Richard W. Rahn wrote an article in The Washington Time titled Lies or Ignorance? exploring who is to blame for the financial meltdown. Here are some highlights:
During the Carter administration, the Democratic Congress passed the Community Reinvestment Act (CRA), which gave federal regulators the power to pressure banks into issuing loans to high-risk households and small businesses.
It concludes with:
What we have seen is not a failure of free-market democratic capitalism, but another failure of a government that destroyed the normal market mechanisms for dealing with risk. There have been many calls for the “greedy” to be punished, but the political “greed” for power and money is even more dangerous than excesses practiced by occasional business people.
Updated: This Investor’s Business Daily editorial recounts the history that led to the current financial crisis, including Barney Frank’s role. It finishes by asking the question: “why is the Community Reinvestment Act still law?”
