Thursday, January 14, 2010

We Need More Mirrors In The Capitol

In trying to justify the “financial crisis responsibility fee" I wrote about yesterday, Mr. Freddie Mac and Fannie Mae himself, Barney Frank, said the following to the AP:
“Look, the financial institutions collectively, particularly the larger ones, caused problems by their errors — their errors of judgment, their irresponsibility, in some cases their skating around dishonesty," said House Financial Services Committee Chairman Barney Frank, D-Mass.

"I think it is entirely reasonable to say that the industry that, A, caused these problems more than any other and, B, benefited from the activity, should be contributing," he said.
Did they remove all the mirrors from the Capitol?

Congress, and it’s errors of judgment and irresponsibility in requiring Freddie Mac and Fannie Mae to purchase more and more low-income mortgages with lower and lower borrower requirements, is the root cause of the crisis. Without this push from Congress, lending standards wouldn’t have been abandoned, fewer people would have been able to purchase houses, prices would not have increased as fast and without a bubble, there would be no bust. I concede it’s a simplified argument, and others had their role to play (Fed, credit rating agencies, etc.), but given the time I have to write this, it the quickest way to the facts.

Perhaps we should impose Congress with a special levy to help repay the taxpayers? While we’re at it, let’s impose a special tax on every individual who took out a mortgage they couldn’t afford – after all, isn’t that really the root cause of all of this? A lack of personal financial responsibility? No, of course not, it’s not politically viable to blame Americans for their poor/unlucky individual decisions, let’s go after the big bad banks instead. The same big banks who are doing more to create jobs and growth by providing capital to those who need it (and can actually repay it) than any stimulus the government could ever provide.

Look, I’m not saying the Banks didn’t play a role in the crisis, but to place 100% of the blame, and 100% of the responsibility for bailing out the Administrations (both Bush and Obama in this instance) decisions to save AIG, and the GM & Chrysler unions, is wrong, and sets a terrible precedent. It’s an outright grab of private property for no other reason than it’s there to be taken.

It’s a slippery slope. Who’s next? Fast food restaurants or grocery store chains for making the country fat? Yep. Auto manufacturers for causing car accidents? Actually, no because the auto unions have bought and paid for their protection through their contributions to the Obama Administration. Dell or Microsoft for providing hardware and software to individuals who might use it to commit online fraud? Individuals with names longer than 20 characters because the government spends more money on ink for them when printing various forms and documents?

Seriously, where does it end?


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