Housing Bust Blame Game

Wednesday, March 19, 2008 | 11:45 AM

Back in August of 2007, we looked at the The Ongoing Impact of the Housing Sector.   

At the time, I had assigned blame for all of the problems in the credit market to a variety of institutions and people. The blame went as follows:

    * Federal Reserve (FOMC)
    * Borrowers
    * Mortgage brokers
    * Appraisers
    * Federal Government
    * Fannie Mae
    * Lending banks
    * Wall Street firms
    * CDO Managers
    * Credit agencies
    * Hedge funds
    * Institutional Investors (pensions, insurance firms, banks, etc.)
    * And back to regulatory role of the Federal Reserve

Today's WSJ has a front page article looking at the same issue: Housing Bust Fuels Blame Game. However, they assess blame somewhat differently, with a bit of a political slant:

Democrats are quick to blame Republicans, who were in power during the housing bubble and subprime lending frenzy. For years, America's leaders failed to restrain the markets, companies, investors and consumers from the missteps that led to the most pervasive financial crisis in decades.

But in hindsight, the failure stretches across government and across party lines. At bottom are two strong currents. From the Republican president to urban Democratic congressmen, homeownership was pushed as an overriding and unquestioned goal. And many significant attempts at regulation were obstructed by the prevailing belief that the economy did best when financial markets operated as freely as possible.

While the headline writer tries to call this a "Bipartisan Failure," the bulk of the actual article is find less kind to the GOP. The Journal blamed:

* The Bush administration for cheerleading homeownership and pressuring government-sponsored mortgage lenders Fannie Mae and Freddie Mac to provide funding for riskier mortgages.

* Congress for allowing Fannie and Freddie to invest heavily in securities backed by subprime loans.

* While Democratic congressmen pushed federal law to restrain sub-prime lending practices Republicans (with some Democratic allies) blocked or countered with weaker versions;

* Federal Reserve, Chairman Alan Greenspan, revered for not using the Fed's authority to more aggressively regulate lender behavior.

* California -- where the country's subprime lenders where -- saw Democratic state lawmakers refusing to impose tougher regulations on a prized local industry.

Perhaps its bias on my part, but that list looks a little one sided to me . . .


graphic courtesy of the WSJ



Housing Bust Fuels Blame Game
Democrats Seize On Opponents' Role;
Bipartisan Failures
WSJ, February 27, 2008; Page A1

Free version



Formula for a Housing Bust

A White House push to encourage higher levels of home ownership and oversight failures at all levels of government appear in hindsight to have spawned the current housing crisis. (See related article.)

click thru for WSJ interactive chart


Wednesday, March 19, 2008 | 11:45 AM | Permalink | Comments (67) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post



TrackBack URL for this entry:

Listed below are links to weblogs that reference Housing Bust Blame Game:


The Wall Street Journal? Taking a Republican slant? I am shocked. Shocked! :)

Posted by: mappo | Mar 19, 2008 11:53:47 AM

The comments to this entry are closed.

Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      


Complete Archives List



Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:

Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo



Odds & Ends

Site by Moxie Design Studios™