Dems and Reps are both to blame see the non-partisan facts

HBJETFANBOB · 10-10-2008, 12:04 AM

The Real Deal

So who is to blame? There's plenty of blame to go around, and it doesn't fasten only on one party or even mainly on what Washington did or didn't do. As The Economist magazine noted recently, the problem is one of "layered irresponsibility ... with hard-working homeowners and billionaire villains each playing a role." Here's a partial list of those alleged to be at fault:

The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.

Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.

Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.

Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.

The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.

Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.

Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.

Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.

The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.

An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.

Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.

The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation. Claiming that a single piece of legislation was responsible for (or could have averted) the crisis is just political grandstanding. We have no advice to offer on how best to solve the financial crisis. But these sorts of partisan caricatures can only make the task more difficult.

BushyTheBeaver · 10-10-2008, 12:19 AM

I'm sick of the "innocent, hardworking homeowners" portrayal. Greed, ignorance, and stupidity were rife at every level, and that includes many of the people who are currently defaulting on their mortgages.

adb280z · 10-10-2008, 01:20 AM

It's pretty obvious that the trouble we're in now has many factors. Both Democratic and Republican. To use one of my least favorite buzzwords of the day - Main St. is just as much to blame as Wall St.

10-10-2008, 12:04 AM	#1
HBJETFANBOB Veteran Join Date: Apr 2003 Location: Huntington Beach , CA ( The OC) Posts: 2,107	Dems and Reps are both to blame see the non-partisan facts The Real Deal So who is to blame? There's plenty of blame to go around, and it doesn't fasten only on one party or even mainly on what Washington did or didn't do. As The Economist magazine noted recently, the problem is one of "layered irresponsibility ... with hard-working homeowners and billionaire villains each playing a role." Here's a partial list of those alleged to be at fault: The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap. Home buyers, who took advantage of easy credit to bid up the prices of homes excessively. Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses. Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes. The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families. Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates. Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages. Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral. The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market. An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic. Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up. The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation. Claiming that a single piece of legislation was responsible for (or could have averted) the crisis is just political grandstanding. We have no advice to offer on how best to solve the financial crisis. But these sorts of partisan caricatures can only make the task more difficult.

10-10-2008, 12:19 AM	#2
BushyTheBeaver size matters All League Join Date: Sep 2007 Posts: 3,922	I'm sick of the "innocent, hardworking homeowners" portrayal. Greed, ignorance, and stupidity were rife at every level, and that includes many of the people who are currently defaulting on their mortgages.

10-10-2008, 01:20 AM	#3
adb280z All League Join Date: Sep 2004 Location: Belleville, NJ Posts: 3,427	It's pretty obvious that the trouble we're in now has many factors. Both Democratic and Republican. To use one of my least favorite buzzwords of the day - Main St. is just as much to blame as Wall St.