Mortgage Scandal a Bipartisan Affair

Filed under: Feature, General News — Michael van der Galien, Editor-in-Chief on July 15, 2008 @ 8:00 pm CEST

Of course the mortgage scandal and problems are a ‘bipartisan affair.’ As Froma Harrop points out, every single person was more than willing to use the housing bubble in an attempt to make a quick buck.

For instance Republicans: they had indeed always argued that the free market should do its work. If you let it do what it naturally does, mistakes will be corrected. Where there is a bubble, the market will correct itself and those who gambled or were simply acting stupid will suffer the consequences of their actions. That’s cold, yes, but it does ensure that people will not make the same mistake twice. Additionally, letting the market do what it does best would create a natural situation, which is most healthy for everyone, especially for the economy as a whole.

Or so Republicans have argued for decades.

But now that the market is actually correcting itself, Republicans suddenly say that the government should act. ‘Were the officials true free-marketeers, they would have let Bear Stearns go splat. They’d have stayed aloof to the panic surrounding Fannie and Freddie. They’d just let market forces do their job — and then usher in another Great Depression,’ Harrop writes.

No, instead of letting the above happen, Republicans advocated helping those companies out.

Democrats haven’t been any better. They complain now that George W. Bush ignored potential problems, but they were not willing to do anything about it years ago either. The reason, well one of the reasons, was that these companies made a lot of money which meant that they also had to pay a lot of taxes. The more taxes, the merrier Democrats seem to have thought.

As usual, both sides try to blame each other, while both sides are partially to blame.

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1 Bob A

July 15, 2008 @ 8:26 pm CEST

Ah.. its being called for what it is.. a scandal first, a crisis second.

2 Chuck Norton

July 16, 2008 @ 1:46 am CEST

Michael - Government sorda has to act - why? It is government regulation and taxes that have caused a great deal of this problem. Laws such as the Community Reinvestment Act etc that force lenders to give marginal loans on properties that have declining values to avoid "red-lining" and charges of racism. What lenders do is make the loans that they KNOW are VERY risky to keep the feds coming down on them, and then they sell these loans to Freddie Mac and Fannie Mae and walla - they fail as property taxes go up and energy and food prices go up and causing an overdue housing adjustment to become a full fledged crash. Banks keep most of the good loans and dump the bad ones to Freddie and Fannie.

3 Michael Merritt

July 16, 2008 @ 4:36 am CEST

I found it interesting that the government is so willing to keep these lenders propped up. Just proves that neither party can actually claim true fiscal conservativeness.

I remember during the whole Bear Stearns fiasco, some of the far-right economic conservatives were screaming their heads off at the involvement of the government.