Big government fails again; Obama demands more of the same
Obama in a statement yesterday blamed the shocking new round of subprime-related bankruptcies on the free-market system, and specifically the “trickle-down” economics of the Bush administration, which he tried to gig opponent John McCain for wanting to extend.
But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street’s most revered institutions.
Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.
There’s a political root cause to this mess that we ignore at our peril. If we blame the wrong culprits, we’ll learn the wrong lessons. And taxpayers will be on the hook for even larger bailouts down the road.
But the government-can-do-no-wrong crowd just doesn’t get it. They won’t acknowledge the law of unintended consequences from well-meaning, if misguided, acts.
Obama and Democrats on the Hill think even more regulation and more interference in the market will solve the problem their policies helped cause.
Oh, they get it all right. They want more government control over the American economy. And incrementally, piece by piece — their usual MO — they’re getting it. In fact, so persuasive have their misdirections been, they have fools everywhere shrilly demanding it.
Update! Who ought to be getting the most “credit” for this debacle? Oh, take a wild guess:
The credit crisis and the lack of oversight over government-subsidized lenders like Fannie Mae and Freddie Mac occurred on the watch of George Bush, and many blame his economic team for their lack of oversight in the collapse. Barack Obama has made this point one of his major campaign themes, arguing that John McCain would provide more of the same failures that Bush did. However, what many do not recall is that Bush wanted to tighten oversight with a new regulatory board for Fannie Mae, Freddie Mac, and other government recipients for the express purpose of addressing bad loan practices — and Democrats blocked it.
As with the Pelosi Premium gas-price disaster: imagine my surprise.
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Finally, somene with a voice looked up "redlining" and the various meaures against it. It was not a "good" practice, people who legitimately wanted to buy and/or renovate were turned down not on their own financial merits but on the "location, location, location" mantra of real estate. But governments from villages through Federal decided not to respond with providing services (sewers, police, electrical lines, or what-have-you) to improve those areas since that would cost actual increased-taxes money but with do-it-or-lose-your-license laws and do-it-and-pay-reduced-taxes incentives. A number of those same governments, even if the names of representatives therein changed, continued with a not-so-benign neglect.