By Dan Kennedy
Journalists blind to how government is chief cause of many industry problems.
Have you noticed that the media largely fail to connect the dots between related events?
In all the reporting on the auto industry’s ills, little is said about the government as the chief cause. Politicians holler at auto executives in hearings and beat their chests in interviews, but never mention Corporate Average Fuel Economy (CAFE) mileage standards. Just like unaffordable union contracts, incredibly mentioned often by the same politicians who now wish to give the unions expanded, unchecked power to wreak the same destruction in other industries via the Employee Free Choice Act (which steals away free choice).
In all their reporting of how the sub-prime mortgage meltdown purportedly triggered the financial industry collapse (as a child’s sneeze might topple a meticulously constructed, floor to ceiling house of cards), they uttered hardly a word uttered about Barney Frank and Gang’s push for financial institutions to provide mortgages to the woefully unqualified. Nobody mentioned the he Clinton administration’s pushing for home ownership as a God-given right to be facilitated at any cost, let alone the years of criminal conspiracy and obscene executive compensation at Fannie and Freddie.
The next big mess in the making, where the dots are not being connected,-----------------------> More
Showing posts with label wall street. Show all posts
Showing posts with label wall street. Show all posts
November 26, 2008
October 06, 2008
Subprime Mortgage Suspects - In 2005, Federal Reserve Chairman Alan Greenspan told Congress
By Donald Lambro, chief political correspondent of The Washington Times
There is no more insidious myth than the notion that the subprime-mortgage debacle began on Wall Street and that predatory capitalism was responsible for the whole blooming mess.
Economist Milton Friedman used to say just about every economic and social ill that confronts our country could be traced to misguided federal policies and their "unintended consequences." And that is certainly true of the subprime crisis seeds planted by two federally created, government-assisted lending agencies: Fannie Mae and Freddie Mac.
To be sure, there's lots of blame to go around, but these two mortgage giants were at the root of this scandal. "Fannie and Freddie did this by becoming a key enabler of the mortgage crisis," wrote economist Kevin Hassett in a revealing article for Bloomberg financial news. "They fueled Wall Street's efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio themselves."
To a large degree, Fannie and Freddie became the mortgage market, as Democratic leaders in Congress pressured, pushed and ordered the agencies to make housing loans to lower-income borrowers who could not meet credit standards elsewhere in the mortgage industry.
As of last year, Fannie Mae alone owned or guaranteed more than $388 billion of these high-risk loans. "Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home," the American Enterprise Institute economist says.
There were those who saw disaster early in the making, and that's what happened from 2004 to 2005 when both agencies were caught in the undertow of an accounting scandal that swept Fannie Mae CEO Franklin Raines from office in disgrace.
One of those who tried to rein in the two agencies was President Bush, who recommended in 2003 that an agency be created to regulate the housing-finance industry,----------------> More
There is no more insidious myth than the notion that the subprime-mortgage debacle began on Wall Street and that predatory capitalism was responsible for the whole blooming mess.
Economist Milton Friedman used to say just about every economic and social ill that confronts our country could be traced to misguided federal policies and their "unintended consequences." And that is certainly true of the subprime crisis seeds planted by two federally created, government-assisted lending agencies: Fannie Mae and Freddie Mac.
To be sure, there's lots of blame to go around, but these two mortgage giants were at the root of this scandal. "Fannie and Freddie did this by becoming a key enabler of the mortgage crisis," wrote economist Kevin Hassett in a revealing article for Bloomberg financial news. "They fueled Wall Street's efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio themselves."
To a large degree, Fannie and Freddie became the mortgage market, as Democratic leaders in Congress pressured, pushed and ordered the agencies to make housing loans to lower-income borrowers who could not meet credit standards elsewhere in the mortgage industry.
As of last year, Fannie Mae alone owned or guaranteed more than $388 billion of these high-risk loans. "Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home," the American Enterprise Institute economist says.
There were those who saw disaster early in the making, and that's what happened from 2004 to 2005 when both agencies were caught in the undertow of an accounting scandal that swept Fannie Mae CEO Franklin Raines from office in disgrace.
One of those who tried to rein in the two agencies was President Bush, who recommended in 2003 that an agency be created to regulate the housing-finance industry,----------------> More
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