.  Of course this was done under the veil of social equality.  As far as Clinton’s culpability check out this excerpt from a NY Times article in 1999.

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

All this is not to say that idiot Republicans didn’t support these measures as well.  But it is clear if the government had stayed out of this in the first place and let the free market work (by excluding people who can’t pay back loans from getting them) we wouldn’t be in this mess.

Notice how eager congress is to blame greedy CEOs and people like Chris Cox.  That is because they are to blame and are trying to divert attention away from themselves.  However when you look at these “greedy” executives you quickly find that Freddie and Fannie’s biggest benefiters (in the form of contributions) have been Chris Dodd and Barack Obama, exactly the people trying to blame others and pretend they are coming to our rescue with regulation.  They are demanding more regulation and government involvement when they are the ones who screwed us in the first place.  Why should they be trusted or any other Republican retard who supports these measures.

As unpopular as it might sound the best long term solution would be for government to get the hell out of the housing market and let these institutions fail.  Yes the short term pain would definitely suck, but it is better to let bad companies fail and deal with the consequences of bad business practices.  Personally, the thought of the government “bailing” out all these companies and now effectively controlling the housing market scares the shit out of me.  This is a step towards Socialism.

Right now I’m listening to Bush talk like a democrat.  ”The markets aren’t functioning properly.”  They aren’t functioning properly because the government has prevented them from being FREE markets.