The best way to prevent the next financial crisis, or dampen its effects, is to understand the roots of the current crisis. So it is with sadness that I read this article in the Huffington Post today. The article states that the four Republicans on the Financial Crisis Panel are releasing their own report, blaming the crisis on government policy and the Community Reinvestment act of 1977.
The Republicans, led by the commission’s vice chairman, former congressman and chair of the House Ways and Means Committee Bill Thomas, will likely focus their report on the explosive growth of subprime mortgages and the heavy role played by the federal government in pushing mortgage giants Fannie Mae and Freddie Mac to purchase and insure them. They’ll also likely focus on the Community Reinvestment Act, a 1977 law that encourages banks to lend to underserved communities…
This seems disingenuous and untrue. It gets worse:
During a private commission meeting last week, all four Republicans voted in favor of banning the phrases “Wall Street” and “shadow banking” and the words “interconnection” and “deregulation” from the panel’s final report, according to a person familiar with the matter and confirmed by Brooksley E. Born, one of the six commissioners who voted against the proposal.
The beneficiaries of the biggest bail out in American history are also getting the benefit of this grand whitewashing.
via Calculated Risk