Think deregulation caused this mess? read on..

[Fieldmouse]

A MINORITY VIEW
BY WALTER E. WILLIAMS
RELEASE: WEDNESDAY, JANUARY 14, 2009 AND THEREAFTER

Congress' Financial Mess

News media people, often plagued with little understanding, fail miserably in their duty to inform the public. This is particularly evident in their reporting on the current financial meltdown, suggesting it was caused by deregulation and free markets.
Professor David Henderson, research fellow at Stanford's Hoover Institution, writes about regulation in "Are We Ailing From Too Much Deregulation?" in Cato Policy Report (November/December 2008). The Federal Register, which lists new regulations, annually averaged 72,844 pages between 1977 and 1980. During the Reagan years, the average fell to 54,335. During the Bush I years, they rose to 59,527, to 71,590 during the Clinton years and rose to a record of 75,526 during the Bush II years. Employees in government regulatory agencies grew from 146,139 in 1980 to 238,351 in 2007, a 63 percent increase. In the banking and finance industries, regulatory spending between 1980 and 2007 almost tripled, rising from $725 million to $2.07 billion. So here's my question: What are we to make of congressmen, talking heads and news media people who tell us the financial meltdown is a result of deregulation and free markets? Are they ignorant, stupid or venal?
A New York Times article, "Fannie Mae Eases Credit To Aid Mortgage Lending" (9/30/99), reported, "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 "¦" The pressure was the 1977 Community Reinvestment Act that was beefed up during the Clinton Administration. It required banks to make high-risk loans they would not have otherwise made. Failure to comply meant fines and difficulty in getting approval for mergers and branch expansion.
When questions began to arise about government policy that intimidated lenders into making high-risk loans, we received congressional assurances. At hearings investigating the solvency of Fannie Mae and Freddie Mac, Rep. Barney Frank said, ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.'' In a speech to the Mortgage Bankers Association, Frank advised, "People tend to pay their mortgages. I don't think we are in any remote danger here. This focus on receivership, I think, is intended to create fears that aren't there." Protesting against greater controls against lax mortgage lending, Sen. Harry Reid said, "While I favor improving oversight by our federal housing regulators to ensure safety and soundness, we cannot pass legislation that could limit Americans from owning homes and potentially harm our economy in the process."
One-third of the $15 trillion of mortgages in existence in 2008 are owned, or securitized by Fannie Mae, Freddie Mac, Ginnie Mae, the Federal Housing and the Veterans Administration. Wall Street buyers of repackaged loans didn't mind buying risky paper because they assumed that they would be guaranteed by the federal government: read bailout from the taxpayers. Today's housing mess can be laid directly at the feet of Congress and the White House.
Congress and the White House aren't finished with the taxpayers yet. Once a bailout parade gets started, it has a momentum of its own. President Bush, citing danger to the economy, signed a $17 billion bailout for the auto industry. According to the Wall Street Journal article "Shovel-Ready on Campus" (December 17, 2008), presidents of 36 state government universities have called for bailouts; they call it a "federal infusion of capital." Soon, if not already, state governors and city mayors will descend on Washington seeking bailouts. California is $15 billion in the hole, Florida $5 billion and things are so bad in Michigan that the governor has shut down one prison to save money.
What kind of assumptions do politicians and news media make about the intelligence of Americans to expect us to buy the idea that our current mess results from deregulation and free markets? I do not find that assumption flattering.
Walter E. Williams is a professor of economics at George Mason University. To find out more about Walter E. Williams and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.
COPYRIGHT 2009 CREATORS SYNDICATE, INC.

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[falcon]

Walter Williams is a gaping idiot whowill not admit that his beloved Republican political pukes bear any responsibility for this mess that we are in.

[Fieldmouse]

ORIGINAL: falcon

Walter Williams is a gaping idiot whowill not admit that his beloved Republican political pukes bear any responsibility for this mess that we are in.

Wow, that was intelligent. Please help me find the word republican on demacrat in this statement? "Today's housing mess can be laid directly at the feet of Congress and the White House."

[ipscshooter]

ORIGINAL: falcon

Walter Williams is a gaping idiot whowill not admit that his beloved Republican political pukes bear any responsibility for this mess that we are in.

The seeds were planted by what now appear to be your (since you seem to have switched sides) beloved Democrat political pukes. And, anyone who doesn't recognize that the housing problem is a direct result of Clinton era pressure to force lenders to make high risk loans is, as you say, a gaping idiot. If all of those idiots, who took out loans that they could not afford, had made their payments when due, the housing market wouldn't have gone to hell in a handbasket, dragging the rest of the economy down with it.

