I was reading Gene Lyons take on President Obama’s release of his “certificate of live birth”. He notes that the whole birtherism movement is only part of a much bigger barrel of pure freak’n nuttiness – The futility of reasoning with crazy. This paragraph is just one example,
Alas that’s merely the tip of the proverbial iceberg where GOP delusional thinking is concerned. Judging by my inbox, a large proportion of angry white men also believe that the burst housing bubble and financial meltdown of 2007-8 were caused by — wait for it — President Jimmy Carter. A version of this poisonous myth has been popularized by syndicated columnist Thomas Sowell.
I do not mean this to be simply name calling or hyperbolic, syndicated right-wing columnist Thomas Sowell seems to have some severe cognitive disorder – several examples here. I may have mentioned the documentary “Inside Job” previously. For those who dread reading about economics it is a relatively painless way to digest some of the history of financial deregulation that lead to the U.S. housing bubble and the Great Recession. Some Democrats during the 1990s such as Larry Summers and President Clinton, hand in hand with Republicans such as Newt Gingrich and Phil Gramm, were clearly guilty of jumping on the deregulation bandwagon. Those really into the history of Democrats and the conservative Democratic Leadership Counsel ( recently disbanded) know that these people were the non-progressive branch of the Democratic Party. They did a lot of the kind of triangulations between corporate, Wall St and middle-class interests that frustrates progressive Democrats. A large number of Democrats bought at least partly into, and continued the deregulation of the banking system started by Reagan ( Reagan has the most recent and now third largest financial meltdown of modern times with the Savings and Loan scandals). If Sowell and his ilk want to present an honest history of the housing bubble and the history of who was involved and who passed what legislation, including Democrats, by all means do so. That is not his agenda. It has becomes the Right’s meme that the working poor caused the housing bubble. That liberals used the the 1977 Community Reinvestment Act to force banks to make all the sub-prime loans. And that by extension the housing bubble was all Freddie Mac and Fannie Mays fault. Statistics show that regular banks made most of the sub-prime loans and that large Wall St financial houses such as Bears Stearns and Goldman-Sachs, for the sake of their derivatives and CDOs pushed banks to make loans to people across the economic spectrum on houses they could not afford. Did Liberals Cause the Sub-Prime Crisis?
First, consider timing. CRA was enacted in 1977. The sub-prime lending at the heart of the current crisis exploded a full quarter century later. In the mid-1990s, new CRA regulations and a wave of mergers led to a flurry of CRA activity, but, as noted by the New America Foundation’s Ellen Seidman (and by Harvard’s Joint Center), that activity “largely came to an end by 2001.” In late 2004, the Bush administration announced plans to sharply weaken CRA regulations, pulling small and mid-sized banks out from under the law’s toughest standards. Yet sub-prime lending continued, and even intensified — at the very time when activity under CRA had slowed and the law had weakened.
Second, it is hard to blame CRA for the mortgage meltdown when CRA doesn’t even apply to most of the loans that are behind it. As the University of Michigan’s Michael Barr points out, half of sub-prime loans came from those mortgage companies beyond the reach of CRA.
As the FCIC (Financial Crisis Inquiry Commission) staff reports demonstrate fairly conclusively, it was the shadow banking system’s unregulated private securitization of mortgages that caused the financial crisis, not affordable housing policies. The FCIC staff has done an excellent job of compiling the facts, and we encourage you to check out the FCIC’s comprehensive reports to date.
Like birtherism these wild accusations about the cause of the housing bubble, which never have any authoritative evidence to support them, serve multiple purposes. They smear people, institutions and governing philosophies they do not like, and cannot win an honest debate on. Estimates vary,but a common figured used to estimate the amount of wealth that Wall Street’s fraud and thief cost the country is about $7 trillion. Not one person involved in the Wall St meltdown has been sent to jail. The media and most people are now convinced the U.S. is having problems balancing the budget because Obama went on some kind of spending spree. Or that the states or having budget problems because of excessive federal spending under Democrats. We do have a spending problem, we have a loss of wealth problem coupled with a loss of revenue problem. How are Republicans handling that situation. By claiming the middle-class and working poor have to make sacrifices. P.T. Barnum could well have been thinking of people who believe the Republican lies when he said there is a sucker born every minute.
Freddie and Fannie are not guilt free. They did misrepresent the value of their assets early in the Bush administration ( they were fined), but that was not part of the larger structural issues that lead to the housing bubble or the financial collapse of Wall St. The Federal Reserve of New York did its own investigation and also found that private banks were the largest originators of sub-prime loans – Understanding the Securitization of Subprime Mortgage Credit. I doubt Sowell has read it since it is not in big block letters made with crayons.
A week after he promised to “go after the teachers and the union organizers,” his website BigGovernment.com started running a series of choppy, heavily edited videos taken from labor studies courses taught at the University of Missouri-St. Louis and the University of Missouri-Kansas City. The posts promoting these videos claim, among other things, that the professors “instruct students on how fear, intimidation, and, even, industrial sabotage are important and, often, necessary tools,” and that they teach their students that the US flag is “racist.”
But given Breitbart’s history of dishonesty and his declared intention to “go after” teachers and unions, do we have any reason to think Big Government’s claims are credible?
In a word, no. And in fact a quick review of the full context of these clips reveals that Breitbart is up to his old tricks again.
Brietbart’s little games may be wearing thin for all but the raw meat eaters. His little con game with Planned Parenthood didn’t work as well as the ACORN stunt. When the con comes down to fleecing the other cons, its game over.