The Liberals Made Them Do It
by digby
Just in case any of you have the mistaken impression that the housing meltdown (what Atrios refers to as "Big Shitpile") has anything to do with rapacious lenders and a bunch of greedheads who made sick profits using complicated financial instruments that even they didn't understand, think again. Guess whose fault it is?
Last week's 360-point drop in the Dow was fueled by the announcement of NYAG Andrew Cuomo that he is subpoenaing Fannie Mae and Freddie Mac for information on all mortgages they had bought from Washington Mutual as part of a general investigation into mortgage loans. Fannie Mae stocks fell 10 percent, Freddie Mac 8.6 percent, and Washington Mutual a whopping 17 percent, turning what was already a bad day into the worst drop in over a year. Cuomo has decided that the reason for the mortgage meltdown is -- you guessed it -- big-time fraud.
All this is just a search for scapegoats. The reason we're in a mortgage meltdown is this. For years the federal government and everyone else has done everything possible to encourage people to buy their own homes. One of the biggest liberal criticisms of the market was that low-income people -- particularly blacks and Hispanics -- were excluded from ownership through "blackballing," "red-lining," and other forms of discrimination.
So the banks and mortgage markets responded. They invented "sub-prime" loans for high-risk customers and tried to spread the risk by bundling them into broader financial instruments. Eventually the market became overextended and we're all suffering the consequences. Only demagogues like Andrew Cuomo think this has anything to do with legerdemain.
See? The banks and mortgage markets were just trying to help out the blacks and the Mexicans like the liberals kept telling them to and this is the thanks they get for it. Now everybody's blaming them when the lazy blacks and Mexicans refuse to pay their bills ... as usual. (Try to do someone a favor...)
This is why we need to deport all the illegal immigrants and get "tough on crime" like the Republicans are urging us to. This crass exploitation of the poor banking and mortgage industry has got to stop. It's costing real Americans their homes!
Update: I was just reminded of the biggest bastard liberal of them all:
WASHINGTON — Federal Reserve Chairman Alan Greenspan said Monday that Americans' preference for long-term, fixed-rate mortgages means many are paying more than necessary for their homes and suggested consumers would benefit if lenders offered more alternatives.
In a standing-room-only speech to the Credit Union National Association meeting here, Greenspan also said U.S. household finances appeared generally sound, despite rising debt levels and bankruptcy filings. Low interest rates and surging home prices have given consumers flexibility to manage debt, he said.
"Overall, the household sector seems to be in good shape," Greenspan said...
"American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage," Greenspan said.
h/t to Stephanie
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