Here he is, folks. The conservative Republican candidate for president, blaming the private sector for the recession:
Sen. John McCain this morning said “greedy” Wall Street investors are partly to blame for what he said is probably an economic recession the nation is now suffering.
“There has to be a modification of the greedy behavior of some of these people,” he said, using the word “greedy” repeatedly in remarks to the Associated Press annual meeting at the Washington Convention Center today.
Moron.
As Freeper Aristotelian said:
“Greed” doesn’t cause recessions. More often than not, failed governmental policies — e.g., monetary, regulatory, fiscal, etc. — are to blame for an economic setback. In this case, the blame lies with poor money management by the Fed — under both Greenspan and Bernanke — and the effects of federal rules on subprime mortgage lending — notably, the 1977 Community Reinvestment Act.
Plus the push by the Clinton administration to hand out loans to people who were totally unqualified for them.
The National Homeownership Strategy began in 1994 when Clinton directed HUD Secretary Henry Cisneros to come up with a plan, and Cisneros convened what HUD called a “historic meeting” of private and public housing-industry organizations in August 1994. The group eventually produced a plan, of which Mason sent me a PDF of Chapter 4, the one that argues for creative measures to promote homeownership.
The very worst idea in the plan, which fortunately never gained approval, was to let first-time homebuyers freely tap their IRA and 401(k) retirement-savings plans with no penalty to scrounge up a downpayment. That, HUD estimated, would have “benefited” 600,000 families in the first five years.
Plenty of other ideas in the plan did become reality, though. Knowing what we know now about the housing bust, the earnest language in the document seems faintly ridiculous. Here’s an excerpt. Read it closely and you can see the seeds of disaster being planted:
For many potential homebuyers, the lack of cash available to accumulate the required downpayment and closing costs is the major impediment to purchasing a home. Other households do not have sufficient available income to to make the monthly payments on mortgages financed at market interest rates for standard loan terms. Financing strategies, fueled by the creativity and resources of the private and public sectors, should address both of these financial barriers to homeownership.
Note the praise for “creativity.” That kind of creativity in stretching boundaries we could use less of. Mason puts it well: “It strikes me as reckless to promote home sales to individuals in such constrained financial predicaments.”
And how about the people who took on loans they knew they couldn’t afford, or failed to understand the contract they were signing? Are they responsible for anything?
Nope, just the greedy Wall Street banker types. And it seems to me that they were encouraged by the government to give out those loans.
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