[909bowsniper]

ORIGINAL: ipscshooter

The seeds were planted by what now appear to be your (since you seem to have switched sides) beloved Democrat political pukes. And, anyone who doesn't recognize that the housing problem is a direct result of Clinton era pressure to force lenders to make high risk loans is, as you say, a gaping idiot. If all of those idiots, who took out loans that they could not afford, had made their payments when due, the housing market wouldn't have gone to hell in a handbasket, dragging the rest of the economy down with it.

This is the best statement that concerns the current mess...Clintoon forced the issue of bad home loans thru fannie and freddie, so here the mess is...

[kevin1]

Goobermint interference is obviously the problem, and a bloated goobermint will only cause bigger problems in it's efforts to continue growing. The Founders never intended for the federal goob to be large, so the logical answer to the problem is to massively reduce both the size and power of the fed to where it should actually be.

[falcon]

Walter Williams is a political hack who refuses to believe that deregulation, a failure to regulate on thewatch of the Bush bunch AND the the huge blunders of the Clinton administration have got us where we are today. BTW, Clinton pushed for deregulation.

Ipsy, i am not a Democrat but an equal opportunity basher who refuses to drink thepoisoned Kool Aidof the Demonrats and the Republicants. Guys like you are so politically biased that you cannot see the woods for the trees.

[Canuck_Buck]

Good thing Hillary got in as Secretary of State then ?

[Alsatian]

I think it is an extremely bad precedent to bail-out companies. If a company makes bad business decisions, the corrective is for them to fail. Others in the industry see the consequences of the mistakes made by the failed company, take due notice, and they learn from this experience of the other company. The assets of the failed company are sold at a fraction of value, bought out by the failed companies competitors who improve their plant and perhaps retire obsolete plant. The market that the pool of companies formerly served presumably remains, so the remaining companies increase their market share. By contrast, if you prop up this company, in essence bad behavior is rewarded and the lessons are NOT learned.

With respect to bailing out state governments. The states have to be self-sufficient and pay their own way. The answer for any given state to their own financial problems is to increase taxes on their tax payers and/or reduce their spending. If they need more money, let them go to banking institutions for bonds. If they are not bond worthy . . . you make your own bed and you lie in it. By contrast, if you prop up this state government with federal money, what this in reality comprises is tax payers of other states paying for state spending in the failed state. Very, very bogus.

The one thing that comes again and again to my mind when I think about thiswhole bailout game and the mortgage fiasco that has created the problemis the reflection that democracy (not Democrats) as a form of government is far from perfect and at least some of its imperfections have long been identified by reflecting people, at least as far back as Plato. In a nutshell, you have the ignorant and the stupid running the show -- the masses. The blind leading the blind. The news media is an apt instrument of this ignorance and stupidity. I generally come to the conclusion that it is foolish to expect better from our government, given this analysis. I will confess that I don't have a solution for this shortcoming in my back pocket. I'm not advocating monarchy or oligarchy as a replacement, although some form or hybrid state involving elementsof oligarchy might be salutory.

[Fieldmouse]

Walter Williams is a political hack who refuses to believe that deregulation, a failure to regulate on thewatch of the Bush bunch AND the the huge blunders of the Clinton administration have got us where we are today. BTW, Clinton pushed for deregulation.

Perhaps you missed this fact so let me repost it:

The Federal Register, which lists new regulations, annually averaged 72,844 pages between 1977 and 1980. During the Reagan years, the average fell to 54,335. During the Bush I years, they rose to 59,527, to 71,590 during the Clinton years and rose to a record of 75,526 during the Bush II years. Employees in government regulatory agencies grew from 146,139 in 1980 to 238,351 in 2007, a 63 percent increase. In the banking and finance industries, regulatory spending between 1980 and 2007 almost tripled, rising from $725 million to $2.07 billion.

We don't have free markets, they don't exist. Everything in your life is regulated to the Nth degree. There's hardly any profession these days that doesn't require a license and/or a government permit, fees or approval board. It's become a joke. When you give up your rights to free markets to the government and have your representative blackmail businesses into business deals, how is that free or deregulated? We have been speedingdown this road since FDR and he isn't the president folks like to believe he was.

Did you know Dr Williams no longer gives testimony before congress? He understands, as I do, the problem is congress. He said his last testimony he gave before congressional hearings he began with "The problem in America is you congress. Now that you elected you will do one or both of two things. You will take private property from one individual and give it to someone it doesn't belong to and/or you will give a right to one individual and deny that right to another individual". That's hardly a statement from someone who is playing partisan politics, don't you agree? Or perhaps, you agree congress is well in their rights to play favorites?