The price tag of political correctness: $700 billion
Would you like to blame, as Nancy Pelosi puts it, "The failed economic policies of the Bush administration" for this financial situation? How about Wall Street fatcats, and their deregulatory enablers back in Washington?These are convenient targets, but they exist primarily in the minds of journalists. To see how we got into this situation, look no further than Fannie Mae and Freddie Mac - take a look at their hideously huge campaign contributions to the likes of Hillary Clinton and Barack Obama, along with many others, and indeed, on both sides of the aisle.
And before you seal the envelope of the letter blaming capitalism for this folly, take a look behind the scenes, at Chris Dodd's shameful defense of Fannie and Freddie back when the likes of - suprise, surprise - John McCain was trying to pull the reins on these mortgage behemoths via legislation that would have strengthened oversight and accountability procedures - Chris Dodd, who now points the finger everywhere but at himself, as managers for Fannie and Freddie who took the last train out of town after pocketing their hefty bonuses for - what, exactly?
For years, the pressure was on mortgage lenders to open up their lending practices in the goal of increasing home ownership among - yep, everyone's favorite recipients of taxpayer largesse - "Minorities" and "The Poor". Imagine that you owned a business that had to make decisions on whom and whom not to lend money to. Now imagine that a government flunky walks in and tells you that you have to start making loans to customers with the worst possible credit ratings, or even with no credit ratings at all, and that if you don't, you are "Redlining", "Racist", or some combination of the two. You've now traveled from one end of the race-spectrum to the other, arriving at the point where not lending to a minority - no matter what job or credit history he or she has - is a "Racial" action. Why not just legislate that you have to pay the mortgage of anyone who walks in the door, as long as it's not a white guy? What's the difference?
That's what went on, and the danger was hidden as long as home prices kept rising - which, of course, everyone likes to imagine will never end. When the party ends, as it must, who is left picking up the tab for those mortgages gone sour? The Government, meaning the taxpayers, meaning you. So what if these loans were extended to those who had no means to pay if the market didn't rise? It's your responsibility to cover their losses, according to the government. You might ask, "Why were these practices allowed to go on for so long that they wound up requiring my money?", and the answer would be an attempt to ignore all lending practices, and tell you that it doesn't matter, but that now that it has come this far, it's such a dire crisis that we absolutely have to use your money.
So you can blame the "Fat Cats" if you wish, but be very clear on who they are, because the only difference between this meltdown and that of Enron is that no one in the media is calling for the heads of Fannie Mae and Freddie Mac's leaders, who have already pocketed their gigantic bonus payoffs, and ridden off into the sunset. Why they are not being taken directly to task has a lot more to do with the mindset of journalists, for whom it's much easier to write stories blaming the situation on vague and greedy capitalists, rather than questioning their own fervid devotion to the Democrat party.
Update: Since the current bailout plan failed, the race is already on to blame Republicans, but take careful note of the fact that Democrats could have passed the bill by themselves due to their majority status, but couldn't even convince enough of their own to go along with it.
posted by ET @ 4:57 PM
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