Tuesday, October 14, 2008

No Risky Borrowers to Blaim

Shannon Buggs says Hogwash:
"In the search for a scapegoat in this economic crisis, some pundits and politicians lay the blame on a 'welfare state' law that 'forced' bankers to make ultra-risky, high-priced loans to uncreditworthy borrowers.

The problem is that's hogwash."
Really? Government policy led to distorted incentives to lend to less credit worthy borrowers. This, matched with securiterization of such loans and the purchase by Fannie Mae and Freddie Mac in addition to mark-to-market accounting standards got us here. Without the CRA, I find it unlikely this crisis would have happened.

I find it amazing that Buggs cannot make a causal link between government policy regarding lower economic strata and the current crisis as long as their is a racial element involved. It is not racial, it is economic.

If you read the comments, Buggs is being savaged. I won't do that, but I find it interesting that cloudy thinking has drifted (and is tolerated) from Loren Steffy to Buggs. Hopefully, Buggs will shake the muddle-headedness that appears to inhabit the Houston Chronicle business pages.


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