This Cato Institute article, Who Are the Villains of the Mortgage Mess? by Daniel J. Mitchell, was published in the LA Times. It is a good summary of the reasons behind the current crisis and who is to blame.

Problem No. 1 — easy-money policy from the Federal Reserve. Blame the Federal Reserve and every politician.

Problem No. 2 — corrupt subsidies from Fannie Mae and Freddie Mac. Blame politicians, mostly Democrats, and especially Barney Frank and Chris Dodd.

Problem No. 3 — the Community Reinvestment Act. Blame Jimmy Carter, the Democrats, Bill Clinton, and George W. Bush.

Tags: financial crisis

Democrats are calling for another economic stimulus package. If this is anything like the first package, it will be another massive income redistribution package paid for by high earners and benefiting lower earners. High earners received nothing based on the Economic Stimulus Payment Calculator.

Tags: financial crisis

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?”

Tags: financial crisis