Doc91678
Rookie
- Banned
- #1
John Fund @ NRO:
In Star Wars, Obi-Wan Kenobi used an old Jedi mind trick on Stormtroopers to deflect them from their real quarry: These arent the droids youre looking for. It worked.
It looks as if another mind trick, well known in the Congress delay and deflection will now work to make Americans forget one of the biggest scandals of our time: the housing collapse that triggered the 2008 financial meltdown we are still suffering from. We shouldnt just gaze over the fiscal cliff everyone else is scrutinizing; we should also examine the droids who helped set in motion our current economic mess.
Last week, over the holidays, the House Ethics Committee quietly joined its Senate counterpart in finding that no members or staffers or at least any it claimed jurisdiction over broke congressional rules while obtaining VIP mortgages from Countrywide. This failed lender at one time provided a huge share of the questionable subprime mortgages issued by Fannie Mae and Freddie Mac, the government-backed mortgage lenders that were some of the first players to fall in the 2008 financial collapse.
Fannie and Freddie scooped up Countrywide loans and pooled them and others into mortgage-backed securities that were sold with an implicit taxpayer guarantee that eventually became explicit. The taxpayer guarantee allowed indeed, encouraged the lenders to be reckless, creating a moral hazard. In 2008, this set-up helped bring down the whole house of cards built by subprime mortgages.
But far from being dismantled, Fannie and Freddie have avoided insolvency, thanks to massive taxpayer bailouts. Talk of winding them down has faded on Capitol Hill and is being discouraged by the Obama administration. The two entities, along with the Federal Housing Administration, currently back some 90 percent of new mortgages. Talk about there being no consequences for failure.
Read more:
The Mega Scandal Everyone Has Forgotten - John Fund - National Review Online
In Star Wars, Obi-Wan Kenobi used an old Jedi mind trick on Stormtroopers to deflect them from their real quarry: These arent the droids youre looking for. It worked.
It looks as if another mind trick, well known in the Congress delay and deflection will now work to make Americans forget one of the biggest scandals of our time: the housing collapse that triggered the 2008 financial meltdown we are still suffering from. We shouldnt just gaze over the fiscal cliff everyone else is scrutinizing; we should also examine the droids who helped set in motion our current economic mess.
Last week, over the holidays, the House Ethics Committee quietly joined its Senate counterpart in finding that no members or staffers or at least any it claimed jurisdiction over broke congressional rules while obtaining VIP mortgages from Countrywide. This failed lender at one time provided a huge share of the questionable subprime mortgages issued by Fannie Mae and Freddie Mac, the government-backed mortgage lenders that were some of the first players to fall in the 2008 financial collapse.
Fannie and Freddie scooped up Countrywide loans and pooled them and others into mortgage-backed securities that were sold with an implicit taxpayer guarantee that eventually became explicit. The taxpayer guarantee allowed indeed, encouraged the lenders to be reckless, creating a moral hazard. In 2008, this set-up helped bring down the whole house of cards built by subprime mortgages.
But far from being dismantled, Fannie and Freddie have avoided insolvency, thanks to massive taxpayer bailouts. Talk of winding them down has faded on Capitol Hill and is being discouraged by the Obama administration. The two entities, along with the Federal Housing Administration, currently back some 90 percent of new mortgages. Talk about there being no consequences for failure.
Read more:
The Mega Scandal Everyone Has Forgotten - John Fund - National Review Online
