George Will Spreads Some Lies About the Economic Crisis

It really is incredible to see such a concerted effort to rewrite history in front of our faces. There is not much ambiguity in the story of the housing bubble. The private financial sector went nuts. They made a fortune issuing bad and often fraudulent loans which they could quickly resell in the secondary market. The big actors in the junk market were the private issuers like Goldman Sachs, Citigroup, and Lehman Brothers. However, George Will and Co. are determined to blame this disaster on government "compassion" for low-income families.

We are going to have to defer somewhat to Morgenson and Rosner (the actual sources for Will's polemic) on this, sorry Dean. While it is obvious the private sector took the bubble to the "nth power" in the latter years, it has seemed pretty clear to us that the government set the stage for it. This is not so much directly because of the CRA, but the culture of laxity that developed at Fannie and Freddie, FHA, the Fed, and other banking regulators. Had there been an environment of seriousness rather than punch-bowl-spiking at these institutions, undoubtedly the "private financial sector" would not have gotten so far in bubble mania.

Of course, Democrats will just blame Bush for that -- even when talking about largely Democratic strongholds like Fannie and FHA.