Saturday, September 27, 2008

Harvard economist corrects Obama's mortgage crisis narrative

Harvard Economist Greg Mankiw, responding to Obama's account of how the mortgage crisis came about:
Senator Obama might want to read this NY Times article from 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....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.

13 comments:

sporcupine said...

Those rotten, reckless Clintons. These eight years have been way too long. I'm so glad they'll be out of the White House in a few months.

Lee said...

I guess all problems take less than eight years to develop.

sporcupine said...

Lee,

You missed my point. Many of the most important problems longer than eight years to develop into a true crisis.

Since this one was so long in coming, it's really sad that Americans didn't pay attention to that 1999 warning.

If we had, we could have moved within a year of two to elect a president with, like, an MBA or something.

Anonymous said...

It is amazing that with the Republicans controlling Presidency and Congress for much of the last 8 years and especially with loan lobbyists so intimately connected with McCain and the unholy revolving trinity of government official, lobbyist, and businessman, that nothing could have been done to avert this crisis. I guess we will never have stability until the last liberal is run out of the country, locked up, or dead.

jah

Lee said...

There were a couple of halfhearted attempts by Republicans to reel in the P.C. viruses loosed by Carter and Clinton on the housing industry.

But their hearts weren't in it as long as their Wall Street buddies made money in an up housing market.

Can we at least agree that it's a bad idea for government to force lenders to lend money to people who can't afford it?

Martin Cothran said...

Jah,

So the Democrats don't have any culpability in this?

sporcupine said...

Martin,

So, the Republicans have less than two-thirds culpability?

Martin Cothran said...

I just wondered why the silence on Democratic involvement in pushing for easy credit for people who can't pay it back. Bush certainly deserves credit for this. But I get a funny feeling he didn't start it.

Lee said...

I'd give the blame about two/thirds Democrat and one/third Republican.

Which is how this sort of thing usually plays out.

1. We get in trouble with dumb liberal Democratic ideas like forcing mortgage lenders to lend money to folks based on their skin color and not on their ability to repay. You know, affordable housing. Bigoted money lenders. And all that.

2. We proceed deeperin to trouble because Republicans with only the squishiest notions of a philosophy go along to get along. You know. Compassionate conservatism. Bipartisanship. And all that.

3. The conservative Republican remnant predicts disaster and get no credit for being right.

We're in this because of liberal do-gooder notions of applying government leverage to private sector decision-making. Because of federal sponsorship of quasi-government corporations like Fannie Mae and Freddie Mac. And because liberals always believe bad government can be fixed with more government.

And the private sector will get the blame because they're not as good as politicians are at deflecting the blame.

sporcupine said...

Lee,

I'm sad for those poor powerless bankers.

I take it they were also unable to meet with legislators to point out the problem themselves, unable to afford lobbyists, unable to write letters to the editor, unable to buy ads in the paper, and unable to write to their own stockholders to explain the problem?

Or were they just cowed into silence by bearded professors and women who don't shave their legs?

Lee said...

Many bankers, and certainly the ones from Freddie and Fannie, were certainly to blame. They discovered they could make money on bad loans as long as the market continued to appreciate. I have acknowleded this already in several posts, but apparently I need to say it again.

But ridicule aside, your position is essentially to blame the rape victim. All you're pointing out is that some of the rape victims are prostitutes. That does not absolve the rapists.

And note to "moderate" Republicans: this is what you can expect when you go along half-willingly with bum liberal ideas. You get blamed for it when things go south. You get more blame, in fact, than the liberals whose idea it was.

One of these days, maybe Republicans will learn, but I doubt I'll live to see it.

Anonymous said...

silence cause i had to go out of town'

of course the democrats bear some responsibility
but the conservatives bear the vast majority
needless to say, MC only mentions the liberals - that is what i mean when i say he misrepresents the facts


from the NYT

Dozens of interviews, most from people who requested anonymity to avoid legal repercussions, offer an inside account of the critical juncture when Fannie Mae’s new chief executive, under pressure from Wall Street firms, Congress and company shareholders, took additional risks that pushed his company, and, in turn, a large part of the nation’s financial health, to the brink.

Between 2005 and 2008, Fannie purchased or guaranteed more than $230 billion in loans to risky borrowers — more than three times as much as in all its earlier years combined, according to company filings and industry data.
'



jah

Martin Cothran said...

Jah,

How are conservatives responsible for this? What conservative policies helped bring this about?