For those that do not know Jacob is a friend on Face Book and he and I have had some very spirited debates. On Sunday Jacob sent me an article that stated, the left was not willing to face up to the prominent role, Fannie Mae and Freddie Mac played in the housing market failure. This is my response to him and to people on the right that want to paint everyone with a broad stroke, without asking individuals how they view an issue.
First, the article used the view of one person and then extrapolated the idea was held by all so called liberals or the political left. It also down played the role, large financial businesses, the banks, played. There is plenty of blame to dole out here.
Jacob, I want you to understand why I feel qualified to discuss this point. I worked for Bank of America for 27 years. I was a mortgage officer for 15 of those years. I was only able to do 20% down, conventional loans. Large and small banks, when I started, did portfolio loans and retained the paper, thus the responsibility of the loan. If a bad loan was made they took the loss. Simple. Then Congress, Democrats and Republicans alike came up with an idea, that became the secondary market companies, Freddie Mac and Fannie Mae. The banks could make more loans and much more money and do it quicker.
I do not deny the role that was created here and agree it was a disaster. The reason it became so toxic, was however driven by the banks and financial services companies that got into the home lending business. The original idea should have been, money sent back to the banks, to re lend, but on a smaller scale and the lender would have to follow strict under writing rules to do the loans. Last the institutions would be responsible for the loss. Then we would have had smart, efficient loans. I do not believe that everyone should or has to be a homeowner.
The right has to acknowledge the role played by lenders in this fiasco. To use one person's response and call all politically left people wrong and thinking the same is irresponsible. To try and make this an issue that only the left is ignoring is wrong. The right was content with this process, when they thought it was working. I believe that we need to go back to banks being banks. The Federal Reserve, needs to quit giving free money to banks. Then banks will have to attract money from savers and pay a fair interest rate. The banks should have to be responsible for their loans and keep it within its portfolio. We need to stop the money flowing to Freddie Mac and Fannie Mae. We need to have the housing market upright itself and assist homeowners to keep the foreclosed rate down.
There are many companies and people to blame here. Greed drove this and the people who played the right way, should not suffer, but yet they have seen their own homes go down in value, because of the actions of others. Lets all acknowledge what went wrong and then have a plan to address the issues and change the direction. I have in the past and will again in the future discuss my ideas and plans.
Lastly, I ask that the right or left or independents, stop thinking they know how the other side thinks. I look at each situation and decide from there. Look at my posts and you will get a better understanding of who I am. My largest issue with my political opponents is the fact they have in the past and continue to demagogue issues and distort facts. Is the left guilty of the same. Absolutely. So, why don't we start to work toward resolutions and not arguments.
Ok, I have read it. First of all I have to note that you first claim that the lefts narrative is somehow misrepresented, but it is really not at all a missrepresentation to claim that the left wants to put the blame some place other than government regulation. You yourself start out by giving lip services to the fact that Fannie and Freddie played a huge part of making the housing bubble happen (together with artificially low interest rates instituted by another government entity: the state monopoly on currency), but at the end you still claim that "Greed" was somehow the primary driver. Fannie and Freddie may have in many ways been a bipartisan thing, but delineating this according to partisan lines is not relevant. I have never not acknowledged that Keynesian policies (the real common denominator here and what is to blame at the fundamental level) are not part of Republican policies as well. They are, but Democrats today are those who not only promote these (as Republicans do) but also being their staunchest defenders. Obama is a hardore fanatic in this respect, so is Krugman to whom you have referred earlier on as someone who is supposed to be an authority (Krugman who actually put forward creating a housing bubble as a way to get out of the internet stock bubble as a proposition for a solution in 2001). Tea Party Republicans on the other hand are not for the most part. "Greed" did not create this, government regulation did on the other hand. Without those regulations that "greed" would not have been able to have these consequences as a Free Market would counter and curb such economic activity (rent seeking, corporatism, and cronyism would not be part of a Free Market due to it being impossible under Free Market conditions). To call for more regulation instead of less is the same as wanting to put out a fire with gasoline.
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