Thought Of The Day: Pointing The Finger In The Wrong Direction On The Financial Crisis
To blame deregulation or Laissez Faire capitalism for the financial woes we have right now is not just getting it wrong, it’s getting it EXACTLY backwards.
It was government regulations that forced Fannie Mae and Freddie Mac, which are quasi-governmental entities, not truly private enterprises, to give home loans to people that couldn’t afford it.
Additionally, it was members of Congress, like Barney Frank and Chris Dodd, who thwarted attempts to fix the regulations and then spent hundreds of billions of taxpayer dollars when the whole mess they created imploded.
So, we have heavily regulated, quasi-governmental entities that were practically bent over a barrel by Congress and forced to give the bad loans that ultimately led to a financial crisis.
That is the root of this whole crisis and it has less to do with deregulation or Laissez Faire capitalism than Vladimir Lenin did with the creation of the stock market.